What happens to a local property market when a city, town or region is told to go into lockdown?

In Aberdeen this week First Minister, Nicola Sturgeon, re-introduced lockdown for a period of seven days. But viewings will already have been booked for that period and transactions taking place.

The Scottish Government hasn’t put a hold on the property market functioning, but it has insisted that estate agents and others in the industry follow ‘best practice’ in terms of coronavirus guidelines. England, Wales and North Ireland will follow similar procedures.

This means estate agencies don’t have to close the local branch and they can still go ahead with viewing (provided it is socially-distanced with only one person per household and that everyone attending wears a mask). They stress that in the first place though viewings should be via video or online. Physical viewings are only appropriate for buyers or tenants who seem very likely to purchase or rent.

Thousands of landlords could be set to benefit from the government’s plans to change leasehold regulations.

Boris Johnson and his cabinet are reviewing the recent Law Commission’s reports which recommend, amongst other issues, cutting the cost of buying back additional years on a lease. This is referred to as Leasehold enfranchisement.

It will affect landlords of apartments and some New Builds – which are more likely to be buy to lets. In fact, the government has calculated that there are currently around 4.7 million leasehold properties that will be affected.

The Law Commission – an independent body – looked at three main areas of the leasehold system in England and Wales. These were leasehold enfranchisement,right to manage and commonhold.

They want to stop the recent practice of developers selling on freeholds to property investment companies – rather than offering it to the leaseholder first. In many cases this has resulted in the freeholder charging the leaseholder extortionate service charges and land rents.

England and Wales using antiquated system

Other proposed reforms include abolishing the leasehold system completely. So antiquated is the system – it dates back to 1066 – that England and Wales are currently the only two countries in the western world who still operate leaseholds.

Landlords with buy to lets north of the border already have Outright Ownership of their property. Scotland abolished leaseholds in 2004 – a fact that makes changes to the other parts of the Union all the more likely.

Right to Manage to cut service charges

The Right to Manage issue, if it goes through, will mean that landlords can choose who they want to service their property. This is possible at the moment but leaseholders have to pay the freeholder’s legal costs in order to achieve this. In future, this wouldn’t be the case.

Commonhold may be compulsory

Under the Commonhold system apartment owners or house owners in a development can vote to manage their own block – despite not owning the freehold. All they would need to enact this is the go-ahead from half the owners. Other proposed changes include making all new apartments and housing complexes Commonhold in future.

Landlords and other property investors will have to file tax returns under the Government’s new digital system in 2023.

The start date was announced recently and means that you’ll have to send quarterly updates of your accounts to HMRC and sign an annual ‘declaration.’ Sending reports can be as simple as pressing a button – but only if you already have a Making Tax Digital (MTD) account.

In order to sign up you will have to find software which is compatible with the government’s system. Right now, there are a number of software programmes which can do this and it’s likely that others are currently in development. If your property company is a partnership then you’ll have to find software that allows you to record the other individuals details too.

Exemptions ‘few and far between’

There are exemptions to the rules. If you earn less than £10,000, for instance, then you don’t have to open an MTB account. As far as landlords are concerned very few will quality, other than those who rent a room in their home and are eligible for a £7,500 exemption. You’ll also be exempt if you can’t get online due to your location, a disability or if your religion forbids you using a computer.

Penalties for non-compliance and late payment

Just like the old system there are deadlines and fines for late payment. Although – unlike the old system – late filing results in points which can be accumulated and then reset (like points on a driving licence). The first point is accrued after 15 days missed deadline. A penalty is issued after a certain amount of points have been reached.

Late payment penalties kick in after 15 days and double after 30 days. Interest is charged from the due date.  In the meantime, it’s believed the government will allow a year-long ‘grace’ period until users become familiar with the new system.

Those paying VAT at more than £87,000 pa are already using the system. Next year it will be the remaining VAT payers. The self-employed are being asked to file the same time as landlords and companies.

The government say they’re bringing in the new system to make errors in tax payment less likely. They have estimated the Exchequer lost around £8.5 billion for the tax year 2018 to 2019. It also means landlords, companies and the self-employed will have a better idea of how their business is going throughout the year – rather than waiting until they file annually.

North East letting agency My Property Box teams up with private equity to fund ambitious growth plans

Specialist letting agent My Property Box has teamed up with a private equity firm as it seeks to expand its operations into West Yorkshire.

The Darlington-headquartered company, which lets homes throughout the North East and North Yorkshire, is currently looking to gain a foothold in the Leeds area.

It is working with investment company Winch & Co, which will fund its expansion through the acquisition of other letting agencies in key target areas.

