Thursday 28 March 2013

Devon tenant Brian Kiddell Sells Landlord's Home Online for £90,000


A tenant who sold his landlord's property on the internet for £90,000, has been jailed.

Brian Kiddell, 75, of Topsham Road, Exeter, posed as the owner of the Newton Abbot property.

The owner of the Devon house only found out when he drove past the For Sale sign after the deal had been completed.

At Exeter Crown Court Kiddell admitted nine charges of fraud, theft, and the dishonest use of a dead man's passport. He was jailed for six years.

The court heard that Kiddell rented the house in Prince Rupert Way, Heathfield, Newton Abbot in the name of Paul Stevenson, who had died in 2004, but whose passport he had obtained.

He posed as owner David Ayton, to put the house up for sale.

Mr Gareth Evans, prosecuting, said: "Kiddell had been renting the house for four months when the owner happened, purely by chance, to be driving past and noticed there was a For Sale sign outside the address.

"He contacted his own letting agent and the estate agent and found that it was being sold."

By the time he raised the alarm, Kiddell had completed the sale and made off with the money.

The court also heard that Kiddell tried to access a bank account under a false name to transfer £18,000 after saying the account holder had died and presenting a fake death certificate.

He claimed to be the dead man's brother but the bank blocked the transfer when the real customer was found alive.

Kiddell carried out several other frauds but was caught after applying for a £25,000 loan in the name of Anthony Russell at Barclay's Bank in Launceston, Cornwall.

When Kiddell, posing as Mr Russell, turned up for an appointment he was arrested by plain clothes police.

Mr Stephen Mejzner, defending, said Kiddell was forced to take part in the frauds by an organised crime gang to whom he owed money.

He was sentenced on Wednesday.

Wednesday 27 March 2013

Landlords Could Claim More Than £10k Tax Back

Landlords with a portfolio of buy-to-let properties could be missing out on claiming thousands of 
pounds of cash back from the taxman.

Legislation dating back more than 130 years allows property owners to claim back capital allowances worth tens of thousands of pounds against various fixtures and fittings in commercial properties.

Beverley Loggia, sales director at Bracknell-based Inventive Tax Strategies, said many qualifying UK landlords can claim capital allowances, including those with student lets, professional shares, and more traditional HMO lets.

As many as nine in 10 properties being used for commercial purposes in the UK are eligible for capital allowance tax relief that has never been used.

The allowance is a form of relief available against any capital expenditure made buying, renovating or making adjustments to a commercial property.

There are also some circumstances where the reliefs can be applied to Buy-to-let properties as well. To qualify, residential properties should be shared flats or houses with two or more bedrooms, worth £100,000 or more and owned by UK taxpayers (individuals, UK trusts and UK companies) paying income tax at a rate of 40%.

In some circumstances that can mean there are tens of thousands of pounds worth of rebates available to the property owner, because this tax relief can be backdated to the year the property was purchased.

Loggia said: “The process with ITS is genuinely straightforward. We carry out a free initial capital allowances assessment after giving them some basic property and income details, and if this is promising and you wish to proceed, we appoint a surveyor to carry out a specialist plant and machinery survey to provide an unbiased valuation of the qualifying assets within the property.

“In addition, a due diligence process is undertaken to ensure previous owners have not already claimed in order to confirm your entitlement to claim.

“We are confident that we can save tax on your property assets, hence our initial no-cost review to ascertain the potential extent of the tax savings available. Once determined we will agree a fee structure that suits you, normally between 3% and 7% of the capital allowances amount identified.

“Finally, a claim report for submission to HMRC is compiled and sent to you and your accountant. The report is of a format commonly accepted by HMRC, highlighting the applied legislation, confirmation of ownership, entitlement to claim and the amount.”

Matthew Anderson, director at bridging lender Fincorp, said: “At Fincorp we have a good working relationship with Inventive Tax Strategies, who have been helping landlords reclaim income or corporation taxes previously paid and reduce their future tax liabilities for years. In their opinion it is possible to reach as much as 8% of the property purchase price for residential properties or up to 15-20% on commercial properties.”

Anderson added: “One of the main reasons so many properties haven’t taken advantage of the tax relief is because of the complexity of the claim process - your typical accountant won’t necessarily know that relief is even available, much less how to go about claiming it.”

