The Blackpool Property Blog

Covid-19

• How will it affect you as the buy to let Landlord?
• Should you grow or contract your portfolio? 
• Is now a good time to invest? 
• Are you able negotiate better prices for property purchases with the current slump in demand? 
• Have you reviewed your mortgages, to see if you can benefit from record low mortgage rates, with Chris securing mortgages with rates as low at 1.4%! 

Watch my interview with local leading Mortgage Broker, Chris Days:

As a Landlord, Serviced Accomodation Operator and Letting Agent Owner, the above questions I have been asking myself on a constant basis. My Property Strategy is to create Freedom, not so I don’t have to work, but Freedom so I can take risks in future business ventures and still no I have a safe income to support me and my family. That means my buy to let strategy, looks like X number of properties returning a profit of X,  I am looking for property investments that will generate good returns and attract good long term tenants. Currently, I am looking to secure a deal on a property that requires refurbishing (so I can add value, put my touch and ensure it is to the ‘Hamza’ standard) and I am confident with the lack of investor demand in the market I will be able to secure a better deal prior to Covid-19. I will be looking to purchase the property with lending in my Limited company. With most lenders offering limited products at 60% LTV (hence requiring deposit of 40% instead of the usual 25% I pay) I have been exploring other options and a few lenders such as Nationwide and Barclays have started to launch products with upto 80% LTV (29/04/2020):

https://www.financialreporter.co.uk/mortgages/barclays-relaunches-mortgage-products-up-to-80-ltv.html

Chris Days can be contacted via details below and is happy to provide advice and support.

Chris – 07715488908
Email – Chris.days2@mab.org.uk
Chris Days – Mortgage and Protection Broker

Vlog:

The last three or four weeks, unquestionably, have been one of the most life-changing times we have seen since WW2. The imminent threat of the Coronavirus has taken over the world, the UK and Thornton-Cleveleys and will challenge you, our families, our relationships and test us all.

The drive of this worldwide action of social distancing is not just to stop you from getting ill with the virus; the bigger drive is to slow down the development of this virus so the NHS will not become overwhelmed with those who are most likely to need hospital care. Yet the issue of social distancing has certainly raised many questions around the landlord/tenant/agent relationship, so in this article I wanted to share with all the 1,194 Thornton-Cleveleys (or FY5 to be precise) landlords their rights, obligations and responsibilities to their Thornton-Cleveleys tenants. I also wanted to highlight the rights, obligations and responsibilities of the 2,950 Thornton-Cleveleys tenants in return.

These will be trying times for Thornton-Cleveleys landlords and Thornton-Cleveleys tenants alike, so let’s start…

A landlord has the responsibility to ensure the property is fit for habitation, so what if the Thornton-Cleveleys landlord/agent is incapable of undertaking an emergency repair (or say the annual gas safety check) because the tenant is self-isolating or actually has the virus? The answer is the landlord should use their best efforts to fix the problem if it’s an urgent repair, yet if the landlord/agent are unable to do so they should record this fact and that it is related to the Coronavirus epidemic. One should then re-try as soon as is possible and appropriate, having full respect for information on self-isolation, personal-safety and social-distancing and ensure that you make a written note for future issue. My advice is that you or your agent (as we are with our Thornton-Cleveleys tenants) need to uphold good lines of communication with the tenants touched by these current circumstances, so they are clear on what action you are taking and the timescales for this.

Yet at the same time, there will be very few situations in the coming weeks when the contractors who the landlord/agent use will also be in self-isolation, meaning a handful of the 2,950 Thornton-Cleveleys tenants might have to wait for repairs to be sorted. We have some excellent Thornton-Cleveleys contractors with their own backup plans and so together we will use our best endeavours to find an alternative contractor to fix any issues. If your agent has issues, then maybe we can help – do call me. Yet whatever you do, if this occurs, document everything and that it is related to the Coronavirus epidemic.

The total rent paid by Thornton-Cleveleys tenants each month is £1,752,300

It’s true the UK government has demanded that building societies and banks give a three-month mortgage holiday to those landlords that are unable to make mortgage payments. This is not free cash, the mortgage payments are basically postponed with interest to be collected at the end of this crisis, meaning your obligation as a Thornton-Cleveleys tenant to pay the rent still exists. HM Government is offering employers an 80% wage support with the furloughing to avoid having to make people redundant and the rent for your Thornton-Cleveleys rental home will be treated in the same way as the landlord’s mortgage.

