Property News - Time To Invest In Short Stay Lets ?

Mayor Of London Calls For Rent Capping 

January 30, 2019

Short Stay and Holiday Lets are not legally residential tenancies, they operate as a business and are not seen by housing legislation to be a main residence. Landlords are increasing exploring the short stay sector

The mayor of London has stated that he is considering introducing rent controls across London

Sadiq Khan announced that London needed to adopt a “strategic approach to rent stabilisation and control”, since the arguments in favour of capping rent inflation are becoming “overwhelming”.

 

“I have long advocated such reforms; in 2013, I suggested reforms could give renters the right to longer-term tenancies and predictable rents. The housing crisis is now having such an effect on a generation of Londoners that the arguments in favour of rent stabilisation and control are becoming overwhelming.”

The proposed changes include ending section 21 “no fault” evictions, which the housing campaign group Generation Rent said have been the leading cause of statutory homelessness since 2012. “This law allows evictions with no reason needed, and this is one more reason why we should scrap it,” the group said.

Assured shorthold tenancies, the standard rental agreement for almost all renters in England, should be replaced with open-ended tenancies – providing greater security of tenure to renters, according to the draft blueprint. Currently, landlords are able to evict tenants immediately after the initial fixed term, usually six months, without a legal reason.

 

Increasing Letting Cost For Landlords 

January 30, 2019

In direct response to the Tenant Fees Bill, the majority of letting agents are increasing their commissions for both letting and managing rental property. Agents can no longer rely on tenancy sign up, referencing or administration fees charged to tenants, and an already over competitive sector has no option but to increase their charges to landlords. Many of the larger agent groups are now advertising management commissions at 13 and 14 % plus other increased re-let fees. 

Certainly some landlords are seeing the writing on the wall and selling their investment properties and leaving the private rented sector, and are keen to invest in other sectors such as  Commercial Property and Holiday Lets.   

 

Landlords Right To Automatic Possession Being Eroded Away

 January 30, 2019

Back to the future ? ...yes looks like the political will is returning to one of increasing tenant rights and controls over the private rented sector. In the 1988 Housing Act was born the Assured Shorthold Tenancy Agreement and Section 21 that gave a landlord an automatic right to gain possession back of his/hers investment property. These two things fueled the growth of the private rented sector allowing lenders to give mortgages to investors knowing there would be no risk of potential sitting tenants ( which would devalue the capital value of the property).
 
This landlord's automatic right to get tenants out of a rental property is slowly being eroded away...No fault evictions...or loss of right from a number of administrative mistakes are now in evidence, and further a call to completely abolish Section 21 is growing in political circles.
 
Short Stay and Holiday Lets escape this growing risk of semi-sitting tenants being left in a rental property, and increasingly property owners are wanting to invest in this sector.
 

Tenancy Deposit Capped - Damage Costs Will Be Controlled

 January 30, 2019

 

Private renters are set to benefit from new measures reducing the amount tenants have to pay up front to secure a home from 6 weeks’ rent to 5 for annual rentals of under £50,000.

The move, announced as part of the Tenant Fees Bill, is a further step by Communities Secretary James Brokenshire MP towards ending costly fees imposed on tenants when they first move into their property - creating a fairer housing market that works for everyone.

Around 1 in 3 renters who currently pay a deposit are set to benefit from the change - saving tenants £64 million in the first 12 months by keeping more of their hard-earned cash, while also making sure landlords are able to recover costs in the event of damage to their property.

The new cap will apply to properties where the annual rent is less than £50,000. A deposit of 6 weeks’ rent will continue to apply where the annual rent is £50,000 or more.

Other amendments to the Bill include protecting tenants from unfair fees by limiting the type of default fees that can be charged by landlords and property agents.

This change means that during the tenancy landlords and agents will only be able to charge fees to replace lost keys or for late rent. Landlords will still be able to claim back costs for damage through the tenancy deposit at the end of the tenancy. However, landlords and agents will not be able to write lots of different default fees into a tenancy contract and tenants cannot be charged hundreds of pounds for a damaged item that actually only costs a few pounds to replace.

Deposits however can still be charged for short stay and holiday lets and reasonable charges for breakages charged to guests subject to terms and conditions. Further with weekly cleans in place property owners can maintain and keep their properties to an excellent standard.

New Legislation Prevents Charges To General Let Tenants

January 20, 2019

The Tenant Fees Bill sets out the government’s approach to banning letting fees paid by tenants in the private rented sector and capping tenancy deposits in England. The aim of the Bill is to reduce the costs that tenants can face at the outset, and throughout, a tenancy, and is part of a wider package of measures aimed at rebalancing the relationship between tenants and landlords to deliver a fairer, good quality and more affordable private rented sector.

Tenants will be able to see, at a glance, what a given property will cost them in the advertised rent with no hidden costs. The party that contracts the service – the landlord – will be responsible for paying for the service, which will help to ensure that the fees charged reflect the real economic value of the services provided and sharpen letting agents’ incentive to compete for landlords’ business.

The ban on tenant fees is intended to come into force on 1 June 2019.

The government will shortly be publishing guidance for tenants, landlords and letting agents to help explain how the legislation affects them.

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