Last month we released a blog on future trends that seemed to earn the interest of a number of our readers. One particular point that resonated with landlords was our point on “Section 24.” Section 24 is new legislation that will push more than half of UK landlords into a higher tax rate. Unsurprisingly, this has caused some consternation among the landlord community, as before this new legislation, landlords were able to deduct their mortgage interest payments before the tax was calculated – however, since April 2017, this has been shifting and, slowly, over the next 4 years’ landlords will receive only 20% tax relief. The only groups not included in this increase are UK and non-UK resident companies as well as landlords of Furnished Holiday lettings.
It is predicted that Section 24 will have a significant impact on landlords, most seriously affecting landlords in the South of England and quite possibly hurting most of those landlords here in London. Vilified by many, it has been suggested that as a direct result certain landlords will end up renting at a loss. Not only that, but if a landlord is placed in a higher tax bracket it could well have a knock on effect on other aspects of their finances – like child tax credit assessments and student loan repayments. So if you are landlord, we would advise doing some research and finding our if this will affect you, and if so, having a strategy in place to mitigate any potential shortfalls. It could well be that by remortgaging your property and making your payments lower you are able to change your band and avoid the ramifications of section 24.
Of course, many landlords may simply respond by selling their property. Although, the most obvious, and concerning solution to this problem would be to increase rents which many argue will simply see a rise in homelessness in the country, with individuals simply unable to pay for their housing. That being said, there is another argument that suggests this is simply fearmongering. Most landlords will have no problem paying the additional tax. Not only that, according to a recent poll commissioned by Shelter 45% of landlords have absolutely no mortgage, whilst 24% have mortgages with a combined loan-to-value ratio of less than 50% which means they won’t be affected at all. According to the same survey currently 41% of landlords find that rent is “a lot more” than their property costs, again the individuals probably won’t be affected. The problem with this survey, of course, is that it still carries some intrinsic bias and whilst both it, and the media, would like to put forward a positive argument, for many, section 24 is the cause of much concern and worry (and in any case it still doesn’t make it right!)
At LMA property we have taken Section 24 very seriously indeed and have been speaking with a number of the fantastic accountants and lawyers we work with. These professionals have suggested some rather interesting alternatives. Although, obviously these will vary widely from case to case and just to keep our lawyers happy, we would advise you probably seek professional help before embarking on any of these strategies. However, these could include transferring your rental property into a limited company (although this is not necessarily simple to accomplish or beneficial in every circumstance), increase mortgage repayments to reduce your interest payments in the long term. If you married or in a civil partnership and have joint ownership you could make a declaration of beneficial interest of joint property which would change how the income is taxed and potentially be more beneficial. Finally, if you are close to the 40% tax band, you may, if you’re lucky, be able to use AVC pension schemes to help reduce your tax liability.
If you have any questions or would like to discuss any of these ideas with one of our team, feel free to give us a call on 020 3893 8635 or drop us a line on firstname.lastname@example.org.
New Year, new fears? It’s 2018; we’re in the future! Which has got us at LMA Property thinking – what does this have in store for us and the future trends of property generally?
This is the term coined to describe the predicted rise in rents due to Brexit. Yes, we know – can one write an article on property without mentioning the “B” word? Perhaps not, particularly when it comes to the rental market. As many analysts are predicting, as a result of Article 50 and the rise in the stamp duty surcharge, many will be reticent to move or purchase a home, increasing rent prices across the UK.
- Safety and security
Grenfell Tower fire was a horrific tragedy that was sadly all too avoidable. Public pressure and, in my many cases, anger saw immediate responses with councils and landlords quick to check their building materials and improve their fire safety assessments. However, there seems little doubt that in the long-term this emphasis will be integrated into government policy, creating a far more regimented and structured approach to health and safety in domestic and commercial properties.
- Changes in property investment
This is slightly interesting and in its very earliest stage. However, with Section 24 coming into play, which will see over half of UK landlords pushed into a far higher rate of tax (despite their income not having increased), many may well look to alternative avenues of investment. This could see investors move into holiday lets, property trading as well as development and semi-commercial properties.
- Move to the North
This one scares us as proud London residents, but it seems with the ever-increasing cost of living, house prices and living in a rather busy city, more and more individuals (particularly young families) are looking to Northern cities like Leeds and Manchester as well as their home counties. This is something we have discussed in a previous blog, so if you want to have a more in-depth understanding please take a look below.
