Government Considering to Introduce Tax Airbnb Style Short Lets

Bad news is on the way for people renting out their property in short style type lets. Thanks to Airbnb and similar platforms, the number of people renting out rooms in their homes on a short-term basis has ballooned but could that be about to change? It might if the government decide to introduce a new tax that will make it more difficult and certainly more expensive.

Recently the government has suggested they are considering introducing a tax that will alter the current terms of the Rent A Room System. This would mean that hosts operating using a platform like Airbnb would have to pay more tax. Some may not even be paying tax right now, but those hosts would certainly have to start.

Changing The Relief System

The Rent A Room Relief system, was first established in 1992. It was used by the government to encourage people to use spare rooms in their home and make them available for rent. This was designed to allow more low-cost housing and hopefully make it easier for people on a low income to find a place to live.

Right now, it’s possible to rent a room in your home and earn up to £7,500 tax-free every year. This tax relief, according to experts is what has driven many people to decide to rent out spaces in their home using a property management company or even just an online platform. It’s unclear whether an increase in taxes would deter people from doing this in the future.

Who Will The Change Impact

The good news is that the change may only affect people who rent out their whole property rather than just a room. According to the treasury people who rent out a room in their home are using it as a second source of income or a side hustle. They will be adding a small amount onto their annual income. In contrast, the Treasury suggests that those who rent out an entire property could be making a lot more money and receive a higher income over a longer period. In other words, they could be operating more like a commercial landlord.

However, it’s also possible that changes to the Rent a Room scheme may also impact those who are renting out spare rooms in their home that could be occupied by them or even more tenants. It will be interesting to see whether this change does come to pass. Currently, it is only being considered as a possible change.

Should You Claim On Entire Properties?

Airbnb and similar platforms, as well as property managers, have always made it clear that owners should only claim relief if they are renting out single rooms in their property rather than entire homes. They seem to share the government’s belief that those who can afford to rent out an entire property can afford to pay taxation. However, the worry is that the change could also at least limit relief for people just making a little extra cash by renting a room in their home as well.

How can deposit for renters be fairer for both tenants and landlords?

We live in a generation of renters who are unable to buy a home because, although many of them can afford the ongoing costs, many can’t raise the cash to afford a mortgage. Rental properties offer a more accessible alternative, but some landlords are failing to attract tenants because high and unfair deposit systems make it just as unfeasible for tenants. Here, we’re going to look at how to keep it fair for both sides.

Reduce your risk with more frequent inspections or cleaning services

One of the larger issues facing landlords is that they feel they have to hold larger deposits because of the risks to their property. The deposit is your insurance that too much damage won’t be caused. However, you could get away for asking for less of deposit by forming a contractual agreement to inspect the property a little more often, such as twice a year instead of at the end of a tenancy. What’s more, you can recoup the costs and ensure the property remains in good condition by offering housekeeping and landscaping services as an extra with a fee attached. Making deals the benefit both tenant and landlord establishes a sense of good faith, that is likely to make the relationship and the inevitable turnover period better for both parties.

Make turnover easier for all

The turnover process is tiring for landlords and tenants alike. Landlords have to ensure that a property is vacated as soon as possible to start cleaning, advertising, and welcoming new tenants. Meanwhile, tenants need to raise the funds to pay a second deposit while still living in the property they want to leave. A deposit release scheme, in which a landlord releases some of the deposit after an initial inspection, can help tenants leave quicker. In turn, your letting agency can start advertising in advance, knowing that a tenant isn’t going to be lingering too much longer because they aren’t able to acquire the funds they need to move. A shorter turnover period helps everyone.

What about deposit replacement schemes?

There are certain insurance providers that do allow for zero deposit agreements. With these, landlords don’t have to ask for a deposit up front that can make a rental all the more appealing to potential tenants. However, the premiums on these schemes do make it much less profitable for landlords. These zero deposit insurance schemes, paired with custodial agreements that allow landlords to charge for housekeeping, could offer a real solution that benefits both parties. We simply need the insurance providers to charge lower premiums to landlords. In the meantime, a deposit release scheme might be the best solution for all parties involved, as things currently stand in the market.

The landlord has all the power when it comes to enacting a deposit system but stands to lose the most if they fail to get tenants because their current system is off-putting or too demanding. The only deposit system that will work for you is the one that works for your tenants.

