Published: 07/12/2016 By W. TaperThere is a huge amount of going on in the residential sector at the moment. I will highlight a couple of the keys topics that are causing some very heated debates around the Willmotts water cooler.
We have seen over the last year many councils look to introduce licensing schemes. Here is West London, Ealing are introducing this in January 2017. Costs can vary from £600 to over £1000 for a license from the council to rent out your property.
A spokesperson for one council said:
"By obtaining a licence at a reasonable cost, landlords will be able to clearly demonstrate to prospective tenants that they meet required standards. So the introduction of a licensing scheme would not only bring benefits for tenants, local communities and council tax payers by reducing the cost of enforcement action necessary, it would also actually benefit landlords themselves."
We at Willmotts have been asked to apply for licenses in Ealing, West London on behalf of some of our landlords. What I can say is that it is one very large time consuming administration exercise. The cost in Ealing for the license is £1100 for some units. However, this does not include costs the landlord must pay for to comply with the license, such as floorplans, risk assessments, internal fire doors, fire blankets, electrical tests, etc.
With mandatory licensing, the changes in tax, many of our fantastic landlords are seriously thinking about leaving the residential sector altogether and moving their monies into other investments. They provide a brilliant service to thousands of tenants which may not be there in the future. The rouge landlords this is supposed to expose will not be completing or applying for these licenses they will simply continue under the radar while the council receives very large sums of money from very good landlords.
Landlords have been hit with an extra 3% in stamp duty charges thus making their BTL investments less desirable. Stamp duty also prevents a lot of first time buyers from getting on the ladder. One MP, John Stevenson suggest getting the seller to pay for the stamp duty, which is an interesting chain of thought. One building society says that by doing this then on average buyers would not have to pay £3,791 in stamp duty
He said : “Stamp duty should be flipped and rather than have the buyer pay it, the seller should pay it. The Exchequer would raise the same amount of money,
“Somebody who is downsizing is in a better position to pay and if someone has died the estate is also in a better position to pay. There is a financial argument that this will do nothing for the price of property because buyers will just increase the price of their property – that may or may not be the case – but people will be able to cover this because mortgages cover the purchase price but not the additional costs of buying.”
At the moment it seems the Chancellor is not bowing to mounting pressure to adjust the stamp duty. This new approach from Mr Stevenson may get some traction, but I will not hold my breath.
If you would like any help with licensing, investments, buying residential property, or would simply like to have a chat about the changing residential market please give me a call.
Director, BSc (Hons)
Residential Sales & Lettings
DDI: 020 8222 9904