Written By Em

Em Morley

Third of Tenants Spend Half of Wages on Rent

Published On: July 24, 2012 at 11:05 am

Tags: cost of renting,half of wages on rent,rent affordability ceiling

Rightmove has issued statistics that indicate a growing number of tenants are spending half of their take-home pay on rent.

Following a survey of 6,913 people, it was revealed that 30% of tenants spend over half of their monthly wage on rental costs. The figure grew for tenants in London and the East Midlands (32%), the South West and Wales (33%) and the South-East (36%).[1]

On average, the UK rental spend is now 38% of net income.[1]

Third of Tenants Spend Half of Wages on Rent

Affordability ceiling

The figures released from Rightmove come with a warning that in some areas, rent has reached an affordability ceiling. 61% of those questioned believed that their rent would rise during the next twelve months.

Miles Shipside, the director of Rightmove, said that the figures were an indication of rental demand outnumbering the properties available. Shipside said: “The failure of rental supply to keep pace with tenant demand” asks questions about “how high the affordability ceiling is and how close we might be to it”[1]

Mr Shipside indicated: “Greater new investment in the rental sector would ease the pressure on rents” as, at present, the “rental supply tap continues to produce a drip rather than the steady flow that the market really needs.”[1]

Limits

Despite thinking that the rental market needs more investment, Mr Shipside was philosophical about its current state. He said: “While the rental bubble is unlikely to deflate, as there is no readily acceptable alternative to the rented roof, it does appear to be approaching a limit in some areas.

“Agents report that the seemingly incessant demand is causing rental price pressure to spill over into other previously less sought-after areas and some tenants are attempting to negotiate lower rents.”[1]

Shipside says that this is a “clear sign that rents may be hitting an affordability ceiling in some locations.”[1] He goes on to use a playful water comparison, saying that when rent hits the affordability ceiling, “like water it finds the path of least resistance and makes its way to other nearby areas with more headroom.”[1]

The result of this, Shipside says, “force some to find alternatives such as stay with parents or squeeze more people into smaller spaces.”[1]

[1] http://old.lettingagenttoday.co.uk/news_features/Third-of-tenants-spent-half-take-home-pay-on-rent

Landlords Urged to Eradicate Unscrupulous Agents

Published On: July 19, 2012 at 10:15 am

Author: Em Morley

Categories: Landlord News

Tags: inefficient letting agents,law breaking letting agents,regulation in private rental sector

The chairman of the Residential Landlords Association has called on landlords to rally together in a bid to eradicate inefficient and often law-breaking letting agents. Speaking to welcome Labour’s policy review of letting agents, Alan Ward said that the industry must do more to self-eradicate the problem.

Fair and Professional

Ward believes there should be a full policy review regarding letting agents and the rental sector. He also believes that landlords should use their heads when choosing letting agents. Ward said: “Landlords especially have it within their power to supply property only to letting agents which act fairly and professionally, and thus starve out the unqualified, the fraudulent and criminal operators.”[1]

Ward also suggests that landlords should “not just take the cheapest offer.”[1]

Clear charges

Letting agents should show their professionalism in regards to charges and such to avoid extra regulation, according to Ward. He has called on members of professional groups, such as the Association of Residential Letting Agents (ARLA) and the Royal Institution of Chartered Surveyors (RICS) “to make clear their charges at all times to both landlords and tenants.”[1] This in turn, he suggests, will “avoid the need for unnecessary extra regulation.”[1]

Support

Ian Potter, MD of ARLA, supports the views of Ward concerning more efficiency in the sector. Potter said that his organisation has, “for many years campaigned to have regulation of the private rented sector.”[1] Potter advises that this regulation “should cover everyone operating in the sector both landlords and agents, as without this, there is an opportunity for people to slip through the net.”[1]

Landlords Urged to Eradicate Unscrupulous Agents

Key Features

Potter thinks that the introduction of some key features would go a long way in improving consumer satisfaction. He says that the features should include “mandatory recognised qualifications, consumer redress using recognised ombudsman services, client money protection, and the ability to be banned from trading in a fair but robust manner.”[1] Potter said he was committed to further future discussions on the matter.

Confidence

More calls for landlords to use professionally accredited agents have come from the National Landlords Association (NLA). This, they claim, would inspire more confidence in the industry.

