Private Landlords at risk of falling foul of the ever changing and updating of Lettings regulations.
Are you a private Landlord ? Are you aware the ‘How to Rent Guide’ you are legally required to issue to tenants at the start of a tenancy has been updated this month ?
I have recently found that not only are some landlords not aware of their obligations to issue a tenant the ‘How to Rent Guide’ at the start of a new tenancy but those who do are not aware that they must issue the latest version. A new version was released in January 2018 and this is the version you should now be using. Not issuing this to tenants or using an outdated version can make your Section 21 notice invalid.
The ‘How to Rent Guide’ is information for tenants about the renting process and I believe this should be issued to the tenants when they apply for a property and not when they are starting a tenancy.
There are also a number of changes that have recently come into force or are about to that you should be aware of notably:
Well the fallout from the recent Budget is still continuing. I was chatting to a couple of movers and shakers from the Leighton Buzzard area the other day, when one said, “There isn’t enough land to build all these 300,000 houses Philip Hammond wants to build each year”.
...and if you read the Daily Mail, you would be forgiven for thinking the Country was at bursting point ... or is it?
It was 60 years ago the first satellite was launched (Sputnik). All the Superpowers have used them to take high definition pictures of each other for decades, but now satellites and their high-powered cameras are being used for more peaceful purposes. The European Environment Agency (EEA) have been taking high definition pictures of the UK from outer-space to give us a focused picture of what every corner of the Country really looks like … and the findings will come as a surprise.
As my blog readers know, I always like to ask the important questions relating to the Leighton Buzzard property market. If you are a Leighton Buzzard landlord or Leighton Buzzard homeowner, this knowledge will enable you to make a more considered opinion on your direction and future in the Leighton Buzzard property market. Like every aspect of all economic life, it’s all about supply and demand, because over the last twenty or so years, there has been an imbalance in the British (and Leighton Buzzard) housing market, with demand outstripping supply, meaning the average value of a property in Central Bedfordshire has risen by 439.18%, taking an average value from £58,700 in 1995 to £316,500 today.
Using the information from the EEA and data crunched by Sheffield University with their Corine-Land Cover project, I posed them a few questions about the local area, interesting questions I would like to share with you …
1. What proportion of the whole of Central Bedfordshire is built on?
That surprised you, didn’t it! In the study, land classified as ‘urban fabric’ defined has land which has between 50% and 100% of the land surface is built on, (meaning up to a half might be gardens or small parks, but the majority is built on).
2. How much land is intensively built on locally?
Of that amount mentioned above, how much of it is high-density urban fabric? (i.e. where 80% to 100% is built on – still leaving 20% for gardens) Less than 0.1% - again I bet that surprised you!
3. So how is the land used locally?
Sports Facilities 3.08%
Arable Farmland 62.99%
...the rest being made up of various other minor types such as forests, woodlands and waterways, etc.
Leighton Buzzard and the surrounding areas are greener than you think! In fact, I read that property covers less of the UK than the land revealed when the tide goes out. The assumption that vast bands of our local area have been concreted over doesn't stand up to inspection. However, the effect of housing undoubtedly spreads beyond its actual footprint, in terms of noise, pollution and roads.
Now I am not suggesting for one second we concrete over every inch of the locality, but the bottom line is we, as a country, are growing at a quicker rate than the households we are building. I appreciate the emotional effect of housing is greater than other land use types because most of us spend the vast majority of our time surrounded by it. As Brits, we live our lives driving along roads, walking on footpaths and working and living in buildings meaning we tend, as a result, to considerably overemphasise how much of it there is.
In fact, I was only flying home recently back from a weekend break in Ireland, when I looked down and I was reminded just how green Britain actually is!
The bottom line is Leighton Buzzard people and the local authorities are going to have to put their weight into building more homes for people to live in. There is going to have to be some give and take on both sides, otherwise house prices will continue to rise exponentially in the future and Leighton Buzzard youngster’s won’t be able to buy their own Leighton Buzzard home, meaning Leighton Buzzard rents and demand for private rented accommodation in Leighton Buzzard can (and will) also grow exponentially.
I miss the good old days of George Osborne as Chancellor, with his hardhat and hi-vis jacket. He must have visited every new home building site in the UK with his trademark attire! For the last few years, the nearest Philip Hammond got to donning a ‘Bob the Builder’ outfit was at his grandchild’s birthday party. However, with what appears to be a change in focus by the Tories to ensure they get back in power in 2022, they appear to have fallen in love with house building again with the Chancellor’s promise to create 300,000 new households in a year.
Nationally, the number of new homes created topped 217,344 last year, the highest since the financial crash of 2007/8. Looking closer to home: in total there were 1,773 ‘net additional dwellings’ in the last 12 months in the Central Bedfordshire Council area, a decent increase of 135% on the 2010 figure.
The figures show that 94% of this additional housing was down to new build properties. In total, there were 1,673 new dwellings built last year in Central Bedfordshire. In addition, there were 111 additional dwellings created from converting commercial or office buildings into residential property and a further 24 dwellings were added as a result of converting houses into flats.
While these all added to the total housing stock in the Central Bedfordshire area, there were 35 demolitions to take into account.
I was encouraged to see some of the new households in the Leighton Buzzard area had come from a change of use. The planning laws were changed a few years back so that, in certain circumstances, owners of properties didn’t need planning permission to change office space in to residential use.
With the scarcity of building land available locally (or the builders being very slow to build on what they have, for fear of flooding the market), it was pleasing to see the number of developers that had reutilised vacant office space into residential homes in the local council area. Converting offices and shops to residential use will be vital in helping to solve the Leighton Buzzard housing crisis especially, as you can see on the graph, that the level of building has hardly been spectacular over the last seven years!
Now we have had the autumn budget, Theresa May and Philip Hammond have set out their stall with housing as their key focus. I was glad to see the Government introducing a variety of changes to improve housing, including more funding for the supply side and an injection of urgency into the planning system.
The biggest question is, just where are the Government going to build all these new houses? Maybe a topic for a future article?
Back to the main point though and the focus on the housing market by the Tory’s is good news for all homeowners and buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of home ownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants.
It’s now been a good 12/18 months since annual rental price inflation in Leighton Buzzard peaked at 3.3%. Since then we have seen increasingly more humble rent increases. In fact, in certain parts of the Leighton Buzzard rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?
Well, possibly in the short term, but in the coming few years, it is my opinion Leighton Buzzard rents will regain their upward trend and continue to increase as demand for Leighton Buzzard rental property will outstrip supply, and this is why.
The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Leighton Buzzard). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).
Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).
Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Leighton Buzzard, that Leighton Buzzard landlords are (instead of selling up on masse), actually either (1) re-mortgaging their Leighton Buzzard buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.
The sentiment of many Leighton Buzzard landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin).
Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth. It really is swings and roundabouts!
So, what does this all mean for landlords and tenants in Leighton Buzzard? In my considered opinion,
Rents in Leighton Buzzard over the next 5 years will rise by 8.9%, taking the average rent for a Leighton Buzzard property from £844 per month to £919 per month.
To put all that into perspective though, rents in Leighton Buzzard over the last 12 years have risen by 20.7%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Leighton Buzzard economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections
In the past, making money from Leighton Buzzard buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Leighton Buzzard property market, as a Leighton Buzzard landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Leighton Buzzard, Regional and National property market’s, to enable you to continue to make money.
One place for that information is the Leighton Buzzard Property Market blog www.leightonbuzzardpropertyblog.com/blog
Daniel Bourke is the owner of Belvoir Lettings Dunstable and in his previous career in Architecture he was an Associate in a leading London Architectural practice