Tenants of National Trust Properties Facing Huge Rent Rises

The National Trust couldn’t care less about the elderly. The trust has told an octogenarian tenant in his late 80s that his rent payments are set to rise from £148 to an astronomical £15,000 per annum, reported The Times recently.

It’s not just this helpless old man, there are several other hundreds of tenants who have been faithful tenants for long who face the prospect of rent increases that are unrealistically high. With over 5,000 homes owned by this charitable trust, there are over 10,000 tenants who don’t know where to go with their belongings.

There are some other problems as well. Most of these tenants are paying monthly rent payments, though in between several leases changed hands and were sold as long leaseholds. The lease agreements were drawn long back with 49-year terms, and the rents fixed were obviously based on the cost of living index prevailing then.

With most of the leases periods nearing maturity, the tenants are forced to apply for extensions. That’s when the National Trust puts its foot down saying the lease agreements cannot be extended on the same terms. The tenants have two options: either pay increased rental charges, or pay huge deposits in order to “buy up” or make up for the low ground rent they are paying.

The quandary the old man is finding himself in is that he has to cough up close to £80,000, along with some 300 others who find themselves in the same fix. What with the Government ministers pledging to ban what they refer to as “feudal” leases, and replace such rents with hefty ground rents, for which they are able to find gullible buyers through building companies.

The National Trust is not altogether merciless and is trying to reduce the “ground rents” by at least 50% for certain genuine cases, though even after such a huge discount, the amount payable is far beyond the means of the hapless tenants. While some at the National Trust feel that the leaseholders may have been misled by unscrupulous agents, they are willing to consider letting such tenants off the hook by waiving off the “ground rent” deposit demand altogether. If that should come to pass by some act of providence, the tenants who are already in a sad plight might get some succour after all. One can only wait and watch the future course of events.

Landlords Turning to Holiday Lets

A whole lot of private rented properties are being put up on “holiday let”. No one seems to bother about breaking the 90-day planning rule, and most of them browse the Internet and find their tenants online. This has caused a lot of problems for the regular tenants who just can’t seem to find houses as most of them are let out to tourists for much higher rents.

Research indicates that there is a considerable increase in the number of listings on the Internet, particularly in the past year. Moreover, most of the ads blatantly announce that properties are available for more than 90 nights in a year, which is in stark contravention of the rules laid down for holiday letting. The result of these ads is that there is a considerable increase in the number of properties available for “holiday let”.

While the above is the scenario in London, the trends emerging elsewhere are not very different. According to the survey conducted by RLA over 7% of the 1,500 landlords covered in the survey have been offering their properties as holiday lets. They have been getting these temporary tenants by advertising on portals like Airbnb or some portal or the other on the Internet.

If not for the holiday rush, most of these properties would have been available on regular long lease in the private rental sector, making life a lot easier for the locals. The startling truth is that with this trend of “holiday let” emerging, a few hundred thousand private rented homeshave shifted from the conventional private rental market to the latest boom in the “holiday let” market, where short let accommodation fetches much higher rents with less hassles.

Most of the landlords blame the recent changes in the tax sector, which has forced them to consider letting their properties on short term basis. What makes things worse is the difficulty in selling property due to CGT, which most of the property owners feel is quite unjustly thrust on them. The net result is that there will be very few properties available for rent on long term basis, putting the common people to a lot of difficulty.

The RLA is trying to prevail upon the Government to scrap the mortgage relief changes, so that the property owners can be wooed back to the regular way of letting out their properties. The need of the hour in London and most other parts of the country is for many more new homes that can be made available on long-term rent basis.

More than 4 Tenants on a Single Tenancy Agreement?

According to the Property Act of 1925 a landlord shall not have more than 4 tenants in one tenancy agreement. So, what happens when a good tenant turns up with a family of five or six?

There seems to be a bit of a confusion here in interpreting the rules. Most of the landlords and letting agents have heard of the provisions under Section (2) Law of Property Act,  which stipulates the 4-person rule, which is contrived that a rental agreement shall not have more than 4 people, however this is not quite true. 

The 4-person rule applies only in relation to the legal hold or ownership of the property. The Act further stipulates that if there be more than 4 tenants figuring in the agreement, the first 4 of the lot shall hold the property “on trust” on behalf of the remaining number of tenants. Thus, the law can be interpreted that tenants one to four shall own legal title on the property and hence will automatically hold the interests of the remaining tenants figuring in the agreement.

This is similar to the way private trusts function, for example family trusts that are set up for minors will have trustees who will be the actual owners of the property. These trustees will also be managing the financial affairs of the minors until they reach adulthood.

