Written By Em

Em

Em Morley

Open election causing uncertainty in property market

Published On: April 16, 2015 at 10:56 am

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Growing uncertainty about who will be residing in Number 10 after May 7th is having a negative knock-on effect on the housing market. Experts are concerned that the property market is stationary, due to fears about not only the election result, but features such as increases in stamp duty. This has lead to a drop in the supply of housing, whereas prices of property for sale have been driven upwards.

 

‘Cork in the market’

The Royal Institution of Chartered Surveyors (RICS) believe that there is heightened competition between buyers to purchase the small number of homes currently on the market. This in turn has forced prices up following months of fairly insignificant movement, leading estate agents to express their worries over a housing bubble being created.

 

RICS has estimated that prices will rise by 4.5% per year over the next five years, which will push home ownership further away for more young people. Tony Jamieson, estate agent at Clarke Gammon Wellers and member of RICS, believes that fears over Ed Milliband’s proposed mansion tax are seeing many high-value property owners staying in their present homes. Jamieson said that, ‘people with properties worth £2 million and above are fearful of any form of mansion tax so they are sitting tight rather than moving to bigger properties.’ Mr Jamieson believes this is, ‘putting a cork in the top end of the market,’ which, ‘affects the chain of buyers and sellers,’ as a result.[1]

Jamieson went on to say that, ‘we are 40 per cent down on stock compared with this time last year and we have 38 per cent more buyers, so properties lower down the chain are going for a premium.’[2]

 

Election concerns

Landlords of rental properties who are contemplating the sale of their portfolio are, according to Mr Jamieson, waiting for the result of the election. This has led to a reduction of affordable homes becoming available on the market.

 

Benson Beard, member of RICS and employee of Bective Leslie Marsh, believes that the proposed mansion tax is to blame for the housing bubble. Beard stated that, ‘the mansion tax is really the crux of this. Buyers at the top end don’t want to risk buying at full price when Labour hasn’t announced all the bandings or the different levels of mansion tax that would be payable. There is very little detail.’[3]

 

Stamp Duty

Chancellor George Osborne’s stamp duty reform has also seen an affect on the property market, with people purchasing homes over £1m paying more in stamp duty as a result. Head of residential research at Savill’s estate agents, Lucian Cook, believes the changes of stamp duty obligations are a big factor affecting supply of housing. Cook said that, ‘people are less inclined to move house and the resulting shortage of houses will underpin price growth.’[4]

Open election causing uncertainty in property market

Open election causing uncertainty in property market

 

Mr Cook stated that Savill’s estimate prices will rise, ‘by 23% over the next five years in the regions and by 10.4% in London.’[5]

 

The chief economist of RICS, Simon Rubinson, described the increase in house prices as, ‘worrying.’ Rubinson said that, ‘the trends visible in the latest survey,’ by RICS, which showed a fall in properties on the market for a second consecutive month, ‘urgently need to be addressed by the next government.’[6]

 

Milliband misery

Lawrence Hall of property website Zoopla, left no uncertainty about which political party wouldn’t be getting his nod in the ballet box. Hall suggests that, ‘a Milliband win in May would have a negative impact on the UK housing market in the short to medium term.’ He continued by saying, ‘the Tories have paved the way for considerable strides in the property recovery, but the Labour proposals for a punitive tax on homes and restrictions on some of the first-time buyer support systems would create uncertainty and could well pull the rug out from under the feet of recovery and dampen market confidence.’[7]

 

As the election campaigns hot-up, the only thing that remains certain alongside bold statements, false smiles and questionable pledges, is that the housing market will continue to struggle until May the 7th has come and gone.

 

[1-7] http://www.telegraph.co.uk/news/politics/ed-miliband/11540462/Mansion-tax-fears-and-election-jitters-crippling-property-market-and-causing-price-bubble-estate-agents-warn.html

 

 

 

Preparing your Property for Renting

Published On: April 16, 2015 at 9:55 am

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If you are already a landlord or are considering becoming one, it is important to understand the work that needs to be done in order to reap the rewards of the industry and make your tenants happy.

Follow our advice on preparing your property for future tenants, in order to achieve the best rental experience for all involved.

  1. Structural repairs

Any major repairs should be completed when the property is empty. To fully understand what needs to be done, don’t just inspect the property yourself, ask previous tenants to tell you what they think needs improving.

In terms of budgeting, prioritise repair work by focusing on the crucial issues first, for example, any damp or loose roof tiles.

If your property is in a good condition, it is still a good idea to touch things up, such as decorating or fixing squeaky doors.

  1. De-personalising

If a past tenant has been in a long-term agreement, they may have decorated the property to their tastes. This can cause your property to be inappropriately presented for other tenant types, such as children’s wallpaper in a student house.

The best option is to paint or wallpaper in neutral and plain tones. These often last longer and will suit all tenants.

  1. Cleaning

A property should always be cleaned thoroughly before a tenant moves in. You could hire or buy a steam cleaner for floors, furnishings and curtains. Pay extra attention to the bathroom and kitchen, which should be spotless.

