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Crediton Landlords and Second Homeowners will probably save money from the proposed new Capital Gains Tax changes

Yet, if the proposals were adopted in full, some Crediton landlords would pay £13,000 less Capital Gains Tax than they would currently

The government borrowed £394bn this financial year (April ‘20 to April ‘21). This figure does not include the cost of November lockdowns and support measures, which means the final bill will probably be over half a trillion pounds, these billions will ultimately need to be paid back to cover the cost of Coronavirus.

The Office of Tax Simplification (OTS) published a report for tax reform and, as was predicted by many in the press, the Government Dept suggested the Chancellor contemplate readjusting current Capital Gains Tax (CGT) rates with a person’s own Income Tax rates. This would mean increasing the rate of CGT for selling a buy to let property from 28% to 40% for high-rate taxpayers and 45% for additional rate taxpayers. To add salt to the wound, the OTS is suggesting cutting the £12,300 annual CGT allowance.

This has meant many Crediton buy to let landlords contacting me in the last few weeks, wondering if this is the time to exit the Crediton buy to let property market, especially as they have been hit by growing levels of rental legislation and higher taxes.

With tax bills about to go through the roof, is this the time to leave the Crediton buy to let property market?

Yet, like all things, the devil is in the detail as Crediton 2nd homeowners and Crediton landlords may well finish up having lower CGT tax bills with these new taxation proposals, even though the CGT restructurings are being introduced to raise the much-needed cash for the Government.

Apart from the suggested cut of the annual CGT allowance and increase in the CGT percentage rates, the OTS report also proposed reintroducing rebasing and indexation. In layman’s terms, the OTS are suggesting all gains made before 2000 would not be taxable (rebasing) and any capital gains would be calibrated to account for inflation.

So, what would that actually look like for a Crediton landlord? Let us assume we have a landlord who bought a Crediton buy to let property in 2000.

Under the current CGT rules

  • The average value of a Crediton property in 2000 was £108,100
  • Today, that same Crediton property has increased in value to £304,200
  • Meaning a profit of £196,100
  • As our landlord is a high-rate taxpayer (earning £60,000 a year), their CGT bill would, after the annual allowance be £54,464

Under the new proposed CGT rules

Under the new proposals, the CGT payable (assuming the CGT rate of 40% and a lower annual allowance of £5,000), the same landlord would only pay £41,250– a saving of just over £13,000.

And the savings don’t stop there. Remember, under the new OTS proposals, all capital gains made before 2000 would also be tax-free.

However, let us not forget the responsibility of the OTS is to report on tax simplification opportunities, not to set Government taxation policy. None of us have a crystal ball on what Rishi Sunak will do with CGT on buy to let property or second homes. Although, as time has always taught us with investments, often the worse thing to do is to make impulsive decisions on what MAY happen.

You have to remember, CGT only gets charged when you sell or transfer your investments, and most people use their rental investments to provide them with income. If you did sell up, the best 90-day building society accounts are obtaining 0.8% pa, the stock market is a rollercoaster (good luck with that) and Government 10-year bonds are paying a princely 0.324% pa … where else are you going to invest to get the income Crediton property investments provide?

Property is an asset you can touch, feel and ultimately understand. Maybe, this is the time (if you haven’t already) to take portfolio advice on your buy to let investments? Many landlords do so, whether they use our agency, another agency or they manage their property themselves. The service is free of charge, we don’t need to meet face to face as we can do it over Zoom and it’s all without obligation. I promise to tell you what you need to hear – not what you want to hear … what do you have to lose?

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5 ways all Crediton landlords can escape the worst of the coronavirus downturn on their rental property.

Now the second lockdown started on the 5th November 2020, does this mean Mid Devon landlords can wave goodbye to their buy-to-let investment and see it go up in smoke on the bonfire of buy-to-let dreams, like a Guy Fawkes puppet?

With many Crediton tenants at risk of losing their jobs after the furlough scheme ends in March and as the reverberations of the Coronavirus recession hit this winter, what does this all mean for Mid Devon landlords and what can they do to mitigate the risks?

Since the spring, most tenants and buy-to-let landlords have been protected from the coronavirus crisis thanks to the banks with their mortgage payment holidays and job support schemes.