When it comes to ownership of property, whether on lease or as freehold, there are two parts in the English law under which they come. One is legal ownership and the other is beneficial ownership. While the legal owner can be a different entity and the beneficial owner can be someone totally different. The tenant who has been bestowed with the beneficial interest has every right to enjoy and make use of the property after taking possession. Hence, when there are more than 4 tenants figuring in the agreement, the additional tenants will enjoy the same rights enjoyed by the first 4 tenants.

Of course, the first 4 tenants will still have a say in the legal ownership of the tenancy, for themselves and on behalf of the additional 5th, 6th or 7th tenants. This happens by default, hence there is no need to specifically mention it in the tenancy agreement, merely listing of the tenants will do just fine. However, it is important to name each tenant clearly, and they will also have to append their signatures in the agreement, indicating that they agree to the terms and conditions set in the agreement.

Periodic Tenancies: Notice-to-Quit

If a tenant wishes to end a tenancy contract, he or she has to give the landlord a written notice to that effect. The written notice needs to be duly signed by the tenant and the address of the premises has to be clearly mentioned. The notice should also include the date on which the tenancy contract/period ends.

That’s not all; the tenant has to make sure that the notice is handed over to the landlord personally. In case that is not possible due to any reason, the tenant may send the notice by registered post with acknowledgement due. If either of these is not possible, the notice can be sent via email or by fax. If the notice is sent by fax, make sure you get a copy of the notice printed and save it for future reference.

Whatever the fixed term agreed upon has to be honoured by both the landlord and the tenant. Although neither party has the right to end the term, under section 21, the landlord has a right to serve a 2-month notice period asking the tenant to vacate the premises. Please note this will be a “Notice Requiring Possession” and not a “Notice to Quit” being issued on the tenant. However, the landlord needs to make sure he or she has a court order for possession before the eviction proceedings can take place.

If the fixed term takes its course naturally and the tenant refuses to budge at the end of the term, both parties need to agree to what is known as a Contractual Period Tenancy (CPT) and let the tenancy turn into a Statutory Period Tenancy (SPT) automatically. One advantage with SPT is that it is almost the same as the original term contract, though the 2-month notice period will not apply here. Similarly, the notice period for the SPT will depend on the nature of the new contract: if it is a monthly rent contract the tenancy will be a monthly period tenancy; for a 3-month period it will automatically become a 3-month periodic tenancy.

In case the landlord wishes to serve a notice to quit to a tenant who is on an SPT, he or she has to give a minimum notice of 2 months according to section 21. If the same is for a 3-month period, the notice will be for 3 months. However, the 1988 Housing Act is not very clear about the tenant’s notice for an SPT, though it is covered under Common Law (notice to quit) for protection from the Eviction Act of 1977.

Property Maintenance and Cleaning for Landlords

Being a landlord, the onus is on you to maintain your property in a good condition so that it attracts tenants who are looking for vacant premises. When you showcase a well-maintained property, you are bound to get quick offers at better rents and there are fair chances for attracting tenants who hold reliable jobs and do not have problems paying their rent promptly. Moreover, moving into a property that is spic and span will naturally prompt the tenants to continue maintaining it in the same manner.

If you want to maintain your property really well you need to call in professionals who are adept at maintaining residential accommodation. If not regularly, you should at least call them in whenever the tenancy period ends for a cleaning routine that will ensure that the property is in good condition and attractive for the next tenants. If you have difficulties in locating a good professional cleaner you should get in touch with a professional letting agent who can handle the job for you.

Many landlords have understood the convenience in contracting letting agents for managing their properties. Letting agents are experienced in this line of work and have the right contacts, though they usually charge a steep fee, but one which is generally well-worth paying. Apart from helping maintain your property, a letting agent is the best person who can help find the ideal client who won’t make too much of a fuss or make a general nuisance of himself or herself as they perform various due diligence checks prior to the tenancy beginning.

Cleaning the premises and carrying out minor repairs whenever necessary are two important aspects that can be taken care of by most landlords on their own. What with companies advertising online, it is easy to locate a professional cleaning company and sign up for annual contracts. However, there are a few landlords who are not quite aware of how to go about such things, and they become the targets of letting agents who tend to capitalise on their ignorance. Hence it is important to beware of some unscrupulous letting agents who tend to overcharge landlords for extending such services.

There being no set SLA (Service Level Agreement) to go by and many landlords don’t know how to go about contracting with an agency in this regard. The costs can vary from agent to agent, and unwary landlords often end up spending more than necessary. Hence, it makes sense to make a thorough search before signing up with a cleaning company or letting agent in order to avoid problems at a later stage.

Dealing with the Unthinkable - Landlord Repossessions!