It could be a good idea to hire a professional cleaner, however these can be expensive. Although tenants are more likely to treat the property well if it is faultless when they move in.

  1. Plumbing

One of the biggest problems to tenants is faulty plumbing. Lack of hot water, broken radiators and leaking taps are all things that will cause hassle for you and your tenants. A trustworthy plumber should inspect the property and make any necessary repairs that will hopefully last for at least a year.

  1. Appliances

If you can afford to, replacing kitchen appliances can be really beneficial. The state of the kitchen can bring the price of rent down, and tenants will be more inclined to move into a property with modern utilities.

Guide to Preparing your Property for Renting

Preparing your Property for Renting

You will also avoid costly repair bills with new appliances and the value of the property could increase. Some stores may have landlord deals on these goods and also ensure they have the required safety checks. It is also important to opt into the warranty.

  1. The garden

If the property has a garden, either front, back or both, it should be neat and tidy when the tenant moves in. Cut the lawn and trim any hedges. If the tenant is required to maintain the garden, offer tools and equipment.

You could hire a professional gardener, as tenants place having a garden near the top of their wish lists. A well-presented garden could attract more tenants.

  1. Prepare information for tenants

Keep a folder in the property for your tenants including any instruction leaflets to utilities and a list of contacts in case the tenant needs something. This allows the tenant to sort things themselves and not rely on you constantly.

  1. Keys

Unfortunately, tenants often lose their keys. You should ensure you have several copies of your property’s keys cut. Keep one yourself and give some to your letting agent, who will give them to tenants.

For doors and windows inside the property, clearly label individual keys and leave these in the home.

You could get lost key cover on your insurance policy to avoid high costs for changing locks.

  1. Energy Performance Certificate (EPC)

An EPC is required by law and you must also give it to the tenant. This document is valid for ten years and details the energy efficiency of the property. Contact an accredited domestic energy assessor (DEA) to survey your property if you need an EPC.

  1. Gas safety certificate

Any appliances using gas should be kept safe and serviced every year by an approved tradesperson. Your tenant should also be given a copy of this certificate.

  1. Electrical safety

You should regularly inspect and record the conditions of all electrical appliances and equipment in the property if you have supplied it.

  1. Landlord insurance

It is important to note that standard home insurance does not cover rental properties, and for these you will need landlord insurance.

  1. The market

If you are receiving high returns from your rental property, you could expand your portfolio in the same area. If you are looking to sell the home, look into prices in the local area.

 

Green Party Will Abolish Letting Agent Fees

Published On: April 16, 2015 at 9:13 am

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The Green Party announced in its manifesto that it would abolish letting agent fees and insurance-backed tenancy deposit schemes, if it came into power.

Green Party Will Abolish Letting Agent Fees

Green Party Will Abolish Letting Agent Fees

It was also revealed that it would launch five-year fixed tenancy agreements and rent controls. The party would also encourage the introduction of local not-for-profit letting agencies.

The Green’s plans are similar to those in the Labour Party’s manifesto.

If the Green Party won the general election, there would also be obligatory licensing for all private landlords and the abolishment of tax reliefs that landlords can currently claim.

Favouring homeowners, owner-occupiers would be able to receive more tax-free rent from letting a room in their home, as the party would increase the Rent a Room cap to £7,250 a year.

The National Landlords Association (NLA) criticised the proposals describing them as an attack on landlords, giving “a one-sided view of the private rented sector.”

The NLA states: “The Green Party appears to want people to rent. However, it does not take into account the demands on landlords to provide safe and decent housing for those families. Rent controls have been proven not to work and many landlords will just sell up and leave the sector if they are introduced.

“Five-year tenancies will reduce the flexibility within the private rented sector that suits landlords and tenants alike, and this policy does not take into account the fact that tenants can ask for longer tenancies already under the current system.”1

1 http://www.propertyindustryeye.com/second-political-party-pledges-to-abolish-letting-agent-fees-and-bring-in-rent-controls/

Mortgage Lending Dropped by 16% in February

Published On: April 15, 2015 at 4:05 pm

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The amount of mortgages offered to first time buyers and those moving home dropped by 16% in the year to February, the Council of Mortgage Lenders (CML) found.

The CML says that the normal lending dip in the early part of the year has been worsened by the general election, which may have caused buyers to avoid moving until they find out who will be in power. An upturn in lending is expected in the summer.

Bucking the trend, lending to buy-to-let investors has increased yearly by 11% from February 2014. 15,900 loans were approved in February 2015 worth a collective £2.2 billion.1

Some estate agents believe that new pension rules, allowing over-55s to withdraw from their retirement savings, have encouraged them to invest in the buy-to-let market.

Yesterday, we revealed that buy-to-let investors have seen 1,400% returns. Read more here: /1400-returns-create-buy-let-landlords/.

Mortgage Lending Dropped by 16% in February

Mortgage Lending Dropped by 16% in February

The CML found that so far the rise in buy-to-let lending has “almost completely” been a consequence of remortgaging. Lenders have been cutting their mortgage rates recently, as they expect an increase to the Bank of England’s (BoE) base rate to not be until next year.