6 important tips for moving out of a rented flat that can save you money

Whether moving to another rental property or stepping onto the property ladder for yourself, ending your current tenancy agreement can be a stressful moment. However, those frustrations will be far greater if you allow simple mistakes to result in financial issues.

From avoiding bills and fines to getting your full deposit returned, these six simple steps will keep you on the right track. Here’s all you need to know.

1. Inform Those That Need To Know

Of course, you’ll want to tell friends and family about your moving plans, not least because they might offer to help. However, you also need to ensure that all of the associated companies and institutions have been informed in advance. Failure could result in unnecessary bills and fees.

The list includes council tax, DVLA, TV license, and home contents insurers. Above all else, you need to tell the bank.

2. Set Up Mail Redirection

In addition to sorting out billing, registrations, and legal necessities, you should set up a mail redirection service. If moving to a new permanent address, you can have letters and packers rerouted directly there. If moving to a temporary address, they can be stored at the post office.

You can’t trust that the next tenant or homeowner will be an honest person. Given that you won’t want them to read your post, it’s better to be safe than sorry.

3. Clean Up

As a good tenant, you should have kept the property in great condition throughout the agreement. But a deep clean just before leaving is essential as over 20% of deductions relate to this issue. This should include thoroughly cleaning the floors, oven, and bathroom. Taking photos is vital too.

If there were already marks when you moved in, you’ll want to remind the landlord of those. While the DIY option is for the best, some agreements may require a professional service. Do check.

4. Know Your Rights

Even if you’ve been a perfect tenant, the property will have encountered wear and tear, especially if you lived in the property for years rather than months. Common issues include worn carpets, boiler issues, and weary-looking walls. Either way, a landlord can’t deduct you for reasonable wear.

If you do face reductions, you are well within your rights to challenge those. Those battles tend to last around six weeks, but can be a lot shorter if you know where things stand.

5. Settle Bills

As you leave the property, knowing that your rent has been fully paid is just the start. You should also ensure that broadband accounts and other household bills are squared off. Otherwise, those fees could follow you. Aside from spiralling, it could even result in legal battles and court cases.

Taking photos of gas, water, and electricity meters when you leave is vital too. Failure to do this could put you in a vulnerable position should the landlord or next tenant become awkward.

6. Get Your Deposit Back

There are many factors to consider during the moving process, but getting your deposit back will soften the financial blow. While landlords can initiate the return of this money, they often won’t. Therefore, it’s imperative that you begin this process as quickly as possible.

As long as the landlord agrees and doesn’t have a reason to make deductions, your funds will be returned in next to no time. The only thing left to do is enjoy your new home in style.

What To Do If A Tenant Doesn’t Allow You Access

There are few scenarios quite so distressing to landlords as their tenant not allowing access to their property. If you find yourself experiencing this problem, then you’re going to need to know how to resolve it.

In an effort to help you find a solution, read through the points below and apply them to the awkward situation you are experiencing.

The legalities of the situation

It’s easy to think that, as the owner of the property, access is a right— but this is not the case. When you sign a tenancy agreement, you essentially sign away your rights to access the building. The tenant is the party who has the choice as to who can and can’t enter the building, not you.

This might sound odd, but it’s actually a key component of how tenancies work. No tenant would sign an agreement where their landlord is permitted access as and when they please; they would feel violated, and unable to relax in their own home. So while there’s sympathy for landlords who cannot access their property, it’s also important to acknowledge that your tenancy agreement stipulates that the tenant has a right of refusal.

If you attempt to access the property without the tenant’s consent, then you could find yourself struggling with legal issues.

The “notice” problem

Many landlords believe that their tenant has to provide property access, providing the landlord gives 24 hours written notice. This may even be written into your contract. However, this isn’t legally enforceable, and violates the tenant’s basic rights to the “quiet enjoyment” of their home. So if your tenant still refuses access despite you giving notice, it’s important to note they do have the right to do so.

Forbidding access for essential maintenance

If you are requesting access for essential maintenance — such as the annual gas safety check — and your tenant refuses, then you have more leverage. You will likely need to take the matter to a local court, who can grant you temporary access. However, this is a time-consuming and potentially expensive process, so wherever possible, it’s best to try and talk to your tenant first.

Options to try

If your tenant is forbidding access, then you need to talk to them — preferably face to face — to ascertain the reason. They may be struggling with a heavy work schedule or suffering through a period of ill health; a refusal to allow access is not always a sign that there is something amiss with the property.

Be flexible. Offer a range of times and dates at which you wish to visit the property, so they can find something that suits your schedule.