- Keep calm and carry on
This is England after all, and we aren’t really a society known for radical movements. The truth is that even with Brexit, stamp duty and the much derided Section 24, change will come slowly and steadily. Like the proverbial tortoise, we don’t accept to see any momentous changes over the next year, but rather steady and gradual change over the next 5-10 years.
If you have any questions or would like to discuss any of these ideas with one of our team, feel free to give us a call on 020 3893 8635 or drop us a line on email@example.com.
This week we visited the Landlord Investment Show at Kensington Olympia for the 3rd time, and it really does get bigger every year. One of the biggest items now is the quality of guest speakers on the ‘expert panel’ which at this show consisted of the Rt. Hon. Iain Duncan Smith, Fionnuala Earley – Chief Economist of the huge Countrywide group, David Whittaker – CEO of Mortgages for Business, Vanessa Warwick – co-founder of the very popular ‘Property Tribes,’ and Simon Zutshi – CEO of Property Investor Network (‘PIN’).
Given Mr Duncan Smith’s (IDS’) previous guise (as former Secretary of State for Work and Pensions) and his introduction (nay – legacy) of Universal Credit, there was a lot of focus on this and how it will affect landlords in the long-run, however there were a quite a few more gems to be taken away.
The Autumn Budget
IDS said that he has ‘genuine sympathy’ for landlords due to new regulations they are suffering such as the introduction of Section 24 (a good explanation on this here – https://info.upad.co.uk/hubfs/Guides/Upad%20-%20Section%2024.pdf?t=1509038393222)
He has spoken to the Chancellor both privately and publically through many articles written on the subject, but he points out that we won’t know if this has been taken on board until the Autumn Budget is released. He encouraged the audience, largely themselves landlords, to write to the Chancellor with their thoughts and fears.
David said that the Chancellor would do better to see how these changes pan out before changing anything again and the best landlords can hope for is that he doesn’t mention them in the Autumn Budget! This is because of course tax will otherwise have to come from elsewhere, and it may actually hit landlords harder in other areas. IDS agreed and said the Government should review the changes and unscramble any messes first.
When asked what trends had already occurred due to the impending changes, Vanessa said that 150,000 smaller landlords (those with 3 or less properties) have sold some or old of their stock since the tax regulations were announced by George Osbourne. One third are now the ‘larger landlords’ who own 10 or more properties. In terms of what may later change, she said that she believes that long term landlords are retiring earlier as they will feel that it won’t be worth them doing the same work for less return. It was agreed that those smaller landlords are the bread and butter of the private housing sector, making up 97% of landlords and so they must be protected – for they are propping up the Housing Benefit stock which we all know is dangerously low.
As a side, it was suggested that there is a lack of awareness for ‘accidental landlords,’ those who didn’t plan to rent a property but have ended up doing so through circumstance. Property Tribes aim to help such landlords but of course word needs to get out there to them in the first place. There are so many regulations (the Deregulation Act, changes to smoke detector regulations, Right to Rent etc etc) that they may easily fall foul of without realising.
Simon thinks that the Bank of England interest rates will creep up more quickly than first thought and that 2019 will show a panic sell from landlords who realise that the s24 implications mean their return it not worth it anymore. Fionnuala however thinks that interest rates will rise gradually, and that rents will continue to rise as the population continues to increase. There will be 1.3 million more households by 2021 and it’s likely that half will be in the Private Rental Sector, as renting is seen as more ‘usual’ as well as necessary.
The conversation then moved briefly onto the tenant fee ban which is likely to come in next year, and Vanessa pointed out that a lot of agents, especially smaller ones will close and that they are the ‘gate keepers’ for landlords to do the right thing.
All in all the discussion was very interesting and chaired well by Marie Parris – CEO of George Eillis Property Services. At LMA Property we always like to be kept up to date with the sector news, changes and thoughts of those involved. The Landlord Investment Show is always worth a visit, and make sure you get there early enough to see the expert property panel!