The average Thornton-Cleveleys rental payment currently

stands at £594 per month

Therefore, if you are incapable of being able to pay your rent, it will still build up and accumulate during this virus predicament and you will need to start a payment plan to pay it back on top of your normal monthly rent.  So if your rent is £594pm and you have already been living there for 2 months into a 12 month tenancy, there is still £5,940 to be paid over the next 10 months, so should you not pay anything for 3 months your rent would increase by 43% a month for the last seven months or you face eviction due to arrears (remember arrears have been put on hold – not removed during the virus outbreak). One option, subject to status and agreement by all parties, could be to renegotiate a new longer lease to pay off the arrears over a longer period. Again, the point here is communication from all sides – making sure there are no nasty surprises.

So, if you are in this predicament, there is a lot of help accessible from the HM Government including Universal Credit or Employment Support as soon as possible to escape any interruptions to your payments. Remember, your Thornton-Cleveleys landlord will need proof of your Universal Credit or Employment Support claims to give to their mortgage company to be able to start the mortgage holiday, so my advice to all the 2,950 Thornton-Cleveleys tenants is keep in contact with your agent to ensure your Thornton-Cleveleys landlord doesn’t suffer any avoidable hardship (which ultimately may end up with your home being repossessed because the mortgage payments were missed because you were unable to furnish the landlord with your own claim documents).

Communication is the #1 priority here. Whilst most agent’s premises are closed including our own, all are open for telephone and email enquiries, with staff working from home. This is a fast-changing time for everybody, for the 1,194 Thornton-Cleveleys landlords and 2,950 Thornton-Cleveleys tenants correspondingly and we will be ever vigilant to oversee the financial and monetary backdrop in the coming months.

These are going to be tough times for the people of Thornton-Cleveleys (and the world), financially and mentally; yet together we will come out of this stronger. By working together, working in partnership, again keeping lines of communication open with regards to your finances and your housing, by keeping safe and protecting our families and most of all by being kind to each other … we will get through this, a little battered and bruised – yet hopefully better human beings for it?

Well, with the General Election just over the horizon and having been asked by a number of Blackpool homeowners and Blackpool buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount – just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.

However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Blackpool landlords?

Labours policy of 20% Right to Buy discount could cost Blackpool landlords £437,892,680

  … and if Blackpool tenants got the maximum discount of 35% that Council tenants have with the Right to Buy scheme that would cost Blackpool landlords £766,312,200.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Blackpool’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) ……

 Of the 17,401 rental properties in Blackpool, 4,750 are owned by Blackpool landlords with 6 or more properties in their portfolio

To target these larger scale landlords, who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation became law, thus making the tenants homeless (and who would house them??) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£119,532,800 in Blackpool alone).

If Labour want to fix the property market, it needs long term certainty and confidence, yet even these revised policies would instantly challenge this

And don’t think I am just Labour bashing here as the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a boon for new home builders.

The Tory’s announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market. That £10bn could have been better spent building Council houses, not helping the large plc builders line their pockets with Government cash.

Labour Party’s U-turn on the £437,892,680 grab on Blackpool landlord’s wallets

Well, with the General Election just over the horizon and having been asked by a number of Blackpool homeowners and Blackpool buy to let landlords what the different main parties would do to the local property market, in this week’s article we focus on Labour’s contentious Right to Buy proposal for private tenants. Launched in September, the plan was designed to force landlords to sell their buy to let investments to their tenants who wished to buy them…. at a substantial discount.

Shadow Chancellor John McDonnell told the FT in September that, under a new Labour government, tenants would be given the Right to Buy their tenanted home with a hefty discount – just like the Tory Right to Buy policy for Council house renters that came into force after the 1979 General Election.

Yet it was not certain who would have been expected to pay for discounts on buy to let homes sold to tenants. Four years ago, Jeremy Corbyn advocated using the £14bn of tax allowances that UK landlords had at the time to pay for these discounts, allowing tenants to buy their tenanted home at the same discount as they would a local authority home without leaving the landlord out of pocket.

However, these tax allowances have been substantially reduced with the changes in the way mortgage interest relief on landlords’ mortgages is calculated, meaning that this method of funding would no longer be feasible. In fact, bankrolling a project at a modest 20% discount for the whole of the UK would cost £177.84bn; a lot more than the £14billion quoted by Mr Corbyn. So, what would that policy cost Blackpool landlords?

Labours policy of 20% Right to Buy discount could cost Blackpool landlords £437,892,680

  … and if Blackpool tenants got the maximum discount of 35% that Council tenants have with the Right to Buy scheme that would cost Blackpool landlords £766,312,200.