Explain your purpose. Wanting to “check on the place” isn’t a great justification; use words like “annual inspection” or “necessary safety checks”.

Final thoughts

Unfortunately, if your tenant refuses to allow access to the property, it’s within their legal rights to do so. All you can do is ask, explain your reasons, and consider legal options if it comes to that.

At Smartspace, we’re experts at taking the stress out of owning a buy-to-let property, so feel free to get in touch to discuss our landlord services— we’ll work hard to ensure a solution to any issues you experience.

Average Monthly Rent Increases by 2.5% to £853 in England and Wales

Rental prices in England and Wales have risen by 2.5% at the start of 2018. This puts the average monthly rent at £853, causing many tenants to worry that they’ll soon be priced out of their property. With this rise in rental prices creating concern amongst regular people, many property experts are arguing that the onus is now on landlords to provide more value for money.

The Facts

This discovery came off the back of a report from Your Move (an estate agency that serves the UK) that took a look at rental prices in the last year. From the beginning of 2017, all the way through to January 2018, rent went up by 2.5% on average throughout England and Wales.

But, as we dive deeper into the report, it shows that a whopping eight out of ten regions experienced increases in rental prices. Which were the two lucky regions not to experience an increase? In the North East of England, there was actually a drop in rental prices of 2% over the course of the year. Needless to say, this was the biggest drop in price out of every region surveyed. The second region to experience a decrease in price was, rather surprisingly, London. Renters here got to enjoy a lovely 0.8% decrease.

Regional Differences

Speaking of London, while the tenants in this city aren’t paying as much as they were last year, they still pay the highest rental price on average out of every other region. Their average came out at £1,276, putting it way above the national average.

However, you can see quite remarkable fluctuations in rental prices through the London region. The Your Move report took a look at different parts based on the Underground Zones and concluded that those in Zone 5 pay the least rent (£1,098.83) and those in Zone 2 pay the most (£1,650.57). So, while you can find places in London that are considerably cheaper than others, even the cheapest Zone comes out at higher than the national average.

Then, compare this to the cheapest region (the North East), and it’s staggering. In January 2018, the north east of England had an average property rental price of just £534! As you can see, that’s well below the national average, and over £1,000 cheaper than the most expensive Zone in London.

If London and the North East were the only regions to experience a fall in rental prices, what regions experienced the biggest rise? From looking at the report, you can easily identify two main regions that both saw a big rise above the national average of 2.5%.

The North West of England, along with the East Midlands, both saw the monthly rent increase by 2.9%. This made the average January 2018 rent in the North West £636, with the East Midlands sitting on £652. So, still nowhere near London standards, but an increase for people living there nonetheless.

What Is Causing The Increase In Rent?

The big question that comes from all of this is; what’s causing the rental prices to go up? Well, the last year did see property prices increase in the UK, which inevitably has a knock-on effect on rental prices. More and more people are looking to rent a home rather than own them, and this increased demand causes landlords to raise prices.

When you look at the two regions with the most growth, some fairly good arguments explain both rises. The East Midlands is home to many big cities such as Birmingham. Recently, this has become a popular place for large corporations to set up businesses. The BBC is an example of this, with their main BBC3 headquarters moving there. As a result, you can argue Birmingham is becoming an attractive place to work, which means more interest in rental properties, driving up the price.

In the Your Move report, it stated that the North West saw a rise because places like Manchester are very desirable as they offer reasonably priced properties in great locations near lots of schools, public transport, and jobs. There’s also a selection of top Universities in the North West, and many high-quality local hospitals. It’s become a very desirable place for families to move to.

What Next?

Will rental prices continue to increase on average throughout England & Wales? It certainly seems so, and Your Move believes landlords now must take things up a notch. They should start offering more amenities, and better value for money. Some suggestions include communal gardens, and incentives to stay for longer.

London is only city in the UK where renting a flat is cheaper than buying

London is the only city in the UK where renting out a flat is cheaper than buying a property and making the mortgage payments on it, research has shown. Buying a property is cheaper than renting in 49 out of 50 largest British cities. Renters in London pay £1,840 versus the average monthly mortgage repayment of £2,168 – a £328 gap. Outside the capital, the renters who fare the best dwell in Brighton and Cambridge. However, there is a measly 1% difference between renting and buying when looking at these two places! As there’s little difference here, buying is likely the best option for those looking for somewhere new to live.

