If you are thinking of letting out your property in Surrey, then one of the questions you may be asking in the early stages are, “What does the Landlord have to pay for, and what generic flatsdoes the tenant pay for”.

One of the most frequently asked questions for those letting flats and apartments is “Who pays the service charge?”. This is an important question especially for those investing in a property to purchase, as the cost of the service charge can greatly impact the return on investment.

A landlord is responsible for:

  • Making any repayments on the property to the mortgage/ Lending company
  • Keeping the structure of the building in good, safe condition
  • Maintaining Buildings and Contents insurance (though only obliged to cover their own contents and not the tenants)
  • Ensuring the property is fit for purpose and compliment with the Landlord ad Tenant Act.

Tenants are responsible for:

  • All utilities. Gas, Electric, Water, Council Tax, TV licence, broadband, phone, oil, septic tank clearing etc.
  • Their own contents insurance
  • The rental
  • Garden maintenance (unless otherwise agreed)

Therefore Landlords, if your property is leasehold, you are responsible for paying the service charge on the building. The only exception to this is in properties for special needs or the elderly where the service charge package includes 24hr safety monitoring or properties offering leisure facilities For more information see below.

The Service charge will normally include the buildings insurance, cleaning of communal areas, repairs to communal areas, repairs and maintenance on the building.  The service charge is normally set and agreed at an AGM held by the managing agents for the block or in smaller units will be agreed by all the residents. Normally there is a saved “pot” as a contingency. The amount may be fixed annually, but in the even of major work needed may have to be topped up. Therefore if considering purchasing a leasehold property its important to get a surveyor to advise you on the buildings condition so you are aware of any potential forthcoming costs and speak to the managing agents about the plans for the building.

Elderly / Special Needs / Assisted Living

In catering for those with special needs, some specific blocks include into the service charge, 24 hour assistance in the even of a fall. Some cater for communal activities. Where this is the case, the managing agents should be able to bill you with the areas of spend broken down. The Landlord would pay for anything related to the building, but a proportioned amount for the care should be met by the tenant.

Leisure Facilities

In properties where there is a gym / pool etc, the same applies and the tenants should pay the additional cost towards these facilities.

If you would like further information regarding this, please contact Sally Asling,  SurreyLets, the letting specialists on 01483 282470

If this information has been helpful, you may be interested in other articles from SurreyLets. Please visit our blog site. 

I write this with a child in year 6 in the oversubscribed, increasingly popular and highly sought after academy that is The Raleigh School in West Horsley. I count myself as privileged and increasingly fortunate. As I write, I am, like a few hundred other parents, waiting to hear if my son has got into The Howard of Effingham School in September. That said, like many others before me, I moved a matter of just one road to be certain of catchment areas for the schools.

Last week I took on a property “To Let” very close to the school and immediately went under e-mail attack. It felt akin to how I imagine Simon Cowell feels at the auditions for the  X-Factor; each  excited applicant streaming “pick me first” and offering on a property before I had even got the key.

It doesn’t matter how you cut it. Its dog eat dog in the world of housing and getting your child into a school.

There is a 5 deep waiting list for most year groups at The Raleigh. To get to the top, after siblings and looked after children ,it all becomes a matter of geography. Roll of the dice, the closer to the school the more chance you have of securing a place. So when a house a stones throw away from the school comes on the market, the stampede starts.

Homes close to the school sell  and let quickly and at a premium. They are sought after. So, when I saw this property come on the market with Curchods this week with an asking price of £775K, potentially giving a potential gross ROI of 4 % I thought it was worthy of a mention as this is a good ROI for this area. You can download the brochure here. Oh, and it really is a “stones throw” away, even with my poor attempt with a pebble! low res drive

 

Located within the popular village of West Horsley, literally a moments walk of the sought after Raleigh Primary School, this immaculate home really does offer everything a family could need.

 

 

The property would realistically let out IRO £2750pcm.  There is 1555q ft of property, making it not a super large home, but the fact that its divided into 5 bedrooms could suit a larger family, and after all, its a larger family who will have the need for the school. The one thing is certain, whilst the school is situated here, this property will always be let!

However, I would be tempted to advise a  would be investor to ditch bedroom 5 and add another bathroom (en-suite) and have it as 4 bed 2 bathrooms opposed to 5 bed and 1 upstairs bathroom. Given we have property only a short way down the road that rents at £2500pcm and lacks the office, this property I believe would rent quickly. We are seeing rentals in the roads surrounding the school average at 30 months which is perfect for long term investors.