However, it appears Mr McDonnell has re-considered the original suggestion and done a (slight) U-turn, stating it should apply only to the richest landlords and not those who only own a couple of rental properties. He was quoted in The Times as saying, “There’s a large number of individuals or families who have bought another property as an asset for the future and we wouldn’t want to endanger that”.

Yet, even this somewhat watered-down account still creates threats to the private rental sector and Blackpool’s overall stock of private rented homes. John McDonnell seems to have altered his initial thought to permit all private tenants the right to buy from their landlords to apply only to those with more than a couple of buy to let properties. The shift appears to be aimed at pacifying middle England small time landlords who are probably swing voters with smaller property investments and instead, Labour’s focus is on the larger scale buy to let investors. Looking at the stats, and being generous that we are only looking at landlords with 6 or more (not the couple that Mr McConnell suggested) ……

Of the 17,401 rental properties in Blackpool, 4,750 are owned by Blackpool landlords with 6 or more properties in their portfolio

To target these larger scale landlords, who would unquestionably leave the property market in their hordes if their buy to let investments could be so easily destabilised. There would be mass sell offs before the legislation became law, thus making the tenants homeless (and who would house them??) ..and even if that didn’t happen, it would be very damaging and someone (probably landlords) would have to stump up the £48.54bn national bill (£119,532,800 in Blackpool alone).

If Labour want to fix the property market, it needs long term certainty and confidence, yet even these revised policies would instantly challenge this

And don’t think I am just Labour bashing here as the Tory 2014 Help to Buy scheme hasn’t really helped either as their scheme which gave first time buyers (FTB) a 20% interest free loan, if they put down a 5% deposit, has been a boon for new home builders.

The Tory’s announced recently another £10bn of taxpayer’s money will be pumped into a scheme which, quite frankly, wasn’t needed to boost an already decent property market. The banks were already giving 95% first time buyer (FTB) mortgages from 2010 and the Help to Buy scheme was only allowed on new homes purchases, meaning it didn’t help the larger second-hand market. That £10bn could have been better spent building Council houses, not helping the large plc builders line their pockets with Government cash.

In 1979, Margaret Thatcher was voted in on a Tory landslide with the ‘right to buy your own council house’ being a mainstay of Conservative policy. She encouraged people to buy their own their own council flats and houses, although it might interest you to know, that the council tenant right to buy idea was first proposed in the late 1950s and formed part of the manifesto of the Labour party. Yet Maggie’s version was based on massive discounts for tenants and 100% mortgages (i.e. no deposit). However, the real bugbear was that half the monies raised form the house sales went to central Government and the other half to the local authorities … but that money had to be used to reduce the local authorities debt rather than building new houses – so houses were being sold and not replaced.

2,872 council homes in the Blackpool area have been bought in the last 40 years (an average 72 per year)

Interestingly, the Tories relaxed the rules in 2012 for right to buy and raised the highest discount on a property to £75,000 (it has subsequently increased further, to £100,000, in some parts of the UK) meaning 62 council houses have been sold locally since the rule change, raising £3,220,400 since 2012 alone.

The issue, stated by many existing council house tenants, is that those tenants turned homeowners subsequently sell on their ex-council homes at a huge a huge profit, meaning the demographics of those areas has become ever more transient, more specifically, properties that were once council homes are now owned by buy-to-let landlords who rent them out on a short-term basis.

Yet up to this point in time, nothing has been said about ‘other’ type of social housing – housing association properties. Whilst council houses are properties owned by the local authority providing low cost social housing, housing associations also provide lower-cost social housing for people in need of a home, yet they are private, non-profit making organisations.

The Tory’s state one of the biggest divides in our British society is between those who can and cannot afford their own home, so plan to establish a new national model for shared ownership which allows people in new housing association properties to buy a proportion of their home while paying a lower/subsidised rent on the remain part – helping thousands of lower income earners get a step onto the housing ladder.

So, what for the tenants of the existing 2,223 housing association households in Blackpool? The Conservatives have said they will work with housing associations on a voluntary basis to determine what right to buy offer could be made to those Blackpool tenants, although there are already existing rules which give most housing association tenants the right to buy their home, yet with only modest discounts of £9,000 to £16,000 depending on where you live. So, what does all this mean for the current homeowners and landlords of Blackpool properties?