Before the second lockdown was announced on the 31st October, it was expected that as the furlough and mortgage payment holidays were due to end on Halloween, there would be some serious fallout from those schemes finishing. One silver lining from the lockdown (if you can call it that) is that mortgage payment holidays and furlough have been extended, yet does all that just kick the can down the road?

The question is, what can landlords do to mitigate the financial risk on their buy-to-let investment?

  1. Help Your Tenants Get the Financial Support They are Entitled To 

Billions of pounds are being spent by the Government to help those people whose income has been hit by coronavirus. The better letting agents and self-managing landlords are supporting, guiding and helping those tenants in financial difficulty to gain a better understanding of the Universal Credit (UC) processes, systems and payment levels, to enable their tenants to pay the rent and ultimately indirectly help their landlord. Also, if you are a tenant, and that support isn’t given when you ask, don’t forget Mid Devon District Council do hold special cash reserves for discretionary housing payments, which can be utilised to close the gap in rent between what UC pays and your current rental commitments. Also, the Government’s Money Advice Service & Citizens Advice are a good online resource for you to find out what you are entitled to.

  • Adopting, Adapting & Improving Your Crediton Buy-to-Let Property

Demand for gardens or office space means Mid Devon landlords will need to think outside the box. Those homes with tenants sharing (e.g. HMO’s and shared houses) might need to price their pre-coronavirus 4 bed sharing house to maybe a 3 bed sharing house plus a work/office room and, if you haven’t already, installing a top of the range, fast and dependable internet connection could be the thing that swings it. Outdoor space and gardens are really high on housebound tenant’s wish lists, in fact I have come across some Crediton tenants demanding that new rental properties have a landscaped garden or those that bought a dog or cat for company during the first lockdown, are looking for their landlords to relax their ‘no pets policy’.

  • Hold On to Your Good Tenants

Those buy-to-let landlords with decent tenants, who find themselves in financial dire straits should consider attempting to keep them, even if their own monetary circumstances mean they have to decrease their rent somewhat over the short term. Now of course, I would expect that tenants need to prove their circumstances, yet if their plight was real, surely it would be a wise choice to reduce the rent by perhaps £50 a month and support your tenants? You know they are taking great care of your rental property and rather than risk the issue of advertising your empty buy-to-let property – particularly when there is no assurance you will achieve your existing rent and ultimately risk drawn-out void periods with no rent coming in at all. What I would suggest therefore,  in such circumstances, is that you create a new Assured Shorthold Tenancy agreement with a longer term with your existing tenant at a lower rent – a temporary measure but with peace of mind for both parties which can then be reviewed once that tenancy is up for renewal.

  • Carry Out Firmer Checks on Your Prospective Tenants 

Many private landlords and a few slipshod letting agents tenant checks are somewhat lacking in their depth. Trust me, there is tenant referencing … and then there is ‘proper’ forensic tenant referencing. As certain parts of the British economy have been hit harder than others, landlords must consider when choosing their new tenants, the type of work they do or who their employer may be, to enable them to decide on their future capacity to meet their rental commitments.

  • Rent Guarantee Insurance for your Crediton Rental 

There are still insurance companies offering landlord rent guarantee insurance if your tenants become unable to pay the rent. Many insurance firms removed these insurance products in the first lockdown, yet some have returned to the insurance market although insurance premiums have gone up in price. Remember to check the small print of the insurance, although you will get a lower insurance premium if you can show stringent tenant referencing (as per the previous point). 

The Nuclear Option – Eviction

Landlords need to be conscious that, should their tenancy run into trouble, the Government have changed the rules when it comes to eviction during the coronavirus pandemic. Going into the first lockdown, there was already a backlog in the courts and now, just before going into the second lockdown, bailiffs have been instructed not to enter rental properties in high risk Tier-2 and Tier-3 Covid-19 areas.

Eviction really does have to be the very last option. Negotiation or arbitration will nearly always deliver quicker and improved outcomes for both parties. Landlords who do come to mutually agreeable arrangements with their tenants by briefly reducing the rent, or allowing payment holidays with legally enforceable pay back schedules should ensure they get the agreed terms in writing and run by a solicitor or their agent (feel free to drop us a note if you need advice).

