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Are we heading for a buy-to-let exodus?

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The number of homes for rent in Britain could drop dramatically, as landlords leave the market thanks to higher taxes and stricter rules.  

Almost a million landlords, more than a third of the total, will review their property portfolios in the next year, according to the Nottingham Building Society, and the number planning to sell homes outnumbers those planning to buy new ones.

A fifth plan to sell some or all of their portfolio, it said, while 16 per cent plan to buy more. 

While those homes going to first-time buyers or families would help more people climb onto or up the property ladder, it could also lead to a shortage of roperty to rent. In some popular parts of the the country a lack of rental homes has recently led to bidding wars.

Letting go: There are more landlords considering selling their buy-to-lets than there are new ones wanting to buy them, according to two reports

Letting go: There are more landlords considering selling their buy-to-lets than there are new ones wanting to buy them, according to two reports

Meanwhile, a new report by the University of York and the Nationwide Foundation found that a large cohort of baby boomer landlords were now ‘ageing out’ of the market –  and were not being replaced at the same rate by younger landlords due to diminished returns and more stringent regulation.

This, it said, could mean that there are not enough rental homes to go around in future – especially for those tenants on lower incomes and who receive benefits.

It added that across the entire sector, there was a fall of 30 per cent in the volume of buy-to-let mortgages between 2014-15 and 2018-19.

Both reports noted that tax changes have been one of the main factors making buy-to-let less attractive for some. Previously landlords got tax relief on mortgage interest, but this ended in April 2020.

There are also new restrictions on private residence relief, which reduces the capital gains tax due on homes which people rent out after living in them.

Dr Julie Rugg, lead author of the report, said: ‘Letting property looks altogether different to landlords now: it looks like a much risker proposition, delivering a lower level of return and with a lot more hassle.

‘As one landlord said to me, ‘stocks and shares may not deliver the same level of return, but they don’t phone me on a Sunday morning because the boiler’s bust”.

‘We feel we’re being picked on’: Landlords have their say 

 The University of York report features interviews with landlords, who gave an insight into their thoughts about the buy-to-let market. 

One smaller portfolio landlord who self-managed with his wife said: ‘We want to wash our hands of the whole thing and take the money out. 

‘It’ll mean that we won’t have an income but we think we might have enough capital to carry on to, well, the rest of our lives. We’re 72 now so, being realistic, we might only have another few years left.’ 

On Universal Credit, one landlord said: ‘It’s another nail in the coffin because the legislation’s getting tighter, the mortgage interest rate change was a massive thing, the loss of Section 21 that’s on its way. 

‘It’s just, yes, we feel like we’re being picked on and must be top of the list, someone doesn’t like us sort of thing’ 

A Leeds-based landlord said that people in receipt of benefit carried too many disadvantages compared with other tenants: ‘If I can get somebody who can pay on the day he walks into the house, pay a month in advance plus a month deposit, why would I bother taking someone who can’t pay for five weeks and I can’t get insurance on? It really doesn’t make any sense’.

However, another was more lenient: ‘Personally, I’ll take a good-as-gold tenant on benefits over probably like a normal tenant, because if you treat them right and make sure the house is all looked after and stuff, they stay a long time. They’re happy. 

‘I’ve got plenty of DSS tenants that take pride in their houses and they’re always asking me, ‘Can I paint? I can do this? Can I change the carpet?’

Rugg also mentioned the ‘regulatory burden’ which landlords felt they were faced with thanks to stricter Government rules on how they managed their tenancies.  

They are now open to possible criminal convictions and fines of up to £30,000 if they contravene the Housing Act, for example. 

Restrictions on landlords’ ability to serve section 21 ‘no fault’ eviction notices also meant that some landlords were worried that they would be unable to evict problematic tenants, the York report noted. 

Some landlords interviewed in the report said they had ended up paying such tenants to leave. 

Denise Wells, head of mortgage operations at The Nottingham, said: ‘Our research suggests sellers currently outnumber buyers in the buy-to-let market with regulatory issues and tax changes among the reasons persuading landlords to pull out of the market.’

