Aylesbury Landlords and Tenants : What does the Tenant Fee Banning order mean for you?

·         Tenant Fees set to be banned within 12 to 18 months

·         Rents due to rise as those fees passed to Landlords

·         Landlords won’t be worse off – and neither will tenants or agents 

With our new Chancellor of the Exchequer revealing a ban on tenant fees in his first Autumn Statement on Wednesday what does this actually mean for Aylesbury tenants and Aylesbury landlords? 

The private rental sector in Aylesbury forms an important part of the Aylesbury housing market and the engagement from the chancellor in Wednesday’s Autumn Statement is a welcome sign that it is recognised as such. I have long supported the regulation of lettings agents which will ensconce and cement best practice across the rental industry and, I believe that measures to improve the situation of tenants should be introduced in a way that supports the growing professionalism of the sector. Over the last few years, there has been an increasing number of regulations and legislation governing private renting and it is important that the role of qualified, well trained and regulated lettings agents is understood. 

Great News for Aylesbury Tenants

 

So, let’s look at tenants .. this is great news for them, isn’t it?  Well before you all crack open the Prosecco, read this … 

Although I can see prohibiting letting agent fees being welcomed by Aylesbury tenants, at least in the short term, they won’t realise that it will rebound back on them.

First up, it will take between 12 and 18 months to ban fees, as consultation needs to take place, then it will take an Act of Parliament to implement the change. A prohibition on agent fees may preclude tenants from receiving an invoice at the start of the tenancy, but the unescapable outcome will be an increase in the proportion of costs which will be met by landlords, which in turn will be passed on to tenants through higher rents.  

Published at the same time as the Autumn Statement, hidden in the Office for Budget Responsibility’s Economic and Fiscal Outlook on the Autumn Statement (The Office for Budget Responsibility being created by Government in 2010 to provide independent and authoritative analysis of the UK’s public finances), it said on Wednesday … 

“The Government has also announced its intention to ban additional fees charged by private letting agents. Specific details about timing and implementation remain outstanding, so we have not adjusted our forecast. Nevertheless, it is possible that a ban on fees would be passed through to higher private rents”

The charity Shelter and Scotland 

Scotland banned Letting Fees in 2012. The charity Shelter have been a big voice in persuading and lobbying the Government since it managed to persuade the Scottish Parliament to ban fees in 2012. On all the TV and radio shows at the moment, they keep talking about their Independent Research, which they said showed that,  

“renters, landlords and the industry as a whole had benefited from banning fees to renters in Scotland. It found that any negative side-effects of clarifying the ban on fees to renters in Scotland have been minimal for letting agencies, landlords and renters, and the sector remains healthy.”

Going on,  

“Many industry insiders had predicted that abolishing fees would impact on rents for tenants, but our research show that this hasn’t been the case. The evidence showed that landlords in Scotland were no more likely to have increased rents since 2012 than landlords elsewhere in the UK. It found that where rents had risen more in Scotland than in other comparable parts of the UK in 2013, it was explained by economic factors and not related to the clarification of the law on letting fees” 

.. yet the devil is in the detail…. 

Last week Shelter were quoting this Research from December 2013 to say rents never went up following the tenant fee ban in Q4 2012. I have read that research and I agree with that research, but it was published three years ago, only 12 months after the ban was put into place.  

I find it strange they don’t seem to mention what has happened to rents in Scotland in 2014, 2015 and 2016 ... because that tells us a completely different story!

What really happened in Scotland to rents? 

I have carried out my research up to the end of Q3 2016 and this is the evidence I have found.. 

In Scotland, rents have risen, according to the CityLets Index

by 15.3% between Q4 2012 and today

 (CityLets being the equivalent of Rightmove North of the Border – so they know their onions and have plenty of comparable evidence to back up their numbers).  

When I compared the same time frame, using Office of National Statistics figures for the English Regions between 2012 and 2016, this is what has happened to rents  

·         North East 2.17% increase

·         North West 2.43% increase

·         Yorkshire and The Humber 3.21% increase

·         East Midlands 5.92% increase

·         West Midlands 5.52% increase

·         East of England 7.07% increase

·         South West 5.82% increase

·         South East 8.26% increase

·         London 10.55% increase 

….and let me remind you about Scotland … 15.3% increase.  