However, if eviction is required, it doesn’t mean the tenant gets off ‘scot free’. Evicted tenants, depending on their circumstances, will either be placed temporarily into an inexpensive B&B, asked to move in with family or given one of the local authority’s temporary accommodation properties, with the goal to then move them into long term council accommodation (as the chances of obtaining private rented accommodation would be slim with agent’s heightened reference checks – more of that at the end).

The Potential Cost of Evicting a Problem Tenant

The average rent for a Crediton property currently stands at £607 per calendar month.

Thankfully, evictions are very rare. Last year before lockdown, tenants from 201.4 rental properties were evicted each working day in the UK … but if yours was one of those, that is still a potentially large cost.

Working on the basis that most evictions from the first rent not being paid, through to eviction, refurbishment of the kitchen, bathroom, carpets and décor (because often these do need sorting/replacing) were taking on average between eight to nine months before Coronavirus hit, (plus the mortgage payments), this means a Crediton landlord could be hit by a £23,617 bill, broken down as follows:

Missing rent (8½ months)£5,160
New kitchen£3,853
Bathroom£2,812
Carpets£2,286
Redecorate£2,008
Agents fees£542
Legal fees & court fees£3,500
Mortgage payments£3,457
Total£23,617

What that would be now is anyone’s guess – it could be a lot more.

This is why it is so important to get the best tenant from day one. Many tenants, who know they wouldn’t pass the references of letting agents, are attracted to those private landlords who don’t use a letting agency, as they know their referencing checks are not as strict and may be a softer touch. That’s not to say going with a letting agent is a guarantee you won’t need to evict; it just means the chances are much, much smaller. Like anything in life – it’s a choice.

Whether you are a landlord who uses a letting agent or not, and feels their reference checks are not to the standard or level you might hope or if you just want a chat about the best rental guarantee insurance, then give us a call what have you got to lose?

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Crediton House Prices 2021: What will happen to the value of your Crediton home next year?

What will a no deal Brexit on the horizon, the end of the stamp duty holiday in March, mortgage payment holidays coming to an end, unemployment set to rise after furlough and ongoing on/off coronavirus restrictions do to the Crediton property market and the value of your home?

In the late spring of 2020, every man and his dog were forecasting impending doom on the British property market. Drops of 10% were considered optimistic as we all held our breath after lockdown was relaxed. Yet, the property market didn’t listen to the forecasters. UK property values today are 2.5% higher than they were a year ago, and more locally,

Crediton house prices are 6.0% higher than a year ago.

So, what exactly is going to happen to the Crediton property market in 2021?

Well, with the end of furlough and 1.7m people still on the furlough scheme at the start of October, a number of economists are saying that unfortunately many of those furloughed will become unemployed. Unemployment currently stands at 4.5% in Q3 2020 (compared to 3.8% in Q3 2019). The Government’s independent Office for Budget Responsibility believes the unemployment rate will peak at 9.7% in early 2021, and then return to pre-coronavirus  levels in 2022. In the past recessions of the early 1980’s, early 1990’s and Credit Crunch of 2009, when unemployment went up, the property market went down.

Yet, in this recession, the link between unemployment and property values may not be so direct.

So why is the link between unemployment and house prices potentially broken? It comes down to interest rates.

The reason Crediton house prices have gone up by 306.76% since the middle of the 1990’s isn’t because the labour market has got so much sturdier, nor that the economy has outperformed every G8 country, or that the UK has had less boom and bust economic cycles than the previous decades. Instead, it’s because of the fundamental and underlying decline in the Bank of England (BoE) interest rates.

High BoE interest rates equal high mortgage payments which holds everything back regarding the property market. In the 1980’s, the average BoE interest rate was just over 11%, making mortgage payments very expensive and keeping property prices dampened. In the 1990’s, the average BoE interest rate was a little over 6%, in the 2000’s just over 4%. However, in the 2010’s, it had been a really low 0.5%. Now with interest rates down to 0.1% because of coronavirus and the BoE threatening negative interest rates, there appears little threat of an eruption in mortgage repayment costs.

