£9m Paid in Stamp Duty by Rutland Residents

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 Rutland constituency, property buyers paid £9m stamp duty in one year alone.  Although not as much as the eye-watering £324m in income tax that Rutland residents paid last year.

As you may know, George Osborne introduced an additional tax for landlords 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 following a report by Deutsche Bank suggesting the new surcharge could see house prices fall by as much as 20%.

In data released by HMRC for Quarter 2 (Q2), those fears seemed to be backed up, as they published some worrying figures; only 1 in 7 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 1 in 4 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 1 in 4 (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%.

If you are considering purchasing an investment property, or would like to discuss one you already own, please get in touch with me.

UPP Property Agents - For professional advice on buying, selling, renting and managing your homes and property investments.

David Crooke
Owner

 

SALES & LETTING AGENTS
Understanding People & Property

Email: david@upp-property.co.uk

Stamford: 01780 484 554      Oakham: 01572 725 825

 

 

Exciting Stamford Investment Opportunity

This week's 3 Best Buy-To-Let Investment Properties in Stamford & Rutland offering 5% Yields

Three great properties with 5% yields this week...

Property 1:
3 Bedroom Town House For Sale - Offers Over £170,000
Mallard Court, Oakham.  Marketed by Moores Estate Agents

3 bed town houses in Oakham can range from £675pcm - £750pcm depending on its location. This particular one is located very close to the station and is offered in excellent order.  I’d expect a rental return of £695pcm on this property, achieving a yield of 5%.

 

 

Any yield over 4.3% in Oakham is fantastic and this property stands out as one of the better properties available this week.

Price: Offers Over £170,000
Rent: Approx. £675-£750pcm
Yield: c5%, based on £695pcm

Click this link for more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-62809895.html

Property 2:
2 Bedroom Terraced House For Sale £169,950
Worcester Crescent, Stamford.  Marketed by Newton Fallowell

The rental marketing in Stamford continues to go from strength to strength and it’s properties like this one that has made the biggest difference. Ex-local authority properties are packed with space and large gardens and combine that with the solid builds, it’s no wonder they are so in demand. Offered at c£695pcm the yield return would come in at 5%. Another excellent find.

Price: £169,950
Rent: Approx. £695pcm
Yield: c5%

Click this link for more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-57109159.html

 

 

Property 3:

2 Bedroom Ground Floor Flat For Sale - Guide Price £125,000

Bourne Road, Essendine Nr Stamford.  Marketed by UPP Property Agents

 

If you are prepared to invest into the villages surrounding Stamford there is no better investment out there than this tidy 2 bed ground floor apartment.

 

Offered with a return of £525pcm the yield would come in at just over 5%. The market for this property is very much in demand and we’d expect half dozen viewings to be called for within the first week of marketing.

 

 

 

Guide Price: £125,000

Rent: Approx. £525pcm

Yield: c5%
 

Click this link for more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-45594672.html

If you would like to discuss any of these properties in more detail, or if you are considering investing in a different property, please do get in touch with me.  I am here to help and will be glad to discuss any property with you.
 

David Crooke, Owner

UPP PROPERTY AGENTS - Sales & Lettings

Understanding People and Property



Email: david@upp-property.co.uk
Stamford: 01780 484 554      Oakham: 01572 725 825

 
 

 

 

What does the Tenant Fee Banning Order mean for you?

Stamford & Rutland Landlords & Tenants... what does this mean for you?

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

· Rents due to rise as those fees are passed on to landlords

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

With our new Chancellor of the Exchequer revealing a ban on tenant fees in his first (and last!) autumn statement, what does this actually mean for our Stamford and Rutland landlords and their tenants?

The private rental sector here in Stamford and Rutland forms an important part of the housing market and the engagement from the Chancellor in the 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 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 Stamford and Rutland 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 Stamford and Rutland 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’s fees may preclude tenants from receiving an invoice for fees 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…

         “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.”


Case studies on the charity ‘Shelter’ and Scotland

Scotland banned Letting Fees in 2012, and 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.”


As my regular blog readers know, the devil is always in the detail…

Shelter were quoting this research from December 2013, saying 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 3 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 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 stuff 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 to the Stamford and Rutland rental market in the short term?
Well nothing will happen in the next 12 to 18 months, it is business as usual!
But what about 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 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.

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?

But, business is business. No landlord, tenant and or letting agent does work for free.

I, along with every other Stamford and Rutland letting agent will have to consider passing some of that cost onto my landlords in the future. Now of course, landlords would also be able to offset higher letting charges against tax, but I (as I am sure they) wouldn’t want them out of pocket, even after the extra tax relief.