 

 

 

 

Are you really telling me the Scottish economy has outstripped London’s over the last 4 years? Is anyone suggesting Scottish wages and the Scottish Economy have boomed to such an extent in the last 4 years they are now the Powerhouse of the UK? .. because if they had, Nicola Sturgeon would have driven down the A1 within a blink of an eye, to demand immediate Independence. 

So what will happen in the Aylesbury Rental Market in the Short term? 

Well nothing will happen in the next 12 to 18 months .. it’s business as usual! 

… and the long term?

Rents will increase as the fees tenants have previously paid will be passed onto Landlords in the coming few years. Not immediately .. but they will.

As a responsible letting agent, I have a business to run. It takes, according to ARLA, (Association of Residential Letting Agents) on average 17 hours work by a letting agent to get a tenant into a property. We need to complete a whole host of checks prescribed by the Government; including a right to rent check, Anti Money Laundering checks, Legionella Risk Assessments, Gas Safety checks, Affordability Checks, Credit Checks, Smoke Alarm checks, Construction (Design & Management) Regulations 2007 checks, compliance with regulations relating to blinds, compliance with the Landlord and Tenant Act, registering the deposit so the tenants deposit is safe and carry out references to ensure the tenant has been a good tenant in previous rented properties. This list is by no means exhaustive!

All of which the vast majority of lettings agents take very seriously and are expected to know inside out making us the experts in our field. Yes, there are some awful agents who ruin the reputation for others, but isn't that the case in most professions? 

No landlord, no tenant and no letting agent works for free. 

Aylesbury letting agents will have to consider passing some of that cost onto landlords in the future. Landlords will be able to offset higher letting charges against tax, but I (as I am sure they) would not want them out of pocket, even after the extra tax relief. 

It will be interesting to watch this play out over the next couple of years as agents and landlords decide what their response to any changes may be....

 

 

 

 

 

 

 

 

 

Excellent three bedroom house on the Hartwell estate, Aylesbury, 5% potential yield

An excellent three bedroom house, reduced to sell.
The Aylesbury average yield is around 4% this house will give you 5% with a monthly rental of £1100.00pcm and is in great condition. This is what the sales team here say...

PRICED TO SELL AND OFFERED WITH NO UPPER CHAIN!
This excellent three bedroomed house is located on the popular Hartwell development and is bound to sell quickly at this price.Keys held for immediate viewing.
This excellent three bedroom terraced house has been well maintained by the current owners and benefits from replacement double glazed windows and gas central heating.  The accommodation includes entrance hall, lounge, large kitchen/diner, three bedrooms and a modern bathroom.  Outside there is private rear garden and a single garage situated in a block nearby.
http://www.mortimersaylesbury.co.uk/listing/hillington-close-aylesbury/

Hillington Close Aylesbury HP19 7SG

Good presentation throughout



This one is going to sell fast so please call the sales team 01296 398555

 



£13m paid in Stamp Duty by Aylesbury Residents

“A pound saved is worth two pounds earned . . . after taxes” is what my Grandfather used to say. He loved his irony, yet was always a wise man, and it is tax I want to talk about today, in particular, property taxation ... Stamp Duty as it is otherwise known. 

Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68bn a year for the HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty). 

In the latest set of data from HMRC, in the MP constituency that covers Aylesbury, property buyers paid £13m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £361m in income tax that all of us in the same area paid last year). 

 

However, as you may know, George Osborne introduced an additional tax for landlords or anybody else buying a second home and from 1^st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property. There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.

 

HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).

In previous articles, I spoke about the slump of property transactions after the 1^st of April (as landlords rushed through their property purchases in March to beat the April deadline). In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy to let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge). 

However, looking at Q3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge. 

The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year. The figures also show that 65.4% of "buy to let" purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31^st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.  

You shouldn’t believe everything you read in the newspapers! I can assure you the Aylesbury property market is doing just fine.

All this talk of tax is tiring, can we talk about food?

Is this a window of opportunity for Aylesbury investors?

The Aylesbury buy to let market has been a little quiet over the past weeks. Sellers have not been keen to sell at levels that would be interesting to investment buyers who lack confidence in the current market or bought earlier in the year to avoid Stamp Duty changes. But some sellers have come to realise that unless they take action on their pricing they will not be selling this year.

 For those that are selling to make a ‘desired’ move this is not a problem, they will wait until 2017 and try again. But for the motivated ‘need’ to sell vendors time is running out and they are taking action. This is evidenced by Rightmove figures.