With mortgage payments at an all-time low of just under 30% homeowners’ disposable income (compared to 48% in 2007), those middle-aged people lucky enough to still be in a job (who are mainly made up of workers whom are spending a lot more time working from home), they could be more inclined to dedicate more of their monthly income to mortgage payments than they did pre-coronavirus for a bigger garden or a move out of the big cities?

So, if unemployment isn’t going to make a huge difference to the Crediton property market, what is?

Most commentators believe a no deal Brexit will have hardly any short-term effect on the property market (apart from certain upmarket parts of central London).

The stamp duty holiday ends at the end of March 2021 and that certainly will reduce the number of Crediton people moving (as many moved their plans forward to beat the deadline) meaning there will be less Crediton people moving in 2021, yet that will curtail the supply of property for sale and hence keep Crediton property prices higher.

Next, the Help to Buy scheme (started in 2013 and where the Government underwrites part of the mortgage for the first time buyer, meaning they can obtain a 95% mortgage) ends in April next year, yet the Tories indicated at their conference last month they would probably create ‘Help to Buy – Part 2’.

The bottom line is in the early 1980’s and 1990’s recessions, when interest rates were over 15%, obviously homeowners couldn’t afford to keep up the mortgage payments when made redundant or on lower wages, so many handed in their keys to the banks and got their homes repossessed, thus exacerbating the issue with falling property values.

However, with interest rates so low, this will not be the case. I envisage that UK property prices will be between 4% to 5% higher by December and Crediton values just behind that at 2% to 3% higher, before levelling out in 2021 (although we might see a modest dip in certain sectors and types of Crediton homes depending on location and condition).

I suspect those Crediton first time buyers, eager (and able) to break free the rental-rat-race will want to take up the anticipated ‘Help to Buy – Part 2’ scheme, particularly if the BoE base rate stays low. The other winners in 2021 will be low mortgage/equity rich households upsizing to the countryside or leafy suburbs to test out their boss’s promise of ‘flexible-working’.

Yet the losers will be the 18yo to 29yo renters … most likely to be made redundant and least likely to buy a home.

My advice to the Government for this cohort is to not ignore them once the country is out of this coronavirus situation. It’s all very good keeping the Home Counties Tory voting Baby Boomers happy with green belt policies and other policies to keep their property values higher, yet as the Generation X and Millennials get older and take over as the largest demographic to keep happy (for the polls), the hitherto inconceivable action of the Government levying Capital Gains Tax on your main home may come to fruition.

I mean, we have £400bn to pay back because of coronavirus … it has to be repaid and it has to come from somewhere. Those denied real access to buying their own home in the last 10 years, because of massive house price gains over the last 25 years, could vent their anger via the ballot box — if not at the 2024 General Election, maybe in 2029, when they realise that the futile housing policies of both Labour and Tories of the last 23 years have left them with enduring financial diffidence.

Maybe we should all look to the grocer’s daughter from Lincolnshire who in 1979 set out a bold vision of home ownership for everybody. Whichever political party truly picks up the batten and reframes it for the current 2020’s generation and comes up with the goods, will be the ultimate winner in this game.

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Lockdown Update for Sellers and Buyers in Devon

In this two-minute read, we look at what the announcement on Saturday by Prime Minister Boris Johnson means to home sellers and buyers in Crediton and surrounding areas.

On Saturday we received confirmation England will go into lockdown from Thursday, November 5 until at least December 2.

So, how will this affect people in the process of moving or thinking about selling in mid Devon?

Well, firstly it’s good news from a property moving perspective because the Housing Minister Robert Jenrick confirmed in a tweet on Saturday evening that the market was still very much open for business.

QUESTION:

‘Can I still move home?’

ANSWER:

Absolutely Yes – the housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance.

The Minister’s tweet linked to an information guide about the new lockdown which you can find at the bottom of this article.

At Helmores we continue to work hard for our sellers and buyers in a Covid-19 secure way, while strictly following the regulations laid out by the Government.

Yes!

We offer virtual tours and carry out video valuations.  Most of our properties already have interactive digital tours.

We will still conduct safety first viewings using PPE, hand sanitisers and social distancing.