In a separate move, My Property Box is also in negotiations over the acquisition of a letting agent in North Yorkshire to extend its reach within the county.

Managing director Ben Quaintrell said: “Since founding the business in 2012, My Property Box has expanded rapidly from its original Tees Valley heartland.

“Last year we acquired two letting agents in Thornaby and Darlington and, as a result, we currently manage more than 1,000 homes valued at a total of £50 million.

“We are an innovative company with an ambitious growth strategy and that includes establishing a presence in Leeds, which has a vibrant rental market and is one of the best areas in the UK for property investment.

“I’m seeking to acquire a lettings business in Leeds with the help and support of Winch & Co, which has extensive local expertise as well as acquisition experience.”

In addition to managing properties and sourcing new landlords, My Property Box operates a property lettings function, focused mainly in the North East.

Nathan Winch, partner at Leeds-based Winch & Co, said: “We are pleased to be working with Ben and My Property Box in this exciting venture.

“We focus on professional service businesses, particularly property, so this project couldn’t have come at a better time.”

Winch & Co has been involved in several private equity deals and investments across a variety of sectors. Its focus is on professional services, including finance, legal, and accounting businesses, with a preference for those deriving recurring income from repeatable or ongoing trading activities.  

Ben added: “I’m looking forward to implementing our growth plan with the assistance of Winch & Co. We can see the synergies and that will allow us to achieve our goal within a reasonable timeframe.” 

winchandco.com

mypropertybox.co.uk

Housing developers will be given automatic permission for developments under Boris Johnson’s shake-up of the planning system.

The PMs Build Build Build programme is aimed at simplifying and speeding up the current time it takes for developments to be put up.

At present it takes around five years for the typical development to finally get the planning go-ahead. Under the new rules that time will be reduced to three years.

And it’s not only housing developments that will find it easier to move through the local government planning system. Those constructing new schools and hospitals – as well as offices and shops – will also find, if not an open door, then one that is already very much half ajar.

Housing Secretary Robert Jenrick, writing in the Telegraph newspaper, said the Prime Minister was intent on creating “a simpler and faster planning system.”

From September it will be possible to change a town centre commercial building to residential use without the need for a planning application. Householders will also be able to ‘fast track’ applications for two further storeys onto their homes.

UK land – one of three new categories

Under the new reforms, UK land will be separated into three categories – either for growth, renewal or protection.

The automatic permission is for developments planned for the ‘growth’ category. Having received automatic permission, a development in the growth category will only get the go ahead if it fits with local development plans and eligible building types earmarked for the area.

The renewal category covers brownfield land and urban sites. There are plans for buildings to conform to an official ‘style book.’

Protected areas are current Green Belt land and Areas of Outstanding Natural Beauty.

The three different categories of land are to be decided by individual local authorities and the communities that live there.

Despite the reduction in timescales for new developments to go through planning, there wouldn’t be a similar reduction in standards, insists the Housing Secretary. Every new street, he adds, will be tree-lined and minimum standards for design will be set.

Meanwhile, some government critics are sceptical over whether the proposals to secure planning permission will make much difference. Housing charity Shelter say that from 2011 to 2016 a total of 280,000 homes received permission but were never built.

Hannah Vickers, chief executive, Association for Consultancy & Engineering also added a word of caution. Saying it was more about ‘deliver, deliver, deliver’ than ‘build, build, build’ she added: “While we may wish to speed up programmes and projects, this won’t be possible without business confidence.”

Bringing planning proposals online

The planning system will also become digitalised under the new reforms. By this Jenrick means residents will be able to comment on planning proposals of their area via an online interactive map. Currently planning proposals are available via the council’s planning agenda, planning notices and by posters near the location.

The highest jump in 11 years – that’s how much the cost of the average property in the UK increased last month according to the Nationwide Index. But then, things have been a bit crazy in general in recent months.

What it does mean though is that the predictions about the ‘V shaped curve’ – where the market fell then returned pretty quickly – weren’t that wrong, after all. Whether the right-hand side of that ‘V’ starts to flatten out though in the coming months is highly likely.

The Nationwide’s jump was 1.7% – the highest jump since August 2009. Mortgage approvals are back on course according to the Bank of England. But they are still 40% lower than in March pre-pandemic.

Overall house prices are 1.5% higher year-on-year. And that figure is expected to rise even more as prospective buyers make use of Rishi Sunak’s Stamp Duty holiday over the following eight months. Unless, that is, unemployment in October once the furlough scheme ends then results in a fall in demand.