The Tory’s sold off 2,120 council houses in Blackpool whilst in power between 1979 and 1997

This really created waves in the housing market in the 1980’s and was a contributary factor to the housing crash of 1987 when Dual-MIRAS tax relief was removed by Nigel Lawson. By the selling off of council housing in those years they were accused of selling off the family silver cheaply, thus created the foundation of the buy-to-let boom of the early to mid 2000’s, because of major shortage of affordable housing being sold in the previous two decades.

Yet this time round, note the Tory’s state it is just for new housing association properties, not existing. Also, that tenants will have the right to go into shared ownership – NOT OUTRIGHT OWNERSHIP. This means this policy will have hardly any effect … unlike the Thatcher policies of 1979.

Investing in a Thornton-Cleveleys buy to let property has become a very different sport over the last few years.

In the glory days of the five years after the turn of the Millennium, where we had double-digit house price growth, mortgage companies (notably Northern Rock, HBOS and their ilk) desperate to get on the buy to let mortgage bandwagon with rates so low it would make the belly of a snake seem high and an open mildness to give loans away with not so much more than a note from your Mum and with hardly any regulatory intervention… anyone could make money from investing in property – in fact it was easier to make money than fall off a log! Then we had the unexpected flourish of the property market, with the post credit crunch jump in the property market after 2010, when everything seemed rosy in the garden.

Yet, over the past five years, the thumbscrews on the buy to let market for British (and de facto) Thornton-Cleveleys investors have slowly turned with new barriers and challenges for buy to let investors. With the change in taxation rules on mortgage relief starting to bite plus a swathe of new rules and regulations for landlords and mortgage companies, it cannot be denied some Thornton-Cleveleys landlords are leaving the buy to let sector, whilst others are putting a pause on their portfolio expansion.

With the London centric newspapers talking about a massive reduction in house prices (mainly in Mayfair and Prime London – not little old Thornton-Cleveleys) together with the red-tape that Westminster just keeps adding to the burden of landlords’ profit, it’s no wonder it appears to be dome and gloom for Thornton-Cleveleys landlords … or is it?

One shouldn’t always believe what one reads in the newspaper. It’s true, investing in the Thornton-Cleveleys buy to let property market has become a very different ballgame in the last five years thanks to all the changes and a few are panicking and selling up.

Thornton-Cleveleys landlords can no longer presume to buy a property, sit on it and automatically make a profit

Thornton-Cleveleys landlords need to see their buy to let investments in these tremulous times in a different light. Before landlords kill their fatted calves (i.e. sell up) because values are, and pardon the metaphor, not growing beyond expectation (i.e. fattening up), let’s not forget that properties produce income in the form of rent and yield. The focus on Thornton-Cleveleys buy to let property in these times should be on maximising your rents and not being preoccupied with just house price growth.

Rents in Thornton-Cleveleys’ private rental sector increased by 4.38% in the past 12 months

Rents in Thornton-Cleveleys since 2008 have not kept up with inflation, it is cheaper today in REAL TERMS than it was 11 years ago and some landlords are beginning to realise that fact with our help.

Looking at the last few years, it can be seen that there is still a modest margin to increase rents to maximise your investment (and it can be seen some Thornton-Cleveleys landlords have already caught on), yet still protect your tenants by keeping the rents below those ‘real spending power terms’ of the 2008 levels.

Buy to let must be seen as a medium and long-term investment ….

Rents in Thornton-Cleveleys are 8.20% higher than they were 3 years ago and property values are 9.65% higher than Jan 2016

…and for the long term, even with the barriers and challenges that the Government is putting in your way – the future couldn’t be brighter if you know what you are doing.

Investment is the key word here… In the old days, anything with a front door and roof made money – yet now it doesn’t. Tenants will pay top dollar for the right property but in the right condition. Do you know where the hot spots are in Thornton-Cleveleys, whether demand is greater for 2 beds in Thornton-Cleveleys or 3 beds? Whether terraced houses offer better ROI than suburban semis? With all the regulations many Thornton-Cleveleys landlords are employing us to guide them by not only managing their properties, taking on the worries of property maintenance, the care of property and their tenants’ behaviour but also advising them on the future of their portfolio. We can give you specialist support (with ourselves or people we trust) on the future direction of the portfolio to meet your investment needs (by judging your circumstances and need between capital growth and yields), specialist finance and even put your property empire into a limited company.

If you are reading this and you know someone who is a Thornton-Cleveleys buy to let landlord, do them a favour and share this article with them – it could save them a lot of worry, heartache, money and time.