Monday 25 March 2013

House Prices in Biggest Jump for Three Years, says Hometrack

House prices are being kept up by lack of stock – but affordability appears to be driving new buyers away.

The latest Hometrack report, out this morning, says house prices rose by 0.3% this month, but stock volumes and the level of sales agreed were down. Also down was the rate of rise in new applicant numbers.

The house price rise was the highest monthly growth for three years, says Hometrack.

London house prices rose the most (0.7%) this month. But prices were down in just one region, the North-East.

In London, prices rose in 60% of postcodes. Across the rest of England and Wales, there have been price rises in one fifth of postcodes.

Supply continues to be a headache for many agents. It has grown by 13% over the last two months, but by just 3.5% over the last six. Demand has risen by 19% in the last two months, but the rate of increase fell this month, and is lower than this time last year.

Time on the market stands at just 4.9 weeks in London, the lowest since October 2007. That compares with 11.8 weeks in the Midlands and North.

Richard Donnell, Hometrack’s housing analyst, says market sentiment is improving, and said it should continue to do so thanks to Budget initiatives and Funding for Lending.

However, he cautioned: “While scarcity of homes, and support for lending and new housing, will act as a support to pricing levels, the problems of affordability and deposit levels still remain serious impediments to a full-blown housing market recovery.”

Thursday 21 March 2013

£4.5bn Housing Package Announced in Budget

Communities Secretary Eric Pickles welcomed a new multi-billion pound housing package that will help aspiring homebuyers move up the housing ladder and build thousands of new homes.

As part of yesterday’s Budget, the Chancellor revealed £3.5 billion of funding to help homebuyers secure affordable mortgages and new measures that will enable more social tenants to purchase their home through Right to Buy.

The Chancellor also pledged over £1 billion of extra funding to build thousands of new homes for affordable and private rent.

Welcoming the Budget, Communities Secretary Eric Pickles said: “The multi-billion pound package for housing recognises its vital importance to the economy. But this support is not just an economic calculation – it’s about values.

“These measures mean whoever you are – whether a prospective first time buyer, an existing homeowner or a social tenant – if you work hard and want to take responsibility for your future, we will support your aspiration to move up the property ladder.

“At the same time our funding for thousands of new affordable and private rented homes will get spades in the ground, workers on site, and deliver a vital boost to the British economy.”

Housing Minister Mark Prisk said: “The Budget places housing front and centre in the Government’s plans for economic growth, with measures aimed at getting Britain building, helping aspiring homeowners, and supporting our growing market for privately rented homes.

“The clear message from the multi-billion pound package of measures is clear: that wherever you are in the housing market, whether renting council housing or privately, whether a first-time buyer or looking to move up the property ladder, there is help available for you.”

Mortgages
At the heart of the package is the new £3.5 billion Help to Buy: Equity Loan scheme, which by 2016 will help up to 74,000 homebuyers take their next step on the housing ladder with just a 5% deposit.

It will expand and replace the highly successful FirstBuy model, which is currently aimed at first time buyers purchasing new build properties.

Under the new scheme existing homeowners will also be eligible to receive a 20% equity loan that will help them buy a new build property, with prospective buyers receiving support to purchase properties from a participating housebuilder with a value of up to a £600,000.

By extending support to existing homeowners, the scheme will remove a bottleneck in the market where people want to move, but may be struggling to raise a large enough deposit to purchase their next property.

At the same time a separate option, called Help to Buy: Mortgage Guarantee, will enable lenders to use Government-backed guarantees to offer £130 billion worth of mortgages with smaller deposits, as little as 5%, on new and existing properties.

Where properties are bought under this option, the Government will provide security for the loan, so if the house is then sold for less than the outstanding mortgage total the lender will be able to recover its loss.

Help to Buy will build on the popularity and success of the FirstBuy and NewBuy schemes, which housebuilders have praised for driving sales and boosting the supply of new homes.
Aspiring homeowners have already been voting with their feet: by September 2012 nearly 11,000 reservations and 7,000 sales had been completed through FirstBuy, and the latest figures show 3,700 reservations have been made through NewBuy, the successful industry-led scheme that will continue to work alongside Help to Buy.