Well firstly – what is blockchain? The truth is it’s one of those convoluted and complex technological entities that you don’t necessarily need to understand to use. Quite frankly, like most devices we use in the 21st century – does anyone else have no idea what goes on inside an iPhone? However, it is the multitude of benefits that accompany this technology that will see it take over the world over the next year or two. Essentially, blockchain allows us to store blocks of information with some pretty nifty intelligent network, which automatically checks itself every ten minutes. This allows for complete transparency, absolute security and no room for error. Changing the way buyers and sellers interact in the market irrevocably, it will undoubtedly have a pretty serious impact on the UK property market.
- Cutting costs
Anyone who has bought a property will know just how arduous the process can be, requiring a wide range of professionals and a significant amount of forms. This can be inordinately frustrating and can often lead to transactions falling through without anyone really knowing why. With a blockchain ledger the process would be far more transparent – allowing for the buyer and seller to interact directly. Removing the need for any intermediaries and streamlining the entire process, this would help save time and money.
- International purchase
Currently, transferring funds means navigating complex exchange rates as well as tax rates. Ultimately, this means that in any transaction you will lose some money. However, by using bitcoin through blockchain you could simply transfer money automatically, making the entire process cheaper, quicker and far more secure.
- Mortgage process
Particularly in this economic climate, the mortgage process is, sadly, rarely simple. Even if you are convinced of the strength of the application, sometimes it simply isn’t enough. Blockchain may well be able to change this. Using the interface, potential homeowners could create a digital ID for themselves and a property. More than that, by using blockchain your credit history and income could instantaneously be checked, negating the need for trips to the bank, lawyers and estate agents.
- Reducing fraud
This is hugely problematic within the property market. Nearly impossible to control or track, it sees homeowners lose huge swathes of money. This is, simply because there are currently so many steps in the process that there are far too many entry points for hackers. However, the transparency of blockchain should not only reduce fraud, but also obliterate it as every transaction can be checked simply.
- Title deeds
Another exhausting process in purchasing a property, purchasing title deeds can slow down the entire process. However, by using blockchain it can be far easier to check tittle deeds and leaving far less chance for fraud and error. This can not only help speed up the entire process, but also reduce insurance costs.
There seems little doubt that blockchain should help make it far easier, safer and cheaper to purchase property in the UK. What are your thoughts? Contact us on firstname.lastname@example.org
Now, at LMA Property we live in South London and operate mainly within the city, so we are a little biased towards our capital. So when researching the UK’s top property investment hotspots, we were unsurprised, and a little smug, to see that a number were situated within London.
That being said, it would seem that property in the North of England is becoming ever more enticing, because a fair few Northern cities also made the list. So, with a little for every person, the London lover and the joyous expat – take a look at our list of the UK’s top property investment hotspots both within and without our glorious city.
- Wood Green
A savvy option for the patient investor, Wood Green may well be akin to the proverbial tortoise of the London property market. With a target of £3.5 billion to rejuvenate the city centre, which will include the redevelopment of over 25 sites as well as the creation of the Crossrail 2 – offering far better links for commuters, we expect Wood Green to see some fantastic growth over the next few years.
Situated just outside of London, Basingstoke is proving a popular choice for young professionals driven out by London prices. Whilst the city itself has a surprisingly prosperous digital economy, its real pull is its fantastic links to London. With a number of regeneration and development projects in the pipeline, Basingstoke could well be one to watch over the next few years.
Situated in our very own South London, Croydon is the up and coming place to be for young professionals. Fast becoming the “Silicon Valley of the South” and boasting over 1,000 startups (a title which is uniquely complemented by the soon-to-arrive Westfield shopping centre as well as the introduction of Boxpark), there is little doubt that Croydon could well be the place to be for young professionals seeking affordable rent and attractive job opportunities.
This city in Manchester has, over the past few years, had something of a remarkable transformation. The Northern town has seen a tremendous revival thanks to investment in the creative industry, with a recent £1 billion investment in MediaCityUK – a clear demonstration of just how powerful this sector is becoming in Salford. Currently, 60,000 people now work in the creative and digital industries in Greater Manchester and it is predicted that this number will grow 27% by 2034. This injection of capital and young professionals is of fantastic benefit to investors seeking a change from the London property market.
For those who wish to dip a toe into the student rental market, Liverpool may well be the place to do it. Boasting a phenomenal 70,000 students spread over four Universities who are attracted to the fantastic nightlife, culture and affordability, demand for student accommodation is unlikely to dip in the foreseeable future. Not only that, but housing regeneration schemes in the Liverpool docks have seen prices across this city rise, most notably in the L1 postcode where house prices have risen by a whopping 41.2%.
