Greater flexibility to keep pets in homes amongst range of Housing Bill measures
New legislation will introduce a range of measures to improve renting in Scotland, including strengthening tenants’ rights to keep a pet.
Measures in the Housing (Scotland) Bill will allow a renter to make a request to keep a pet in their home and for that to not be unreasonably refused by their landlord. Currently, it is entirely up to the landlord whether a tenant can keep a pet, and they must be given written permission to do so.
Other provisions aimed at providing a good quality, and affordable rental market also include a system of long-term rent controls, with the Scottish Government working with tenants, landlords, investors and developers to bring forward a system that works for tenants and supports investment in private rented housing.
Housing Minister Paul McLennan said: “Pets are an important part of the family for many people across Scotland. Tenants have the right to feel at home in rented accommodation and having more control over keeping a pet can play a big part in that and can have additional benefits for their mental health and wellbeing.
“This is just one of a range of measures in the Housing (Scotland) Bill, including long-term rent controls, which will help improve the lives of renters and create an affordable, high-quality, and fair private rented sector.
“The Bill also meets the Scottish Government’s ambition to improve the renting experience in Scotland, whilst also encouraging landlords to invest.
“We will continue to work to create a system that strengthens renters’ rights and supports continued investment in the rental market.”
Gilly Mendes Ferreira, Director of Innovation and Strategic Relations for the Scottish SPCA said: “We welcome the provisions included within the Housing (Scotland) Bill, particularly the safeguarding of the rights of tenants to keep pets and hope that these measures will foster a more inclusive and compassionate rental market.
“Our research has found that over 75% of tenants stated they had a pet for emotional (77%) and mental health (83%) support.
“This survey also highlighted that seven out of 10 tenants would risk becoming homeless if they were no longer able to keep their pet in their current accommodation.
“Sadly, we also found that 37% of tenants stated that they have had to make that unimaginable choice between having a pet and having a roof over their head.”
Tenants’ rights in Scotland continue to be strongest in the UK
Private renters are being urged to know their rights before the emergency rent cap and additional evictions protections in Scotland come to an end from 1st April.
Tenants in Scotland have some of the strongest rights of any part of the UK, an awareness raising campaign will highlight those rights and what tenants should expect from their landlords, including:
the right to ask for a review of a rent increase
protection from illegal evictions or being asked to leave a property without proper notice
a landlord giving a tenant the correct notice period before increasing rent
ensuring rented homes are maintained to an acceptable standard
Tenants and landlords are also reminded that the emergency rent cap is still in place until 1 April, so all rent increase notices for private residential tenancies issued before then must still comply with the current cap of 3%.
Rent increases proposed after that date still need to give 3 months’ notice, and tenants can seek a review of increases they are concerned about.
On a visit to Clackmannanshire Citizens’ Advice Bureau, where he spoke to rent advisors, Tenants’ Rights Minister Patrick Harvie said: “Our emergency legislation has led the way in the UK in capping most in-tenancy rent increases, protecting tenants across Scotland from the worst impacts of the cost-of-living crisis.
“The emergency nature of the legislation, which was approved by parliament, means the rent cap cannot be extended beyond 31 March. But tenants still have significant rights from before the emergency act, and we have made use of powers to make sure any rent rises are more manageable.
“Subject to parliamentary approval, the system of checking rent rises will be adjusted from 1 April so that rents are not simply jumping to market levels in all cases in one step.
“I would encourage anyone who is currently renting or about to enter the rental market to check the rights that exist to protect them from unfair practices.”
Citizens Advice Scotland spokesperson Emma Jackson said: “It’s so important that people understand their rights around private rents once the rent cap ends. If you think your landlord has put up the rent by too much after 1 April you can apply to Rent Service Scotland to see if it is a fair rise.
“The reality is the cost-of-living crisis has left a lot of people struggling to afford essential bills like energy and rent, and the Citizens Advice network can help with broader advice to increase how much money you have coming in each month or cutting bills.”
