Landlord Investor Dec 16%3AJan 17 (PDF)

DEC 2016 /JAN 2017

W R I T T E N B Y I N D U S T R Y E X P E R T S C O V E R I N G A L L A S P E C T S O F B U Y - T O - L E T

LANDLORD | PROPERTY | INVESTMENT

WHAT A YEAR FOR THE PRIVATE LANDLORD:
2016 PROPERTY ANALYSIS

- Tom Entwistle

ESSENTIAL ADVICE FOR LANDLORDS:
RESPONSIBILITIES AND LIABILITIES

- Peter Littlewood

HELPING OTHERS IN PROPERTY:
ETHICAL INVESTING

- Simon Zutshi

DESPITE ALL THE CHANGE:

BUY-TO-LET INVESTMENT
HAS CONTINUED TO GROW

THE FASTEST GROWING
PROPERTY SHOW IN THE U.K

2016 PROVES MOST
SUCCESSFUL YEAR YET
SINCE OUR LAUNCH IN 2013:

43 EVENTS ORGANISED THROUGHOUT THE U.K
1,910 COMPANIES HAVE EXHIBITED
494 SEMINARS DELIVERED BY EXPERTS
49,400 LANDLORDS & INVESTORS ATTENDED

BE A PART OF OUR 2017 SHOWS
MARCH - NORTH LONDON
Very informative and wide range of
new businesses in the industry.

APRIL - MIDLANDS
MAY - SURREY
MAY - BERKSHIRE

our stand was busy with a stream
of visitors throughout the day and
we are delighted to say that new
business was won as a result.

JUNE - LONDON
SEPTEMBER - EAST LONDON
SEPTEMBER - SUSSEX
SEPTEMBER - KENT

I recommend anybody interested in
property or working in the industry
attend, they will benefit a lot.

OCTOBER - MANCHESTER
OCTOBER - CARDIFF
NOVEMBER - LONDON

TO BOOK YOUR FREE TICKETS AND FOR INFO ON HOW TO EXHIBIT WITH US, VISIT:

LANDLORDINVESTMENTSHOW.CO.UK OR CALL 0208 656 5075

3

WELCOME TO THE DECEMBER
ISSUE OF LANDLORD INVESTOR!
Editorial
Editor

Tracey Hanbury
editor@landlordinvestmentshow.co.uk
Editorial Contributors
Kevin Wright
Magna Group
Peter Littlewood
Simon Zutshi
Steve Cox
Tom Entwistle
Urban.co.uk

Art Dept.
Design
Craig Edmonds
Advertising
Beverley Meliniotis

Contact
Telephone: 0208 656 5075
Website: landlordinvestmentshow.co.uk
Facebook: /LandlordInvestmentShow
Twitter: @LandlordINShow

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a result of any information within these pages or any information
accessed through the promoted links.

Firstly Seasons Greetings and a Happy New Year to all
our readers and welcome to the December and January
issue of Landlord Investor Magazine.
What a year it has been, where do we start ...Brexit, the
ever changing rules and regulations, swinging tax
changes that will effect residential Landlords the list is
endless.

CONTENTS
Expert Advice
New Investor
Landlord Insurance
Investment
Lettings & Management

06
10
16
20
24

With so many questions unanswered we turned to our
resident writer Tom Entwistle for a 2016 property
analysis. In this analysis Tom explains that despite all of
the change, buy-to-let investment and the private rented
sector has continued to grow! Go to page 6 for full article.
Peter Littlewood has provided a great guide and essential
advice for Landlords Responsibilities & Liabilities, whilst
Simon Zutchi writes about “Helping others in Property
and ethical investing".
We hope you have enjoyed the last 12 articles of
Landlord Investor! I would like to thank all of our writers,
advertisers for your support! We are very much looking
forward to 2017.
See you at a show in 2017?
Our National Landlord Investment Show has gone from
strength to strength, since our launch in 2013 we have
organised 43 shows and are now the leading buy-to-let
Property exhibition throughout the UK, have a look at
our show website as we are in 11 locations next year
including 5 National Shows located in London,
Manchester, Birmingham and Cardiff !

To book tickets visit:
www.landlordinvestmentshow.co.uk
Seasons greetings from all the team at Landlord Investor
and National Landlord Investment Show.

