Tuesday 20 July 2010

Tenant demand outpaces supply


Rocketing demand for rental accommodation has prompted the UK’s largest letting agent to call for more incentives to encourage buy-to-let landlords to invest in the market.

According to Countrywide, tenant demand is at a record high, with up to nine tenants competing for properties.The 211 branches had 50,480 new tenants register in the second quarter of this year – a 16% rise on the first quarter. The sharpest increase was in June, with over 18,000 new tenants registering, the highest number in a single month since records began in 2003, and 22% more the previous month.

However, the rise in tenant demand is in sharp contrast to the fall in the number of new properties being offered to rent. They have fallen 6% in the last three months. The excessive level of demand has led to marginal increases in rental prices. As more families turn to renting, four-bedroom properties have seen the highest increase, with the average rent rising to £1,090 per calendar month.

There is now an average of 5.5 tenants vying for each property compared to 4.9 tenants in the first three months of the year. The highest demand is for two-bedroom houses in the South-West where 8.9 tenants competed for each property. This level of demand is having a significant impact on the market, with properties being snapped up on average within two weeks – three days less that in Q1 and six days less in Q4 2009.

John Hards, Countrywide Residential Lettings co-managing director, said: “The number of tenants entering the market is at unprecedented levels – and we have yet to enter the peak season. Student demand for private rental accommodation will increase further with university applications at record levels. “The buy-to-let sector remains a good source of investment. However, the Government needs to do more to incentivise new landlords in order to ease the current shortage of properties. If tenant levels continue to rise at the same rate, this will be further exacerbated.”

A new report from specialist lender Paragon also confirmed the huge growth in tenant demand. Nigel Terrington, Paragon Group chief executive, said: “Tenant demand has been rising consistently for two years and shows no signs of slowing down. Would-be home buyers continue to be unwilling or unable to step on to the property ladder, whilst longer-term social changes, such as greater numbers of single-person households and economic migrants, are also creating more demand for rented property.

“Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector, because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios.

“It is clear that confidence is high amongst the landlord community, which is reflected in the greater appetite for investment. There is obviously a dislocation between landlords’ intention to purchase and their actual ability to do so, given the continued scarcity of buy-to-let mortgage finance. Landlords still value residential property as an investment vehicle.”

Tuesday 6 July 2010

New Warning That Tax Man Intends to Target Landlords


New warnings have been issued by major accountants UHY Hacker Young that Landlords are likely to be targeted by HMRC (The Tax Man).

The Government has set HMRC a target of raising £16.1 Billion from Tax Investigations, an increase of £4.6 Billion on the last tax year. Since early 2008 we have been warning Landlords that HMRC is targeting you in an effort to raise more Tax. This warning has been echoed by the media and Landlord Organisations.

Whilst it is quite right that HMRC should collect all the Tax due and indeed vigorously pursue Landlords who fail to make correct Tax Returns, Landlords all over the country have told us that they feel victimised. Many have told us that is was cheaper to pay the amount HMRC have demanded than to fight the claim.

HMRC have said that they have no agenda to specifically target Landlords and yet accountants and the media believe that HMRC are targeting Landlords. They point to evidence that HMRC are trawling through the Land Registry to gather information. There have been stories of HMRC officials going as far as checking small ads in shop windows for rented property in order to contact Landlords who might be avoiding Tax.

The advice from accountants we have spoken to is simple - ensure that you keep all records and documents relating to your property and ensure that you submit Tax Returns accurately and on time. Accountants say that far too many Landlords do not keep accurate records and that when the Tax Man comes knocking Landlords do not have the evidence to defend themselves.