Housing Secretary launches a consultation proposing new legal requirements for England’s social landlords to address hazards including damp and mould quickly
plans to clamp down on rogue social landlords who fail to provide safe homes have been announced today, supporting the Government’s pledge to deliver Awaab’s Law.
The two-year-old from Rochdale died from a respiratory condition caused by extensive mould in the flat where he lived, and the Government is taking action to introduce lifechanging reforms in social housing to prevent future tragedies.
The Awaab’s Law consultation has been launched by the Housing Secretary, which proposes introducing new strict time limits for social housing providers and force them to take swift action in addressing dangerous hazards such as damp and mould.
It proposes new legal requirements for social landlords to investigate hazards within 14 days, start fixing within a further 7 days, and make emergency repairs within 24 hours. Those landlords who fail can be taken to court where they may be ordered to pay compensation for tenants.
Landlords will be expected to keep clear records to improve transparency for tenants – showing every attempt is made to comply with the new timescales so they can no longer dither and delay to rectify people’s homes.
Housing Secretary, Michael Gove said:“The tragic death of Awaab Ishak should never have happened. His family have shown courageous leadership, determination and dignity to champion these changes and now it’s time for us to deliver for them through Awaab’s Law.
“Today is about stronger and more robust action against social landlords who have refused to take their basic responsibilities seriously for far too long. We will force them to fix their homes within strict new time limits and take immediate action to tackle dangerous damp and mould to help prevent future tragedies.
“Alongside Awaab’s Law, our landmark Social Housing Act will drastically improve the quality of life in social housing, granting residents a proper voice to fight those who think they can cheat the system and ensuring rogue landlords face the full force of the law.”
Faisal Abdullah, Awaab’s father. said:“We hope that Awaab’s Law will stop any other family going through the pain that we went through.
“Landlords need to listen to the concerns of tenants and we support these proposals.”
Social Housing campaigner, Kwajo Tweneboa said:“As we know many families across the country are still living in homes with damp and mould, creating misery but more worryingly risks their health and safety.
“I’m pleased to see Awaab’s Law reach the consultation phase and hope that it goes far enough to prevent other families going through the tragedy Awaab’s family have had to. It’s crucial the government are able to make sure this law has teeth and is enforced for it to work as intended.”
Through the measures announced today tenants will be able to take their landlords to court if they fail to fix dangerous hazards. This builds on the progress already made to drive up standards in social housing.
The UK Government says there has been consistent improvement in the quality of social homes since 2010 – with a reduction in non-decent social homes from 20% in 2010 to 10% last year – but recognises ‘there is more work to do’.
The Social Housing (Regulation) Act, which became law last year, will equip the Regulator of Social Housing and tenants with stronger powers and rights to hold the small minority of rogue landlords accountable.
New enforcement powers will also be available for the Regulator to weed out bad landlord practices – including issuing unlimited fines and entering properties with only 48 hours’ notice to make emergency repairs in the most severe cases.
As part of changes to deliver Awaab’s Law, the Government recently consulted on what more tenants need to better understand their rights and challenge social landlords when things go wrong – the direction to the Regulator will be published in the coming weeks.
This is the latest step in addressing systemic issues identified following the Grenfell Tower fire – not just the safety and quality of social housing but how tenants are treated by their landlords.
Awaab’s Law consultation will be open for eight weeks and further details on how to respond can be found here
Just before Scottish Ministers slashed Scotland’s affordable homes budget by 26 per cent, Glasgow last month (November 30) became the latest major local authority in Scotland to declare a “housing emergency”, following the lead of Edinburgh and citing “unprecedented pressures” facing the council’s services (writes RICCARDO GIOVANACCI).
While of course there is a political element to these dramatic gestures – Labour-led Edinburgh is blaming Holyrood and SNP-led Glasgow is pointing the finger at Westminster – the declarations are a sure sign that the housing market isn’t working and that something needs to be done.
New statistics just released (December 13) show that the country’s housing crisis is intensifying, with plummeting numbers of both new starts and completions. Starts were down 24%, meaning that the crisis will only become more acute in years to come.
In more pragmatic times, before the private rental sector became public enemy No 1 in the eyes of some of the country’s more radical politicians, private landlords would have stepped into this breach and filled the gap between supply and demand.
