Welcome to the latest ‘Winter’ edition of the Trigg & Co Landlord Newsletter – keeping you up-to-date with what is changing in the world of residential lettings.
Remember that because you are a Trigg & Co client, we will automatically keep on top of all the latest legal changes and requirements on your behalf making sure your property and rental income are as fully protected as possible – at all times.
Tenant Fees Bill – Coming 1st June 2019
The Government announced way back in 2016, that it intended to legislate to ban the practice of charging fees to tenants when they apply to rent a property.
Whatever you think of the proposed ban (and actually we believe tenants should be asked to pay their fair share of tenancy costs and referencing charges), the legislation has been grinding slowly through Parliament and the House of Lords. It is due to come into effect on the 1st June 2019.
The Government has made some late final amendments to the Tenant Fees Bill, while it was being debated in the House of Lords. The main amendments which unfortunately all adversely affect landlords are:
- The maximum security deposit that can be charged to the tenant(s), to be held on account of end of tenancy dilapidations or damage, will be limited to five weeks’ rent – rather than the current norm of holding a deposit equivalent to six weeks’ rent.
- The so-called permitted fee payments, where costs arise from the fault or carelessness of a tenant, will be limited to instances where tenants have lost a key or other security device, or where a tenant is at least two weeks late in paying their rent.
- Landlords and agents will be allowed to take only one holding deposit for a property, to ‘reserve it’ while the tenant is being referenced and the tenancy paperwork is being completed.
The most important of these changes impacting Landlords, is likely to be the restriction on the size of the security deposit which can be taken in case of damages or dilapidations at the property. Here at Trigg Lettings, we believe that 6 weeks rent deposit is the minimum that a Landlord should reasonably require. Costs can quickly mount up if the property is left in a dirty state or if carpets and fittings are damaged.
To ensure that our Landlords are not disadvantaged by this new Government restriction, we are introducing the option of a ‘nil deposit’ insurance scheme for our Landlords properties. Instead of the letting agent arranging for the deposit to be held ‘in cash’, as a sum of money on account, we will offer our landlords the alternative of a comprehensive protection insurance product, to be paid for by the tenant.
This will offer the landlord a comprehensive scheme with a cover equivalent to the full six weeks rent. We will give you full details of the scheme at the point that you come to grant or renew a tenancy and will check that it is the right option for you.
We believe this is going to be a very popular product and will be another big plus for Trigg Lettings landlord clients.
Rents Continue to Rise
Despite all the media hype around house prices and rents, the latest Homelet Rental Index, issued at the end of 2018 has shown a continuation of the steady rise in rents seen throughout the year. This mirrors our own knowledge and experience in the local market. Tenant demand remains strong and rents are stable with gentle rises at renewal being commonplace.
The rental index confirmed that the average rent in the UK is now £921, up by 1.5 per cent when compared to December 2017. When London is excluded, the average rent in the UK is now £763.
Commenting on the rental index data, chief executive of HomeLet, Martin Totty, said:
‘Positively for both tenants and landlords, this year we’ve seen stability in UK rental price growth, with increases remaining broadly in line with the rate of consumer inflation. For landlords there remains a sustained demand for property, with the private rental sector continuing to provide the market with both flexible and long-term housing options.’
Free Portfolio Review
Do you own more than one rental property? If so, then you may well wish to take advantage of Trigg & Co’s FREE annual ‘Portfolio Review’ service.
The Trigg review service aims to make certain that you are maximising the rental yield and the overall return on the value of your assets. We will provide you with a completely free, no obligation portfolio review giving you an up to date valuation of both the capital and rental values of each property. This will be backed up with evidence of similar comparable property sales and rentals and an insight into the current market conditions.
The service is available to Trigg & Co landlords even if we only currently deal with one property within your portfolio.
We can also help you to check that you have the best Buy to Let mortgage deal currently available and if necessary can assist with arranging tax advice and planning.
In short it’s a great free bonus for being a Trigg landlord. We look forward to helping you. To ask for your review, please call 01983 525710 and speak to Julie Davies Lettings Manager.
Buy to Let Mortgages Get Cheaper – 10 year fixes available
Good news for Landlords and Investors hoping to add to their portfolio or keep their borrowing costs as low as possible. The range of available buy to let mortgages continues to grow with some great rates for landlords – especially those who have built up equity in their investment properties.
Landlords who are concerned about higher mortgage costs if interest rates rise have a wider range of fixed rates to choose from too, following the launch of a new range of 10-year fixes at the end of last year. The Mortgage Works, the specialist buy-to-let arm of Nationwide Building Society, has introduced a market-leading 10-year fixed rate deal for landlords looking to borrow up to 65% of the property value. The deal has a £1,995 fee but comes with a free standard valuation and £250 cashback. Early repayment charges apply throughout the 10-year fixed rate period. Alternatively, landlords have the choice of a slightly higher 10-year fixed rate deal which only has early repayment penalties for the first five years. This deal again comes with a £1,995 fee, free standard valuation and £250 cashback.
As a sign of how keen lenders are to lend to the right landlords and an indication of their confidence in current rent levels and the market generally, some key lenders are also reducing their ‘stress rates’ on selected products. These are the theoretically higher interest rates that lenders apply during the mortgage application approval process to check that you’d still be able to afford to pay your mortgage should actual interest rates go up. For example, The Mortgage Works used to apply a stress rate of 4.99% for five year fixed rate deals to make sure landlords could withstand higher payments, but this is being reduced to 4.50% for those borrowing up to 75% of the property value. The stress rates have also been reduced for borrowers taking a 10-year fixed rate mortgage, and those re-mortgaging on a like-for-like basis and borrowing between 65% and 75% of the property value. This shows the hidden benefit of a long term fix – lenders can apply lower stress rates on longer term fixed rates, as there are no fluctuations during that time, and a higher stress test is therefore not necessary. From a landlord’s point of view these long term fixes add a welcome increased level of flexibility.
However, we always recommend that you get professional advice to make sure that this type of deal is right for your particular circumstances before going ahead.
Call us on 01983 525710 and we will put you in touch with our expert, independent mortgage broker who will be pleased to offer you an initial confidential discussion, with no obligation – completely free of charge.