We will continue to progress all current and new sales as per usual.

And we will keep everyone we work with updated about any changes that may happen.

Here for YOU

We appreciate this is an anxious time for many of our clients and that’s why we want you to contact us if you have any questions, concerns or need to get a better understanding of what’s happening.

As we were in the first lockdown, we are 100 per cent committed and focussed on doing the right things for our clients, our colleagues, and our community.

Thanks for reading.

PS: Here’s the Government article:

https://www.gov.uk/guidance/new-national-restrictions-from-5-november

Copyright: Helmores

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Crediton’s ‘Generation Rent’ to Become ‘Generation Buy’?

Boris Johnson has attracted both praise and horror in equal measure with a new plan for 95% mortgages to help beleaguered first time buyers to get on the property ladder, but would that expose UK taxpayers to too much risk? In this article I discuss the implications of what that would mean both nationally and locally in Crediton.

With the Crediton property market taking off due to the stamp duty holiday introduced in the summer, Boris Johnson announced at the recent Tory Conference a plan to offer first time buyers long-term low interest rate 95% mortgages (meaning they would only need to raise a 5% deposit). Yet when someone borrows more than 75%, the banks normally take out insurance in case the buyer defaults and the bank lose money if the property gets repossessed.

When the economy is good, the risk is low – so the insurance premiums are also low for the banks – meaning they are happy to lend high percentage loans. Yet, nobody could deny we are entering a period of uncertainty in the coming 12/18 months, meaning the insurance premiums for the banks have gone through the roof.

Mortgage companies have avoided riskier high percentage first time buyer mortgages since the start of the Coronavirus predicament. At the end of February 2020, there were just under 400 95% loan-to-value mortgage products accessible for first time buyers, yet today that figure stands at just 26.

Another reason for removing the number of 95% mortgages was that the demand for lower percentage loans exploded after lockdown was lifted, and with many mortgage staff still working from home, the banks and building societies focused their attention on getting those (less risky) mortgages sorted first. Therefore, they removed the higher percentage loans from their books, so they weren’t swamped with too much work … so, one must ask, should the Government take on that risk from mortgage providers in the form of a guarantee from the Government – sparking concern among economists the Government is already burdened with debt – does it need anymore?

Yet taxpayers have been funding a similar scheme for years. The Help to Buy scheme, which allows first time buyers to buy a home with a 5% deposit (and the Government guaranteeing between 20% to 40% of the loan) has been in operation since 2013. Taxpayers are already guaranteeing £16.049bn of loans for 224,133 first time buyers, and when we look closer to home locally, since 2013…

369 first time buyers in Mid Devon have used the Help to Buy scheme to help buy their home, relying on the Government to guarantee them on average £45,017.

That means in Mid Devon alone, £16,611,273 is at risk if those Crediton homeowners’ default on those pre-existing Help to Buy Loans … yet the default rate is quite low.

So, should the Prime Minister be playing with the housing market? Ought he instead allow open market forces to be applied to the property market, allowing it to find its own normal and leave the mortgage providers to decide on mortgages based on risk, because all the Prime Minister will potentially achieve is a synthetic rise in property values?

Some in fact have argued it would be better to spend that public money on delivering affordable rental properties?

However, in the long run, isn’t it better for the country as a whole that British people own their home rather than rent because the Government will have rent to pay for those tenants when they retire if they are on the basic (low) state pension?

Personally, I don’t disagree with the initiative, yet all I am querying is, what are the Crediton first time buyers going to be able to buy? The Crediton property market is already quite drawn-out, as ultra-low interest rates have augmented the gap between the first home and the second home, the second home to the third and so on and so forth, so is this initiative fashioning a massive demand that will inflate property prices up the Crediton property ladder still further and ultimately lead to even more frustration down the line?

However, could this be the very thing that saves the Crediton property market in 2021?

Firstly, with the stamp duty holiday due to finish by the end of March, some people have suspicions that the property market will stall. And secondly, the very popular Help to Buy scheme mentioned above also finishes at the end of March 2021. This boost instead of fuelling house price inflation could stabilise the property market.