They would have done this by bringing properties to market which would have accommodated a fluid and flexible population of tenants at rents they could afford until they found homes of their own or longer-term social rentals which suited their needs.
Now, however, many of the landlords who might previously have provided this service are abandoning the market, driven out by increasingly punitive legislation, fewer tax breaks, rent controls and the mora attractive market of holiday let sites such as Airbnb.
Is this sea change factored in to the concept of a housing emergency in the City Chambers of our great cities? There is little evidence to suggest that it is. Instead, councillors, single-issue charities and NGOs focus exclusively on the perceived plight of tenants. There is a marked lack of balance in current political thinking.
There does not appear to be much in the way of appreciation that elements such as the cost of living, rents, running costs, disposable income and inflation impact on landlords as well as the people for whom they are providing a roof over their heads.
Tenants’ Rights Minister Patrick Harvie was told in April this year by delegates at the Scottish Property Federation that rent control legislation he introduced the previous year had led to investors pulling millions of pounds out of Scotland.
Despite such warnings, the word on the street is that the Scottish Government is considering making the temporary restriction imposed on rent increases to help with the cost of living into a permanent rent control.
It is all very well to criticise others for inaction or for incomprehension of the seriousness of the situation, but what can realistically be done to help alleviate this escalating crisis?
Here are five suggestions which might go some way to help:
The overall tax burden on landlords needs addressed. They are currently taxed full amount and there needs to be a reward to encourage further investment, since the activity is by no means risk-free. There is nothing at the moment withing the tax regime to encourage participants into the sector.
Landlords should be treated with respect, rather than the current disdain. They are responsible grown-ups who want happy tenants. Longer-term lets are in everybody’s interest.
There is no reason not to keep regulation as it is. Landlords have factored the current regime in. But upcoming legislation needs more balance, as it is too heavily weighted in favour of tenants at the moment.
Rent caps are not working and experts said they wouldn’t work. The Government and other interested parties should listen to advice from professionals when it is asked for.
Career advice for young people to consider the trades as a career to improve housing stock in long term.
These are simply suggestions, but the more the parties involved in Scotland’s housing market can work together, rather than against each other, the more likely it is that the current and future crises will ease.
Riccardo Giovanacci is Managing Director at Glasgow-based Rosevale Letting.
It is a challenging time for renters, with rental prices rocketing and demand far outweighing supply – a recent study revealed that for every 100 rental ads in Scotland, 197 people are looking for a room to rent.
And while renters face greater financial hurdles, they are also dealing with more problems with landlords. According to the UK Housing Ombudsman, landlords were issued a record number of complaint handling failure orders between July and September 2022, a 105% increase on the previous quarter.
With this in mind, Online Mortgage Advisor wanted to discover where in the UK and the wider world tenants are most and least satisfied with their landlords. They found that renters in both Glasgow and Edinburgh are some of the most dissatisfied in the UK, despite the implementation of rental controls in Scotland.
How did we do it?
We analysed 276,000 rent-related geotagged tweets across the UK, US, and Europe, as well as other OECD nations, using an academic tool called SentiStrength.
SentiStrength is an AI tool which detects positive and negative sentiment levels in short pieces of text and assigns them a score from 5 (extremely positive) to -5 (extremely negative).
Belfastis the UK city with the highest proportion of dissatisfied renters with 43.5% of tweets analysed recorded as negative, followed by Glasgow (41.7%) and Bradford(38.7%).
Edinburgh came in at number 7 with 36.1%, meaning two Scottish cities appear in the top 10.
The UK ranked 9th overall in the list of OECD countries with 34.8% tweets deemed as negative out of those surveyed, with Sweden, Denmark and Irelandoccupying the top three spots.
The most commonly mentioned words in negative tweets about rent were: “people”, “money” and “time”.
Renters in Glasgow and Edinburgh amongst the most dissatisfied in the UK
Using the academic tool SentiStrength, Online Mortgage Advisor analysed 276,000 geotagged tweets related to renting to find out which cities had the least satisfied renters.