One of the most painful tasks that most landlords hate is evicting their tenants for whatever reason. Usually, the reason is rent arrears that have been piling up for quite a while. However, this is not the only reason. Some tenants can be really careless with the way they handle the property and can cause damage to the property, which naturally upsets landlords, though they can’t do much about it except to evict the troublesome tenant.

When it comes to confronting the tenant, the experience can turn quite nightmarish, and even if the tenancy contract is about to end, most tenants have the audacity to stick on for however long possible. Suing the tenant is the last thing any landlord would want to do as the case can drag on for ages, what with adjournments happening too often, leaving both the landlord and tenant running around in circles. The worst part is the prohibitive legal costs that can spiral to over £10,000, not to mention loss of income and other incidentals. For landlords living in larger cities, the costs can be close to 50% higher.

However, there seems to be no dearth of such cases with a sharp increase being recorded in possession orders and the warrant process time that keeps extending. This was not the case a year back. Some landlords are close to ruining their lives as the fight to get possession of their properties can extend up to 45 weeks or more.

As of March 2017, over 35,000 possession cases were registered in England and Wales. As per the statistics released by the Ministry of Justice, more than 25% of these cases have dragged on to become repossession cases that had to be handled by a court bailiff. Most of the tenants refused to budge until they were forcibly evicted by these bailiffs.

How does one avoid such unpleasant incidents? Your best bet is to be thoughtful enough to have a strong agreement with a letting agent who can take care of the fees, should anything go wrong with the tenant. There are several landlords who silently suffer, not being able to evict defaulting tenants, and are left with hardly any recourse. Landlords need to make sure that they deal with a letting agent who includes rent guarantee and legal insurance while signing a rental/lease agreement, to be on the safe side.

 

Tenancy Surrender & Mitigating Loss

What if your tenant decides to surrender the tenancy midway and refuses to pay rent? As a landlord do you have the right to insist that the tenant pays the rent for the entire period he or she signed up for? According to law the landlord has a right to insist on the payment being made, and there are precedents like one of the earliest ones - the case of British Westinghouse Electric Company versus the Underground Electric Railway Company in 1912.

However, it is left to the discretion of the landlord to let the tenant go scot free and re-let the property to make up for the losses caused by the erring tenant. The other alternative is to refuse to accept the surrender and take the tenant to court, though the outcome could take quite a while, and there is no guarantee that the losses can be made up at the end.

There have been cases like the one involving Reichman (landlord) versus Beveridge & Gauntlet (a firm of solicitors). Although it was a 5-year lease, the tenants broke the contract in 3 years and vacated the premises. The tenant’s contention was that the landlord failed to re-let the premises and also refused an out of court settlement for a negotiated amount. The judge, however, ruled that the landlord did not have any obligation to mitigate the losses, though the defendants went on further appeal.

The case went to the Court of Appeal, which had to rule whether the landlord’s claim was unreasonable as far as continuing the tenancy was concerned. This is one reason why landlords need to think twice before accepting surrender when the contract is being broken well before the contract period ends. Landlords normally insist that the tenants themselves find a suitable replacement before vacating the premises, so that the losses are mitigated. However, the landlord has the right to demand rent for the entire lease period or until a suitable replacement is found, whichever is earlier.

The above case was for commercial premises, and the same yardstick may not be applied for a residential property and cannot be taken as a suitable precedent. Of course, it is the prerogative of judge to consider tenants to be consumers who need to be given due protection. If the remaining lease period is rather lengthy, it is up to the landlord to consider the case and act accordingly by accepting the surrender graciously.

Lodger landlords must carry out Right to Rent checks

Right to rent checks by lodger landlords have been made mandatory since February 2016. Hence all the landlords in U.K. have to necessarily carry out checks on the occupants and make sure they have a right to rent lest the landlords become liable to pay hefty fines.

Landlords need to go on a damage control exercise by making sure that the tenant has a genuine right to rent, and prove to the authorities that as a landlord he is following the rules by the book so that there is no need to pay fines. While the onus of keeping out illegal immigrants is the immigration department, a landlord should make sure he or she is no harbouring illegal immigrants with or without having any knowledge about it. It is better to follow some basic tips like:

  • Keeping meticulous records of every check and the findings
  • Recording the date on which the check was carried out
  • The name of the person who carried out the check
  • A transcript of the questions asked and the answers given by the tenant
  • Photo copies of ID documents provided by the tenant while moving in

The above records need to be maintained safely for at least a year after the tenant moves out of the premises.

Another important point to remember while carrying out the checks is to make sure that checks are carried out on the entire family, leaving out just the underage children. Teenagers who look suspiciously above 18 years need to be verified thoroughly by scrutinizing their papers as well. It is better to include all the names (with ages) in the tenancy agreement, and it is better to include a clause that there should strictly be no sub-letting of the premises, nor should anyone be allowed to move in after the tenant occupies the premises.