 Of the 139 properties that have featured in the last 14 days 29 of them (20.8%) have been price reductions, 23 (16.5%) have been new build homes and only 19 (6.4%) of them have become SSTC in the same time period. That leaves just 68 homes that have come new to the market and remain available.

We have registered more investment buyers in the last two weeks than in the preceding month. Perhaps it is not just me that sees this window of opportunity to buy before the year end at sensible prices? Stock levels are low and the motivated sellers are hard to find but they are out there.

If you do not buy now the New Year will bring the usual inflated prices that come with the optimism of the turn of the year even if it is not warranted. April would then represent the next opportunity to invest if the first quarter does not deliver for sellers. In my experience April is always the first month that you can call the market for the year. If the first quarter has been strong all will be fine. If it has not it will be April before sellers react and start to take action to get sold.

So if you are buying to let in the next 6 months it is worth getting out now and looking for those motivated sellers. Or you can keep watching the market and this blog! with a view to buying in April or beyond. There is of course the possibility that the economic news will be sufficiently good through the first quarter to encourage others to buy…then you will have to go with higher market values!

I hope this helps those of you that are sitting on your hands trying to get a fix on the market. If you want to talk through your plans I would be happy to see you or you can email ian@mortimersaylesbury.co.uk

Average Rent Paid by Tenants in Aylesbury rises to £922 per month

Back in the Spring, there was a surge in Aylesbury landlords buying buy to let property in Aylesbury as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in HP20. 

Jan 2016 – 18 properties sold

Feb 2016 – 29 properties sold

March 2016 – 55 properties sold

April 2016 – 20 properties sold

May 2016 – 23 properties sold 

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction? 

However, there appears to be no apparent effect on the levels of rent being asked in Aylesbury - and more importantly achieved - and this direction of rents is not likely to reverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage. 

.. but it’s not all bad news for tenants. Whilst average rents in Aylesbury since 2005 have increased by 22.6%, inflation has been 38.5% over the same time frame, meaning Aylesbury tenants are 15.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets) 

Year	Average Rent in Aylesbury per month
2005	752
2006	769
2007	786
2008	812
2009	825
2010	813
2011	833
2012	852
2013	864
2014	877
2015	897
2016	922

 I found it interesting looking at the rent rises over the last five years in Aylesbury, as it was five years ago we started to see the very early green shoots of growth of the Aylesbury economy.  As a whole, following the Credit crunch (2011), rents in Aylesbury have risen by an average of 2.4% a year.  

The view I am trying to portray is that while renting is often seen as the unfavorable alternative to home ownership, many young Aylesbury professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.

 

 

Only 1.9% of Aylesbury Homes Are For Sale

The Aylesbury Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual after the summer break.  

The challenge every Aylesbury property buyer has faced over the last few years is a lack of choice – there simply has not been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Aylesbury, the market is likely to see upward pressure on property values continue. 

However, there may be hope for first time buyers, with homeowners looking to move upmarket and buy to let landlords looking for their next investment, the Aylesbury property supply just might be starting to ease, as the number of new properties coming onto the market in Aylesbury has increased.

For example, last month HP21 saw 89 new properties coming on to the market, for some months last year the average was in the low 40’s. With the average Aylesbury property value hitting a record high, reaching almost £359,300 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure, but there is a glimmer of hope that  Aylesbury's supply may be starting to ease. 

As I write this article, 1.99% of Aylesbury properties are up for sale. That equates to 474 properties on the market in Aylesbury (within 2 miles of the centre of Aylesbury) – which, when compared to only a year ago when that figure stood at 306, is a serious increase in the number of properties available to buy. Split down into the type of property... 

·         Detached Properties in Aylesbury  - 60 on the market a year ago compared to 81 on the market now – an increase of 35%

·         Semi Detached Properties in Aylesbury - 81 on the market a year ago compared to 158 on the market now - an increase of 95%

·         Terraced Properties in Aylesbury - 61 on the market a year ago compared to 96 on the market now - an increase of 57%

·         Flats / Apartments Properties in Aylesbury  - 94 on the market a year ago compared to 114 on the market now - an increase of 21% 

With realistically priced properties flying off the shelves and this increase in new properties (especially semis), this is evidence of strength in the Aylesbury housing market that many did not expect. Many believed that the Aylesbury property market was not going to be strong enough post Brexit - as what was a sellers' market before the Brexit vote and Buyers' market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.

 

However, all this will mean property values will not continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This will not be down to Brexit but a re-balancing of the Aylesbury Property Market – which is good news for everyone.