If you would like to view this property call Curchods on 01483 281010. If you would like to discuss buying this property to let and would like some impartial free and without obligation advice, then call Sally Asling at SurreyLets on 01483 282470 

 

 

 

According to a recent report from the Association of Residential Letting Agents (ARLA), residential rental prices are higher in London and the South East than elsewhere, as shown in the graph below. While the UK average weekly rent in 2014 stood at £134, the figures  the South East were £144

ARLA average weekly rental

However, when we look at the commuter areas of The Horsleys, Effingham and Guildford, we see average weekly rentals more in line with the London rentals/ SurreyLets statistics would suggest an average rental for this area to be higher than the averages listed here.

The latest data from the Office for National Statistics (ONS) show a clear North-South divide in rents, with price growth much stronger in the South than in the North of England. Furthermore, price growth has accelerated strongly in London, the East and South East of England compared with a year ago. This may reflect the difficulty of getting on the property ladder in these regions, with high house prices and deposit requirements for purchasing property. This is pushing individuals into the private rental sector.

Arla Year on year rising rentals.

 

In 2015 people living in the South East spent  a fifth of their income on rental. However when we look at areas in definitive commuter belts  such as Cobham, The Horsley’s, Effingham and Guildford where rentals are much higher, this is believed to be closer to 25% eating into a quarter of disposable income.

Sally Asling, Lettings director of SurreyLets Ltd said

“These figures released from ARLA really do highlight the predicament that young people are facing regarding housing. In a recent blog I wrote about generation rent and the fact that people are just not going to get on the housing ladder until later in life.”

“This research clearly demonstrates the huge amount of rental being spent prior to purchasing which clearly puts a dent into what they need to be saving to raise a deposit for their home.

A person buying their first home in the South East  has spent an average of £57,000 on rent*

Its staggering to think that the average person in the South East will have spent an average of 57K renting before buying, even more staggering is this figure is closer to 90K if renting in London.

This is a massive amount of money when you think how much that could be worth if it were saved for a deposit on a home instead.

ARLA av spent on rent buying first home

 

*Assumes most people move out of their family home at the age of 18 and takes into account the average first time buyer age of 31.

 

The ARLA research, which is based on someone moving out of their family home at 18 and renting for 13 years, shows that in the north-east a typical tenant will have spent £31,300 on rent before they can buy, while in London the figure is £68,300. The figures, which were compiled with the Centre for Economics and Business Research, suggest that someone moving into rented accommodation in London today will spend an average of £91,500 on rent before buying their first home. A fifth of those renting now told ARLA they did not expect to ever be able to afford to buy a home.

Searching for a property to buy in KT24? Stocks levels are at the lowest they have been in 2 years according to Rightmove. Sally Asling, Local property Expert from SurreyLets says she is certainly hearing this from my UK and overseas’ investor Landlords who are looking to buy but exasperated at the lack of local stock on the market.

Rightmove confirms that in January only 54 properties were listed in the KT24 (The Horsley’s and Effingham) sales market.  A slight rise from the 47 listed in seasonally low December. However compared with previous Januarys this is almost 50% less available property.  If that sounds quite dire for one of the wealthiest villages in Surrey, lets also not forget these numbers don’t take into account multiple listings which bring the reality down to 41 properties listed For Sale in January.

Screenshot 3

One local Estate Agent has stated that they have 12 properties on discreet marketing and another Agent has said one in eight of the properties they sell don’t officially launch on the market and are sold before to known registered buyers (although they go on the market at completion). Both of these statements will be influencing the available levels of property seen advertised on the Rightmove Portal and just reiterates the message that when one is moving to a new village, getting to know the agents personally and registering with them is of absolute importance. Right move has its place, but it does not negate the need for relationship.

In the peak of 2015, 122 properties were available, giving a lot more choice. So why is there such a shortage of stock now?

Are people waiting to see if there is a referendum this year?   Are people waiting to hear what house prices are doing? Are people waiting to see if the growth slows down?

So what about House prices?

House price growth in the UK increased to 9.7% in the year to January, up from 9.5% a month earlier, according to the Halifax. Halifax stated  the last time that figure was greater was in July 2014, when prices were rising by more than 10%. At the end of last year Haart Estate Agents forecast a rise of 10% and Savills suggested a more realistic 5%. In the Horsley’s and Effingham Agents are expecting to see sustainable growth between 5 – 7% over the next year.

The Horsley’s and Effingham are hugely desirable locations, situated in Surrey’s green commuter belt and nestled in areas of outstanding countryside. The local schools are all oversubscribed and purchasing close to chosen school is popular.

According to local leading Estate Agents; Curchods and Henshaws they sell more than 80% of stock that comes to the market demonstrating just how keen people are to secure homes in the area.

Screenshot  2

So which agents are selling the most in the KT24 area?