The above rules apply to landlords as well as people who take in lodgers on a temporary basis. The rules also apply to those who plan to rent out property under a license and to property guardians as well. It is advisable to keep updated with the information the Home office is constantly updating on its website. Landlords are expected to keep themselves informed of the latest developments, ignorance will not be accepted as a valid excuse. Fines can be rather stiff, with £1,000 being charged in the first instance, and £3,000 for subsequent deviations.

Current Status of Buy-to-Let Market

According to property experts most of the buy-to-let investors are seeking greener pastures and prefer investing in commercial property. Traditional residential property seems to be losing its charm, and shops, office complexes and restaurants seem to be more lucrative investment options. Most of the landlords living abroad are disposing off their buy-to-let properties, especially in the London area. Ownership of buy-to-let properties has come down drastically from 26% in 2010 to a dismal 11% currently, and is fast declining to single digit figures.

However, though overseas investors are hesitating to invest in buy-to-let properties, Britain-based investors are showing keen interest in investing in buy-to-let properties, which is keeping the prices somewhat stable for now. One major reason why foreign-based investors are fighting shy of investing in properties in the U.K. is stringent tax regimen, particularly the capital gains tax, which is a deterrent.

Although Brexit triggered a fall in the value of the sterling, foreign investors were not too keen on investing in property. There was a sharp drop in property prices post Brexit, but there were hardly any takers, especially in the buy-to-let segment. The changes brought about in the stamp duty have escalated the costs of investing in buy-to-let properties. Even owner-occupied properties did not seem to be lucrative enough to attract buyers. Looking at the buy-to-let segment alone, the decline in the number of purchases is quite alarming, what with the “additional property” stamp duty playing spoil-sport, the number of properties being bought and sold has steadily declined since April 2016.

Most of the Britain-based investors are not cash rich and all have mortgage payments to contend with. With returns from property plummeting, default in mortgage payments is a regular occurrence. However, investing in commercial property is a different ball game altogether, and the segment is attracting more investors than ever before. The commercial property range includes small garages (easy to rent out) commercial buildings and sprawling industrial estates that house a wide range of factories.

The main attraction with commercial properties is the higher return on investment, though the appreciation of commercial property is much lower than that of buy-to-let properties. Moreover, the tenants in commercial buildings do not make a fuss about amenities and go ahead and spend out of their pockets if they need small improvements. The business-folk take care of the insurance premiums and minor repairs as well. This trend is expected to continue for a while, until the next boom in buy-to-let property comes.

Two Thirds of Landlords pay Basic Rate of Tax

According to data released by the government, only two-thirds of the landlords come under the bracket of basic rate of income tax. The reaction from The Residential Landlords Association (RLA) is that this information explodes the myth that most of the landlords are rolling in money and can very well pay up their taxes.

In response to the questions put forth by DUP MP Jim Shannon in the Parliament, of the 1.9 million individual landlords who are in the disorganized sector and are not incorporated, two-thirds come under the basic tax bracket. These landlords have submitted tax returns that were self-assessed. Of the total of 1.9 million, 30% came in the higher tax bracket and only 4% paid the additional tax rate.

According to the treasury minister Mel Stride, he has confirmation that landlords end up paying more taxes than home owners. They shell out more money that goes towards taxes on rental incomes, and they also spend extra money on Stamp Duty as well as Capital Gains Tax. According to the spokesperson of the RLA the assurances given by former Chancellor George Osborne that increased tax rates levied on private landlords have created a level playing field with home owners does not sound true after all.

The Treasury has countered with a strong re-assertion that according to its estimates, only 20% of the 1.9 million odd landlords are likely to be affected by the recent reduction in the interest relief for mortgage. It is anybody’s guess on the number of properties and tenants living therein who are going to be affected by this cost pressure.

What with the urgent need for more houses on rent, the RLA is urging the government to altogether scrap the recent decision on taxing the landlord’s turnover instead of only the profit. They are also pressing for the abandonment of the mortgage interest relief changes and to also do away with the Stamp Duty levy that is being exercised on additional homes, which are certainly helping ease the pressure on the demand for more homes that can be made available on rent.

The RLA Policy Director, David Smith is of the view that the increase on taxes on the private rented sector initiated by the previous Chancellor was based purely on false assumptions and not on facts. With ministers having no clue about the number of properties or tenants that are being affected by their policies, they have no idea about the intensity of the problem. More homes need to be built to meet the growing demand, which the system should support and encourage. 

What is Tenancy Surrender?

