HMO - Issue 31 - February-March 2022

58 Pages·2022·20 MB·English

THE GO-TO MAGAZINE FOR HMO LANDLORDS, INVESTORS AND DEVELOPERS
ISSUE 31 FEB / MAR 2022 І £4.99 І WWW.HMOUK.ORG
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In this issue:
INVESTMENT SALES TAXATION
Savoys look at why HMOs are Richard Nicholls, Director Vincent Burch gives some
the only investment properties at The Property Advantage, top taxation tips to help you
you should be buying for 2022. assesses the key variables to get it right fi rst time.
watch out for when selling
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Property
Finance
A
B
C
Confronting D
the EPC E
F
Challenge
G
From 2025, newly rented properties may
efinance
require an EPC rating of C or above.
Our new whitepaper – Confronting the EPC Challenge – analyses the
proposed EPC regulations and the impact this legislation could have.
A 14%
B
C
D
E
27%
23% F
G
23% of landlords surveyed 27% of landlords don’t 14% don’t have funds
say their properties are know the EPC ratings of available to pay for
rated D or below their rental properties improvements
Download Confronting
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the EPC Challenge today
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EDITOR’S WELCOME
Feb / Mar 2022
CONTENTS
FROM STRENGTH
TO STRENGTH
42
As we end the first quarter of
6 News In Brief
The substantial growth of the 32 2022, the HMO property market
buy-to-let sector since 2017. is moving at a blistering pace.
8 News In Brief 22 Taxation The market has been going
Racism in student accommodation. Financial consultant Vincent Burch
from strength to strength where
gives vital tax advice for HMO
landlords and investors. demand has continued to
9 News In Brief
outstrip supply.
The tenant stamp duty that could
prove costly for renters. 24 Co-Living
Stephen Fahy from LOFT examines
If you were ever on the fence
the impact of PBSL on the
10 Property Management Co-living sector. about investing in the HMO
Ed Mead takes a futuristic insight at
property market, this would
managing your property asset in
2030 and the infl uence of 26 Tenants seem like the perfect time
technology. Jim Haliburton explains how in 30
to take the plunge. A poll by
years he has never evicted a tenant
who could not pay the rent. flatshare site SpareRoom of
11 Utilities
6,206 respondents reveals that
Iain Clarke looks at your HMO
being energy effi cient and 28 Student Accommodation more than nine in ten (96%)
enviromentally friendly. Sam Chick gives some top tips
people who are currently looking
on how to build a successful student
accomodation portfolio. to move are struggling to find
12 Technology available rooms.
Iain Drudy examines how virtual
viewings can save you time 32 Investment
and money. HMO specialists Malkit and Sanjay The UK is getting back to
show why you should be only
investing in HMOs for 2022. normality, and this has created a
14 Sales storm in the rental market, with
What is the real value of the HMO
demand outstripping supply
resale market? Richard Nichols gives 36 Interview
his perspective on what you can Savoys Properties interviews Tex for the first time since before
expect for 2022. Jones, Managing Director of Jones
the pandemic. If there are any
Real Estate Property Group.
questions, queries, views or
15 Case Study
opinions that you may have,
EP Property Solutions give a start-to- 42 Landlord of the Month
fi nish breakdown of their six-bed Every month HMO picks a please contact me at:
ensuite HMO in Derby city centre. landlord of the month, and this
csimon@ hmouk.org
month it’s Mark Harvey.
16 Investment
What’s the real value of your 44 Property Soft ware
investment in the HMO sector? Andy New proptech fi rm COHO raises To your success,
Graham looks at the factors that £275k for unique property
aff ect your HMO long term. management platform.
46 Property App
20 Property Management Property Investor app creator Arsh
Rick Gannon gives 10 top tips on Elahi gives an insight into the
dealing with demanding tenants property sourcing tool that is
in your HMO. sweeping the market.
