Investment Analysis And Performance Reporting

Dominic Martin, Former Member of the Department For Communities & Local Government's Private Rental Sector (Residential) Taskforce

Dominic Martin, Former Member of the Department For Communities & Local Government’s Private Rental Sector (Residential) Taskforce

Introduction

New Investment Market & Data:
The UK is witnessing the emergence of a specifically designed and managed ‘institutional grade’ residential asset class, loosely referred to as the new Private Rented Sector (PRS), or as Build-to-Rent. However, for any investor, be this institutional, private equity, sovereign wealth funds or housing associations, there is a need to underpin entry into this sector with good quality data and analysis.

Therefore, this article looks to acknowledge some of the existing sources of data and provide commentary around these. Secondly, it highlights areas where improvement can be gained.

Investment Asset Performance:
In the medium to long-term, the aspiration from an investment performance perspective is that this market resembles the US ‘multi-family housing’ market (MFH), where detailed accounts of the performance of the investments are standard in any investment particulars. Investors need certainty around the investment performance of this asset class. This will comprise both the annual net returns (i.e. income less annual maintenance and management costs) and total long term returns (driven by either yield compression and/or House Price Inflation).

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Land Acquisition In The Private Rented Sector

Darryl Flay, Chief Executive Officer, Essential Living

Darryl Flay, Chief Executive Officer, Essential Living

Rising house prices, demographic change and the tight mortgage market have led to a doubling in the number of renters in the UK over the last decade.

While no one doubts the UK’s penchant for ownership is about to change any time soon, there’s a huge opportunity in unlocking the kind of institution-backed sector that supports housing in the US. Replacing the reputation for poor standards underpinning the buy-to-let sector could, however, redefine the way the public approaches renting, while creating an exciting new asset class for institutional and, eventually, retail investors.

A growing number of large investors have been posturing on the sidelines for years and, over recent months, the talk has turned to action with major schemes in development across London and Manchester.

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Consultation on Definitive House Price Index

Office For National Statistics

Office For National Statistics

The Office for National Statistics has launched a consultation seeking input from “users” on the proposal of developing a single definitive house price index.

As I have blogged about previously, there is not a precise house price index as all of the current indexes source their data differently.

The move to a single, UK-wide, index would help end the confusion caused by the contrasting data thrown up by the current indexes.

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Another Successful RESI

Cathy Fuller, Head Of Events at Property Week

Cathy Fuller, Head Of Events at Property Week

On September 10th the property industry’s best and brightest descended upon the Welsh countryside to attend the UK’s biggest property event, RESI 2014.

Once again we had more than 1,000 delegates in attendance networking, discussing the current state of the residential property sector and enjoying a full conference programme of opinion and debate, Chaired by Mark Eason, the BBC’s Home Editor.

Leading developers, researchers, financiers and politicians took to the stage to talk about the key issues facing the sector and I have collated some of the biggest talking points to come out of this year’s conference.

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Young Group at RESI 2014

RESI Café 2014

RESI Café 2014

Once again, Young Group was in attendance at the annual Property Week RESI Conference, and sponsor of the ever-popular RESI Café.

The event was a resounding success with around 1,000 of the residential property sectors’ good and great in attendance.

All of the conference delegates received a copy of the latest biannual PRSupdate publication. The overarching theme of this issue is ‘Delivering the Private Rented Sector’, which was received with great enthusiasm and complemented the themes presented by the event’s speakers.

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Revenge Eviction Bill Proposed

The government backs bill to end retaliatory evictions

The government backs bill to end retaliatory evictions

The Government, in the form of Communities Minister Stephen Williams and Housing Minister Brandon Lewis, recently gave their backing to a Private Members Bill, put forward by Sarah Teather MP (LibDem), which aims to end the practice of retaliatory evictions.

The Bill has been backed by a number of organisations, including the housing and homelessness charity Shelter who stated, “no one should face eviction for complaining about bad conditions. The government’s – and ultimately Parliament’s – support for Sarah’s Bill could end this practice once and for all.”

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Changes to Capital Gains Tax Target Non-Resident Sellers

Peter Sarney, Director, Felton Pumphrey

Peter Sarney, Director, Felton Pumphrey

The imposition of Capital Gains Tax (CGT) on the disposal of UK residential property for non-residents came as a surprise to many people as the UK government seeks to level the playing field between those who are tax residents in the UK and those who are not.

Unlike many other countries, that tax gains on the disposal of residential property situated in their jurisdiction, the UK has not generally charged CGT on gains made by non-residents. The result of this is that a gain would either be fully taxable in the country of residence or escape taxation entirely.

The UK government considers this to be unfair and has proposed legislation to tax the gains on residential property of those who are non-resident in the same way as gains made by those who are resident.