Some landlords complained about the 'hassle' of managing tenancies in a climate of diminishing returns (picture posed by models)

Some landlords complained about the ‘hassle’ of managing tenancies in a climate of diminishing returns (picture posed by models)

Interest still remains in property investing 

But despite these changes, The Nottingham also found that 11 per cent of people who have never been landlords want to purchase a buy-to-let in the next five years.

‘It remains the case that there are potentially strong returns to be earned in the buy-to-let market and we continue to see landlords buying rental properties whilst our research indicates that many more potential landlords are considering going into the market too,’ Wells added.

According to The Nottingham, their main reason for potentially investing in buy-to-lets was the low rates available on cash savings. 

More than half (55 per cent) said they wanted to put their cash into property to earn a better return while 48 per cent saw buy-to-let as a good way to diversify their investments and 42 were confident buy-to-let would generate a good income.

Most landlords interviewed in the York report were of the view that new entrants to the market could make it ‘stack up’, if they bought the right property in the right place. 

However they also questioned whether – given what they regarded as a ‘hostile environment’ for landlords – it would be wise to take the risk. 

Landlords' reasons for buying and selling homes, according to The Nottingham

Landlords’ reasons for buying and selling homes, according to The Nottingham

Low-income tenants could be hit particularly hard 

The York study found that many landlords had a ‘No DSS’ policy and would not rent to benefit claimants.

Of landlords that had been in the market for three years or less, only 9 per cent said they rented to tenants receiving housing benefit, along with 28 per cent of those in the market for more than 11 years.

The landlords said they were unhappy about the long delays with initial payments of housing benefit and problems with managing Universal Credit, and found it easier to deal with tenants who didn’t need help paying the rent.

Larger landlords renting to tenants receiving benefits were much more likely to be planning to reduce their properties or exit the market than to increase their lettings.

However, it noted that there were some locations where increases in the housing benefit rates combined with low house prices mean that landlords can achieve better returns by letting to benefit recipients, compared with letting on the open market.

And it said that some landlords were increasingly targeting the housing benefit claimants with the greatest additional needs, where rent is paid directly to the landlord.

Rugg added: ‘It’s a real concern that many good, professional landlords are no longer letting to housing benefit claimants because of the way that Universal Credit is administered’.

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Sirius Real Estate sells London business park for €18.8m (GB)

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Sirius Real Estate has agreed to the sale of an asset in Camberwell, London, for €18.8m (£16m), representing a NIY of circa 2%. The property formed part of the portfolio Sirius acquired in November 2021 with its purchase of BizSpace, the leading provider of regional light industrial, workshop, studio and out of town office units across the UK. The sale price represents a 94% premium to the valuation at the time of Sirius’ acquisition of BizSpace.

 

The multi-tenanted business park, which comprises approximately 34,700ft² of industrial and office space is 91% occupied following a series of asset management measures delivered through the BizSpace platform. The sale is expected to complete in July 2022.

 

Commenting on the transaction, Andrew Coombs, Chief Executive Officer of Sirius Real Estate, said: “This disposal is further proof of the latent value in the BizSpace portfolio we acquired late last year, the price being significantly ahead of last September’s valuation on which our purchase was based, and the attractive sale follows our recent announcement that we had since improved like-for-like rental income across the portfolio by 7.5%. The sale will allow us to invest in new opportunities for BizSpace in the UK as we continue to build our acquisition pipeline. Bringing together the Sirius and BizSpace platforms, with a strengthened management team at BizSpace, is already delivering strong results and operational synergies that will enhance our UK portfolio.”

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Southwold beach hut which is 10ft wide with no running water or electricity up for sale for £250,000

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A beach hut in an upmarket seaside town which is famed for its celebrity visitors has gone on the market for a record £250,000.

The price is believed to be the highest ever to be asked in the UK for a hut which people are not allowed to sleep in – and is double the cost of a three bedroom terraced house just 10 miles away.