In fact, the Government are hoping the property market will help power us out of recession. The early signs are good as the Crediton housing market has exploded as a result of the stamp duty holiday introduced in the summer. It certainly needs to as the country’s GDP only grew by 2.1% in August, down from 6.4% in July, 9.1% in June and 2.7% in May.

As a country, our GDP is still 9.2% below the levels seen pre-Covid. With the property market doing well, the country remains on course to leave recession in Q3, yet with the impending triple peril of rising unemployment (after furlough), further lockdown restrictions and a messy end to the Brexit transition period does this mean we are potentially in for an interesting ride?

Only time will tell if ‘Generation Buy’ will help save the property market, the economy and ultimately Boris? In the meantime, I think it will be a safe bet that people still need homes to live in … and irrespective of what happens to the property market, with that simple fact, the winners in all of this will be Crediton buy to let landlords.

Tell me your thoughts on this…why not pop a comment below. I’d love to hear from you!

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What the Tier system Means to Landlords and Tenants in Crediton

In this two-minute speed read, we look at what the new tier system means for landlords and people looking to rent in Crediton

The tier system announced by the Government this week to combat the increase in Covid-19 cases has caused some concern from landlords and people who are looking to move.

The good news is that it shouldn’t.

This is because even in the highest tiered areas which the Government has said are at very high-risk, people can still move. Albeit with extra safety precautions which we’ve been practising since the lockdown.

In Crediton we are currently in Tier 1 – which is described as ‘medium alert’ and includes several guidance points including:

  • Businesses and venues can continue to operate, but pubs and restaurants must ensure customers only consume food and drink while seated, and close between 10 pm and 5 am.
  • Takeaway food can continue to be sold after 10 pm if ordered by phone or online.
  • Schools and universities remain open.

Even in high alert areas, Government guidelines say you can still move home.

According to a statement on its website on Friday 16 October, the Government advised: “You can still move home if you’re in a medium alert level area. Estate and letting agents and removals firms can continue to work, and people looking to move home can continue to undertake viewings.

Follow the national guidance on moving home safely, which includes advice on social distancing and wearing a face covering.”

Our priority is your safety. And that’s why we have the following measures in place to allow us to show people rental properties they are interested in.

Here are six of our Covid-secure steps.

  • We wear masks on all viewings.
  • We wear disposable gloves on each viewing – these are only worn once then recycled.
  • We carry and use hand sanitiser before and after each viewing.
  • We will be the only people to open or touch handles or cupboards.
  • We will wipe down any surfaces touched after the viewing has finished.

Everyone has a part to play in helping us all get back to normal as soon as possible, and we take our responsibility to keep you safe very seriously.

So, we’ll be following the guidelines and updates daily. And we’ll continue to help people move homes safely, securely, and successfully.

If you are a landlord or tenant in Crediton or surrounding towns and villages and have any questions about what the tier system might mean to you, please get in touch.

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Why Landlords Need to Keep Calm and Carry On (in a Business-Like Way)

Crediton Landlords

In this three-minute read, we look at why a landlord needs a professional mindset, and what can go wrong if emotions cloud your judgment.

There’s a line in the classic film The Godfather that neatly sums up what landlords need to know about letting properties. “It’s nothing personal, Sonny. It’s strictly business,” drawls a brooding Michael Corleone as he plots a daring and ruthless double hit.

Now, here at Helmores, we’re law-abiding citizens, so we’re certainly not suggesting you become a cold-blooded Mafia boss or fraternise with Sicilian mobsters. But we do recommend that Crediton landlords take a business-like approach when they let a property.

One of the biggest mistakes a landlord can make is to allow their personal feelings to impede their decision making; this often happens when:

