Tax Changes To Render Many Landlords Unviable

Recent tax changes could tip many profitable buy-to-lets into loss-making businesses, according to a new report by Standard & Poor’s. The report says those who have invested since 2014 will be hardest hit, with six out of 10 of these landlords potentially looking at unviable businesses by 2021 – when these tax changes are fully implemented. This compares to just 4 per cent of the 160,000 buy-to-let loans it analysed, the vast majority of which were taken out between 2002 and 2016. These changes will cut profits by around a fifth by 2021, with the biggest impact expected to hit BTL investors in the South East and London. Read more on the Mortgage Strategy website.

https://www.mortgagestrategy.co.uk/tax-changes-threaten-profitability-six-10-recent-landlords-sp/

Grenfell Council Gained £50m From Affordable Housing Deals

The council that ran the Grenfell Tower block struck deals worth nearly £50m last year to allow developers to avoid having to build affordable homes. Kensington and Chelsea's own analysis shows it has built a fraction of the social housing the borough needs. Developers can pay a fee if they can convince the council that affordable homes would make their plans unviable. The council said it struggled to build affordable homes in a crowded area. Read more on the BBC.

Two And Three-Bed Buy-To-Lets 'Will Become Unviable'

Two and three-bed buy-to-let properties will become more difficult to buy under lenders' plans to apply far tougher checks on landlords. Landlords with traditional 25pc deposits will be unable to buy property in 91pc of areas if all lenders go ahead with plans to increase the amount of rent which is required to cover their mortgage payments.  The analysis also suggests that more than half of landlords who bought three years ago with a 25pc deposit will be unable to remortgage under the new tougher conditions - forcing them to sell, pay down the debt or increase rents. Lenders have already tightened requirements for buy-to-let borrowers, motivated by the Bank of England's consultation in March, which made income checks more stringent. Read more on the Daily Telegraph website.

Underused Office Blocks Offer 'Thousands More Homes'

Measures put to parliament clear the way for thousands of new homes in underused office blocks. The measures make planning flexibilities allowing such conversions permanent from next month. The government pitches the move as helping provide thousands more homes.  However, at the National Housing Federation’s Land and Planning conference, office to residential developments were criticised.  Due to the increase in land value due to it being a residential plot of land, it makes building ‘affordable’ housing near impossible.  Most sites would be unviable for developers to include ‘affordable’ homes. Read more on 24dash.

Sheltered Housing Developments 'Shelved Due To Benefit Cuts'

Hundreds of planned new sheltered accommodation units have been delayed or scrapped owing to proposed cuts to housing benefit. Several housing associations have said they are no longer financially viable. The flats, for the elderly or people with learning disabilities, are more expensive to build and run because they provide additional support. Ministers say they are reviewing the sheltered housing sector "to ensure it works in the best way possible". The National Housing Federation has calculated that nearly 2,500 units have so far been scrapped or delayed as sheltered housing providers face losing an average of £68 a week per tenant. Read more on the BBC website.

Protect Housing For Vulnerable People

CIH is urging Chancellor George Osborne to use next month’s (March) Budget to exclude supported housing from plans to cap housing benefit for social housing at Local Housing Allowance (LHA) rates (the amount of housing benefit people living in the private rented sector are able to claim). CIH’s budget submission details the potential impact on people who live in supported housing and the social landlords which provide it. One local authority estimated that new tenants in one of its extra care schemes would be left with a shortfall of up to £67 a week. A social landlord with a large care and support arm estimated that it will cost them upwards of £18m a year – making schemes unviable – while another said it would be left with a £9.5m shortfall. Read more on the CIH website.

Developers 'Escaping Affordable Housing Rules'

Developers are deliberately paying too much for land to escape affordable housing obligations, the London Assembly planning committee has warned.  In a letter to Boris Johnson, the committee urged the mayor to introduce new rules for the valuation of land and encourage councils to reject applications that do not adhere to planning obligations. The planning committee alleged that some house builders are intentionally paying too much for land, in order to then make a case that the provision of affordable housing is unviable. Under section 106 planning agreements, developers can argue for a lower level of affordable housing in their schemes if they are able to show that meeting the local authority’s required level of affordable housing is unviable. It also expressed concerns that they are “overvaluing their costs and undervaluing the final scheme’s value”. Read more on the London Assembly website.

Mortgage Rate Rise Would Make Buy-To-Let 'Unviable' In 7 Out Of 10 Regions

Britain’s two million buy-to-let investors are already anxious about what tax changes might do to their property holdings under a new government, as even the Conservatives have been less than supportive. But possibly far more threatening  is the risk of a rise in interest rates. In recent years lenders have been focusing attention on buy-to-let, one of the only points of growth in an otherwise stagnant mortgage market. As a result rates have fallen to all-time lows. But this has coincided with a period in which property prices have risen, in general, far faster than rents. As a result, yields have dropped to record lows. It leaves some landlords – particularly those who have bought recently and borrowed the typical maximum of 75pc of the price – vulnerable to even modest rate increases. Read more on the Daily Telegraph website.