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NEWS IN BRIEF
Buy-to-let sector value up £239bn since 2017
R
esearch from specialist it sits top where the total worth of the tenant eviction ban and a reduction
property lending experts, buy-to-let sector is concerned at over in rental demand across our major
Octane Capital, has £500bn in value. cities, in particular.
revealed that the UK’s buy-
to-let sector has grown substantially The South East is home to the next “Despite all of this, the sector has
in value over the last fi ve years, most valuable buy-to-let market stood tall and continues to provide
increasing by almost £240bn. at £247bn, with buy-to-let values the vital rental market backbone that
also exceeding £100bn in the East so many are reliant on.
Octane Capital analysed the level of of England (£168bn), South West
privately rented stock across each (£156bn), the North West (£110bn) “At the same time, the nation’s
region of the UK in relation to current and the West Midlands (£104bn). landlords have benefi ted from
market values to fi nd the total worth a considerable level of capital
of the buy-to-let sector. They then Largest uplift in buy-to-let market appreciation on their buy-to-let
compared this buy-to-let bricks and value investment and the value of the
mortar value to 2017 to reveal how it sector as a whole has increased
had changed over the last fi ve years. While the level of privately rented substantially.
homes has remained largely fl at
Current buy-to-let market value across the UK over the last fi ve years, “Let’s just hope that whisperings
the total value of the buy-to-let sector of a higher rate of capital gains tax
Their research shows that there are has seen a signifi cant boost due to remain just that, as any further
an estimated 5.5m private rental strong house price growth. increase could spur a reduction in
properties within the UK rental available stock, causing the total
sector and based on current market Octane Capital estimates that the value of the market to decline in the
values, Octane Capital estimates the UK’s buy-to-let market has climbed process.”
total value of the nation’s buy-to-let by £239bn since 2017, a 16.8%
stock to be £1.7trn. increase. Data on total number of private
rental properties sourced from Gov.
With just over 1m private rental While London house price growth uk - Live tables on dwellings stock
homes, the London market accounts has lagged behind the rest of the (England), Gov.wales - Dwellings
for 19% of the UK’s total buy-to-let UK, the capital has still enjoyed the stock estimates (Wales), Gov.
properties. With the capital also largest uplift in buy-to-let market scot - Housing statistics: stock by
home to the highest property values, value with a £57bn jump, followed by tenure and Communities-ni-gov.uk -
the South West (£34bn) and the East Housing statistics (Northern Ireland).
of England (£27bn).
Average UK house price data
CEO of Octane Capital, Jonathan sourced from Gov.uk - UK House
Samuels, commented: Price Index (November 2021 - latest
available).
“The Government has tried its
hardest to dampen investment into Total estimated sector value based
the private rental sector in recent on the total number of dwellings
years, with a string of legislative multiplied by the current average
changes around tax relief, stamp house price, with fi ve-year change
duty and tenant fees reducing compared to the same totals in 2017.
the profi tability of buy-to-let Total UK value is based on a sum of
investments. all regional values.
“The pandemic has also proved
problematic for some landlords
who have suff ered lengthy void
periods due to factors such as the
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NEWS IN BRIEF
Racism in their accommodation places,
research shows
T
he Higher Education by White flatmates and being own, or professional experience
Policy Institute (HEPI) has disproportionately challenged by in supporting those affected by
launched Living Black at security on-site, Black students racism,” the report reveals by also
University, a call for action surveyed have revealed, also revealing that most students rely on
to provide a more supportive system pointing out what a toll such social Afro-Caribbean Society or similar
for Black students in the United situations have on their mental ethnicity-based communities.
Kingdom. health and wellbeing.