  • A landlord has a strong emotional attachment to a property (perhaps they used to live in it, or inherited it from a loved one). When a tenant moves in, the landlord views every minor scrape to the woodwork or carpet stain as a personal affront. Landlords need to accept that some wear and tear is inevitable.
  • A landlord has carried out DIY work at the property to their own taste instead of keeping things neutral, making it less appealing to tenants. They may also see no need for electrical and gas safety inspections because they’ve “had a look over it themselves”. Fact: gas and electrical inspections are legal requirements.
  • The landlord knew the tenant before they moved in, so the professional boundaries are blurred. Things often go awry because the landlord hasn’t conducted a reference check (because a friend or family member has vouched for the tenant). Even worse, some landlords don’t make their tenants sign a contract; it’s all done on a wink and a handshake.
  • The tenant/landlord relationship grows too cosy over time. As a result, the landlord is lax about inspections or hasn’t raised the rent for years because the tenant is a “friend”.
  • The tenant/landlord relationship becomes so toxic that the landlord loses perspective. (As they say in The Godfather: “Never hate your enemies. It affects your judgment.”) Determined to settle a score with a nightmare tenant, the landlord cuts corners on inspections or evictions – a decision that later proves costly. Sometimes the most financially astute course of action is to compromise (even if it is through gritted teeth).

Being a landlord isn’t just about managing a property; it’s about working with people. Whether it’s dealing with a tenant who has lost their job and can’t pay their rent, or managing a messy dispute between a tenant and neighbour, you need to remain calm, clear-headed, and professional.

Landlords don’t have to be unsympathetic or insensitive but do need to balance their duty of care with their financial responsibilities.

One way to manage these difficult situations is to draw on the expertise of us, we will be able to:

  • Come up with workable solutions to all manner of problems (as experienced agents we have seen all sorts over the years).
  • Ensure landlords stay on the right side of the law.
  • Talk to people from all walks of life and clearly articulate a tenant’s legal obligations.
  • Step back from complex scenarios and take a broader view.

Here at Helmores, we can take the stress, emotion, and guesswork out of managing a property. Please get in touch if you’d like us to help you.

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Why are some Banks reining in enthusiastic Crediton homebuyers and buy to let investors?

The UK property market is an enigma and chock-full of contradictions.

Notwithstanding an economic recession and forecasts of property values dropping, nobody seems to have informed the Crediton homeowners selling their homes and those Crediton people looking to buy them. As I have discussed in many recent articles on the locality, the Crediton property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.

However, before we talk about the banks and surveyors, let’s look at what is happening in the Crediton property market now.

Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.

The average value of a Crediton home rose by 3.3% in the year to June to £299,100

Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Crediton property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.

Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘re-tuning the asking price’ — as in, the homeowner removing the property from the market, ‘re-tuning the asking price’ in an upward direction, then placing it back onto the market.

Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell. So, let’s look at what is happening to the Crediton property market (Crediton plus 1 mile) by house type and the number of bedrooms:

 Number of Crediton properties
on the market
..and of those –
how many are Sold STC
% Sold STC
compared to those for sale
Detached House773748.1%
Semi Det House181266.7%
Terraced/ Town House432455.8%
Apartment281657.1%
Bungalows282382.1%

And when we look at the number of bedrooms:

 Number of Crediton properties
on the market
..and of those –
how many are Sold STC
% Sold STC
compared to those for sale
Studio/1 bed201470.0%
2 beds422661.9%
3 beds613760.7%
4 beds522751.9%
5+ beds22940.9%

As you can see, the best performing type of property in Crediton is the bungalow and the best-selling properties when it comes to bedrooms are studios/1 beds.

These are quite impressive figures for the Crediton property market, yet it seems some banks are having none of it

They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage). 

It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages — and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).

One small note to landlords: I am also hearing that some overzealous buy to let landlords who are over-egging the potential rental figures on their buy to let purchase in order to obtain the mortgage are also being reined in by the banks.

 Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).

The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Crediton property.

If you would like a chat about any aspect of the Crediton property market – please do send me a message or pick up the phone, I’d love to hear from you 🙂

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Ten Things Landlords in Crediton Need to Know

If you’re contemplating becoming a landlord, here’s a helpful checklist explaining what it takes to let a property.

You may wonder why a checklist is necessary. After all, how hard can it be? You buy a property, find a tenant, and boom, you’ve got the whole landlord game figured out. Wrong! 

The private rental sector is subject to so many rules and regulations that even experienced landlords get caught out and make costly mistakes. 

Here’s what you need to know.

1 Legal matters – There are at least 175 laws that apply to landlords in the UK, covering everything from evictions to electrical checks. You need to be on top of all of them.Claiming ignorance (or that the dog ate your tenancy agreement) won’t get you off the hook if you get caught out.