So what does this all mean for the future?

The current application fee for a single person at my lettings agency is £150 and for a couple £200, meaning on average, the fee is around £200 per property.

I am part of a group of 500+ Letting Agents, and recently we had a poll to find the average length of tenancy in our respective agencies. The Government says it is 4 years, whilst the actual figure was nearer 1 year and 11 months, so let’s round that up to 2 years.

That means £200 needs to be found in additional fees to the landlord, on average, every 2 years.

In Actual Pound Notes

In 2005, the average rent of a Stamford and Rutland Property was £733 per month and today it is £839 per month, a rise of only 14.5% (against an inflation rate (RPI) of 38.5%).

Using the UK average management rates of 10%, this means the landlord will be paying £1006 per annum in management fees.

If the landlord is expected to cover the cost of that additional £200 every 2 years, rents will only need to rise by an additional 2% a year after 2018, on top of what they have annually grown by in the last 5 years.

So, if that were to happen in Stamford and Rutland, average rents would rise to £992 per month by 2022 (see the red line on the graph) and so the landlord would pay £1190 per annum in management fees - which would go towards covering the additional costs without having to raise the level of fees.


.. but is that bad news for Stamford and Rutland Tenants?

Quite the opposite (look at the blue line on the graph).   f the average rent Stamford and Rutland tenants pay had risen in line with inflation since 2005, that £733 per month would have risen today to an average of £1015 per month.  (Remember, the average today is only £839 per month), and even if inflation remains at 2% per year for the next 6 years, the average rent would be £1103 per month by 2022.  Meaning even if landlords increase their rents to cover the costs, tenants are still much better off when we compare to the £992 per month figure to the £1103 per month figure.

Conclusion

The banning of letting fees is good news for landlords, tenants and reputable agents.

It removes the need for tenants to find lump sums of money when they move. Resulting in tenants having greater freedom to move home and still be better off in real terms, compared to if rents had increased in line with inflation. 

Landlords will be happy as their yield and return will increase with greater rents whilst not paying significantly more in fees to their lettings agency.  Letting agents who used to charge fair application fees won’t be penalised as the rent rises will compensate for any losses.

And, the agents that charged the silly high application fees? Well, that’s their problem. At least I know I can offer the same, if not a better service to both my landlords and tenants in the future in light of this announcement from Phillip Hammond.


David Crooke
Owner

Understanding People & Property
Sales & Lettings

01780 484 554

Average Rent Paid by Tenants in Stamford Rise to £839pcm

Back in the spring, there was a surge in landlords purchasing buy-to-let as they tried to beat George Osborne’s new stamp duty changes deadline 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 PE9.
 

Jan 2016:      41 properties sold

Feb 2016:      36 properties sold

March 2016:  79 properties sold

April 2016:     23 properties sold

May 2016:      42 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 Stamford - and more importantly achieved - and this direction of rents is not likely to inverse 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 loss-making, 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.

It's worth noting that it’s not all bad news for tenants.  Whilst average rents in Stamford since 2005 have increased by 14.5%, inflation has been 38.5% over the same time frame, meaning Stamford tenants are 24% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets).

I found it particularly interesting looking at the rent rises over the last 5 years in Stamford, as it was at that time we started to see the very early green shoots of growth of the Stamford economy.  As a whole, following 2011’s 'Credit Crunch', rents in Stamford have risen by an average of 1.6% a year.

The view I am trying to portray is that while renting is often portrayed as the unfavorable alternative to home ownership, many young Stamford 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.

I like to keep a close eye on the local property market on a daily basis because it enables me to give the best advice and opinion. If you want to learn more about the Rutland and Stamford property market, feel free to pop in for a coffee at our office for a chat with me.

UPP Property Agents - For professional advice on buying, selling, renting and managing your homes and property investments.

David Crooke
Owner

 

SALES & LETTING AGENTS
Understanding People & Property

Email: david@upp-property.co.uk

Stamford: 01780 484 554      Oakham: 01572 725 825

 

 

This week's 3 Best Buy-To-Let Deals on the Rutland & Stamford property market with 4.3% - 5.5% yields

Property 1:

2 Bed Terraced House for Sale.  £175,000

Radcliffe Road, Stamford.  Marketed by Knight Partnership

 

Radcliffe Road is a highly desirable, sought after location in Stamford and these period terrace properties never fail to let.  Offered with a rental income of £625pcm, the yield return comes in at 4.3%. But, more importantly, the property would have little to no void periods, providing an all round rental income.