If you live in any of these areas of have any thoughts please feel free to give us a call on 020 3893 8635 or drop us a line on email@example.com
There is often a focus in the press over mistreated tenants, and without doubt there are negligent landlords who really should know better. However, that being said in our years in the industry we have also seen challenges at the other end of the spectrum – tenants who have taken advantage and made their landlord’s life extremely difficult. So the team at LMA Property have compiled a how to guide, written specifically for all landlords, especially those who are renting properties out for the first time, on how to protect yourselves in the worst case scenario.
- Background checks & references
Getting a tenant is a pretty big deal – you need to trust them to live, maintain and respect your house. So just as you wouldn’t enter into a business deal or take on an employee without undertaking a thorough background check, the same should be true for a tenant. It can seem like a huge inconvenience, but as you know is true – short term pain for long term gain, so make sure to carry out:
- Credit checks
- Employment status/history
- Current and previous rental details
- Employment references
- Landlord references
- Landlord insurance
This is often forgotten, but landlord insurance is actually an extremely cost-effective way of protecting yourself. Packages can start at relatively reasonable prices and cover a range of tenant issues including missing rent payments, legal charges as well as any damages to your property. Hopefully, you never have to call upon this one, but when dealing with tenants it really is better to be safe than sorry.
- Landlord inventory
Not just because at LMA property we are experts in carrying out thorough and precise landlord inventories. Seriously, making sure you have a detailed record of the type, location and condition of all your fixtures and furniture can help protect you at the end of the lease and make sure that if there are any damages you can prove it.
- Trust your gut/don’t be afraid to say no
Many landlords are desperate to fill their property and in their haste will take on any candidate who is willing to pay, even if they have reservations. Don’t be afraid to listen to your gut – yes, the loss of income can be hurtful, but difficult tenants will always be more expensive than a vacant lot so make sure you take your gut instinct into account.
- Regular property inspections
This is easily forgotten because when your tenant has settled in and they are paying every month, the job is essentially done. However, it is important you continually check in on the state of the house – ask your tenants if you can pop in for a coffee and see if there is anything you can help them with, and if you are paying for a management service with an agency make sure this is included! We check on our managed properties three times per year. Good relationships can lead to longer-lasting tenancies too and we really would encourage all landlords to have at least biannual checks with their tenants.
If you have any more questions or would like some help managing your property we are always happy to offer a complementary consultation. Feel free to give us a call on 020 3893 8635 or drop us a line on firstname.lastname@example.org
The snap general election came as a surprise to many, but after the initial shock dissipated, deeper questions arose and one of the first questions at LMA property was of course – what will this mean to the property market? This will be the third year in a row us Brits have been called to the polls, and is a poignant symbol of the huge amount of political instability that is rocking not only our Island, but most of the world. The property market has already had to absorb a tremendous amount of shock – the General Election was followed by Brexit which was quickly followed by Trump, which all took place admits the backdrop of some much derided stamp duty hikes and whatever your political inclinations there is little doubt that these actions had a reaction on the economy – and there is a concern that this snap election is simply another straw to add to this camel’s back of uncertainty. Not only that, but in the run up to any election (even an expected one) there tends to be a cool down in the housing market as buyers wait to see what will happen, and as the Summer season is traditionally one of the busiest seasons in the property world, the repercussions of this could be all too real. That being said, homeowners at the start or in the middle of the buying process didn’t have enough notice of this snap election and thus did not stop half way through. This is supported by a poll by an online poll organised by eMoov.co.uk who questioned 1,000 home buyers and sellers about the news – and majority rules 56.7 % of sellers and 59.2% of buyers agreed that they would go ahead with the planned sale regardless of the snap general election.