For those stepping onto the property ladder for the first time, 18,700 loans with a total value of £2.7 billion were approved in February. This is a 1% drop on January and a 16% decrease on February 2014.1

However, the CML said that this was the second strongest February for first time lending since 2007, behind only February 2014 levels.

First time buyers needed an average deposit of 19% in February, compared with 17% in January. As mortgages are fairly cheap, first time buyers’ repayments make up 19% of their income, down from 24.8% in December 2007.1

The Office for National Statistics (ONS) also revealed that the average price paid for a home by first time buyers in February was £205,000, a rise of 7.4% on the previous year.1

For people moving house, 21,900 loans were made at a total worth of £4.1 billion in February, a 2% fall on January and 16% less than in February 2014.1

Director General of the CML, Paul Smee, says: “Seasonal factors have played their part in dampening house purchase lending activity in February. This typical seasonal trend may also be exacerbated by uncertainty ahead of the general election, but we still expect to see an upturn in the spring and summer months.

“Buy-to-let, in contrast, has shown year-on-year lending increases, due almost completely to remortgaging which is typically strong in the buy-to-let market.”1

Chief Executive of mortgage brokers SPF Private Clients, Mark Harris, says that in March, the mortgage market picked up, as is expected in spring.

He explains: “Buy-to-let lending is up year-on-year, proving its enduring popularity. The relaxation of pension rules this month is likely to provide a further boost for the sector. A combination of cheap mortgage rates, easing criteria and poor savings rates are convincing many that investment property is a sensible home for their money.

“Once election uncertainty is out of the way, we expect to see a flurry of activity in the mortgage market. There will certainly be plenty of cheap mortgage rates to tempt buyers.”1

1 http://www.theguardian.com/business/2015/apr/14/mortgage-lending-dips-16-in-february

Landlord Law Conference Explains Changes in the PRS

Published On: April 15, 2015 at 3:33 pm

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Yesterday, Landlord Law held a conference at Homerton College in Cambridge.

To over 100 attendees, the session focused on legal issues surrounding the private rental sector.

Landlord Law Conference Explains Changes in the PRS

Landlord Law Conference Explains Changes in the PRS

Moderator of the event Graeme Gee greeted guests before his wife, Tessa Shepperson, reviewed the past year for the sector.

Anthony Gold Solicitors’ David Smith followed with a talk on the changes coming due to the Deregulation Act, which was one of the last pieces of legislation to receive Royal Assent before Parliament was dissolved ahead of the general election.

Smith explained how the Act will affect section 21 notices and said that moving forward, the situation is “immensely uncertain.”1

Sue Lukes, a specialist in immigration law, went on to explain the right to rent checks, consequences of the Immigration Act 2014. Read more about the checks here: /guide-for-checking-tenants-immigration-status/.

Lukes said that with the West Midlands trial ending in a few months, we should know soon when it will be rolled out nationwide.

Sharman Law’s Simon Parrott described the rules surrounding old-fashioned tenancies governed by Rent Acts. These are few and far between, but do still exist. For this type of tenancy, there are specific guidelines around possession and rent rises.

The Tenancy Deposit Scheme’s, official sponsor of the conference, Mike Morgan spoke about how adjudicators deal with disputes. He stated that only factual information will be looked at, and none of the involved parties are spoken to. Adjudicators will not visit the property either. Morgan stressed that landlords and agents should use a correct inventory and follow strict procedures.

David Smith returned to talk about Houses in Multiple Occupation (HMOs) and the issues that they can bring, as well as prosecutions.

Fire safety expert and solicitor Warren Spencer, of Firexact, followed onto the podium, where he spoke on the need to comply with fire safety laws, particularly in HMOs.

Sam Madge-Wyld from Arden Chambers spoke about the requirements for landlords when supplying utilities in their rental properties. Paul Shamplina, of Landlord Action, concluded with a speech on the eviction process.

1 http://www.propertyindustryeye.com/its-the-law-and-this-is-how-changes-will-affect-the-private-rented-sector/

Generation Rent Withdraws Support from Homes for Britain

Published On: April 15, 2015 at 2:56 pm

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Generation Rent Withdraws Support from Homes for Britain

Generation Rent Withdraws Support from Homes for Britain

Yesterday, lobby group Generation Rent revealed that they are no longer supporting the Homes for Britain campaign.

Director of the organisation, Alex Hilton, says that the “title’s great” but that Homes for Britain “is so flawed” that it has “undermined the interests of people suffering the consequences of the housing crisis.”

The group have released an open letter calling for participants to “work with us” on a “more effective, loose campaigning network”.

The letter explains Homes for Britain’s plans to end the “housing crisis within a generation”, although Hilton believes “more timely”1 solutions are needed. Hilton asks organisations to email info@generationrent.org if they wish to help.

The letter goes on to say that Homes for Britain’s requirement for political parties to publish “proposals within a year of taking office” is a “get out of jail free card for politicians.”1

Read the full letter here: http://www.generationrent.org/fixhomesforbritain