The hut, numbered 149 and called ‘Here’s Hoping’, measures 10ft 6ins wide and is in a prime position on the promenade in the Edwardian town of Southwold, Suffolk.

The resort has always been a popular retreat for well-heeled Londoners and celebrities including Chris Evans, Michael Palin, Stephen Fry, Rowan Atkinson and Richard Curtis.

Beach huts on the south coast can be more expensive with selling prices for some in Dorset exceeding £500,000.

But the huts in Southwold, which have no electricity or running water, are subject to strict local by-laws which ban anyone from sleeping overnight.

A beach hut called 'Here's Hoping', pictured, which sits on the promenade of the upmarket seaside town Southwold in Suffolk, Doset, famed for its celebrity visitors, has gone on the market for a record £250,000

A beach hut called ‘Here’s Hoping’, pictured, which sits on the promenade of the upmarket seaside town Southwold in Suffolk, Doset, famed for its celebrity visitors, has gone on the market for a record £250,000

The price is believed to be the highest ever to be asked in the UK for a hut which people are not allowed to sleep in. The hut, called 'Here's Hoping' and numbered 149, measures 10ft 6ins wide and is in a prime position on the promenade in the Edwardian town

The price is believed to be the highest ever to be asked in the UK for a hut which people are not allowed to sleep in. The hut, called ‘Here’s Hoping’ and numbered 149, measures 10ft 6ins wide and is in a prime position on the promenade in the Edwardian town

The resort has always been a popular retreat for well-heeled Londoners and celebrities including Chris Evans, Michael Palin, Stephen Fry, Rowan Atkinson and Richard Curtis. Beach huts on the south coast can be more expensive with selling prices for some in Dorset exceeding £500,000

The resort has always been a popular retreat for well-heeled Londoners and celebrities including Chris Evans, Michael Palin, Stephen Fry, Rowan Atkinson and Richard Curtis. Beach huts on the south coast can be more expensive with selling prices for some in Dorset exceeding £500,000

The buyer will still have to pay annual ground rent of £998 and will only have 18 years left of a 30 year lease, although there will be an option to renew.

They will be able to enjoy spectacular views from a veranda overlooking the beach and the North Sea, while being just a short walk from pubs, restaurants and shops.

But just 10 miles away in Lowestoft, Suffolk, there are several homes up for sale, priced between £120,000 and £140,000.

But the huts in Southwold (pictured), which have no electricity or running water, are subject to strict local by-laws which ban anyone from sleeping overnight

But the huts in Southwold (pictured), which have no electricity or running water, are subject to strict local by-laws which ban anyone from sleeping overnight

Southwold beach (pictured) has always been a popular retreat for well-heeled Londoners and celebrities including Chris Evans, Michael Palin, Stephen Fry, Rowan Atkinson and Richard Curtis

Southwold beach (pictured) has always been a popular retreat for well-heeled Londoners and celebrities including Chris Evans, Michael Palin, Stephen Fry, Rowan Atkinson and Richard Curtis

Huts in the best locations within Southwold, which is famed for its Adnams brewery, pier and lighthouse, are rarely on the market and some have been in the same family or generations

Huts in the best locations within Southwold, which is famed for its Adnams brewery, pier and lighthouse, are rarely on the market and some have been in the same family or generations

Several semi-detached homes in the area offer three bedrooms, one bathroom and two reception rooms, and is located 0.1 miles away from Lowestoft railway station.

Another property on the market is a £90,000, three-bed semi-detached bungalow at Broadlands Park and Marina in Lowestoft which has a garden, one bathroom and one living room.

The listing for the beach hut boasts that it has ‘glazed double folding doors’ and ‘a number of storage cupboards’.

The previous highest price asked for one of Southwold’s 300 beach huts was £150,000 in September 2018.

Prices have soared since then as property prices have continued to increase and the demand for staycation breaks following the Covid epidemic has boomed.

Huts in the best locations within Southwold, which is famed for its Adnams brewery, pier and lighthouse, are rarely on the market and some have been in the same family or generations.