However, when looking at all of the cities in the study collectively, the average monthly mortgage payment for a 2 bedroom flat was anywhere from £564 and £136.47 less than the £700.47 average rent payment. These numbers are based on an 85 percent loan-to-value mortgage with an average asking price of £149,539. As a national average, homeowners tend to pay £136.47 less per month than renters.

Rent was found to be £1,861 on average per month in the capital, while a mortgage repayment could set a homeowner back by £3,001 a month on 2 bedroom properties, according to research carried out by Zoopla. Rents continue to dip in the London area, but are hitting an astonishing 3 year high across the rest of Britain. 57% of estate agents predict an increase in the number of renters that will join the market next year, while just 30% think more rental properties will be available to meet the demand. A huge 67% of renters think that rates will rise over the next year, which will mean a 5% increase since the year 2016.

When exploring all cities as an option, Glasgow is actually Britain’s top city for buyers. Here, monthly mortgage payments are a massive 57% cheaper (£298) than renting. Bradford and Dundee come next, with a 53% (£207) cheaper mortgage than renting property. Homeowners in the North of England and Scotland typically get the best deals. The Northern towns of Middlesbrough, Doncaster, Barnsley and Warrington are also in the top 10. If you live in any of these places, you can expect buying to continue to be a more affordable option than renting for the foreseeable future.

Where are the most affordable London boroughs for renters?

Perhaps you’re now wondering where the most affordable London boroughs for renters are. Here’s a list, in order:

  • Bexley £1,007
  • Havering, £1,083
  • Barking and Dagenham, £1,162
  • Sutton, £1,166
  • Bromley, £1,271
  • Enfield, £1,285
  • Redbridge, £1,293
  • Croydon, £1,309
  • Waltham Forest, £1,309
  • Hillingdon, £1,311

This information might put some people off buying in London. London, as with any capital,  is already a much more expensive city to spend time in, whether living there or renting. Hopefully, these figures give you an idea of the best place to go for your budget.

Price For Renting Falls In Real terms in 2017

As we move into the fresh pastures of 2018, looking back over 2017 is a natural habit. For those with an interest in property and lettings, 2017 is undoubtedly a year that has seen a change in fortunes.

The cost of renting a home was once astronomical and seemed to be following an upward curve. News has emerged, however, that the relentless climb is beginning to slow. 2017 was the year when average rental prices fell– for the first time in nearly six years.

The average cost of renting a home dropped to £921 in February, shocking spectators who had expected the usual rise to be announced. Admittedly, this trend proved to be short-lived, as prices had risen by 3.5% by October– but it’s clear the rental market can no longer be considered an upward trajectory in terms of price.

The regional aspect

By the end of the year, many figures had rebounded from their surprising dip in February. However, when taken on a regional basis, the picture is not quite as rosy as it may first appear. Three regions will finish the year with a minus in their average rent percentage, indicating prices are now lower when compared to this time last year.

The three regions who are suffering from a contraction in rental price are East Anglia, the North West, and Northern Ireland– all areas that are regularly mentioned as being in need of regeneration and funding. Another oft-mentioned area is Wales, but they just manage to scrape into the positive percentages with a 1.8% rise to finish the year.

As one might expect, affordable renting in London remains nigh-on impossible. Residents of the capital were further squeezed in 2017, even taking into account the drop that was recorded in February. Renting in London is now 108% more expensive than renting in other parts of the UK, and the price discrepancies are stark. The average rent in London is £1,560; in the North East, the most affordable part of the UK, the average rent is just £536. This is a truly staggering number, and suggests that the London rental market remains buoyant even as other regions struggle.

Looking to 2018

So 2017 saw a year of mixed fortunes in terms of rental prices. The first drop in average rent was a huge surprise, but it is perhaps worth putting into perspective. The drop that caused so much concern was not a huge one; the figure in question was a mere £5 reduction in the average rental cost.

However, it does look as if 2018 will be tough for buy-to-let landlords. Various government initiatives, including Stamp Duty rises, have made buying with the purpose of renting a more expensive pursuit. It is natural to conclude that this may eventually push rent prices even higher as the rental stock is depleted by a lack of interest from investors.

One thing is for sure though: considering the various factors at play, 2018 could be a very interesting year for the rental sector of the economy.