Tenancy surrender can be a tricky affair unless you go about it in the proper manner. There are three ways in which a tenancy can be terminated:

1.     End of Term – This happens naturally at the end of the stipulated period.

2.     Unilaterally – Notice is given from either side indicating that any one of them wishes to end the tenancy contract for any reason (should be mentioned in the tenancy agreement).

3.     Surrender – Both sides voluntarily agree to terminate the tenancy contract.

Things are a lot easier if both the landlord and the tenant have mutually agreed upon a tenancy that features a fixed term, with no specific clause for breaks in between for terminating the agreement at an earlier date. This way both the parties are bound by the contract and the tenancy can come to an end naturally once the specified course of time is completed. However, if a specific clause for early termination exists, it can be exercised by mutual agreement. Both parties need to surrender the tenancy, and upon surrender all obligations cease to exist on both sides.

Surrender by law

Based on a particular circumstance, both parties can imply a surrender, which is considered as surrender by law. In such cases, both the tenant and landlord can opt to enter into a new tenancy agreement based on terms that are different from what was entered into earlier. The tenant voluntarily gives up possession of the property, and the landlord needs to acknowledge the surrender by showing his willingness to accept the keys and complete the surrender. It is better to take the consent in writing from the tenant, lest he or she claims to have been evicted illegally.

Abandonment by tenant

Sometimes a tenant may quietly vacate the premises and walk away without uttering a word to the landlord. This may happen during the term or at the end of the term, and the tenant may have some dues pending. With no notice given, such acts by tenants can cause the landlords a lot of agony and problems.

Although abandonment implies surrender, the landlord cannot assume that the tenant has left for good. The tenant may have gone in a hurry due to some emergency, or a close relative or friend may have fallen ill, or the tenant himself may have been hospitalized. It is better to wait and watch the developments before trying to let out the premises to a new party.

Investment House Fidelity raises Funds for Real Estate

Institutional investors in Europe, especially in countries like Germany, France and Switzerland have been showing a keen interest in investing in property driven investments. Although Brexit was a dampener and the property market became somewhat unstable, what with the new tax regimen adding to the woes of property owners. However, the current scenario seems to have changed with investments in the property sector steadily rising.

Investment house Fidelity, with the help of its group of faithful investors has managed to raise £111m through the Fidelity Eurozone Select Real Estate Fund. It took them just 12 weeks to complete the process with funds pouring in from financial institutions across Europe. Countries like Germany, Ireland, France and Switzerland have evinced keen interest and the investors probably still have faith in the real estate market, which showed some signs of sluggishness until recently.

With yields hovering around 6 to 7% at the outset, the fund seems to be quite popular with investors, both small and large. Clearly, real estate fundamentals seem to be on the rise making landlords a happy lot. The capital sector too seems to be in favour of investing in the property sector. Fidelity International is already busy with the next round of exercise for raising capital, and this time around the target is not only countries in Europe but several cash rich countries in the Asia-Pacific region, including Australia.

The focus still is on institutional investors, who are quite happy with the returns they have got until now. When compared to the returns generated by another fund, namely INREV Continental Europe Funds, Fidelity International fares a lot better with the returns from INREV hovering at a dismal 4%+. While INERV is liberal while picking stocks to invest in, Fidelity exercises a lot more caution, going into details of every single property and its merits.

According to Neil Cable who heads Real Estate at Fidelity International Fidelity’s focus on generating good income has been received well by institutional investors in Europe. Post Brexit, the investors see sense in the tactics deployed by Fidelity and favour investing in alternative sources of income through investments. They also believe that the Eurozone strategy offers minimum exposure to the UK and peripheries of Europe.

Fidelity has already invested in 5 prime assets with the investment totaling £129m. The properties include two DIY retail stores located in Germany and a logistics property in Paris and Germany.

Can tenants claim back their excess rental payments?

Such scenarios are quite common. So what happens when a tenant pays an excess amount by way of rent? It is logical to conclude that the tenant is entitled to be reimbursed the excess amount paid. However, it is not as easy as it seems, and here’s why.

All lease agreements for commercial and residential premises will include a clause that indicates that it is the obligation of the tenant to make payments towards the costs for maintenance of the building and towards other costs like insurance etc. But, as it is the landlord dealing with the company or individuals carrying out the maintenance tasks and the insurance companies, the tenant never really gets to know the actual figures.

Hence, disputes can easily arise, and whenever a tenant feels that he or she has overpaid rent. The landlord on his part will make demands for payments and there is no other go than to negotiate and arrive at a settlement or go in for litigation. On many occasions the tenant would have already made an excess payment without realizing it at that time.

In such cases, the tenant can opt to have the excess amount paid to be set off against the dues to be paid towards service charges for the coming year. However, if there is a specific clause with a provision for anti-set off, or if the tenant is in dire financial straits, the tenant may want the excess payment to be reimbursed immediately.