Several semi-detached homes in the area offer three bedrooms, one bathroom and two reception rooms, and is located 0.1 miles away from Lowestoft railway station

Several semi-detached homes in the area offer three bedrooms, one bathroom and two reception rooms, and is located 0.1 miles away from Lowestoft railway station

Many are rented out for around £600 a week to visitors who flock to the town.

The latest asking price is more than double the price of a three bedroom terrace house on the market for £110,000 around ten miles away in Lowestoft, Suffolk.

More than half the properties in Southwold are second homes and the full-time population is now below 1,000, putting extra strain on local services.

Earlier this year, councillors unveiled plans to try and stem the number of second homes in the town and make more affordable housing possible for local people.

A spokesperson for estate agent Flick & Son, which is selling the hut, said: ‘I am sure it will go very quickly.

‘There is a high demand for huts and we expect there will be a bidding war in the end.’

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EU will retaliate to any unilateral action on NI protocol, Coveney warns

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British prime minister Boris Johnson has been warned of the consequences of unilateral action on the Northern Ireland protocol, including the prospect of “retaliatory” action from Europe.

On the eve of Mr Johnson’s visit to Belfast, the Government and Sinn Féin said moves to disapply parts of the protocol risked damaging east-west relations.

Minister for Foreign Affairs Simon Coveney spoke of a “landing zone” for negotiations and indicated that the European Union was willing to make adjustments through “partnership and dialogue” due to what he said were “legitimate concerns” within unionism about the operation of the protocol.

However, he also said that if London moved unilaterally it would make matters “significantly worse” and that “then the EU will be forced to respond to that with some form of retaliatory action”.

Mr Coveney said it was not “helpful” to expand on what form that might take, but that a response “would be very negative”.

Taoiseach Micheál Martin said “there is a real and urgent obligation now” for Britain to engage with the European Commission “in a real and professional way to resolve issues that have been raised”.

Powersharing

Ahead of talks between Mr Johnson and Northern Irish political leaders aimed at restoring powersharing at Stormont, Sinn Féin’s northern leader Michelle O’Neill said unilateral action would “represent an appalling attack on the international rule of law”.

“Only through joint agreement with the EU can solutions to problems or concerns be resolved,” she said.

“I will be telling Boris Johnson that unilateral action deepens political instability and economic uncertainty and must not happen.”

Ms O’Neill is to meet Mr Martin in at Government Buildings Dublin on Monday morning ahead of her meeting with Mr Johnson.

Mr Coveney travels today to Brussels for a meeting of the EU Foreign Affairs Council and will later speak with EU negotiator Maros Sefcovic and British foreign secretary Liz Truss, who is expected to announce legislation on Tuesday that will unilaterally override central elements of the protocol.

Speaking to The Irish Times, Mr Coveney said Mr Sefcovic is open to making “significant progress” on the protocol.

“I believe there are solutions we could pursue and we can agree relatively quickly if there was an attitude to do so on both sides,” he said. “But we need a partner in London to do that, not a partner that is making threats of unilateral action.”

Envoy

The Minister also said he believes it is “likely” that US president Joe Biden will appoint an envoy to the North, saying the US administration is “extremely interested” in marking 25 years since the Belfast Agreement next year with “its institutions intact and functioning as they need to be”.

Mr Johnson is expected to affirm his commitment to the agreement and assert that he is not seeking to scrap the protocol. But Downing Street said ahead of his meetings with the North’s party leaders that he will not drop his government’s threat to unilaterally disapply parts of the protocol, which Mr Johnson agreed with the EU in 2019.

Downing Street said in a statement that Mr Johnson will tell party leaders that the door will always be open to “genuine dialogue” but that “there will be a necessity to act” and protect the Belfast Agreement if the EU does not change its position.

Writing in Monday’s Belfast Telegraph, Mr Johnson outlined that the protocol “has not been adapted to reflect the realities of the [Trade and Co-operation Agreement]”. He will signal that there is “without question a sensible landing spot in which everyone’s interests are protected”. However, he said that if the EU’s position does not change, “there will be a necessity to act”.


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