Right to Buy
Ministers are determined to ensure that aspiring social tenants also have the opportunity to purchase their home through Right to Buy, and will take further steps to remove barriers so that more tenants can get a foothold on the property ladder.

After years of restricted discounts and dwindling sales, the Government reinvigorated the Right to Buy last April, by radically increasing the potential discounts to £75,000 – almost quadruple the previous discount in some areas.

The Government intends to further boost the scheme by:
  • raising the discount cap to £100,000 in London, from Monday 25 March, to recognise higher prices;
  • lowering the eligibility criteria, so that tenants can apply to buy their homes after 3 instead of 5 years; and
  • looking at ways to simplify the application process for tenants.

Since the higher discounts were introduced in April, 3,500 council-owned properties have been sold to tenants – a third more than in the whole of the previous year, and the highest number of sales since 2007.

The new measures will build on the surge in the numbers of homeowners taking up the Right to Buy, and open the door to home ownership for thousands more social tenants.

Private rented homes
Efforts to help homebuyers will be matched by extra funding to build thousands of new homes for private rent, increasing choice across the housing market.

Funding for the Government’s flagship Build to Rent Fund will be dramatically increased to £1 billion to support the construction of new homes specifically for private rent.

Build to Rent provides recoverable finance that supports the delivery of private rented homes until they are built, let out and managed. This funding model gives housebuilders – more traditionally used to building homes for sale – the confidence to branch out into building homes for private rent, and provides the platform for large-scale institutional investment in this sector.

Since the launch of the fund in December 2012, the £200 million scheme has been heavily oversubscribed, demonstrating the huge untapped potential of investment in the private rented sector. The extra funding will help meet this surge of interest and deliver thousands of extra homes.

Affordable housing
Ministers will also double funding for the Affordable Homes Guarantees Programme to £450 million. Up to 30,000 affordable homes will now be delivered through the expanded programme, with all new homes started on site by the end of March 2015.

Private registered providers in England will be able to bid for a share of the larger funding pot using guidance published last month. The extra funding will complement the Affordable Homes Programme, which is set to deliver 170,000 new homes by 2015 – with almost 63,000 of these already completed.

Ministers revealed that a social rent policy for the next ten years will be announced in the Spending Review this June, which will give certainty to the affordable housing sector until 2025.

They also confirmed that social landlords will be able to charge high-income tenants – those earning above £60,000 – a fair level of rent for the privilege of living in taxpayer-subsidised housing.

The move could see tens of thousands of high-earning social tenants paying market rents to continue living in their social homes, and the additional income generated could then be used by landlords to increase spending on affordable housing.

Ministers believe the changes are necessary to address the problem of precious social housing resources being occupied by tenants who could comfortably afford to live elsewhere.
Making better use of existing buildings

The Budget also included planning proposals to secure the long-term future of high streets, by making better use of empty buildings and bringing people back to live in town centres, increasing footfall and supporting shops.

Other measures will enable rural communities to grow by ensuring better use is made of their existing buildings. By reducing planning burdens, redundant and empty barns and other farm buildings that are no longer viable for other farming or commercial uses could be converted to homes. This will help increase rural housing for local people and promote regeneration of redundant and empty buildings.

Wednesday 20 March 2013

'My House Became a £400,000 Cannabis Farm'


A Birmingham landlord has told how he rented out a family home – only to later discover it had been turned into a £400,000 cannabis farm.
Gary Bond, 53, had let the property on Addison Road, Kings Heath, to what he believed was a Polish couple six weeks ago.
But after they failed to pay their rent he entered the house and discovered it was filled with 400 cannabis plants, each potentially worth £1,000.
West Midlands Police kept the property under surveillance overnight but the mystery tenants did not return.
Police Sergeant Tom O’Keeffe, said: “Around 400 cannabis plants were found inside the property along with heating and lighting equipment; the factory spread over several rooms.
“The force’s cannabis disposal team were alerted to dismantle the set-up once the power company had made the property safe and issued a safety certificate.’’
Yet garage manager Gary and wife Rebecca, 42, from Solihull, were also unhappy with the state police had left the property in.
“I was told that the cannabis team would visit the house, hire a skip and sort it all out,’’ he said
‘‘But instead, they smashed light bulbs in the back garden, cut the cannabis plants off pot-high leaving the pots behind. Fertiliser, smashed plugs and extractor vents were spread around the house.
“The house belongs to my uncle Terrence Bond, 75, and we use the money collected from rent to pay for his nursing home fees.
“I just want the house let again and in it’s current condition it doesn’t seem likely any time soon.’’
Rebecca added: “It was cleaner when the cannabis farm was still up!
‘‘The cannabis gardener was a tidy person as there was washing up done, toiletries in the bathroom and he even had a dustpan and brush.’’
But Sgt O’Keeffe said: ‘‘Cannabis farms need large amounts of fertilizer and irrigation whilst the heat and lighting tends to come from electricity bypassed from mains supply; they are routinely the dirtiest, most dangerous scenes police attend.
“It’s almost impossible to dismantle a cannabis factory on this scale without creating some mess.”