Belfast, is the city with the most dissatisfied renters in the country with 43.5%of all rent-related tweets being recorded as negative.
Glasgow, ranks 2nd with 41.7% of tweets made by renters in the area being recorded as negative.
Edinburgh came in at number 7 with 36.1%.
This means that two Scottish cities appear in the top 10 of our analysis, despite Scotland implementing a rent freeze at 0% from September 2022 until March 2023. The Scottish government then increased this to a cap of 3% in most instances from April 2023. Find the ranking below:
UK cities which are least satisfied with their rental experiences
Rank
City
Negative tweets (%)
1
Belfast
43.5%
2
Glasgow
41.7%
3
Bradford
38.7%
4
Bristol
38.3%
5
Brighton & Hove
37.4%
6
Sheffield
36.5%
7
Edinburgh
36.1%
8
Nottingham
35.9%
8
Plymouth
35.9%
10
Birmingham
35.2%
The most common rental grievances
We found it was ‘people’ that tenants take issue with most frequently, with 60 mentions for every 1,000 tweets. Issues range from landlords turning up unannounced to fellow tenants failing to pay their share of the rent and never taking the bins out. The second and third most commonly listed complaints referred to ‘money’ and ‘time’.
Here are a few of the issues people have voiced on twitter:
Self-employed individuals and landlords will have more time to prepare for Making Tax Digital (MTD) for Income Tax Self Assessment (ITSA), following announcement by the UK Government yesterday.
Understanding that self-employed individuals and landlords are currently facing a challenging economic environment, and the transition to MTD for ITSA represents a significant change to taxpayers and HMRC for how self-employment and property income is reported, the government is giving a longer period to prepare for MTD. The mandatory use of software is therefore being phased in from April 2026, rather than April 2024.
From April 2026, self-employed individuals and landlords with an income of more than £50,000 will be required to keep digital records and provide quarterly updates on their income and expenditure to HMRC through MTD-compatible software. Those with an income of between £30,000 and £50,000 will need to do this from April 2027. Most customers will be able to join voluntarily beforehand meaning they can eliminate common errors and save time managing their tax affairs.
The government has also announced a review into the needs of smaller businesses, and particularly those under the £30,000 income threshold. The review will consider how MTD for ITSA can be shaped to meet the needs of these smaller businesses and the best way for them to fulfil their Income Tax obligations. It will also inform the approach for any further roll out of MTD for ITSA after April 2027.
Mandation of MTD for ITSA will not be extended to general partnerships in 2025 as previously announced. The government remains committed to introducing MTD for ITSA to partnerships in line with its vision set out in the Tax Administration Strategy.
Victoria Atkins, Financial Secretary to the Treasury, said:“It is right to take the time to work together to maximise the benefits of Making Tax Digital for small businesses by implementing the change gradually.
“It is important to ensure this works for everyone: taxpayers, tax agents, software developers, as well as HMRC.
“Smaller businesses in particular should be able to experience the benefits of increased digitalisation of Income Tax in a way which meets their needs. That is why we are also today announcing a review to establish the best way to achieve this.”
Jim Harra, Chief Executive and First Permanent Secretary, HM Revenue and Customs, said:“HMRC remains committed to the delivery of Making Tax Digital as a critical part of our strategy for digitalising and modernising the tax system, but we want to make sure we get this right and deliver it effectively.
“A phased approach to mandating MTD for Income Tax will allow us to work together with our partners to make sure that our self-employed and landlord customers can make the most of the opportunities this will bring.”
The announcement relates to MTD for ITSA only. Making Tax Digital for VAT has already been implemented and is demonstrating the benefits to businesses and the tax system of digital ways of working.
Emergency legislation giving tenants increased protection from rent increases and evictions during the cost of living crisis has become law after receiving Royal Assent.
The Cost of Living (Tenant Protection) Act gives Ministers temporary power to cap rent increases for private and social tenants, as well as for student accommodation.
This applies to in-tenancy rent increases, with the cap set at 0% from 6 September 2022 until at least 31 March 2023, effectively freezing rents for most tenants during this period.