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Spring/Summer 2014: Delivering A New Way Of Renting At East Village

Stuart Corbyn, Chairman, Get Living London

Stuart Corbyn, Chairman, Get Living London

As the Sochi 2014 Winter Olympics came to a close it was hard to imagine that it had been nearly two years since the eyes of the world were on a corner of the East End during the London 2012 Games. And, while the spotlight on Stratford may have diminished since the summer of 2012, the level of work and regeneration in the area has only increased.

For us at East Village, the new neighbourhood at the former Athletes’ Village, the progress has been particularly significant. Over the past 18 months, what were beds for athletes have been transformed into new homes for Londoners and in November 2013 we welcomed our very first residents.

While the Olympic sports venues are making their own strides towards their post-Games use, having the first residents living in a brand new neighbourhood next to the Olympic Park is arguably the strongest legacy of the London Games so far.

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Labour defeated in move to ban lettings agency fees

Government

Government

As PRSupdate reported last week, Labour tabled an amendment to the Consumer Rights Bill that would have banned letting agents from charging fees to tenants.

But, after much debate, the motion was defeated in the House of Commons by 53 votes.

Hours prior to the vote the Government had announced it would put forward its own amendment to the Consumer Rights Bill. Details of the Government’s proposed amendment have not been fully revealed, as it has yet to be tabled, although it is known that it will compel letting agents to publish all of their fees on their websites and prominently in their offices.

The requirement would goes a step beyond the current Advertising Standards Authority (ASA) recommendations, including the ability to fine any agents who fail to comply.

The Government said it would plan to monitor the regime for a year and ‘put the industry on notice’ that it would be ready to consider further steps if it deemed necessary.

Young London, Young Group’s operational business, is fully prepared if these new proposals come into force as it already displays all fees on the its website and provides them to every applicant as part of their viewing pack.

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Spring/Summer 2014: Stamping Out Poor Practice

Peter Bolton King, Global Residential Director, Royal Institution of Chartered Surveyors

Peter Bolton King, Global Residential Director, Royal Institution of Chartered Surveyors

Last year, as confidence began to return to the market, more people were looking to sell or let their property. All told, things are beginning to look up for the residential sector with the January RICS Housing Market Survey showing sales demand at a six year high and rental demand holding up well.

However, a pick-up in the market also means that the issue of industry regulation, for sales and lettings, has become more prominent in recent months. For far too long estate and letting agencies have operated without the necessary training or knowledge to properly serve their clients.

There is a need for a greater number of agents to be working to properly enforced standards.

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Stamp Duty Land Tax (SDLT) for Tenants

Stamp Duty Land Tax (SDLT)

Stamp Duty Land Tax

Stamp Duty Land Tax (SDLT) isn’t only confined to sales.  It’s important that tenants remember that they could have an obligation to pay SDLT when renting a property.

SDLT is due on rents that exceed £125,000, cumulatively, during tenancies and (unlike SDLT for sales transactions) is charged at 1% on any amount over and above that threshold, not on the entire cumulative amount of rent.

Here is some additional information, and a link to the HM Revenue and Customs (HMRC) website, that you may find useful.

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Capital Gains Tax Targets Overseas Investors

HM Revenue and Customs

HM Revenue and Customs

This article is for information purposes only and in no way constitutes advice.

From April 2015 there will be changes to the current Capital Gains Tax (CGT) rules for overseas sellers. Currently the disposal of UK property by a non-resident individual is not normally subject to UK CGT, while UK residents pay 18% of the profits for basic rate tax payers and 28% for higher rate payers.

However, it is not yet clear exactly how the new rules will be implemented as the Her Majesty’s Revenue and Customs (HMRC) have yet to release the consultation documents. Until then, we will not know exactly what is being proposed.

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House building data (December quarter 2013)

House Building

House Building

The latest data on House Building in England, for December quarter 2013, have been released by the Office for National Statistics. The statistics in the release are figures on new build housing starts and completions throughout England.

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Overhaul of Bank interest rate policy

Bank of England

Bank of England

Mark Carney, governor of the Bank of England (BoE),  has overhauled his guidance policy on interest rates as part of his latest inflation report. The governor had originally stated that a rate rise would not happen until there had been a fall in unemployment, but this policy has now been reviewed after the jobless level fell faster than expected.

The governor has reiterated that the BoE will take into account a number of economic factors before raising interest rates, these indicators would include wages, productivity and spare capacity within the economy.

Mr Carney was quick to point out that when rates increase, they will “only increase gradually”.

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TDS launches a new charitable foundation

Tenancy Deposit Scheme

Tenancy Deposit Scheme

The Tenancy Deposit Scheme has set up a new Private Rented Sector charity to provide funding for training and education to promote best practice.

The TDS Charitable Foundation has now been registered as a Charitable Incorporated Organisation with the Charity Commission.

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