And whilst the short term repercussions of this snap election seem to be minimal, in the long term this election could actually help increase the resilience of the property market – and certainly more so if the Conservative retain hold, not least because once a new Prime Minister is elected, that should be it for five years and should bring in a period of, quite frankly, much needed stability. It was the case that most political commentators believed the outcome will see an increased Tory majority which should help to further buoy the market and really help to invigorate the economic climate, however this is outcome is being increasingly questioned as we get closer to 8th June. Interestingly, whilst Labour’s proposed “mansion tax” that would essentially charge anyone living in a property over £2 million and would affect anywhere between 58,000 to 110,000 homeowners – hit the headlines in the last election, Labour seemed to have abandoned all mention of it in their newly released manifesto. However, given Labour’s traditional (and their current leader particularly’s) leanings, if they did win, it would be interesting (we mean worrying!) to see if this a policy they would look to adopt. The mansion tax is one which everyone in property will be keeping a sharp eye on, but so too should the Land Value Tax option, which would affect almost every homeowner adversely as it taxes the value of the land itself, replacing Council Tax, which would also include agricultural land. Certainly, either would affect a huge number of homeowners in the London area especially and will certainly be a cause for concern for residents.
Although the real hope, it seems, is that the snap election will signal an end to all this uncertainty and confusion and allow people to get back to business as usual. At LMA property we like to see the silver lining and we truly do believe that whilst the snap election saw most of us with our chins hanging to the floor, our eyes wide and scratching our hands it should actually all end up OK. Given everything that is going on we feel five years of a stable, elected government can only be of service to the property market.
What are your thoughts? We would love to hear from you, feel free to give us a call on 020 3893 8635 or drop us a line on email@example.com
This week we thought we would share our 5 top tips for landlords
- Be organised
Before you even begin to market your property you need to ensure that it is ready
– Make sure that it looks presentable for photographs and then viewings
Ensure that the fabric of the property is presentable by touching up the paintwork if necessary, getting rid of excess furniture and other fussy objects, and of course making sure that it is clean and tidy
– Get your EPC completed (Energy Performance Certificate), and check that the property is in an A-E bracket*
– Choose a letting agent, or decide whether you can take on this task yourself
A letting agent can help with marketing your property on larger platforms, and by using their sales skills. If you choose to do this yourself remember that you will have to be readily available in order to conduct viewings, and the close landlord/subsequent tenant proximity may not be conducive to negotiations over the start date and rental figure
- Always prepare the property for a tenant
Go through the property again before a tenant moves in and check things like;
– Bulbs are working, hinges and door handles are secure etc
– Check that all of the appliances (and boiler!) work
Get your safety checks done in advance in case of any issues requiring rectification
– The gas safety check is a legal requirement, as is making sure that there are working smoke detectors present. It is also likely that soon electrical tests will be a legal requirement, but at present they are only advisory
Leave a welcome letter and/or bottle of wine
-if a tenant feels welcomed then they are more likely to keep your property well
- A good letting agent isn’t necessarily a good management agent
Will you manage it yourself or get an agent to do it?
Be aware that whilst an agent may be good at finding you a tenant, the chances are that the same member of staff won’t be your managing agent if you give them the whole package, they will probably be different department.
Lettings and property management are very different skills and many agents just see this service as an ‘add on’ and way to make an extra percentage from you at the beginning. Do your research on good property managers
- Keep on top of everything
If you plan to manage the property yourself then you need to be on top of dates, such as;
– When your safety checks are due for renewal (gas currently every year, electrical currently every 5 years – if done)
– When the tenancy is due for renewal
If you get a management company in of course you don’t need to worry about remembering any of these!
- Contingency plans
You will need more of these if you managing the property yourself
– What if the tenants need to leave earlier than you planned they would?
– What if your plumber isn’t available, do you have a second point of call?
By their nature (good) property managers are organisers, problem solvers. They have contingency plans for contingency plans and revel in the chaos of getting something sorted.
*If it isn’t then as of April 2018 you won’t be able to let it out without making changes to the property to get it below this rating – ask us for details
Telephone. 020 3893 8635
At LMA Property we are passionate about South West London – where we live and work. We are pretty sure it is where the phrase ‘when a man is tired of London, he is tired of life’ comes from. Of course, one of our most spectacular attractions is the River Thames that runs through much of our borough, and so it’s safe to say we’re pretty excited for this year’s boat race which will take place on Sunday 2nd April with the women’s race starting at 4.35 pm, followed by the men’s at 5.35 pm. In fact, we aren’t embarrassed to admit that we even have a vintage poster from the 1924 race adorning the walls in our office – see photograph! A reminder that when the going gets tough; it’s the tough that really do get going.