Enforcement of eviction actions resulting from the cost crisis are prevented over the same period except in a number of specified circumstances, and damages for unlawful evictions have been increased to a maximum of 36 months’ worth of rent.
Tenants’ Rights Minister Patrick Harvie said: “Many people who rent their homes are facing real difficulties as a result of the cost of living crisis. While bills are rising for all of us, many tenants are more exposed as they are more likely to be on low incomes or living in poverty than other people.
“These measures aim to give tenants greater confidence about their housing costs and the security of a stable home.
“Some landlords may be feeling the effects of this crisis too. So while the primary purpose is to protect tenants, the emergency measures also include safeguards for those landlords who may be impacted.
“For anyone struggling with their rent, I would urge you to contact your landlord, an advice organisation or a tenants’ union to get help as early as possible.”
Edinburgh Lettings Agent Clan Gordon has been looking at what this means for the landlords and tenants that they represent.
Clan Gordon Managing Director, Jonathan Gordon, was part of the Scottish Government’s working Group which consulted on and helped them develop the Private Residential Tenancy (PRT) regime in 2017 which transformed the sector, introducing far greater protection for tenants and simpler procedures for landlords.
He said: “It is reassuring to hear Ministers say the new Cost of Living (Tenant Protection) Bill balances the protections that tenants need, with safeguards for those landlords who may also be impacted by the financial crisis.
“Under the new law, rents for existing private and social housing tenants cannot be increased until at least the end of March 2023 and can be extended for up to a further 12 months in two six-month blocks.”
So, what does this mean for landlords? Although the rent cap can continue at the current 0% rate or can be varied at ministers’ discretion, there is no cap or limit on increasing the rent when advertising for new tenants.
Jonathan continued, “Despite the media attention when this was announced this is not a ban on landlords ending tenancies. Landlords can still serve notice as normal if they wish to end a tenancy.
“Most tenants leave during the notice period when they find alternative accommodation so this restriction will have little effect here. If the tenant doesn’t leave during the notice period, the landlord can apply to the tribunal for an eviction order as normal.
“However, the legislation delays a landlord from enforcing an eviction order issued by the tribunal in some circumstances for up to six months.
“Tenants can still be evicted for anti-social behaviour, lender reposition, abandonment, substantial rent arrears or if the landlords intend to sell or move back in to the property to alleviate financial hardship.
“We are also very pleased to see that as well as considering the tenants in this legislation, there are new safeguards for private landlords who find themselves impacted by the cost-of-living crisis.
“In certain circumstances, Landlords will be able to apply to Rent Service Scotland to increase the rent on a property to cover up to 50% of a limited number of specific costs, including increased mortgage interest payments and increases in landlords insurance or service charges.
“Interestingly the rent cap also applies to university halls of residence and other student accommodation where energy costs may be included in rent payments.
“There has been widespread concerns about increases to fuel prices, but the legislation prevents landlords passing on gas and electricity cost rises, in increased rents within the next six months unless the landlord can prove excessively high use of any utilities.
“Students are also covered by the same eviction laws and can only be evicted in cases of anti-social or criminal behaviour.
“Our approach has always been to encourage landlords to help us support any tenant who faces any difficulties including financial ones and in conjunction with our landlords we worked to support a lot of tenants financially and otherwise during the Covid pandemic and lockdowns.
“This is going to be a difficult road ahead and we are pleased that the government has put some measures in place to support and protect landlords and tenants.
The government advice website www.costofliving.campaign.gov.scot offers helpful tips, advice and guidance and our team will be very happy to offer advice about the new legislation to those affected by the current cost of living crisis.”
How the new interest rates affect house prices and rent across the UK
Housing market: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed, finance experts advise
Landlords will likely increase rent prices or sell to cope with increased mortgage repayments
Inflation and interest rates will keep rising, but house prices are already slowing down
TODAY, the Bank of England will decide what the new base interest rates might be, currently at 1.75%. Top market analysts expect this to further rise to 2.25%.