Tuesday 19 March 2013

Falling Rents Slow Down in February

The average rent in England and Wales slipped by 0.1 per cent from January to £731 per month, although annual growth actually accelerated to 3.3 per cent.

Despite the monthly drop at a national level, rents grew on a monthly basis in half the regions. The strongest monthly rental inflation was a 1.8% rise in Wales, followed by the North East where rents were 0.9% higher than in January. London’s rents also returned to growth – rising by 0.5%. The fastest falls were in the North West, at 1.3%, followed by a 1.1% drop in the East of England and a monthly fall of 0.7% in the South West.

Only one region saw rents fall on an annual basis; the average rent in the South West is now 1.2% less than a year ago. Rents in London showed by far the fastest annual growth, rising by 6.2% – or £64.

The South East saw the next biggest year‐on‐year rise, of 3.3%, while in Wales rents were 2.9% higher than last February.

David Newnes, director of LSL Property Services, owners of estate agents Reeds Rains and Your Move, comments: “The rental market hasn’t yet burst into life, but we’re seeing more vitality than last year’s timid February market, when tenant demand was impacted by the rush to buy homes before the stamp duty deadline. 

However, this February has also seen a more vibrant sales market reduce the strain on the private rented sector during its sluggish off‐peak season. While a modest increase in supply has had an effect too, in the longer‐term, the supply of rental homes will have to increase considerably to prevent monthly rent rises when the rental market re‐enters its traditional peak season.”

The total annual return on a rental property rose to 6.2% in February. This represents an average return of £10,144 with rental income of £7,622 and a capital gain of £2,522. The average yield on a rental property was 5.3% in February, compared to 5.2% in the same month last year.

If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 12.5% per property over the next 12 months – equivalent to £20,880 per property.

David Newnes comments: “The strengthening of the house sales market has had a positive impact on rented property values. Now, alongside faster annual growth in rents, the expected total return looks even more attractive for landlords. Most importantly, low mortgage rates have widened the gap between monthly payments and rental income even further. In the wake of the base rate decision last week, and after recent speculation that Bank rates could even go negative, mortgage rate rises seem unlikely in the near future. For landlords, the mortgage market looks set to continue providing a platform for profitable investment, especially those with more equity to put down.”

The total amount of rent late or unpaid recovered to levels not seen since November. Total arrears in February were £248m, down from £269m in January. This equates to 7.4% of all rent across England and Wales, compared to 8.1% of all rent in January.

Monday 18 March 2013

Majority of UK Renters Unaffected by Rent Rises in 2012


Nearly three quarters of UK landlords have frozen or cut their rents in the last year, according to research from Shelter today.
A survey of 4,300 renters reveals 26 per cent were affected by rising rents over the past 12 months while 74 per cent were unaffected.
British Property Federation director Ian Fletcher says: “These figures suggest that for most tenants, private sector rents are not rising at all, and official statistics show that nationally they are not exceeding inflation.
“Shelter’s stable rental contract has some good intentions, but it isn't clear what impact it would have – for example, Shelter should clarify if it is calling for rents to be index-linked to RPI or to CPI. Even the difference between these two figures is very important because the consequences could leave millions of tenants or landlords financially worse off.”
Shelter is using the data as the basis of an argument in favour of a stable rental contract, meaning that rents would rise in line with inflation on an annual basis.