Tracey Hanbury | Editor
Landlord Investor

Tracey Hanbury

DEC 2016/JAN 2017

LANDLORD INVESTOR

4

MEET THE TEAM

SHOW LOCATIONS
WEDNESDAY 1ST MARCH - NORTH LONDON

TRACEY HANBURY
EDITOR & SALES DIRECTOR
T: 0208 656 5075
M: 07931 308 845

tracey@landlordinvestmentshow.co.uk

STEVE HANBURY
DIRECTOR

T: 0208 656 5075
M: 07429 683 046
steve@landlordinvestmentshow.co.uk

LES HANBURY

Emirates Stadium - Arsenal Football Club

WEDNESDAY 19TH APRIL - MIDLANDS
Villa Park - Aston Villa Football Club

WEDNESDAY 3RD MAY - SURREY
Croydon Park Hotel

WEDNESDAY 24TH MAY - BERKSHIRE
Reading Crowne Plaza Hotel

DIRECTOR

THURSDAY 15TH JUNE - LONDON
London Olympia

FRAN ROBINS

SALES & EVENTS MANAGER
T: 0208 656 5075
M: 07950 284 615
fran@landlordinvestmentshow.co.uk

RYAN DENNINGTON
SALES & EVENTS MANAGER

T: 0208 656 5075
M: 07931 308 856
ryan@landlordinvestmentshow.co.uk

BEVERLEY MELINIOTIS
ADVERTISING SALES MANAGER

T: 0208 656 5075
beverley@landlordinvestmentshow.co.uk

CRAIG EDMONDS
CREATIVE DESIGNER

T: 0208 656 5075
craig@landlordinvestmentshow.co.uk

WEDNESDAY 6TH SEPTEMBER - EAST LONDON
Crowne Plaza Hotel - Docklands

WEDNESDAY 13TH SEPTEMBER - SUSSEX
Brighton Racecourse

TUESDAY 26TH SEPTEMBER - KENT
Kent Showground

THURSDAY 12TH OCTOBER - MANCHESTER
Old Trafford - Manchester United Football Club

WEDNESDAY 25TH OCTOBER - CARDIFF
Venue - Cardiff City Stadium

TUESDAY 7TH NOVEMBER - LONDON
Venue - Olympia Conference Centre

IF YOU WOULD LIKE ANY INFORMATION ABOUT 2015 SHOWS, PLEASE GET IN CONTACT WITH A MEMBER OF THE TEAM
OR ALTERNATIVELY, VISIT OUR WEBSITE AT: WWW.LANDLORDINVESTMENTSHOW.CO.UK

DEC 2016/JAN 2017

LANDLORD INVESTOR

NEX

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6

EXPERT ADVICE

WHAT A YEAR IT'S BEEN FOR
THE PRIVATE LANDLORD!

Tom Entwistle - LandlordZONE

WHAT A YEAR
2016 HAS BEEN.
Not only have we had the political turmoil of Brexit,
and now a major change in direction for the US
government, one which will undoubtedly affect the
UK, good or bad, we’ve had unprecedented change
in UK letting regulation. We’ve had countless rule
changes in residential letting in England, and a
similar process (in some cases more far reaching) in
Scotland, Wales and Northern Ireland. In addition,
we’ve had some swinging tax changes which have hit
buy-to-let landlords hard.
The fact is, it’s far too early to say what effect the two
momentous economic and political events may have,
and any subsequent political changes in Europe.
The latter do look likely next year, with continental
elections looming. But so far the UK economy appears
to be holding up really well, foreign investors are still
moving in and many commentators are optimistic
about Britain’s future prosperity outside of the EU.
As far as the private rented sector regulation is
concerned, change really started in October 2015
with the implementation of measures enacted in
the Deregulation Act. This brought in considerable

DEC 2016/JAN 2017

LANDLORD INVESTOR

change to the residential letting process in England the first real change to the Assured Shortold Tenancy
(AST) and Section 21 eviction process since it was
introduced in the Housing Act in 1988, with some
minor amendments in 1996.
Following these latest changes, any new Assured
Shorthold Tenancy (AST) in England starting on or
after the 1st October 2015 requires the landlord to
provide the tenant/s (1) with a current copy of the
10 year Energy Performance Certificate (EPC) for
the rental property, (2) a current copy of the annual
Gas Safety Certificate before the tenant enters the
property, and (3) a current copy of the Government
guide “How to Rent”, a the checklist for renting in
England. This MUST be the latest available version
at the time of letting and on a tenancy renewal. Also,
as now, (4) the landlord must protect any tenancy
deposit taken, plus serve the statutory information
(s213 notice) and the scheme’s information leaflet
within 30 days of receiving the deposit.