It seems that quite a few Blackpool homeowners and Blackpool landlords have become acclimatised to living with the uncertainty of Brexit throughout most of 2019, as figures show many of them decided to get on with living life, started reinvesting their money into Blackpool property and buying and selling their Blackpool homes and BTL investments. Land Registry stats confirm that. Current data shows that…

Blackpool property values are 2.5% higher than 12 months ago

Whilst the newspapers were stating prime central London property values were now 17% below the levels being achieved a couple of years, that message seems not to have been heard by certain sectors of the Blackpool property market!

Speaking with other property professionals in Blackpool, many weren’t expecting the usual autumn rebound after the summer holidays. Many were anticipating a dormant Blackpool property market on the run up to Christmas believing many Blackpool home-movers would put off the their home moving activities until the new year, yet in many sectors of the local property market, I have seen (and the stats back this up) that those Blackpool property buyers who are able to hold their nerve (whereas others were hesitant) have found themselves in a better negotiating position to get a great property deal. Putting aside the fluff of newspaper headlines, the real foundations of Blackpool housing market remain sound with record low unemployment, ultra-low interest rates and low inflation.

Interestingly, there are 8% less homes for sale in Blackpool compared to two years ago

However, there are still parts of the Blackpool property market that remain stagnant, with some homeowners being slightly unrealistic with their marketing pricing. To them, the property market appears to be slow, as they stare at their ‘for sale’ board for months on end, yet nothing could be further from the truth.

The key to a balanced (and healthy) property market is realistic pricing by the homeowners when they place the property on the market, mortgage affordability for buyers (which was discussed a couple of weeks ago in the Blackpool Property Blog) and buy to let landlord activity which creates and maintains forward momentum. One measure of momentum is how long a property remains on the market, and interestingly…

The current average length of time a Blackpool property remains on the market is 123 days, up slightly from 114 days two years ago

Now the number of properties sold locally is slightly down year on year (even though we had a burst of property sales in the summer locally) and interestingly, Rightmove reported recently that nationally, the number of properties sold  in the UK was only just over 3% less year on year, so a similar picture nationally.

So, what does all this mean for Blackpool homeowners and Blackpool landlords?

We have always had issues that were game changers for the housing market; for the last few years it’s been Brexit, 10 years ago the credit crunch, 18 years ago the dot com crash, the ERM and 15% interest rates issue 27 years ago, dual MIRAS 32 years ago, hyper-inflation 40 years ago, the 3 day week 45 years ago – the list goes on. Everyone needs a home to live in, the local authority just has not got the money to build council houses, so buy to let will continue to grow for the foreseeable future which in turn creates a stable foundation for all homeowners. Maybe you should use this time, like many are in Blackpool to take advantage of the property deals to be had in Blackpool.

Central Blackpool yields one of the highest Private Rented Sector to Owner Occupied Properties in the country, with some putting the figure at 70%.

Blackpool Council has now licensed the area. To see if your property falls in the selective license area, the defined area and streets are listed in the below link:

https://www.blackpool.gov.uk/Business/Licensing-and-permits/Housing-licences/Selective-licensing/Central-area-selective-and-additional-licensing/Central-area-selective-licence-street-names.aspx

In order to obtain the license, the property must comply with ‘Blackpool (council) Standards’. Below is a link showing the requirements needed to be achieved to obtain a license:

https://www.blackpool.gov.uk/Business/Licensing-and-permits/Housing-licences/Selective-licensing/The-Blackpool-Standard-checklist.aspx

The Central License commenced on the 26^th of March 2019 and Landlords have had until the 25^th of October 2019 to get there property licensed. Please note that the license is Mandatory and fines will be issued by Blackpool Council for not having it in place for your rental property (also ensuring you meet the criteria of the property)

As a Landlord myself, I also share mixed views on this as yourself, is it just another burden for Landlords and another form of taxation for the local authority? Or is this is what is needed to improve the quality of housing in the area (which is desperately needed), more protection for tenants against ‘rogue’ Landlords and action against anti-social tenants. Let me know your thoughts,

Blackpool Council state on their website the reason for Licensing in the ‘Central’ area, as follows:

It seeks to help address high levels of anti-social behaviour associated with poor quality private rented accommodation.

The private rented sector is a vital part of the housing market in Blackpool and many landlords try to provide decent well-managed accommodation.

We want to support landlords to overcome the current problems in the central area and help to improve the area in which local people live and work

The fee involved in licensing a property start from £542 (for a house) and rise for properties in multiple occupation on a sliding scale. Please note the license isn’t transferable if the property is sold during the period of the License and the new purchaser will need to obtain a new license.

If you would like any advice or assistance on this matter, please don’t hesitate to get in touch with myself