Thursday 14 March 2013

Third of Private Landlords Fail to Declare Income


Around a third of buy-to-let landlords could be dodging their tax on their rental income at a cost of £550m to the taxpayer, new figures reveal.
Some 1m private landlords have failed to declare any revenue in the past tax year, in contrast to the 1.9m that did, investigative news agency Exaro reports.
Those evading tax could face a crackdown from HMRC in 2013, following an announcement from the tax authority late last year that it was launching a special taskforce to target private landlords, initially in the south-east, to include those that are letting properties out and not disclosing the income on their tax returns.
HMRC estimates the evaded amount to be around £550m a year.
Richard Murphy, head of Tax Research LLP, said the issue was a ‘massive sideline industry’ that HMRC should tackle as it ‘would pay for a quarter of their staff’.
‘One way round it is to require everyone to fill in a tax return,’ said the ex-KPMG accountant. ‘Is that unreasonable? Not in my opinion. It’s obligatory in most European countries.’
Murphy also suggested another way to unearth tax cheats is to compel people who rent their property to name their landlord or letting agent when they fill in their annual Council Tax rates assessment.
But he stressed the most effective way to increase the compliance rate is when ‘people believe they will be caught’.
An HMRC spokesman said: ‘Nearly a billion pounds has been made available to us to tackle tax dodging and we expect this work to bring in an extra £22bn by 2014/15. Some of this will come from the minority of landlords who are currently dodging their tax.’

Wednesday 13 March 2013

Scottish House Prices up £1,028 in January after Six Months of Falls


According to the LSL/Acadametrics House Price Index, Scottish house prices finally rose in January by 0.7% after six months of decline.
Despite the increase, however, the average house price in Scotland - £141,866 in January - is still £4,014 than a year ago. Sales also fell in January by more than twice the usual seasonal rate.

Richard Sexton, director of e.surv chartered surveyors, part of LSL, comments:

“Six consecutive months of falling house prices in the second half of 2012 threatened to drag the Scottish housing market back into the depths it fell to after the 2008 financial crisis. Prices have fallen over £4,000 in the last year – and by much more if you take inflation into account. Thankfully, a £1,000 rise in prices during January has put the brakes on the slide, at least for now.

The crux of the problem is weak mortgage lending. Demand for mortgages is falling, and the supply of them remains painfully tight. Personal finances have been eroded by inflation and savings are crumbling away like weathered rock. Second steppers in particular are content to sit tight and wait until the market begins to recover. And Scotland is more exposed to public sector cuts than England and Wales, which is stymieing demand in comparison to south of the border. 

On top of that, criteria on mortgages are strict, which is slamming the door on lots of would-be buyers. Although the Funding for Lending Scheme has helped reduce rates and encouraged banks to introduce a wider range of mortgages, borrowers still have to cross a high threshold in order to access them. This is proving difficult while their personal finances are being so savagely attacked.

There are bright spots amid the gloom. First time buyers – historically the fulcrum of a healthy housing market – are finding it easier to get mortgages thanks to a wider choice of products: first-time buyer numbers reached their biggest annual figure in four years over the last 12 months. If that improvement can be sustained throughout 2013 the housing market should begin to gradually recover. And despite the economic travails, underlying demand remains relatively strong, which should help support house prices in the long term.”