7

One measure that is concerning, but will not really
affect those landlords letting well maintained
properties, is the measures introduced by the
Deregulation Act 2015 which affect what has been
termed “revenge” or “retaliatory” evictions. Much
has been made of this in the media and by the
homelessness charities, claiming that tenants are
being evicted using Section 21 for wanting repairs to
be done to their rentals.
Now, it will not be possible to carry out an eviction
where a tenant has reported a repair and (1) it has
not be given an “adequate response” (within 14 days)
and (2) the local authority has served an appropriate
(improvement) notice on the landlord because of a
serious defect (category 1 or 2 hazards). It means
that any section 21 notice served will not be effective,
and a new notice cannot be served for a period of six
months following an improvement notice.

EXPERT ADVICE

In addition, there have been several detailed rule
changes to serving dates for a Section 21 notice,
including a new single standardised Section 21 (A6)
notice, which includes prescribed information for the
tenant, and the requirement to meet all of the above
rules. If the property has a mandatory, additional or
selective licensing requirement, proof of compliance
will also be required. Get it wrong and you could be
stuck with a bad tenant for a long time, as you won’t
be able to use the highly advantageous Section 21
eviction process until you comply.

Some of these requirements were there before
these latest changes, so most landlords will be
familiar with them, but the difference is there’s a lot
more to think about and extra diligence is required
to not only get it right, but to have documentary
evidence that you did. Checklists are now a must
when letting residential property in England. All of
these documents and checklists can be found here:
landlordzone.co.uk/documents
But wait, we haven’t finished here: the tax changes
introduced by the previous Chancellor George
Osborne in his post-election budget in July 2015,
and his subsequent one in spring 2016, constituted
something of an unexpected “bombshell” for private
residential landlords. Public opinion had been
swayed against the private residential landlord with
constant media reports of buy-to-let millionaires,
and the minority group of “rogue” landlords taking
advantage of the ever increasing demand for rental
housing and illegal immigrants.
Mr Osborne reacted to this in a politically motivated
way by introducing quite swinging and punitive tax
changes, (1) to slow down the buy-to-let boom which
was worrying the Bank of England, due to its threat
to lending banks’ stability, with the sheer amount of
loan capital at risk, and (2) to address the question of
whether landlords are inflating house prices, which
he said were pricing Generation Rent out of home
ownership.
The result is a second home Stamp Duty Land Tax
(SDLT) premium of 3%, which has knock on effects
for anyone buying and selling property; differential
rates for Capital Gains Tax (CGT), and CGT payment
deadlines penalising property investors. There are
changes to wear and tear expenses which landlords
can claim, and perhaps must concerning of all,
reclassifying mortgage tax relief as a non-claimable
expense.

DEC 2016/JAN 2017

LANDLORD INVESTOR

EXPERT ADVICE

8
There was big disappointment in the landlord
community when the High Court recently rejected
a full judicial review of buy-to-let mortgage interest
relief changes. Landlords represented by Cherie Blair
QC lost a legal fight to overturn legislation designed
to increase the tax landlords pay on their buy-to-let
earnings. Campaigning landlords Chris Cooper and
Steve Bolton brought together a group of likeminded
landlords under the group’s fighting name of “Axe
the Tenant Tax”, believing that removing business
interest relief for just one group, landlords, was an
injustice and needed to be challenged. However,
the judge thought otherwise, that the claim was not
justified and said: “It would be a miserable spectacle
to watch a case that is bound to fail.”
There has been a concerted move by a minority of
landlords to use companies to shelter their buy-tolet properties from tax, either by transferring existing
properties into a company, or dong this with new
purchases. Incorporation has its merits for some,
but there are many complications. The pros and
cons of every investor’s own situation need careful
consideration and expert advice, and many experts
feel there is little advantage in doing this, plus there’s
always the risk that HMRC will be changing the rules
again.
And still we have not finished. In February the
measures enacted in the Immigration Acts were
introduced which brought in the requirement for
every residential landlord in England, including
lodger landlords, to carry out “Right-to-Rent” checks
on all new tenants and their families. Landlords and
agents must now check documents face-to-face to
satisfy themselves that new tenants have a right to
reside in the UK. Failure to act properly could result
in fines up to £3,000 per tenant, and this penalty
has recently been strengthened in the Housing and
Planning Act 2016, by making it a criminal offence to
rent to illegals.