Price: £175,000
Rent: Approx. £625pcm
Yield: c4.3%
Click this link for details on this property:

http://www.rightmove.co.uk/property-for-sale/property-56662138.html  

Property 2:
2 Bedroom Coach House for Sale.  £145,000
The Maltings, Ascot Close, Oakham.  Marketed by Belway Homes

With so many new build properties being built in Stamford & Rutland, it can be hard to ignore that there are some hidden gems available if you’re prepared to purchase a new build.

 

This coach house comes with 2 bedrooms and would be available from new and would provide 'the edge' over other available rental properties on the market.  With a rental return of £625pcm, the yield would come in at £5.2% (based on a purchase of £145,000).  In some cases the developers of new builds might even offer a discount for a quick completion.

 

Price: £145,000

Rent: Approx. £625pcm

Yield: c5.2% (based on purchase price of £145,000)

Click this link for more details on this property:

http://www.rightmove.co.uk/new-homes-for-sale/property-45456324.html

Property 3:
2 Bedroom Apartment for Sale.  Guide Price £119,950
The Sidings, Oakham.  Marketed by UPP Property Agents

Another wonderful rental property to hit the market this week is this 2 bedroom modern apartment, located within close proximity to the train station and the town centre.

 

The rental income on this block of flats has steadily increased and they now command a rental income of £550pcm, which is a gross yield of 5.5%.

 

 

 

 

Price: £119,950

Rent: Approx. £550pcm

Yield: c5.5%

Click this link for more details on this property:

http://www.rightmove.co.uk/property-for-sale/property-45389175.html

 

If you would like to discuss any of these properties in more detail, or if you are considering investing in a different property, please do get in touch with me.  I am here to help and will be glad to discuss any property with you.

David Crooke, Owner

UPP PROPERTY AGENTS - Sales & Lettings

Understanding People and Property



Email: david@upp-property.co.uk
Stamford: 01780 484 554      Oakham: 01572 725 825

 

Stamford's Property Values Increase by 1.49% Last Month

“How's the Stamford housing market doing?” asked one of our property vendors last week.  “Quite strange”, I replied.  Our seller was perplexed!  Let me explain...

Even the Brexit vote has not hindered the steady rise in Stamford property values, as property values went up 1.49% last month alone, leaving Stamford values 8.12% higher than a year ago.  


An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of Stamford’s housing.

...And that is where the issue is.  With Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout, I was perplexed that our local property market (and values) has remained so strong, still 15.6% higher than 20 months ago.  That is until you start to look into the real reasons why we find ourselves in such a great place.

The housing market as a whole is built on the foundations of basic economic rules that any GCSE Economics student should understand.  However, at a time when as a country we seem eager to uncouple ourselves from all manner of proven facts, anything is up for grabs.

Even the wary Royal Institute of Chartered Surveyors (RICS) said most of its chartered surveyors anticipated UK house prices to increase in the next 6 months, which seems contradictory given economic cautions from HM Treasury.  Even though inflation will rise to around 2% to 3% in 2017 and perhaps a little more in 2018 because of the Sterling’s devaluation, together with a high probability of a decelerating GDP and a slight rise in unemployment, how can the RICS and most of my landlords and sellers remain so confident about the value of our homes?

If we look at where we are starting from, nationally we have a solid base of low unemployment, low inflation and preposterously low interest rates, and here in Stamford the local economy is doing quite well for itself. Confidence also plays a part.  Confidence can supersede basic economic facts for a short time at least, which is why actual property market changes tend to be more exaggerated, as confidence can turn both positive and negative very quickly.

The fact is, there is a long-term relationship between property values, wages and unemployment.  

 

For example, looking at the graph below, you can quite clearly see the ratio of property values to earnings is nowhere near as high as it reached in 2008 and currently is in the middle of the range for the last 30 years.  As a country, we are in a strong position.

 

Property values might drop slightly in 2017, but based on what we know of the UK economy now, values are not projected to move that much over 2017 or 2018.  Going into the next 2 years, we are in much better financial shape as a country compared to the last 2 crashes of 1987 and 2008.

Confidence will continue to be the key player in the housing market for a while longer, and this may spur some much needed second-hand market activity.

If you are considering selling your own property (be that your own home or property investment), and would like your property valued, please get in touch.  I keep an eye on the local property market on a daily basis as it enables me to give the best advice.

David Crooke

Owner

 

UPP Property Agents - Sales & Lettings

Rutland 01572 725 825 and Stamford 01780 484 554

david@upp-property.co.uk