Tuesday 12 March 2013

Welfare Reform Trial Sees Rent Arrears Rise


Tenants in south Wales taking part in a trial of the UK government's benefits reforms have seen rent arrears rise seven-fold to £140,000 in seven months.
Landlords in the pilot area in Torfaen warn evictions could increase if the trend continues after the system for paying benefits is fully adopted.
Housing benefit is currently paid to the landlord but it will transfer to the claimant under the reforms.
The minister in charge said it would help people to manage finances better.
However, an investigation by BBC Radio Wales' Eye on Wales programme highlights concerns that changes to the benefits system - beginning with the introduction of the so-called "bedroom tax" from April - could push both social housing tenants and landlords into financial difficulties.
Torfaen is one of six areas where the Department of Work and Pensions is running what it calls "demonstration projects" ahead of the introduction of the UK government's flagship welfare reform of Universal Credit in the autumn.
Eye on Wales has learned that the first group of Torfaen tenants selected for the trial saw their total arrears rise from around £20,000 to approaching £140,000 in the seven months from July to January.
Under the reforms, claimants' benefits will be rolled into one credit paid directly to their bank account on a monthly basis.
Housing benefit will become part of the Universal Credit, signalling an end to the current system where payments are made straight to local councils or housing associations, reducing the risk of the 100,000 social housing tenants in Wales falling into arrears.
Bron Afon Community Housing, the biggest social housing landlord in Torfaen with 8,000 properties, has 950 tenants receiving direct payment of their housing benefit.
Chief executive Duncan Forbes described the rise in arrears to almost £140,000 as "significant", adding that a large proportion of the tenants were "never in rent arrears before".
"That was a group of people who had a good track record of payment and pretty low level of arrears, thrust into a position where they are now is significant arrears," said Mr Forbes.
"At the same time we've increased our staff levels by about double what we would normally put into income recovery.
"We've been very successful up to now in getting the number of evictions right down.
'Squeezed and squeezed'
"But we can see that inevitably steadily rising.
"The difficulty for us is that if there's no long-term solution to paying that rent we can't sustain business as a landlord."
That combination of reduced income and increased costs concerns Nick Bennett, group chief executive of Community Housing Cymru, which represents housing associations across Wales.
He said its not-for-profit members use funds from the private and public sector with private funding, over 90%, coming from banks.
"If we have a model that starts to unravel because the people that we are trying to help can't afford to pay their rent, then that model could become unsustainable," he said.
"Or you have banks that are under pressure from their regulator to build up their balance sheets, looking for excuses to re-price the debt that is currently held by housing associations.
You only need a broken washing machine or cooker and suddenly you are in a real difficult bind in missing your rent”
Steve ClarkeWelsh Tenants Federation
"So we could end up getting 'whammied' twice - more expensive lending from the private sector, less support from the public sector - and the misery of our tenants getting squeezed and squeezed from both sides."
Steve Clarke, managing director of Welsh Tenants Federation, told Eye on Wales that direct payments are one of the two major causes of concern.
The other is the housing benefits changes - or so-called "bedroom tax" - that come into force next month, which Mr Clarke's organisation has estimated could put 4,000 Welsh social housing tenants at risk of eviction even before Universal Credit begins.
"The general principle of Universal Credit is good but it is happening too fast," he said.
"The voluntary sector can't keep up with the changes, there's not enough support there to help people make the transition.
"There are a lot of people out there that are finding it difficult on very small incomes to be able to manage their budgets.
"You only need a broken washing machine or cooker and suddenly you are in a real difficult bind in missing your rent."
Similar concerns have been voiced by a Commons select committee which last November warned the Department of Work and Pensions not to rush into launching Universal Credit.
Its report said: "We believe that time needs to be allowed for a proper evaluation of the pilots which the government is running on direct payments to tenants, followed by a phased implementation of direct payments, after appropriate safety net arrangements for vulnerable people have been developed and tested."
The Department of Work and Pensions said it was committed to supporting vulnerable claimants.
Welfare reform minister Lord Freud said: "We've always been clear that Universal Credit will be simple and easy for claimants to access and we will ensure that vulnerable people get the support they need to make a claim and budget their finances.
"Millions of people will be better off on the new benefit."

Thursday 7 March 2013

New Ruling Orders Letting Agents to put Fees in Adverts

In a landmark ruling, the advertising watchdog has today ruled that all letting agents must clearly disclose what their fees are when they market rental properties.

The ruling is against Your Move, but also specifically implicates Rightmove, ARLA and the Property Ombudsman.

However, it has far-reaching implications for all advertising media and portals, both sets of ombudsmen, for all the membership bodies, and, most of all, for all letting agents.

The ruling comes as pressure is piled on the whole topic of letting agents’ fees – which were specifically banned in Scotland last year and have become the focus of a Shelter campaign in England.

It also comes on top of yesterday’s Which? report, naming Your Move as one of four agents in possible breach of the law over disclosing fees. The other agents accused were Martin & Co, Foxtons and Barnard Marcus.

This morning, the Advertising Standards Authority’s ruling against Your Move makes it clear that agents will be breaking the rules if they do not spell out exactly what compulsory fees they charge when letting a property.

Your Move found itself in trouble for advertising on Rightmove. The seemingly innocuous advert, for a semi in Surbiton, did not mention a fee.

Guy Parker, chief executive of the ASA, said: “Hidden fees are not only unfair, they hit those who are struggling hardest. Our ruling today makes clear that letting agents need to get their houses in order and treat potential tenants fairly.