Chief Executive of the NLA, Richard Lambert, said: “The NLA believes that landlords and tenants should be able to expect certain provisions when using a letting agency to ensure transparency, fairness and a degree of consumer protection.”[1]

Lambert also offers advice to current and prospective landlords: “Our advice to all landlords is to look for agencies which have a commitment to Continued Professional Development, comprehensive Client Money Protection Insurance and Professional Indemnity Insurance, and have elected to abide by a respected industry code of practice.

“Currently, these features are only available by means of membership of a recognised trade body such as the UK Association of Letting Agents (UKALA), ARLA, National Approved Letting Scheme (NALS) or RICS.

“The NLA would welcome more agencies proactively seeking out these organisations in order to provide the kind of consumer protections and assurances which landlords and tenants need to work and live in the private rented sector.”[1]

Regulation

Lambert acknowledges that if the industry cannot provide confidence from within, then “it has to accept that some form of regulation will inevitably follow.”[1]

A London agent, Eric Walker, said the findings of Labour’s review were hard to take. He was angry that the report clearly admitted that letting agents were not covered by any legislation. Walker said: “Labour were in Government long enough when we were campaigning for regulation and duly ignored by eight housing ministers. Labour refused to amend the 1979 Estate Agents Act and omitted this key issue from the Consumer Redress Act.”[1]

Walker also called for all letting agents to be upfront and honest about their fees. In addition, despite acknowledging that no amount of industry regulations would stop deliberate criminality, Walker said that the report was not right in blaming agents. He said: “It is the fault of Governments who opt not to regulate, and in doing so, encourage rouges to make hay while the sun shines.’[1]

[1] http://www.bonetts.co.uk/news/articles/Landlords-urged-to-starve-out-unscrupulous-agents-103551.aspx

Insurance Protecting Landlords with LHA Tenants

Published On: July 13, 2012 at 4:30 pm

Author: Em Morley

Categories: Landlord News

Tags: insurance for landlords with lha tenants,lha tenants,settled housing solutions

The launch of a new insurance policy has taken place, with its aim being to protect private landlords who rent their properties to tenants who receive Local Housing Allowance (LHA).

Settled Housing Solutions is offering their services to local authorities, who in turn could utilise them as incentives to persuade landlords to accept tenants in receipt of housing benefit.

Insurance Protecting Landlords with LHA Tenants

Co-director of Settled Housing Solutions (SHS), Alan Elborough, said that the incentive works out much cheaper than those used in the market at present. Elborough said: “Because local authorities desperately need private landlords to help provide housing, they are offering incentives such as rent in advance. And because it is such a highly competitive market, it has led to incentive inflation.”[1]

Elborough said that competition in the market has been detrimental to taxpayers. He says: “If one local authority is offering two months’ rent in advance, a neighbouring council will offer three. It is very costly for local taxpayers.”[1]

Research

Studies from SHS revealed that 61 local authorities across the UK have indicated that they could potentially save around £3.98million per annum by using SHS products.

Talking of the survey, Elborough remarks: “When we did our inquiry, we asked local authorities a series of questions. These covered how many households they placed in the private rented sector last year, how many they plan to place in such accommodation this year and how much per household they spend on landlord incentives.” He moves on to say: “No one disputed our findings.”[1]

Protection

SHS’ policy serves to protect landlords against arrears, eviction costs and malicious damage from tenants introduced by local councils.

Runnymede Council in Surrey has been the first council to use the policies. Elborough remains confident that more will shortly follow, citing considerable interest has already been lodged.

[1] http://www.landlordtoday.co.uk/news_features/New-insurance-policy-to-tempt-landlords-of-LHA-tenants

Rise in Retiree Landlords

Published On: July 13, 2012 at 10:09 am

Author: Em Morley

Categories: Landlord News

Tags: pensioner landlords,retiree landlords

New figures seem to suggest a growing number of over 65s are buy-to-let landlords.

Rise

Rise in Retiree Landlords

Statistics from insurers Simply Business assessed in excess of 300,000 landlord insurance quotes. Their findings indicate that retiree landlords were up 11% this year to date, in comparison to 2011 and up 33% since 2009.[1]

The figures indicated a rise in the number of female over 65s renting properties, with a rise of 43% in comparison to 2009.[1] Many elderly people are choosing to let out their previous homes, due to the poor state of the housing market. With property becoming increasingly difficult to sell, more and more people chose to keep their existing property when downsizing.

