Written By Em

Em Morley

Campaign on letting fees labelled anti-landlord

Published On: January 9, 2014 at 11:34 am

Tags: letting agent fees,letting fee abolishment,shelter campaign

A campaign from charity group Shelter concerning the abolishment of tenants’ fees has come under fire from the Residential Landlords Association.

Anti-Landlord

This claim is based on the proposal that landlords should fit the bill for costs of setting up a tenancy agreement.

Alan Ward, head of the RLA, was scathing in his attack of the charity’s campaign, saying that, “once again we have Shelter peddling the same anti-landlord rhetoric, seeking to place yet more costs on the shoulders of landlords.”[1]

He went on, saying, “with almost 90% of landlords being either individuals or couples renting out just a few properties, Shelter seems to think that landlords have a bottomless pit of money to spend.”[1]

Campaign on letting fees labelled anti-landlord

Concern

Ward points to an ill-fated scheme north of the border for one of the reasons for his concern, stating that, “a similar scheme in Scotland has put many letting agents out of business, thereby reducing choice for tenants and landlords.” Furthermore, Ward believes that the Shelter campaign will introduce, “excessive and unneeded red tape,” for landlords and associated costs will “drive up rents for the very same tenants them try to serve.”[1]

Opposition

Jonathan Monjack, is media lawyer and founder of landlords’ collective Happy Tenant Company. The group operates a £500m portfolio in Greater London and utilizes group-buying power.

Monjack observes that, “many landlords-particularly those who aren’t professional property investors-get ripped-off by letting agents who not only charge huge commissions for finding a tenant but also huge renewal fees simply for keeping the tenant in the property.”[1]

One landlord has suggested that landlords are paying agents roughly £1.7bn per year. Monjack though, fears this figure could be even more. He says, “the £1.7bn figure relates only to the amount that landlords are paying to secure and keep a tenant. In actual fact, they often end up paying significantly more to agents via management fees, ambiguous and ubiquitous administration fees and hefty mark-ups on any maintenance works that need doing. Agents often earn yet more revenue via fees charged to tenants and backhanders from contractors.”[1]

He goes onto suggest that landlords need to get out of the mind-set of seeing agents as a “necessary evil.”[1]

[1] http://old.lettingagenttoday.co.uk/news_features/Shelter-campaign-on-letting-fees-blasted-as-anti-landlord?tickertape=yes

Rents have gone North and Benefits South

Published On: January 8, 2014 at 4:29 pm

Author: Em Morley

Categories: Property News

Tags: housing benefit tentants

A husband and wife who own about 1,000 buy-to-let properties have reportedly told letting agents that they will not take any more tenants on housing benefit.

Fergus and Judith Wilson, whose housing empire is based in the Ashford area of Kent, have issued eviction notices to all of their tenants on welfare.

Fergus Wilson explains his decision: “Rents have gone north, and benefit levels south.

Rents have gone North and Benefits South

“The gap is such that I have taken the decision to withdraw from taking tenants on housing benefit. From what I can gather, just about all other landlords have done the same. Our situation is that not one of our working tenants is in arrears; all of those in arrears are on housing benefit.”

Landlords are having problems getting rent guarantee insurance for tenants on the benefit, and this is stated to be one factor behind the issue.

Wilson goes on to say: “Tenants on benefits are competing with Eastern Europeans who came to the UK in 2005 and have built up a good enough credit record to rent privately. We’ve found them to be a good category of tenant who don’t default on the rent. With tenants on benefits, the number of defaulters outnumbers the ones who pay on time.”¹

Despite not all tenants on benefit being in arrears, there have been issues outlined as the reasons for problems with housing them:

People on housing benefit generally have less income than the majority of working tenants, and therefore paying rent is undoubtedly going to be more difficult.
Housing benefit received is often less than the market rent. This means that either landlords must accept lower rents, or the tenants have to make up the difference.
Rent paid by housing benefit is not paid directly to landlords, but by the benefit authorities. Benefit Offices can leave landlords waiting long periods before rent is received.

If a landlord is willing to let their property without rent guarantee insurance, there are a couple of options for them:

Landlords can require that tenants have their benefit paid to a Credit Union account, or use the Tasker Payment Service.
Landlords can also insist that a tenant has a personal guarantee from a family member who owns their own home and is in employment. If there is ever a need to take a County Court Judgement, there is a chance that money will be paid.

However, the Government believes that lower benefits will result in a reduction of in rent from landlords. This seems unlikely to happen, unless there is an oversupply of rented property on the market.

¹http://old.lettingagenttoday.co.uk/news_features/Lettings-agents-told-no-more-housing-benefit-tenants

Councils to offer license fee refund

Published On: January 8, 2014 at 3:11 pm

Author: Em Morley

Categories: Finance News

Tags: HMOs licensing,licence fee refunds

In November last year, court judgments clarifying the cloudy areas surrounding licensing of Houses of Multiple Occupation were issued. The ways in which local licensing fees should be worked out were also clarified. As a result, the National Landlords Association (NLA) contacted every local authority in England to inform them of the new clarifications.