This year, impressively, marks the 158th University boat race with the same route, once again, being taken by the hopeful University students, as they literally row in their predecessors’ path. And whilst going out to watch a load of people row a boat may not necessarily be your thing, the Oxford and Cambridge boat race never fails to cause something of a spectacle – with over a quarter of a million people gathering to join in the festivities. This could, of course, be because it is one of the few sporting activities that is completely free, although we like to think it has more to do with the sense of community spirit that pervades much of South and West London society. As proud South West London residents we wouldn’t miss it – we will probably take up position near that start at Putney Bridge. If you want to too, we recommend the North side, which is generally quieter than the South side, and with better views from Bishop’s Park. You can also view from near the Putney Embankment (but arrive very early!) or from Craven Cottage – also known as the home of Fulham FC, else further down the route at Hammersmith Bridge or Barnes. Of course if you want to see the grand finale then head to Dukes Meadows and Chiswick Bridge, further West. Meanwhile, over at Bishop’s Park and Furnivall Gardens there will be events and entertainment from midday with some handy big screens so you can watch all the excitement after the boats have sped passed, whilst having a fun family day out.
Just think – you could be watching the next Hugh Laurie (who took part in his own Cambridge & Oxford boat race in 1980) or a soon-to-be Olympic Gold medallist like Matthew Pinsent.
Currently, Cambridge are leading with 82 victories to Oxford’s 79 in the men’s competition, whilst over on the women’s side with the race only starting in 1927 Cambridge boast a 41 lead on Oxford’s 30. Last year, Cambridge finally managed to end their four year losing streak to win by a phenomenal 2 and a half lengths in the men’s race, whilst sadly the Cambridge women lost, almost as spectacularly as their counterparts won, losing by 24 lengths as they almost sank the boat. We may have a small, irrational affiliation for one team over the other but we won’t divulge! However, it really is anyone’s race to be won.
If you plan to be at the race do let us know! Feel free to give us a call on 0203 892 8635 or drop us a line on firstname.lastname@example.org. And, of course, if you would like to contact us outside of the boat race we work with landlords and agents to offer complete property management and inventory services.
At LMA property we are proud to work and live in the South West London area. Having worked in this area for well over a decade, we have come to know and love every nuance and intricacy, so it seemed like a natural fit for our very first exhibition to be at Hammersmith & Fulham Means Business*, the business summit taking place this Thursday 16th March in partnership with Your Business Community, with the council hoping to put this region firmly on the map as an important destination for business within the whole of Europe. This is a sentiment that has been bolstered by the announcement of Imperial College London to open the I-HUB at White City. Boasting more than 185,000 square foot, it aims to translate research and innovation into genuine commercial enterprise. This means the hub will have dedicated spaces for entrepreneurs and will be of immense benefit to the South London business community.
And, of course, lying within South London, Hammersmith and Fulham themselves, forming an integral part of the commerce of South West London, with about 17,000 businesses in the borough employing more than 128,000 people and generating around £9.3 billion towards the borough’s economy (according to the event’s website). Which makes the event Hammersmith & Fulham Means Business all the more exciting. With more than 30 companies exhibiting, we really couldn’t say no when the opportunity presented itself to be a part of this exciting day. Dedicated to the SME sphere, and to uniquely raising the profile of those who dare to go it alone, as well as larger companies, the event will have over 400 professionals attending. Therefore, this day should be a fantastic celebration of all that is great in South London.
As well as offering exhibitors the opportunity to promote their services to the local community, it also provides vital support to entrepreneurs and sole traders looking for some advice. There will be a one-to-one advice clinic, where experienced professionals will be able to offer their expertise in fields ranging from law and accounting to marketing and sales.
Meanwhile, there will also be a number of invaluable seminars chock-full of some fantastic educational content. These will include:
– A start-up master class
– Must have social media marketing tips
– Perfecting your elevator pitch
– From concept to reality, the journey of a new business
And for those of you who relish a robust networking opportunity the event promises two speed networking events. We’re a little envious that we’ll be manning our stall and won’t be able to participate in all of the extras going on (however, it will be a great stall, so we really can’t complain)!
At LMA Property we would love to see you there, so please do feel free to pop by if you happen to be in the area… you never know you may even get a free pen!
And if you can’t make it on the day but would like to be in touch about any of your property maintenance, management or inventory needs do feel free to give us a call on 020 3893 8635 or drop us an email on email@example.com