“Renting a property is a significant commitment. And for those who are new to the rental market, like students, navigating it can be particularly difficult.

“That’s why the ASA is clamping down on letting agents who hide fees.

“Today’s ruling makes clear that agents must include all compulsory fees and charges in their quoted prices. If the fees cannot be calculated in advance then the agent must make clear that fees have been excluded, and provide enough information for consumers to establish how fees are calculated.

“It’s now our priority to make sure agents across the sector bring their advertising into line.”

In the case, an unnamed complainant challenged whether Your Move adverts on Rightmove were misleading because they did not include the admin charge. Your Move told the advertising body that information about its charge was available on its own website.

The firm, part of LSL, said that no agent listing properties on Rightmove gave admin charges within the listings themselves.

This practice, it argued, was in line with both ARLA and the Property Ombudsman’s codes.

Furthermore, admin charges levied by Your Move varied from region to region, and depended on individual circumstances.

Your Move told the ASA that it acknowledged that fees were material information that would be relevant in the consumer’s decision to rent. However, it did not believe that people arranging viewings because of listings seen on Rightmove were at the stage of deciding to rent. Your Move did not therefore believe that the admin fee was material information that needed to be made known at this point.

For this reason, information on the admin fee was made known to the consumer later on, but before they had decided to rent.

The ASA did not agree with this, saying that the decision to arrange viewings was itself a “transactional decision” and likely to be affected by knowing about the existence and costs of admin fees.

It said that ads should include information about fees, because it was material for consumers when searching Rightmove for a rental property.

The ASA ruled that Your Move’s adverts breached the advertising code on two grounds, concerning prices and misleading advertising. The ads must not appear again without clearly stating the fee information.

Tuesday 5 March 2013

A Buy-to-Let Income Without Being a Landlord

'Property Isas' offer investors exposure to the housing market.

Should you be looking to invest in property with your Isa allowance this year?

Investors now have a broader range of funds to choose from, and for the first time can invest in the residential property market.

Up until now, most property investments have had to be via a commercial property fund. These either invest directly in bricks and mortar, though some will instead hold shares or property companies.
However, there are now specialist tax structures called property authorised investment funds (PAIFs), and real estate investment trusts (Reits) – basically a property investment trust which is listed on the stock market.

These are essentially pooled funds that can invest in both commercial and residential property. Investments held within these structures don't have to pay corporate tax on their income or gains, potentially boosting returns for investors. These can either be bought direct, or many now can be purchased via an Isa, protecting investors from capital gains and reducing the tax due on any income received.

The T M Hearthstone UK Residential Property fund is one of two residential property options now available to Isa investors, and was launched in July 2012 as a property authorised investment fund.

It invests in homes of varying sizes nationwide, and aims to provide a simpler and less expensive way of tapping into the UK residential property market than a buy-to-let.

The other option (which is not a PAIF) is Castle Trust's HouSA, launched in October 2012. This tracks the Halifax house price index and can pay a fixed quarterly income, regardless of performance.

Darius McDermott, the managing director of Chelsea Financial Services, the investment broker, said these products provide more diversification than buy-to-let by not being dependent on any one location.

He said: "The HouSA is illiquid, so if you go into a 10-year tranche and your circumstances change you can't guarantee to get your money out. It's not for everyone and we are broadly positive on it. With the Hearthstone fund, we like the fact that there is no gearing, as it buys properties outright, but the charges aren't cheap."

Nevertheless, many advisers are reluctant to recommend residential property to clients who are already heavily exposed to it through home ownership. Most favour commercial property, highlighting its ability to pay an attractive income and pointing to historically low correlations with equities and bonds.

Duncan Owen, head of property funds at Schroders, said, "Average commercial property prices as a whole fell by 44pc between 2007 and 2009, but previous to that the biggest fall on record in any one year was 14pc. In every five-year period apart from one it has given you a total annual return of 8pc to 9pc, with around three quarters of this coming from income."

But the income levels paid out by funds investing directly in commercial property are far lower than these advertised rental yields. For example, the Aviva Investors Property Trust currently only yields 3pc – although this will increase by 0.7pc when it converts to a PAIF later this year; while the M & G Property Portfolio still only yields 3.4pc, despite having converted to a PAIF this January. The differential reflects far more than just management fees.