2 Record keeping –It’s vital to maintain a clear paper trail so that if you get into a dispute, you have evidence to support your case. If you’re the kind of person who files important paperwork down the back of the sofa, consider getting someone to do it for you. 

3 Vigilance – No matter how nice your tenant seems to be, regular inspections are a must as they allow you to nip problems in the bud. Lax landlords run the risk of discovering that their property has been sub-let, trashed in a series of all-night parties or, holy smoke, turned into a cannabis farm.

4 Take out insurance – We’re not talking about standard home and contents insurance, but specific landlord insurance. (It’s usually a condition of buy-to-let mortgages.) Various policies are available, ranging from top-tier versions that cover almost every eventuality, to no-frills options.

5 People management –Dealing with people is a major part of being a landlord. Most tenants are reliable and honest, but some, unfortunately, can be infuriating. If a tenant falls into the latter category, you need to remain cool-headed when dealing with them. Good landlords make business decisions, not emotional ones.

6 Maintenance –Routine maintenance stops minor issues becoming major structural problems. It helps to have a network of reliable tradespeople who you can call on when you need work done.

7 Tenant selection – Invest time at the beginning of a tenancy to find the right tenant. Never rush the process when it comes to reference and credit checks.

8 Tax implications –The tax rules covering rental properties have been significantly reformed in recent years. It’s worth getting advice from an expert to ensure you understand what you need to pay and what you can claim back.

9 Understand the market –Successful landlords in Crediton understand the lie of the land, so that when it comes to setting the rent, they are bang on the money. Getting the price right means your property won’t be sitting empty for long periods.

10 Back-up – Good landlords don’t blunder their way through – they have back-up in the form of a reputable letting agent. If you want support dealing with complicated legislation, handling problematic tenants and managing day-to-day admin and maintenance, get yourself a good letting agent. Remember, mistakes can be costly.

Here at Helmores we can help you to become a successful landlord and to see healthy returns on your property investment.

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Evictions – An important update for landlords in Crediton

are buy to let landlords to blame

On Friday it was announced by the Government there is now an extension on the ban on landlords evicting tenants in England and Wales.

The new ruling means landlords will have to legally wait until 20 September to begin proceedings using the eviction process. Landlords will now have to give tenants six months’ notice of eviction, before the pandemic struck it was usually two months.

It was a last-minute measure by the Ministry of Housing, Communities and Local Government as the original deadline for evictions to begin was today, Monday 24 August.

The original regulations were put into place back in March shortly after the Covid-19 lockdown began. It was a move to protect genuine cases of tenants struggling to pay their rent due to the outbreak.

Speaking to the BBC on Friday, Housing Secretary Robert Jenrick, said: “I know this year has been challenging, and all of us are still living with the effects of Covid-19. That is why I am announcing a further four-week ban on evictions, meaning no renters will have been evicted for six months.

“I am also increasing protections for renters – six-month notice periods must be given to tenants, supporting renters over winter.

“However, it is right that the most egregious cases, for example, those involving anti-social behaviour or domestic abuse perpetrators, begin to be heard in court again. So, when courts reopen, landlords will once again be able to progress these priority cases.”

The final part of his statement was notable for landlords already under pressure. It means the prioritisation of the most serious cases, including those landlords who have not received rent for over a year.

At Helmores we’ve always believed and advised our landlords that taking eviction action is a last resort.

Over the past five months, we’ve been focussing on proven techniques to reduce the risk of landlords and tenants having to go through the stress, cost and anxiety of the eviction process.

We’ve been:

  • Keeping in regular contact with tenants to spot and help if possible, with any affordability issues.
  • Helping our landlords understand any rent insurance policies they have in place.
  • Talking with tenants about their legal responsibilities, which have remained the same during the lockdown and beyond.
  • Working with landlords and tenants to come up with acceptable payment plans if necessary.

There are several other things we’ve been doing behind the scenes as we work hard to avoid the worst-case scenario. But we are fully prepared and ready if it does get to that point.

If you are a landlord and have questions around what the eviction ban extension means to you, call us, and one of our lettings’ experts will be on hand to answer them.

Thanks for reading 🙂