Action

The NLA took action following three judgments affecting local authorities in England. Results of these rulings indicate that a number of landlords could have been overcharged for licensing fees and therefore would be entitled to a refund.

Refunds

Three local authorities – namely Dover District Council, Stockton-On-Tees Borough Council and Ipswich Borough Council have replied to the NLA suggesting that they should not have charged fees for certain licenses. All three authorities have said that will appropriately deal with any refund requests.

Following the lead of these authorities, the City of Bradford Metropolitan District Council is to also offer refunds to affected landlords. In all areas, landlords are urged to contact their councils to enquire about a possible refund.

CEO of the NLA Richard Lambert welcomed the news, but said there were still more councils in need to follow suit. Lambert said that, “it is a positive move by Bradford and the other councils who have replied,” and that the NLA “appreciate the time they’ve taken to look into the court cases and change their policies accordingly.”[1]

Councils to offer license fee refund

Mr Lambert went on to say that “the NLA exists to promote and support a fair and equitable private-rented sector” and that “central to this is ensuring a balanced relationship with the council and community.” This in turn, Lambert feels is important, “so that landlords consider that they are treated in an even handed manner in respect of their responsibilities and costs.”[1]

Finally, Lambert expressed that the NLA “want to build up a comprehensive picture of local authority licensing costs and liabilities across the country, particularly in light of these court judgments which have significant bearing on councils’ charging practices.”[1]

[1] http://www.landlords.org.uk/news-campaigns/news/councils-start-offer-license-fee-refund

Landlords plan further rent rises

Published On: January 7, 2014 at 5:24 pm

Author: Em Morley

Categories: Finance News

Tags: landlords raising rents,Rising rent

Demand for rental accommodation has vastly increased during the past five years. Escalating deposit prices for homes, coupled with the recent financial uncertainty have led to a spike in demand for rental housing, with prospective homeowners priced out of the market.

This in turn has led to a rise in rent prices from landlords cashing in on the additional demand for homes. A survey from SpareRoom indicates that 42% of landlords plan to raise rents in 2014, with 26% planning to increase rents by 3%, higher than the rate of inflation.[1]

Unwelcome

A spokesperson for SpareRoom described the findings as, “unwelcome news for the thousands of people who are trapped renting long term because they can’t afford to climb onto the property ladder.”[1]

The findings also showed that on average, rent for a double room in rental accommodation with bills increased by 4.5% in the final quarter of 2013, in comparison to the previous year. Rent is now an average £507 per month as opposed to £485 per month in 2012.[1]

Landlords plan further rent rises

In more welcome news, 58% of landlords said that they had no plans to increase rents in 2014, with their priorities building up long lasting relationships with good tenants.[1]

Advice

Director of SpareRoom Matt Hutchinson welcomed the news that “the majority of landlords would rather keep good, reliable tenants than make a few hundred pounds extra profit a year.”[1]

He went on to warn landlords thinking of increasing rates by more than the rate of inflation, stating that they “risk attracting tenants who could struggle to pay their rent on time, or, even worse, risk void periods with no tenants and no rental income at all.”[1]

Hutchinson also offered advice to tenants, saying that they should “not just accept an increase” but instead “use it as an opportunity to talk to your landlord and get some improvements carried out in return.”[1]

He also said that tenants should be vigilant and know their rights. Mr Hutchinson said, “tenants on fixed-term tenancy contracts could be protected from rent rises as landlords aren’t usually allowed to increase rents until the term ends, unless there’s a clause in the agreement saying the rent can be increased.”[1]

[1] http://old.lettingagenttoday.co.uk/news_features/Landlords-planning-further-rent-rises-in-2014

Tenant demand to increase

Published On: January 7, 2014 at 4:44 pm

Author: Em Morley

Categories: Property News

Tags: increase tenant demand,rent rises

A busy 2014 is predicted for letting agents, according to new figures from LSL Property Services.

Positivity

Positive results of a recent poll of 2,195 landlords indicate a prosperous coming year for the private rental sector. Landlords have experienced boosted confidence through growing tenant demand, with rising prices enhancing properties as surefire investment opportunities.