The Housing and Planning Act 2016 also contains
several measures for tackling rogue landlords, which
to be fair most responsible landlords would be in
favour of. A database of rogue landlords and agents
is to be accompanied by the concept of “banning
orders”, and similar in concept to the Proceeds of
Crime Act legislation, Rent Repayment Orders will
be introduced. A process which landlords can use
to recover abandoned premises is to be introduced,
but the process is so convoluted that its usefulness
is doubtful. It will also be made easier to evict illegal
immigrants if it is found they do not have a right to
remain in the UK.
What else can hit the private landlord? Well, wait
for it, the Bank of England has seen fit to introduce
much tougher mortgage criteria for buy-to-let loans
and it is probable that landlords with several buyto-let investments (4 or more) may find themselves
paying a higher rate of interest on renewal. In any
case, following the Brexit vote, it is predicted that
inflation will reach around 4% sometime next year,
with the inevitable result that the Bank Rate and
mortgage rates will trend upwards after a long
period of decline. Furthermore, it is said that Trump’s
policy if massive infrastructure investment will boost
inflation even more, so get ready for higher interest
rates coming.
Despite all of this change, buy-to-let investment and
the private rented sector (PRS) has continued to
grow, but this growth rate is slowing following the
above changes. However, the latest available data
from the government’s English Housing Survey does
show that the PRS is still growing and in any case the
PRS is now a major industry in the UK. Private rented
households in England have breached the 5 million
household barrier for the first time in recent history.
In Great Britain as a whole, there are now around
5.6m households in the sector, with an annual
growth rate of 8.4%, and representing, 20% of all
households, a greater proportion than the social
housing sector.
London remains the region where most renting
takes place, representing around 20% of the entire
nation’s privately rented households, and that with
only a 14% share of the overall population. On past
trends, approaching half a million new private rentals
had been added to the PRS each year in Great Britain
in recent years.

DEC 2016/JAN 2017

LANDLORD INVESTOR

9

Given all these changes, apart from a greater
focus on tax planning and potentially incorporating
investment businesses, landlords and agents find the
tenancy management task much more onerous and
challenging. We won’t know the full taxation effects
for some time as the main tax change – mortgage
interest relief – is being phased in over 4 years.
What we do know is that landlords will seek to offset the higher costs of running their buy-to-let
businesses, and the obvious option is by increasing
rents to their tenants. We’ve seen this trend over the
last six months or so as the Budget changes have
impacted, especially on those higher rate tax payers,
or those with higher gearing.

Tenant demand continues unabated with a longterm problem of a lack of housing supply, pushing
up house prices and rents, and making saving for
a deposit for first-time buyers, “Generation Rent”
a considerable challenge, if not an impossibility for
many. This is not a particularly British problem, it
spans the Western World where low interest rates
and Quantitative Easing have hiked asset prices to
record levels.

When the costs involved in running a business
increase, landlords have no choice but to increase
rents, which means the tax changes will impact
directly on tenants. The market will determine the
rent level depending on supply and demand in
each location. Tenant demand is driven by market
fundamentals, in particular high house prices and
difficulty of getting a mortgage. These factors are
not going to change for the foreseeable future,
which makes the previous Chancellor’s changes look
counterproductive.

Despite various government schemes with helpto-buy, take-up has been sluggish and small-scale,
likely to disappoint, and prove insufficient to match
the needs for homeownership in a country with a
growing population. House building figures remain
stubbornly low and well below government targets.
Additional mortgage regulation designed to prevent
another boom and bust has been introduced by
the Bank of England. It could be argued that the
tighter lending criteria, particularly the measures
for affordability assessments, are limiting access
to finance for both private buyers and buy-to-let
landlords, creating a demand bottleneck. This, along
with the stamp duty increase is affecting house
sales, but at the same time is underpinning people’s
dependence on the PRS.

DEC 2016/JAN 2017

LANDLORD INVESTOR

EXPERT ADVICE

Average rents across the UK, but highly London
weighted, have recently been rising at the rate of
around 8% annually, with average rents now over
£900 per month. At the same time wage inflation
(wage rises) has improved, boosting tenant finances,
but they still lag far behind rent price inflation.