Single properties

A very large majority, 93%, of pensioner landlords own just a single rental property. Findings from Simply Business also suggest that 74% of retirees have let out their property for in excess of three years.

At the other end of the rental scale, the number of landlords aged between 18-25 has fallen by 38% during the past three years.

The CEO of Simply Business, Jason Stockwood, said that it was unsurprising that more people were choosing to rent out their properties. Stockwood expressed: “In today’s economic climate, choosing to rent out your property rather than sell immediately has been a good option for many when looking to move, and with the current squeeze on pensions, this is proving a good source of income for people of retirement age.”[1]

He went on to say: “Buy-to-let can be a tough marketplace to enter,” but there is “a great deal of support available for those looking to take the plunge.” This in turn has led to a number of accidental landlords choosing to stay in the market for longer and continue to make financial gains.

[1] http://www.landlordtoday.co.uk/news_features/Sharp-rise-in-pensioner-age-landlords

Find the Right Tenant at the Start

Published On: July 12, 2012 at 4:21 pm

Author: Em Morley

Categories: Landlord News

Tags: evicting tenants,tenants in severe arrears,vetting tenants

Landlords in the buy-to-let sector are being advised to enhance their vetting procedures, after figures have shown an increase in the number of tenants in severe arrears by almost a quarter in a year.

The financial difficult of the country has meant static or lower wages and high levels of unemployment. Alongside rising rents and an upsurge in the cost of living, the amount of tenants in serious arrears, more than two months behind with rent, hit 100,400 in the three months to June. The Tenant Arrears Tracker study found that this is the highest number since records started in 2008.

Find the Right Tenant at the Start

There has been an 8% increase of tenants in serious arrears in those three months compared with January to March this year. This has caused a 6% rise in the number of landlords taking non-paying tenants to court to evict them over the past three months.

Chief Executive of mortgage broker SPF Private Clients, Mark Harris, recommends: “The best thing you can do is try and avoid this situation occurring in the first place; vet your tenants carefully, and check references to ensure they haven’t missed rent payments in the past.

“However, if tenants do fall behind with the rent, make sure you tackle the issue as soon as they miss their first payment, rather than letting arrears mount up and getting to a stage where eviction is the only option.”¹

Harris explains how tenants in arrears can be dealt with: “These can be resolved fairly easily, but if they have lost their job and are in financial difficult, you may need to give them longer to pay or reduce their rent for a period of time.”

Harris says that this may be your option if you find them a “decent tenant”, and would like them to stay in the property. “If it is agreed,” he expands. “Get it in writing.”

If this is not an option for you, remember that it is a criminal offence to harass tenants and to attempt to evict them independently. “Take legal advice,” urges Harris. “Court proceedings are a hassle and expense but it is far better to get the situation sorted, the tenant evicted, and a paying tenant in their place than let the situation drag on for months on end.”

Bank computer glitches, such as the few suffered by NatWest, may be a current issue in this area.

¹ http://www.landlordexpert.co.uk/blog/2012/07/10/the-key-to-a-good-tenancy-is-finding-the-right-tenant-at-the-start/

Tenants Unhappy over Withheld Deposits

Published On: July 10, 2012 at 10:16 am

Author: Em Morley

Categories: Landlord News

Tags: tenant deposits,withheld tenancy deposits

Tenants Unhappy over Withheld Deposits

Recordings from FindaProperty show a staggering amount of tenants’ deposit money has been withheld during the past three years.

Billions

The findings indicate that tenants have lost around £1.1bn during this period, averaging out at £367m per annum. 40% of tenants said that they had lost part of or all of their deposit, with the average price of money lost totaling £313 per tenant.[1]

Around 20% of tenants questioned said that they had in excess of £500 withheld. The same figure suggested that they were penalised due to damage caused by previous tenants, with 10% taking legal action to try and gain their money back.[1]

Common causes

Some of the most common reasons for deposits not being returned fully to tenants were costs of cleaning (37%) and damage to curtains/carpets (21%). Other reasons for charges were marks on the walls of the property (19%) and unkempt gardens (13%).[1]

A worryingly high 43% of tenants that experienced having their deposits withheld said that they felt the amount of money charged for carrying out any repairs seemed to be considerably more than what they would consider fair.

[1] http://www.landlordtoday.co.uk/news_features/Tenants-unhappy-over-witheld-deposit-money