There was no Christmas holiday for UK property news as the headlines continued to roll – uncovering the horrific tale of let property vacated by one tenant, the effect of tax increases on the private rented sector as a whole and, the government’s publication of new Right to Rent guidance.
The UK housing market remains in a buoyant state while some good news comes for leaseholders enjoying a ground rent freeze.
A landlord in Manchester faced a horrific scene when he entered a property recently vacated by a tenant who had been there for 18 years or so.
In its edition on the 22nd of December, the Daily Mail reported the stomach-churning conditions encountered by the landlord who had to wade through wall to wall rubbish – including human waste – throughout the property. The stench was overwhelming.
Unsurprisingly, perhaps, the tenant had seemed reluctant to hand back the keys to the property when they left. But, even so, expected the return of a £500 deposit – despite the estimated £15,000 bill the landlord is likely to face just to clean up the dwelling.
How tax hikes hit the rental market
Recent changes to the prevailing tax regime have adversely affected landlords’ enthusiasm for further investment in their buy to let businesses, according to a report by the National Residential Landlords Association (NRLA) on the 20th of December.
In a recent survey conducted by the London School of Economics (LSE), more than half of the landlords questioned pointed to the following changes:
- loss of income tax relief on mortgage interest repayments – identified by a third of those surveyed;
- the imposition of a 3% stamp duty surcharge on the purchase of let property – picked up by 27%; and
- the exception of residential property sales on the recent reduction to 18% of Capital Gains Tax (CGT) – singled out by 24% of those questioned.
These had all contributed to landlords’ decisions to defer any further investment or to acquire any more buy to let properties. The survey revealed that 39% of landlords would not go forward with future purchases, 31% said they would delay any such decision, and 28% announced that they planned to quit the market altogether.
New Right to Rent guide
Despite a revision as recently as July 2021, the government has published yet another updated version of the important Right to Rent guidance for landlords, reported Landlord Today on the 22nd of December.
The current guidance reflects recent decisions taken by the government about the EU Settlement Scheme (EUSS) and, specifically, those EUSS applicants who are hoping to join members of their families already settled in the UK.
The new guidance makes clear that EUSS applicants in the process of joining family members already here will be allowed to sign new tenancy agreements while their applications are being decided.
Landlords and their agents are asked to verify with the Home Office Landlord Checking Service any Certificate of Application presented in pursuit of a tenancy agreement and dated on or after the 1st of July 2021.
UK house prices
In a story on the 20th of December, Forbes magazine cited figures compiled by the online listings website Zoopla on the UK housing market.
According to these statistics, the average UK house price reached a record £240,800 – an increase of some £16,000 during the previous 12 months.
The average UK house price rose to a record level in November 2021, having increased by £16,000 over the past year, according to Zoopla. This represents an annual growth in prices (to the end of November) of 7.1% - with around one in twenty private homes increasing in value by more than £35,000.
The total value of the whole of the UK’s housing stock has risen to an estimated £9.5 trillion, according to Zoopla – an overall increase of some £670 billion during a higher volume of residential property transactions than at any time since 2005 (when these records began).
The hotspot for notable price increases was Mountain Ash in the Welsh Rhondda Cynon Taf, where average prices shot up by 31% in the past 12 months (currently £137,200 compared with £104,431 a year ago).
Other regional highs were marked not just in Wales but also in the southwest and the southeast of England.
Ground rent freeze
Under a degree of pressure from the Competition and Markets Authority (CMA), housebuilders Taylor Wimpey have voluntarily agreed to freeze ground rents on new homes, reported the BBC on the 22nd of December.
Coming as a welcome Christmas present for the relevant homeowners, ground rents on leases will now revert to their original level (when the property was first bought) and not increase over time. On properties that Taylor Whimpey subsequently sold on, the developers have also agreed to pay third party leaseholders so that they can also freeze any further increases in ground rents.