The Office for National Statistics announced on August 17th that UK inflation rose to 10.1%, from 9.4% two months earlier. The Bank of England expects it to further increase, peaking at 13.3% in October. The accompanying higher interest rates and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.
Top market analysts at CMC Markets expect interest rates to further rise to 2.25% this month. This directly impacts mortgages on variable rates – around 1 in 5 households in the UK – and another 3.1 million whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.
Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3% and 4%, up from 1.75% and 2.75% only five months earlier. This will inevitably spill into rent prices.
CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17th, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.
Michael Hewson, Chief Market Analyst at CMC Markets comments: “Houses sold in June 2022 only increased in price by 1% compared to May, whereas, last year, this constituted a much more generous 5.7% surge.
“This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised. Remember, house prices may be slowing down, but they are not decreasing. Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.
“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt. Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.
“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.
“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price. Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”
What did the Bank of England do earlier in August?
The Bank of England explained that the rise in interest rates was necessary due to external pressures which are expected to persist. This means that British firms and residents will continue to feel this weight reflected on rising domestic prices, wages outpaced by soaring inflation, and even higher mortgage repayments, despite the Bank’s attempt to widen the borrowing pool through less restrictive mortgage rules.
Although historic, the Bank’s decision was not a surprise for trading analysts at CMC Markets, a London-headquartered financial services company, who believe the Bank was expected to raise interest rates higher than 1.25% during the June meeting, as a means to keep import inflation in check.
This is on the backdrop of a 10% year-to-date depreciation of the British pound sterling against the US dollar and an indication from the Federal Reserve, the US central bank, of a further interest rate increase by 0.5% or 0.75% in September.
Michael Hewson comments: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”
What’s next and when will things calm down?
Other than adjusting the interest rates to the accurate level to keep abreast of import inflation, the economic projections for the UK paint a bleak outlook for the next two years.
The UK is projected to enter a recession in the final quarter of this year, the Bank of England announced. The country’s economy will contract by 1.25% in 2023 and 0.25% in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2% much before 2024.
The current political race for the Conservative Party leadership and the consequent fiscal policies promoted by the new British government is a major factor to take into account for any inflation, GDP, and unemployment projections and investment decisions.
As it stands with the current measures, inflation is expected to peak at 13.3% in October – a sharper increase than the Bank anticipated in June, originally estimated at 11%. It will continue to rise throughout 2023 only to decline in 2024.
Meanwhile, forecasts for the Consumer Price Index (CPI) are less optimistic now, expected to decrease only to 9.5% in the third quarter of 2023, although the Bank anticipates a sharp fall in prices immediately thereafter.
Selling prices are set to increase to reflect rising costs while real household post-tax income is expected to plunge in 2022 and 2023. The Bank predicted that core prices will peak at 6.5% this year, meaning that, in the following six months, food and energy will constitute more than half of the headline CPI.
The next meeting for the Monetary Policy Committee, where the Bank of England will decide what the new base interest rates might be, is today – September 22nd.
Handelsbanken Wealth and Asset Management urges professional landlords to plan for the future
Most professional landlords with large portfolios (52%) have no succession plan in place, risking the future sustainability of their business for the next generation.
The findings, from local relationship bank Handelsbanken, also suggest a worrying lack of succession planning among older landlords, with half of those aged 45 or above lacking any long-term management plans.
According to Handelsbanken’s SME Landlord Survey Report 2022, which surveyed 120 professional landlords with at least four properties, more than a quarter (27%) of those with no succession plan said they had not had the chance to develop one yet, while 23% admitted it had simply not crossed their minds.
Around one in five (19%) said that they had no one to leave their portfolio to, while 15% stated it is simply not a priority for them – with the same proportion saying the process was just too complicated.
The study shows that landlords with smaller portfolios are far more likely to have taken steps to protect their portfolio from estate tax liabilities: an overwhelming majority (96%) of landlords across all age groups with a portfolio of four or five properties say they have long-term succession plans in place, compared to just 52% with more than 10 properties, suggesting that those with higher value estates are less concerned about the tax liability facing the next generation.
