Streetwise Property Alert

London – Supply & Demand

The Centre for Cities new report, 2013 Cities Outlook, draws attention to the reason why property prices will keep rising, especially in London; it’s down, as you’d expect, to supply and demand. Since 2001, the report suggests that the price of the average London home has gone up by £206,000; that’s pretty much a doubling of prices.

‘Current government forecasts suggest that we need to build 232,000 new homes per year in England alone to keep up with projected household growth while a separate projection puts this number as high as 290,500.’

‘House building in the UK as a whole has only exceeded 232,000 once in the last 30 years. The reduction in the building of new homes since the post-war boom, combined with rising demand for homes, has contributed to a sharp rise in house prices; the sold price of a home has increased by around 300 per cent (accounting for inflation) since 1959.’ Wherever you are investing, look at supply, demand and that pipeline of new supply. More at: www.londonpropertyalerts.co.uk

Tenancy Advice

We’ve had some editorial – more like advertorial to be honest – come in from www.nolettinggo.co.uk That’s not to say it’s not a useful read! ‘It’s always a situation you hope, as a landlord, you don’t have to deal with – when a tenant leaves early. Not only do you have the issues of finding another tenant you also have the potential legal issues to deal with surrounding the tenant’s leaving.

First things first: you should have in your tenancy agreement a clause that covers such an occurrence. This is vital – especially if the tenant’s leaving turns into a legal dispute. When a tenant puts in a request to terminate and leave early from a fixed term tenancy it is essentially a negotiation between them and the landlord. (The issue is clouded if there is one tenant leaving, leaving others behind and this would be covered by ‘Surrender in Part’ and is a slightly different issue). What to do when a tenant leaves a tenancy early?

A landlord is not obliged to let a tenant break the terms of the tenancy but it’s often common sense to negotiate. You need to calculate any loss of fees you may incur – which in itself may be disputed –  or whether your clause for early termination has an actual penalty value to cover the costs you will have to carry and is one agreed by the tenant when s/he signs the contract.

A leaving tenant may also find the landlord a replacement tenant. Do not at any point say yes to the new tenant without carrying out your usual vetting procedures. They may be a perfectly good tenant but they aren’t taking over the tenancy as theirs will be a fresh contract.

This situation is going to occur so it’s more of a situation of how you handle the transition. By working with the leaving tenant you will part on good terms and avoid any missed rent payments. It’s always wise to talk since any costs you incur funding a replacement will have to be borne by the leaving tenant (or, if you have a penalty clause, the costs will be covered by that).

When a tenant decides to leave a property is something of a legal grey area. There is no legislation covering this eventuality and landlords need to set the terms for early termination, notice of termination and how the notice is served. This is purely a contractual matter between landlord and tenant.

This termination date needs to be agreed. You should get a proper ‘Surrender of Tenancy Letter’ which will act as a written document and which will then be proof that the tenant has given up possession of the property to the landlord. If the tenancy agreement between landlord and tenant does not have a break clause and the landlord refuses to accept the termination notice then the tenant is contractually liable to pay the remaining rent balance for the fixed term tenancy.

This is where the art of negotiation is necessary. If there are seven months remaining on the tenancy then you could both settle on four months rent as a settlement to quit. For more information and advice about how to deal with one tenant leaving during a tenancy, contact the UK’s premium provider of landlord services call 0800 8815 366 or go to www.nolettinggo.co.uk.

Prime Property News

We’ve been looking at the latest Knight Frank findings regarding prime country house, Knight Frank state that house prices in this sector fell 1.2 per cent in Q4 2012 meaning an annual decline of 3.8 per cent. As always though, look beyond averages. Oxford, for example, saw a rise of 3.3 per cent over the year.

‘The prime country house market has been under pressure in the last 12 months with concerns over the impact of increasing stamp duty. Overall, stock and viewing volumes are up across the board but buyers have become even more discerning, taking their time to select only the finest homes, in prime locations such as Oxfordshire.’ Interested in this sector? Do check out www.investmentpropertyalerts.co.uk for more coverage.

HMRC – Latest Warning

I’m not sure how many of these we’ve put out over the past 10 years. I’ve lost count! Anyhow, HMRC has just announced that it has set up a specialist task force to recover what it states is some £4m in tax from buy-to-let investors in the South East who have not disclosed this income.

You can expect to ‘see tax officers visiting landlords to examine their records… there is evidence of high risk of tax evasion…HMRC will typically target groups of up to 300 individuals.’ Be ready if you are a BTL investor in the South East and, reading between the lines, have taken out BTL mortgages or remortgages this past year.