The survey suggests that 41% of landlords questioned reported a rise in tenant demand within the last six months. Just one in 16 experienced a fall. Demand led to a marked increase in rent rises during 2013. 58% expect the demand to increase again during 2014.[1]

18% of landlords plan to extend their portfolio in the next twelve months, with 16% expanding in 2013.[1]

Healthy

David Newnes, the director of LSL Property Services, was pleased with the findings of the survey and said that they emphasized the growing rental sector. Newnes said: “The rise in house prices is evidence of the underlying buoyancy in the property market and the stabilising of rent rises is an indication of the current healthy state of the rental sector.”[1]

He continued by saying that landlords are in “a prime position to benefit from the strong yields on properties” and that “buy-to-let investors can be encouraged by the climbing tenant demand.” Mr Newnes went on to say that the demand not only signifies an “excellent long-term investment opportunity,” but also “demonstrates the continued the continued appetite for rental homes.”[1]

Rising Stock

Rick Flay, director of Belvoir Sheffield, said that tenant demand in his city was increasing at a incredible rate. Flay said :”Here at Belvoir Sheffield we are seeing proof that tenant demand is certainly increasing, to the point where we are seeking out new properties in Sheffield and the surrounding areas.

“We are urgently looking for one and two bedroom flats in Sheffield, along with one and two bed terraced houses in the S1, S2, S3, S7, S8, S10 and S11 postcodes, after a significant increase in tenant enquiries.”[2]

Tenant demand to increase

Mr Newnes also underlined the rising stock in the rental market. He stated: “Demand for rented accommodation is strong, exemplified by the fact that the number of lettings, new viewings and applicants are all rising. There are strong foundations for prosperity in the rental sector, fuelled by increased economic optimism and future job creation. Against the backdrop of growing economic stability, more confidence is driving people forward in search of the attractive deals on offer across the buy-to-let mortgage market, which will allow them to benefit from the attractive returns.”[1]

Future

Looking ahead, Mr Newnes urged action to be taken to help first-time buyers raise adequate finances to secure a mortgage, to save over-reliance on the rental sector. Newnes said that “securing mortgage finance is therefore not just a concern excusive to frst-time buyers but remains a real and serious challenge for many landlords.”[1]

He acknowledges that “lending to first-time buyers and those without large deposits has itself seen a pick up,” but says this “still has a long way to go.” Newnes warns that “it is the rental sector that will be continually needed to pick up the slack.”[1]

[1] http://old.lettingagenttoday.co.uk/news_features/Tenant-demand-set-to-increase–LSL-Property-Services

[2] http://www.propertyreporter.co.uk/landlords/tenant-demand-set-to-soar.html

Thousands of Rental Homes to be Built This Year

Published On: January 1, 2014 at 3:58 pm

Author: Em Morley

Categories: Property News

Tags: influx of unsold homes,rental sector

Positivity in the buy-to-let sector is at a record high, and the Government’s £1bn build-to-rent fund could help those renting privately and cause expansion within the sector.

However, one worry is that this growing property market could cause another housing bubble. This could lead to the private rental sector being relied upon to provide affordable housing. The policy could also affect needs at the bottom of the market.

One third of Britain is already too expensive for low-income working households looking to rent. Research has also shown that 1.76 million under-30s will be struggling in 2020, with a very competitive private rented homes market. The number of private renters in poverty has doubled over the last decade, and is now equivalent to the amount of social renters in poverty.

Thousands of Rental Homes to be Built This Year

The build-to-rent fund is designed to encourage institutional investors to create a greater, more improved private rented sector. Research carried out by the Resolution Foundation and Social Finance found that build-to-rent homes could be affordable for people who earn £22,000, and would also be a cheaper option than renting privately in many places.

Build-to-rent also comes with fixed-term tenancies of up to three years. These provide extra security for families that are often stuck in one-year or rolling contracts.

Sigma Capital Group and investor Gatehouse Bank are constructing over six thousand new private rented sector homes, which would help landlords cope with a possible increase in demand. Sites have been identified in Greater Manchester and Liverpool for around 2,000 houses, with other areas looking to benefit.

Business Secretary, Vince Cable, discussed the news: “The UK’s inward investment is booming, growing by 11% last year alone. We want to be even more ambitious and make sure that any new investment is spread right across the country – not just in London and the South East. By ensuring each region has access to good finance opportunities, UKTI’s Regeneration Investment Organisation will help all the UK’s regions fulfil their full potential, helping to build a stronger economy and a fairer society.”¹

Graham Barnet, Sigma’s Chief Executive, as added: “We have developed an innovative joint venture model designed to deliver high quality homes in areas of the country where rental housing is in extremely short supply. Gatehouse has substantial knowledge of and expertise in the UK property market, and has shared our vision for this project. I am delighted that we are now working together to deliver the roll-out of our model, which has the potential to create one of the largest new-build privately rented residential portfolios in the UK.”1

Reviewing even further benefits, Gatehouse Bank Chairman, Fahed Boodai, also said: “Expanding into the residential market, particularly in the UK, is a significant milestone for Gatehouse Bank. We are seeking investment opportunities in mature and stable markets. This joint venture with Sigma breaks new ground in the UK residential sector and will help to deliver thousands of much needed, high quality new homes for rent across the country.”1

¹http://www.justlandlords.co.uk/news/Thousands-of-Private-Rented-Sector-Homes-to-be-built-in-2014-1785.html