Findings from the survey also
According to research commissioned About 28 per cent of Black revealed that Black students aren’t
by Unite Students and undertaken by respondents also said they don’t fully aware of policies promoting
Halpin, Black students don’t have an have access to culturally relevant equality, diversity, and inclusion
experience as positive as their White services, such as food. The survey in student accommodation (23 per
peers in terms of belonging, feeling also revealed that the lack of cent). In comparison, only 11 per cent
comfortable, and having a sense of diversity in university staff makes of White students agreed with such
safety and security, Erudera.com Black students hesitate to open a statement. This means that Black
reports. In addition, this research has up to their mentors. In addition, students didn’t know there were
put light on many other issues within about 25 per cent of Black students policies and procedures to tackle
the Black students’ community agreed with the statement, “My racism. Most Black students said they
by revealing they are impacted accommodation needs to be wouldn’t report racism to staff, which
by so-called microaggression in decolonised.” can happen due to the majority of
accommodation. More specifically, staff being White.
more than half of the students (64 per This inconvenient situation
cent) have confessed to witnessing causes almost 75 per cent of Black According to official data published
acts of racism, some of these stances students to report that racism in by the Higher Education Statistics,
being from staff members at their accommodation impacts their only one per cent of professors at
universities. Experiences discussed mental health. As a result, students UK universities are Black. More
in the focus groups included racial turn to family and other Black peers specifically, 155 out of over 23,000
slurs and racist language, and for support. professors are Black, and this figure
microaggressions such as touching has remained almost the same in the
hair. “Black students feel that the last five years. Moreover, an increase
distress caused by racism is not of only 50 posts has been noticed
However, this research also showed given due consideration by non- despite the fact that the number of
a positive remark as half of all survey Black counsellors who do not have professorships increased by more
respondents and 40 percent of Black either lived experience of their than 3,000 during that time.
respondents have witnessed staff
confronting racism. In addition, two-
thirds of students and 57 per cent of
Black students have witnessed other
students speaking up against racist
attitudes.
Furthermore, only 43 per cent of the
Black students in the survey said
they felt a sense of belonging in their
accommodation compared with 61
percent of White students.
“Incidents reported include racial
slurs and name-calling, being
excluded in social situations
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NEWS IN BRIEF
The TENANT stamp duty charge that could significantly
cost renters if ignored
L
ondon lettings and estate 3.8 years, aft er which point the tenant more or how much you might have
agent, Benham and Reeves, will be required to pay an estimated to pay, Benham and Reeves has a
has highlighted how the annual SDLT bill of £325. guide and SDLT rental tax calculator
nation’s renters could fi nd at: https://www.benhams.com/
themselves paying signifi cant In Westminster, the average annual calculator/stamp-duty-land-tax-for-
penalties due to a little-known law that cost of renting is £30,336 which means tenants/
may require them to pay Stamp Duty the threshold would be reached in
Land Tax (SDLT) despite not actually 4.1 years and the subsequent tax Director of Benham and Reeves, Marc
owning their rental property. bill would be £303 per year; while in von Grundherr, commented:
Hammersmith & Fulham, the average
SDLT has been a focus of the annual rent is £23,568 meaning the “Tenants might feel they already get a
mainstream media ever since the threshold would be met in 5.3 years rough ride - high rent payments, lack
Government introduced a reprieve and the tax bill would be £236 per year. of security in their home, none of the
in 2020 to encourage housing market freedoms that come with ownership,
activity during the global pandemic. With more people renting for longer and so on - so the idea of now having to
While renters may believe SDLT is portions of their lives, SDLT payments pay an ownership property tax is very
only a concern for those purchasing could become a more pressing unwelcome indeed.
a home, the truth is, since 2003, concern for tenants as the cumulative
residential tenancies have had the years in a tenancy agreement start “But unfortunately there is little they
potential to be liable for SDLT, but only to pile up. As such, all tenants need can do to change the situation should
when the cumulative rent exceeds to make sure they know one very they reach this threshold, so it’s vital
£125,000. important thing: when their tenancy that tenants who believe they may
agreement comes to be renewed, reach or exceed it are aware of exactly
In other words, when a tenant has, is the renewed contract linked what they owe and when.
