Here comes 2015 ! House Price Rises Slowing - Pension Reforms in April - General Election in May - Talk of Interest Rate Rises - Immigration Checks

It is expected that confidence in the health and security of the buy-to-let (BTL) market will lead to an increase of investment next year, despite the fact that more than half of investors believe that interest rates will rise during 2015 according to a recent survey of UK BTL investors. Despite the threat of a hike in rates this hasn’t dampened the spirit of landlords, as 43 per cent intend to expand their portfolio during 2015. Of these, 23 per cent plan to purchase one additional property and 14 per cent are expecting to buy two or more BTL houses over the next 12 months. Landlords are still feeling confident about capital growth, despite recent reports suggesting the housing market is slowing down.

We have advised a number of landlords in 2014 especially those looking for their first ‘safe’ BTL purchase. The first purchase can often be a mistake if the right research hasn’t been carried out and the purchase is made with the heart rather than the ‘business’ head. This is an investment from which you will expect a healthy return and this starts at the purchase price and location. All of our new investor landlords paid below the asking price for their first BTL investment this year. We are not in a market where the asking price is the minimum price expected.

Reports in the press stating house price rises are usually distorted by including London prices, but even so in the last 12 months Dunstable, Houghton Regis and Leighton Buzzard have seen an average price rise of 8.5%. This s partly due to the inflated London prices pushing both buyers and investors out of London where the rental yields have fallen as house prices rose. We see many tenants who have lived in London and having decided it is too expensive have looked outside the M25. Hemel Hempstead, St Albans, Harpenden are all places they would love to live, but the asking prices for rents is extortionate. Once they reach Dunstable and Luton the rental prices drop considerably and for this reason the number of available rental properties especially in Dunstable has fallen dramatically this year. This makes Dunstable an ideal area for an investor to purchase a Buy-to-Let property.

House prices

The pace of house price growth has moderated in recent months, activity has slowed more sharply, with the number of mortgages approved for house purchase falling to their lowest level for 16 months in October (and 22 per cent below the level prevailing at the start of the year).

The slowdown in housing market activity is surprising given the reported steady gains in employment, a pick-up in wage growth and the continued low level of mortgage rates. The recent stamp duty changes should also have a positive effect in time.  

A third of retirement savers consider buy-to-let

According to analysis by Direct Line for Business, pension regulation changes are making a third of retirement savers to consider investing in buy-to-let property

Research among a representative sample of 829 adults with a pension aged between 45 and 64 – found 32% of respondents said they would consider using some or all of their pension pot to fund the purchase of a buy-to-let property as an alternative to a traditional pension

General Election in May

There is no doubt that should a Labour Government come to power in May they will introduce a ban on Letting Agents fees to tenants.

This is already the case in Scotland and it can be no coincidence that Scotland has seen some of the highest rent rise in 2014. If the full cost of the service provided by a Letting Agent is to be covered by the Landlord this will inevitably be passed onto the tenant in higher rents which over time will cost the tenant more than if he paid a fee at the beginning. Something now proven in Scotland.

New immigration checks in 2015

Many Landlords are not aware or do not fully understand the new immigration checks they are being required to undertake and those already doing so are not happy about it.

Landlords in the West Midlands are already compelled to check the immigration status of would be tenants under a pilot scheme that is set to be rolled out across the country next year.

 The pilot in the West Midlands will hopefully iron out many of the issues and when the new rules are rolled out nationally in 2015 we will all hopefully feel more comfortable with what is required of us.

The Immigration Act requires landlords to check whether prospective tenants are in the country legally.  Landlords will have to see ‘evidence’, for example a passport or a biometric residence permit, an official form of identification provided by the Home Office. Non-compliance will mean that landlords could face a £3,000 fine.   The new rules will require landlords to check whether potential tenants and occupants over 18 have a ‘right to rent’ before entering into a new tenancy agreement. All adults who will occupy the property as their main home, not just named tenants, should be checked. If they turn 18 during the tenancy, no initial or follow up checks are required. These rules apply to new tenancies only. Renewals are excluded if all parties remain the same and there has been no break.