The following will be taken into account to decide the circumstances under which an overpayment was made:

  • Overpayment made due to oversight or due to an administrative error on the tenant’s part, by either reading the figure incorrectly (decimal point etc) or any error occurring during an electronic funds transfer.
  • Where an approximate sum is paid towards the estimated costs for the year, which, when worked out is found to be in excess of the actual amount.
  • Sometimes the landlords demand payments that have not been agreed upon, nor are such sums mentioned in the lease agreement. Or if it comes under the Limitation Act of 1980 or the Landlord and Tenant Act of 1985 (for residential leases).

In all above cases, the tenant is liable to get a reimbursement although in the case where an approximate sum was paid, it is difficult for the tenant to get a reimbursement as the landlord will try to justify the payment in one way or the other.

 

Problems you may Encounter with Real Estate Sales


Most people have a false notion that investing in real estate is one of the best decisions ever, and unlike dealing in stocks and shares, nothing can go wrong while selling a solid piece of property. Well, most of them are wrong, because real estate is no different from other investment options, and great care needs to be exercised while trying to sell real estate.

The first problem you can face is the lack of any takers even after several months of advertising and letting estate agents know that your property is on the block. The longer your property remains unsold, the poorer the chances of selling it at a good price. Remember that your mortgage payments have to be made on time lest you end up paying stiff penalties. Desperation will lead you to slash prices, and a seasoned buyer will bide his time and wait for the best opportunity, dangling cash in front of you to entice you into selling a prime piece of property at a throwaway price.

Another risk you can encounter while trying to sell your property is the likelihood of the sale never going through, although you received an advance. This leaves you in a dicey situation where you cannot try to sell it to another buyer, nor is the current party going to pay the balance and close the deal. Sometimes, quite unfortunately, the person wanting to buy your house may run into sudden financial difficulties and put you in the soup! Even after signing a firm contract, some buyers try to wiggle their way out and want the entire advance to be refunded.

In some cases, eager buyers pay a token advance, hoping to sell their property to come up with the rest of the money. If their property remains unsold for whatever reason, so will yours. Sometimes, a buyer may have liked your property while viewing it the first time. Later, he or she may bring in some expert or friend who will find several faults with the property and play spoilsport and stop the deal abruptly.

Of course, the picture is not as gloomy as it appears. The silver lining is that if you take enough precautions, you won’t end up with an unsold piece of property. Make sure you do your homework well, and try dealing with seasoned experts who know the business well. Get your property inspected by a professional and make sure you get a written report. Moreover, such people have their own contacts and can put you on to some genuine buyers, leading to a smooth sale.

The Pros and Cons of Buying and Owning a Timeshare

The idea of owning a timeshare may conjure images of a gala time you can have on a vacation in some remote location with very attractive terms. However, it is important to read the fine print before signing on the dotted line. Most people rush into the decision of buying a timeshare and regret it later. With timeshares coming in various types like fixed week, floating, right-to-use and points club you’ll be quite confused which one to go for. Whichever you decide upon, just make sure you know the advantages and disadvantages in buying a timeshare.

Pros

Unlike any vacation home where it could lie vacant for most part and you still get to pay for it, with a timeshare you pay only for the time you spend at the timeshare. That is probably what makes a frightfully expensive property within the easy reach of many middle-class people looking for spending quality time at a great place during a vacation. You don’t have to break your head about maintenance and repairs, nor about paying for a caretaker.

Another major advantage is that you can have a definite vacation at the destined place, and can be sure of accommodation. Unlike resorts where you have to make sure your reservations are in order, and the flights reach the destination on time.

What’s more is you have the liberty of trading destinations with other timeshare owners in various locations, and it’s like owning multiple timeshares. In case you can’t make it on a particular vacation, you can let out your timeshare and expect decent returns that you can put away for your next vacation.

You can surprise your friends and family, especially that favourite niece or nephew of yours who got married recently. You can gift your timeshare to anyone you please, or you can even put it on the block at a charity auction and feel really good about it for long.

Cons

No maintenance is fine, but the annual fees can burn a hole in your pocket. If you were not careful enough to read the agreement fully, you can be in for nasty surprises like arbitrary hike in annual fees. You’ve got to pay up the annual fees whether you use the timeshare or not.

Timeshares are not that easy to sell, and many realize that they are stuck with their timeshares for life. No wonder then that used timeshares are sold at throwaway prices, and if you’ve fallen for one of them, bad luck. Of course, you just might hit a good bargain now and then.