Rental Price Growth On The Decline As Chisrmas Approaches

Rental Price Growth On The Decline As Christmas Approaches

The latest Your Move buy-to-let index confirms that average rents in England and Wales hit £845 during October this year, up 2.2% year-on-year, and down 4.8% compared to October 2016. The East of England seems to have the best deal at the moment with rents rising 6% since the same time last year, and the average price now stands at £887 per month in that region. However, parts of the UK like London and the South East are becoming less and less attractive to both tenants and landlords as we approach the Christmas period. This article will offer some facts and figures that should assist in setting the record straight.

Some other parts of the UK also posted encouraging price increases including:

  • The North West – rents grew to £633 per month – an increase of 3.1%
  • The East Midlands – rents rose to £648 per month – an increase of 3.2%

The capital London didn’t fare as well as some of those areas and had encountered year-on-year price decreases alongside the South East. Experts claim the market continues to move away from those locations as fewer UK residents can afford to rent properties in those upmarket postcodes.

The North East also saw a decline in rental prices with average homes now on the market for £535 per month in October. However, the region is still the cheapest place in the UK for rental properties. Average prices in London now stand at £1,276 per month which is more than twice the price of homes in the North East. Still, both London and the North East saw prices drop by 1% since the same time last year.

Buy-to-let investors saw their portfolios stabilise in most instances between September and October, and average yields in England and Wales remain at 4.4% according to the published Your Move findings. However, compare those figures to the ones obtained a year ago, and homes in every single UK region generate a weaker return than they did back then. During October in 2016, average yields stood at 4.8%.

So, where do buy-to-let investors get the best deal at the moment? Well, those based in the North East of England benefit from the highest returns at the moment with yields of around 5.1% on their investments. Most property tycoons will shy away from London for the foreseeable as returns stand at only 3.2% for October this year. That means it’s possible for investors to make a much better profit elsewhere.

Landlords, investors, and tenants are more than aware of the struggle with rising rents in desirable UK locations. With that in mind, the lack of rental price growth in those areas could encourage more people to turn back to the capital if the trend continues for a few more months. However, as average rents are more than three times higher in London when compared to North East and similar regions, it’s understandable that tenants choose to live outside the city and commute.

Will rental price growth start to improve in the new year? Let’s hope so!

Rent outside London falls for first time since 2011

Rent outside London falls for first time since 2011

Incredibly, rent outside of London has fallen for the first time since 2011, and properties in London have even dropped. According to Rightmove, rents in Britain dropped in the final summer months of the year for the very first time in 5 years.

The First Fall Recorded At This Time Of Year

The national asking rents outside of London fell by 0.2% in the 3 months leading up to September, even though this is one of the busiest times for people to begin looking for a new home. Since Rightmove started tracking rents in 2011, it was the first fall recorded at this time of year.

Landlords are slowly turning away from the overpriced London property market, and are instead flooding the South East of England with new rental properties to consider. This has distorted the national picture somewhat, hence the first drop in 5 years.

The massive number of homes to rent pushed down rents in the southeast by around 2.3%. In every other UK region, the average rent became higher, apart from in Greater London and Yorkshire in the Humber. The average rent in the North East rose by 2.6% to £564 per month, which is the biggest quarterly increase.

A Consistently Unappealing Housing Market

With a chronic shortage of new homes, Britain’s housing market looks consistently unappealing. The young people of Britain are spending 3 times as much as their grandparents did on housing, and according to reports, all for worse quality accommodation.

The number of households privately renting in the UK has increased massively over the years too. In the last 20 years, around 65% of UK households were owners at the end of 2016. 17% were renting from a private landlord and 18% from a social landlord. Less and less people are buying property now, either saying they can’t afford to save up for a deposit or that it’s more of a liability than an investment.

Sam Mitchell, Rightmove’s head of lettings, explains that more landlords are acquiring homes outside of London. This has increased the supply of available property which has in turn pushed down rent. Many agents looking for better yields are now shifting their focus from London. Soon, there could even be a shortage of places to rent in the capital.

Prices have not fallen as much in areas that boast good commuter links, as the demand remains high here. For landlords who are seeking good investments outside of the capital, the most popular areas include; Berkshire, Buckinghamshire, and Surrey.

Average Rent Across The Country

Asking rents in London fell 3.3% in September, with an average of £1,920 per month. The average asking rent across the country is a mere £789 in comparison, so this is still a pretty gargantuan amount that few can afford.

However, it has been predicted that the asking prices of rent in London will rise again soon. This is due to the supply of available accommodation decreasing in the area due to landlords going elsewhere to make money.