under a continuous or successively to the previous one rather than it
linked lease, paid more than £125,000 being considered an entirely new “A good letting agent will be able to
in rent, they are required to start agreement? If so, the SDLT threshold advise on this matter, but the truth is
contributing to SDLT. To be precise, could soon be reached and they could that this law is so unfamiliar to most
they are required to pay 1% of the be liable to pay tax. that even your agent may not be
rent value as an annual tax. This tax fully aware of how it impacts you as a
must be paid separately from the rent For tenants, the idea of paying a new tenant.
payments via a declaration form SDLT1 tax is likely frustrating. Rent is already
to the Inland Revenue within 30 days very expensive, so additional costs In any case, this additional outgoing
of the date the tenancy commenced can be galling, and the extra time and may seem like the cherry on top of an
or the date the lease was executed, eff ort required to stay on top of SDLT already expensive cake, but failing to
whichever is earlier. payments is defi nitely a pain. However, address it could be far more costly.”
it’s important that all liable tenants do
While £125,000 sounds like a huge pay their SDLT tax on time because Average rent value data sourced from
number and a threshold most people otherwise, the relatively low cost of the the Offi ce for National Statistics (ONS).
are unlikely to break in the same tax will be replaced by a much more SDLT for tenants information sourced
rented home, it’s not as unlikely as it signifi cant tax avoidance fi ne from from Benham & Reeves.
may seem, especially in the London HMRC.
rental market.
If you’re worried about a potential
Across London, the average monthly SDLT rental tax and want to know
rent value is £1,597 totalling an annual
payment of £19,164. To reach the
£125,000 threshold would, therefore,
take 6.5 years. And once the threshold
is broken, the 1% annual SDLT bill
would total £192 per year.
In some parts of London, however,
this threshold is likely to be exceeded
in much less time than the 6.5-year
average. In Kensington & Chelsea,
where the average annual bill is
£32,544 per year, the SDLT rental
threshold would be exceeded in just
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PROPERTY MANAGEMENT І ED MEAD
How do you see running your business, or
asset, in 2030?
Suspect you’re hoping it won’t be the same as now.
A
s the generation actually money, if they let someone else take sure where it’s coming from and are
running assets moves from the strain. letting you know now they’ve finished
Boomers [born ’46-’64] their rounds.
through Gen X [’66-’80] Does this mean that Mx 2030 will be
to Millennials [’81-’96] and beyond, sitting at a console like the Starship Today’s possible workflow – you
their expectations and capabilities Enterprise? Well maybe, screens ask when they’re going back, next
will change – radically. This is mostly are the norm and voice control week. You ask the tenant if they have
as they’ll be used to doing things increasingly works – so let’s take a noticed, they either don’t respond,
remotely and trusting others to situation that might arise and see how are away, or don’t care. You look at
do what older people used to do you might deal with it in the future. your calendar and there’s no one
themselves, like collect takeaways At one of your properties, a cleaner scheduled to travel to the property or
or deliver groceries. They know they rings up and tells you there’s a patch carry out any sort of inspection. You
can have a more productive and less of damp on a carpet in the common ring your local plumber and get him to
stressful life, and probably make more parts, it’s 100 miles away. They’re not go round. He’s busy and can’t go for 48
hours and his call-out is £95 + VAT. You
get in the car and drive there – which
is a pain in the proverbial.
In 2030? – you get on your phone or
laptop and book a local inspector
to pop round at a set time later that
day or the following morning. You’ve
fitted a Bluetooth key safe and send
them a three-hour window code for
access. They pop round and call you
on WhatsApp and walk you round
the problem. You watch the whole
thing live from your chair. They find
the leak, turn off the stopcock and you
book a plumber to sort the next day.
All done in 24 hours at a nominal cost.
So, what’s stopping you – or is this
the way you do things already?
You certainly can now bring the
2030 experience into the present
with companies like Viewber. My
experience though is that until Gen
Y takes over, your bank balance and
mental health will continue to suffer …
neither have to.
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