Going for a timeshare in some exotic island or a foreign country comes with its own hassles. You may not be familiar with the local property laws and might end up realizing that you have invested in some worthless property because some countries do not allow foreigners to hold title to any property by law. It is, after all, a lifestyle indulgence and not a healthy investment.

Residential, Commercial or Student Properties for Best ROI?

 When it comes to investing in property one can get pretty confused, what with options to invest in residential, commercial and the ever growing student property, which probably yields the highest returns. However, each segment has its own advantages and disadvantages, so let’s take a closer look and try to find out which type of property gets the best return on investment (ROI).

Residential Property

There is no doubt that investing in residential property is highly secure, and it is possible to earn handsome returns over a long term. U.K. is still one of the leading property markets in the world. Reports released by the Office of National Statistics (ONS) indicate that residential property prices rose by a good 7.2% by the end of 2016. The buy to let market is buoyant and one will certainly enjoy many advantages investing in residential property in the U.K. There is a perpetual lack of housing in the country, and buy-to-let investors are lapping up property like never before. There is a shortfall of close to a million homes, and developers are busy developing new neighbourhoods at a furious pace.

Commercial Property

Gone are the days when commercial property was in the hands of a few big players in the property market. Today, individual investors can aspire to become commercial property owners. To be precise, they can own a segment of a large property worth millions of pounds. High-spec office suites located in busy commercial areas are ripe for the plucking. You have options of letting your share of the property on either a short lease or a long lease. It is more like buy it, let it out, and forget it for a while. The property keeps earning decent returns, and you can add the increment clause while drawing up the rental agreement and seal the deal to your advantage. There are hardly any hassles in letting out commercial spaces as business houses spell the least trouble as tenants.

Student Property

The best in the pick is probably student property, what with thousands of students converging from all over the country to earn their degrees; student accommodation is always at a premium. It’s not just the domestic students; there is a huge chunk of foreign students coming in hordes to get the coveted degree from any of the several colleges in the U.K. Surveys indicate that there could be a 10% increase in international students making a beeline to Britain in the next decade or so. Student accommodation enjoys a high occupancy rate, with rental returns on the higher side when compared to other residential and commercial property. Your best bet yet is to invest in some good student property and earn handsome rental returns.

Property investment in 2017: A Good or Bad idea?

The housing market in the UK has been influenced by two major factors during 2016 – The EU referendum and the changes in stamp duty. It is almost three years since the changes in stamp duty came into force. However, the after effects are still working, and the cost of buying property has shot up. To compound the issue, the higher rate of duty imposed on second homes that followed close on the heels of the stamp duty changes has had a profound effect.

The Brexit poll created a lot of confusion and ambiguity in the property market and the ultimate result was certainly a rude shock, the effects of which are still being felt well into 2017. The Office for National Statistics re-launched the official house price index in June 2016, which replaces the existing indices published by the Land Registry and Office for National Statistics. The figures published last indicate that there is a 6.9% increase in property prices, which is the lowest recorded figure since 2015.

The start of the year has not been very encouraging for property owners as the indices indicate sluggish growth. The artificial growth witnessed is due to a shortage of houses put up for sale, according to the reports published by The Royal Institution of Chartered Surveyors (RIcs). While the number of buyers has increased substantially since Brexit, the number of properties being put up for sale has dwindled.

In June 2016, the rate of growth of property prices in the U.K. was very encouraging at 9.3%, though the same is disappointing at 6.9% in October, a sharp decline in just 3 odd months. Although RIcs predicted a 6% growth, which was substantiated by the figures quoted by ONS, the changes in the stamp duty seemed to have played the spoilsport. The effect that stamp duty changes have had on property prices has eclipsed the effect of Brexit. RIcs predicts even more dismal figures at 3% by the end of 2017.

To compound matters, inflation seems to be fuelling the fall in property prices, what with consumers struggling to make ends meet just for essentials like food and fuel. People are now thinking twice before investing in property. Even the luxury property market does not seem to be immune to the effects and has recorded a very sluggish growth. The sale of million pound homes has taken a bad hit due to changes in stamp duty, and Brexit too has had its own effect on people with money to spend.

 

General Election: Potential Impact on Landlords?

With the general elections just around the corner there is a lot of apprehension about how it is going to affect the rental as well as sales markets in the real estate sector. The general public is rather tired of the exercise where they are being called upon for the third time to turn up for exercising their franchise. The first was the EU referendum that created a lot of buzz, followed by the general election in May last year.

Landlords, agents and realtors are a concerned lot, as the vacuum and instability in the political arena has diminished the value of properties, even the ones located in prime areas. Although the call for elections came as a surprise to many, most people are down with a sense of uncertainty as to how the real estate market is going to react.