Peter Toogood, investment director at Morningstar, said: "Direct commercial property funds need to maintain cash levels of 15pc to 20pc to fund redemptions. Reits can have marginally higher yields of 4pc to 5pc."

Because Reits are shares listed on the stock exchange, there is a good argument for investing in them via a fund that holds a range of property shares, rather than directly. Brian Dennehy, managing director of Dennehy Weller & Co, the financial adviser, never recommends individual Reits as he feels they are slightly too specialist.

He said: "We don't see any need to narrow the focus, so we prefer funds that can buy both Reits and other property shares. Because these are linked to the stock market, they operate in very different cycles to direct commercial property funds, which are very slow moving but far less volatile."

Property share funds, although not providing the same diversification from equities, have tended to outperform direct commercial property funds over most time periods during the past decade. For example, according to Morningstar, the Aberdeen Property Share fund has produced a total return of 26pc over one year and of 78pc over 10 years compared with respective returns of -0.3pc and 22pc from the Aviva Investors Property Trust.

But supporters of direct commercial property funds argue that this largely reflects the recent upturn in equities and that, because direct property tends to move a couple of years after the stock market and has now bottomed out, this could be a good time to buy.

However, some experts do not regard property of any sort as the answer for those seeking diversification. Hargreaves Lansdown is not currently recommending any commercial or residential property funds. It feels that strategic bond funds can produce a better overall return and provide some diversification from equities.


By opting for three spaniels – Tilly , Bumble and Ruby – Phil Morse has showed less appetite for diversification with his pets than with his investments.

Mr Morse, 49, who works as an investment consultant and lives near Portsmouth with his wife, Lorraine, invested £5,000 in the T M Hearthstone UK Residential Property fund in an Isa in February and will invest a further £5,000 in it during the next tax year.

He said: “It is providing me with diversification from other investments I have in equities and bonds and, although I own my own home, that doesn’t pay me an income. I intend to draw on this fund as part of my retirement planning.

“I’ve always thought of getting involved with buy-to-let but never really wanted the hassle, and this fund gives you similar exposure without being a landlord.”

Click here to read the original article "A Buy-to-Let Income Without Being a Landlord"


For further information please email NetRent at enquiries@netrent.co.uk

Monday 4 March 2013

Nationwide Climbs Down over Lending to LHA Landlords


Britain's biggest building society has been forced into a uturn over plans to restrict mortgages to landlords who accept housing benefit.

Nationwide's The Mortgage Works subsidiary had changed its terms and conditions to exclude lenders who wanted to offer properties to tenants on benefits and Local Authority tenants.

However, Richard Napier, the group’s mortgage director, said that the group had changed its mind, following concerns raised by customers.
“The clarification of the terms and conditions, which took place last December, brought The Mortgage Works into line with several other Buy-to-Let lenders,” he said. “This will now be removed.”

“The Buy-to-Let sector is very important to us,” he said. “We have listened to concerns that have been expressed by some of our customers, over the last few days, and believe this is the right way forward for The Mortgage Works, for landlords and for their tenants.”

The decision followed warnings that vulnerable tenants could be left homeless by the decision. The Mortgage Works is the biggest lender to landlords who provide housing to those in receipt of housing allowance. It had lent to these landlords on a case-by-case basis before changing its terms and conditions back in December.

"There is a great deal of demand from tenants in receipt of housing allowance and if the private-rented sector doesn't help to support housing provision, many tenants will be left homeless" warned Richard Lambert, chief executive officer of the National Landlords Association (NLA).

Experts said that Nationwide’s earlier decision was down to the changes in the benefits system. As well as a cap on total benefits, the new system will not see benefits paid directly to the landlord, except in exceptional cases. The housing element of benefit will be cut first if people’s benefits exceed the new cap, which comes in in April.

The NLA said that its latest research showed that landlords were already being put off letting to those receiving benefit, with a 6pc drop in the incidence of landlords letting to these claimants between quarter three of last year and quarter four.

The Mortgage Works has around 20pc of the buy-to-let market, but it is the biggest lender in this particular buy-to-let area. There are around 3.8 million households in private rented accommodation, 26pc of which – 982,000 – receive housing benefits, according to government figures.