According to Rightmove, the breakdown of homes sold (agreed sales) during 2015 in KT24 is: 

(Please note: KT24 takes in The Horsley’s and Effingham and these agencies  cover a larger geographical area and these sales figures are limited to KT24 postcodes only, not the agents overall number of sales)
  1. Curchods 36
  2. Henshaw’s 35 (Horsley and Bookham office combined)
  3. Gascoigne Pees 24
  4. Wills and Smerdon  20
  5. Huggins Edward & Sharp   7
  6. Patrick Gardener 6
  7. Savills 4
  8. Others 20 branches a total of 27 but under 3 units each.

 

 

 

 

Its been around in the news now for over a month, Estate Agents are using it tostamp duty draw in more instructions to sell property to investors and there is a lot of debate as to how it could fuel a deeper housing crisis.  Yes, I’m talking about the 3% Stamp Duty supplement that the government have decided to add on to anyone buying a second home on top of the normal rate Stamp Duty.

Time is creeping upon us and for sales completing on or after the 1st April 2016 this 3% addition tax will apply. In reality, this means unless offers are in this week, it could be a rush to complete in time to avoid it.

This is one tax that is far from been received with any enthusiasm, partly because it could just add to the housing crisis we, as a county have.

Given that the council homes are gradually being sold of under the government’s “Right to Buy” scheme, and,  more and more tenants who rely on social housing are being pushed into the PRS (Private Rented Sector), this tax is not doing anything to help encourage the vast numbers of investors needed to supply more stock into the marketplace.

LHAIts hard for LHA (Local Housing Authority) tenants to find property as it is.  The LHA rates only make the bottom third of rentals within grasp, and once we rule out all the landlords that can’t (or won’t) take LHA tenants due to mortgage restrictions the rental market is left with very little stock available.

The saving grace to the current housing crisis was the Buy-to-Let landlord.  Investors who are buying property as a means to a pension in latter years.  Many cash buyers indeed were looking at the lower end as there is some benefit in letting on long lets to tenants receiving LHA as they are often longer term tenants whilst the rents are lower, often the purchase price of the property is lower and actually, excellent ROI can apply.

The governments decision to charge this tax was (as written ) “the government will use some of the additional tax collected to provide £60 million for communities in England where the impact of second homes is particularly acute stating that the tax receipts will help towards doubling the affordable housing budget. This will help first time buyers and is part of the government’s commitment to supporting home ownership”

However, this statement is quite far from reality when looking at the social housing issues. The vast majority of the people who are claiming LHA are people who are not going to be in a position to buy their own home anyway. I don’t understand why the governemnt are failing to acknowledge that to be entitled to LHA people can’t have savings (and certainly not ones that are equivalent to a deposit for a house), additionally, to receive LHA they can’t be earning the salaries that would put them in a position to be able to purchase.

All the government are sucessfully doing is fueling a crisis. The lack of PRS homes available to the LHA marketplace, which is a growing sector of the market, means these tenants are squeezed out by rising rents and lack of stock available..  There are cries from Housing Associations and Housing charities that the great problem to the LHA tenants is that housing is simply unaffordable and coupled with caps on the allowance, impossible to secure accommodation.  One key factor to rising rents is a lack of supply…..which is why imposing a 3% additional Stamp Duty tax makes no sense at all if it acts a a deterrent to those wanting to add supply into the marketplace.

Back to the 3% Stamp Duty Tax. Basically, if a buyer owns fully or in part two or more residential properties when the sale is completed, then the tax will apply. The 3% is in addition to the normal rate of Stamp Duty Tax.  Below is a chart demonstrating what this means in pounds and pence.

A slightly unfair part of this is that married couples and civil partners will be treated as having only one main residence between them, but unmarried couples can have one main residence each. Thus an unmarried couple will be able to own a property each (not held jointly), before they become liable to pay the 3% SDLT supplement on the next property purchase. This I feel is  detrimental to good old fashioned values and could possibly be yet another reason for people not to tie the knot. The main home will be classed as the one they are in occupation in, not the second home, irrespective of time of purchase. Indeed Chancellor George Osborne has been accused of a tax on marriage because of the three per cent surcharge on second homes. I don’t disagree.

Full details about the governments bill can be found here 

As well meaning as this tax may have been, I personally think its shortsighted and not the solution. Buy-to-let landlords will, without a doubt, be affected by these upcoming changes but so will any other owners of more than one property. I hope it doesn’t deter Landlords from investing, but without doubt, it will have an impact. There is some hope though and that is those investors who are investing in multiple properties, for them  it may be that it would be more tax efficient for a buy-to-let landlord to transfer properties to a company prior to the 1 April 2016 and I will be writing about that soon.

 stamp duty table

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