Whoever is going to make it to Downing Street will have to start from scratch, which might send some positive signals as far as the housing market is concerned. The need of the hour is a strong and stable government that can be a tough negotiator in the Brexit deal, which will be a great boost for the financial as well as property markets in Britain.

Landlords and realtors are pinning their hopes on anend to the bickering going on in Westminster, and any party coming with a clear mandate should be welcome. Mark Hayward, head of NAEA and David Cox, head of ARLA are of the opinion that the realty market is already in a severe crisis and the acute shortage in housing is causing alarm bells to ring.

The new government has to take a comprehensive view of the housing policy, bringing in drastic changes wherever necessary. The private rental market is already plagued by exorbitant tax hikes with benefits being cut ruthlessly. With a ton of regulations bogging down the industry, tenants are finding it increasingly difficult to find a place to dwell.

Landlords, on their part are finding it difficult to provide decent accommodation and are reluctant to put in any more money to improve the properties. Brexit and the consequent exit of Britain from the EU still has its effect, which will probably continue for a few more years. Unless the new government gets a favourable deal it is going to be tough going for property owners and realtors. However, people who are selling their properties will continue to do so, and new investors will probably shore up enough courage and invest their hard earned money in new property acquisitions.

How can I calculate property taxes myself?


Owning a piece of property has its own hassles and a sizable amount has to be paid as property taxes. You’ll have to first have the property assessed properly. You need to arrive at the value of the land in the particular location, and the higher the land value, the higher the property taxes. Moreover, the value of the land keeps appreciating and every year the figures are bound to change.

You will have to approach the local property assessor whose specific job is to assess properties, and he or she is the best person who can calculate the value of your home. Alternatively, you may contact the local tax authority. These days there are several online tools that will help you look up your property’s value. All you need to do is fill in your address and the tool will calculate using the current rate of taxes and help you arrive at a figure.

One other alternative is to approach any of the financial institutions who can give you estimates for the value of your home, based on which you can calculate your tax liability. In order to get the exact value of your home you need to calculate the current land value and take into account the improvements carried out on your house, this will add to the value of the house and the tax amount will be based on the new value. Here again, the local assessor should be able to help you out to arrive at a value for the land and your home.

The next thing you need to do is to find out the current tax rates being charged by the government. The property tax is arrived at on a fixed percentage of the value of the property. Hence, the tax rates can vary from year to year and there could a steep increase if the county is facing financial difficulties as it will try to make it up by increasing the tax rates. Based on the current valuation of the property and the rate of taxes being charged, it should be easy to arrive at the approximate tax amount that needs to be paid by you towards property taxes.

However, if you are not too sure that you have got the figures right, you need to either contact a property management agency or a tax consultant who will be able to guide you better. Bear in mind though, if the idea is to save on consultation fees, you should maybe take the risk and submit the taxes based on your own calculations.

How can letting agents benefit out of the government’s recent ban on fees?


With the Chancellor of the Exchequer, Philip Hammond hinting at a proposed ban on letting agents’ fees, most agents are a worried lot. However, with the Chancellor insisting that it is merely a proposal that will ‘consult’ the possibilities of effecting a ban, there’s bound to be some delay in the implementation.

What with the government consulting with industry experts, consumer forums and others with a stake, it could be a while before the ban comes into force, and the same applies for up-front fees for tenants as well.  Most letting agents are notorious for charging helpless tenants costs of references; while others use different tactics like ramping up prices for services rendered on drawing up contracts and inventories.

It is such indiscriminate and unfair charges that the Chancellor is targeting and hoping to ban, giving the tenants and landlords a much needed reprieve. However, the ban is not right around the corner, though the possibility has caused mild tremors in the industry. According to informed sources from the Department of Communities and Local Government that handles such issues, talks will not take place for some more time.

Before the ban can come into force, the Department will certainly talk to the affected parties. They include landlords, tenants and letting agents, as well as leading consumer groups such as Citizens Advice who are the tenants’ representatives. While it is certain that there cannot be an outright ban, up-front fees may be banned altogether, which is a certain dampener for letting agents.  Or, utmost, there could be a cap on the fees that can be charged, so that letting agents are allowed to collect some sum to cover the costs suffered.

However, letting agents are going to have a field and continue collecting their fees until the consultations get over and the final picture is revealed. The consultations could drag on for another three to four months. Even after the consultations are concluded, the parliament has to pass a law, which could take some more time.

A letting agent charges anywhere between £300 to £400 for renting a home, and that’s what most of the tenants in London are paying currently. There is dissent amongst tenants and complaints galore that letting agents are ramping up prices, and what is passed on as fees is far more than actuals. For instance a credit check that costs a mere £3 is charged at £50, with letting agents pocketing the difference. Hence, it is still raining money for letting agents.