Among all those with a clear succession plan in place, more than half (54%) plan to convert their portfolio into a property development portfolio to attract business property relief, while 43% are considering a charitable trust, which would enable the handover of business to their heirs with minimal tax exposure.
Other popular options include family trusts (35%), family investment companies (28%) and acquiring agricultural properties to qualify for agricultural relief (26%).
Plans and solutions for succession planning
Percentage of respondents
Converting portfolio to a property development portfolio to attract BPR
54%
Charitable trusts
43%
Family trusts
35%
Family Investment Company
28%
Acquiring agricultural properties for Agricultural Relief
26%
Christine Ross, Head of Private Office (North) and Client Director at Handelsbanken Wealth and Asset Management, a subsidiary of Handelsbanken, said: “The success of buy-to-let over the past decade has created huge numbers of wealthy landlords – with a real need for dedicated financial and tax planning.
“Property investors with substantial portfolios often defer creating a wealth succession plan, but are prompted into action when considering the alternative – the need for their heirs to sell assets to meet the tax liability on death.
“A plan that includes the use of a family investment company or a trust may carry some initial tax cost, but if put in place early enough, has the potential to create far greater savings over the longer term.”
To read the full Handelsbanken’s SME Landlord Survey Report 2022, please click here.
Handelsbanken research shows half plan to buy over the year ahead as confidence in residential and commercial property demand grows
SME landlords[1] are planning to expand their portfolios in the year ahead as optimism about residential and commercial property builds despite fears of an economic downturn and the cost of living crisis, new research* from property business experts Handelsbanken shows.
Its nationwide study shows half (49%) of professional landlords – those owning at least four properties – intend to buy more, of which 8% plan to invest in improving the quality of their portfolio, underlining their enduring confidence in bricks and mortar as long-term investment.
Just 7% of landlords expect to sell some or all their portfolio, and a third (35%) are committed to retaining their current properties for the next 12 months.
The first Handelsbanken SME Landlord Survey found 86% of landlords expect a rise in demand for residential property, with nearly two-thirds (63%) confident that commercial property demand will also increase in the next 12 months.
Landlords’ optimism is not being driven by expectations of substantial increases in yields – Handelsbanken’s research shows average yields are only expected to rise by 0.44% over the period, although 89% of landlords questioned do expect an increase.
Instead, their plans to buy more properties are motivated by a desire to diversify their assets across different sectors and regions.
Nearly three-quarters (73%) said their plans to buy are focused on expanding into different parts of the property market – the most attractive are houses (66%), followed by flats (38%), houses of multiple occupation (HMO) (34%) and commercial retail (32%).
Among landlords expanding their portfolios to different parts of the UK, London is seen as the most attractive region (selected by 53%), followed by the East of England (chosen by 40%) and the East Midlands (22%).
More than half (51%) of landlords on the acquisition trail said their reason for buying was simply feeling bullish about the market.
James Sproule, UK Chief Economist, at Handelsbankensaid: “Recent house price growth shows how property has shown its resilience against economic doom and gloom and the cost-of-living squeeze.
“Landlords are anticipating that a shortage of rental properties will help keep prices buoyant, particularly as working patterns continue to adjust to the post pandemic world and people seek to move back to big cities, particularly in popular areas such as London, which is also seen to be better placed to ride out the next series of economic challenges and opportunities.
“Landlords went through a tough period following the COVID-19 pandemic, with residential property transactions falling by more than half and business investment contracting. But the sector has survived and is now looking forward.
“The 2022-23 financial year is forecast to see a further softening in residential property transactions as vendors wait for the right buyer rather than accept any perception of loss in value.”
The table below shows how professional landlords rate the attractiveness of regions across the country:
REGION
HOW MANY LANDLORDS THINK IT WILL BE THE MOST ATTRACTIVE OVER THE NEXT 12 MONTHS
London
53%
East of England
40%
East Midlands
22%
Scotland
19%
Northern Ireland
18%
North West
14%
South East
12%
Wales
12%
South West
10%
West Midlands
8%
North East
6%
Yorkshire & The Humber
6%
[1]Professional landlords with a minimum of four properties in their portfolios. This applies to all references to “landlords” within this release.
