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Em Morley

Letting Agents Breaking Existing Laws on Tenant Fees

Published On: May 29, 2019 at 9:55 am

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Categories: Lettings News,Tenant Fees Ban

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Tenant lobby group Generation Rent has found 21 letting agents around the country that are breaking existing laws on tenant fees.

The campaigners found that many letting agents are currently flouting the Consumer Rights Act, four years after it came into force, which raises concerns about the effectiveness of the upcoming tenant fees ban.

The Consumer Rights Act requires letting agents to display the fees that they charge in their branches and on their websites. The penalty for failing to comply is £5,000. 

In 2017, Generation Rent research of 1,088 agents found that 131 were failing to display their fees.

With the Tenant Fees Act coming into effect on 1st June 2019, Generation Rent has been assessing how well letting agents comply with existing laws, inviting supporters to report unlawful behaviour on its Report an Agent page.

A group of Generation Rent volunteers, nicknaming themselves the Letting Fees Detectives, have been mystery shoppers online, checking agents’ websites and making phone calls. The research has revealed 21 agents that are still misleading tenants by failing to publish their fees.

The Report an Agent page has received reports of agent attempts to avoid the tenant fees ban, including:

  • Pressuring new tenants to sign up to expensive no-deposit schemes
  • Asking existing tenants to renew their contracts before 1st June, allowing the agent to lock in renewal and check-out fees for the next year
  • One agent told a tenant that the fee ban is “like Brexit” – it is being delayed and probably won’t happen

The Tenant Fees Act received royal assent in February and will come into force on 1st June in England.

Georgie Laming, a Campaigner at Generation Rent, says: “The scale of malpractice from the lettings industry is shocking. Failing to display fees is in breach of the Consumer Rights Act 2015, and it’s ripping off tenants who can’t make an informed choice. Whilst the Tenant Fees Act is a brilliant victory for renters, it is clear that we need better enforcement of the law if it is to work properly.

“That’s why Generation Rent supporters have started a Letting Agent Detective team. These are ordinary renters, taking matters into their own hands by mystery shopping letting agents across England to expose them. We’ve found letting agents across the country disregarding the law or deliberately misleading tenants.”

They add: “Probably one of the most shocking examples was a letting agent who told a tenant that the letting fees ban was ‘like Brexit’in that it was constantly being delayed and probably wouldn’t happen, so she should sign a contract now.”

Property Sales Up, Despite Fall in Supply and Demand

Published On: May 29, 2019 at 9:18 am

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Categories: Property News

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Property sales were up in April, despite a decline in supply and demand for housing, according to the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

Property sales

The number of property sales agreed per NAEA Propertymark member branch increased for the first time this year in April, from an average of seven in March to eight.

This is the highest level seen since October 2018, when eight sales per branch were also recorded.

Year-on-year, the number of property sales remains unchanged.

Housing supply

The amount of properties available to buy per NAEA Propertymark member branch dropped in April, from an average of 37 in March to 35.

Annually, however, housing supply has increased, with just 33 properties available in April last year.

Property demand

Following a rise in demand for housing in March, the average number of home hunters registered per member branch dropped by 10% in April, from 296 to 265.

Demand was at the lowest level recorded for the month of April since 2008 last month, when 237 home hunters were registered per branch, on average. Year-on-year, demand fell by a fifth (21%) from April 2018, when an average of 337 prospective buyers were registered per branch.

First time buyer sales

The amount of sales made to first time buyers in April rose marginally, from 26% in March to 27%.

On April last year, this marks an increase of three percentage points, from 24%.

Mark Hayward, the Chief Executive of NAEA Propertymark, comments: “Despite a fall in housing supply and demand, it’s encouraging to see an increase, for the first time this year, in the number of sales going through. This means that, even though buyers and sellers remain uncertain given the current climate, many are continuing to move forward with their transactions, and sales are still happening at the rate we would expect to see at this time of year. 

“More than four in five properties are selling for less than the original asking price, so there’s opportunity for house buyers and sellers to negotiate an offer to get a sale moving.”

Only the Best Letting Agents will be Valued by Landlords Post-Fees Ban

Published On: May 29, 2019 at 8:54 am

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Categories: Lettings News,Tenant Fees Ban

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Letting Agents could Benefit from Build to Rent

Following the introduction of the Tenant Fees Act next month, landlords and tenants will increasingly focus on the level of service provided by the country’s best letting agents, believes Tenant Shop.

The utility management service says that, due to the financial pressures that the ban on fees will put on letting agents, only the best equipped will succeed, as we move through the second half of 2019 and into 2020.

In a post-fees market, letting agents that take a traditional approach, with a focus on high levels of customer service, will be of huge value to landlords, Tenant Shop claims.

With tenants no longer paying upfront fees from 1st June 2019, it will be essential that agents help landlords to properly vet prospective tenants and ensure that all aspects of the move-in/move-out process – including notifying local councils and utility companies about tenancy changeovers, and dealing with stray bills – are handled professionally and efficiently.

Glenn Seddington, the Managing Director of Tenant Shop, says: “The introduction of the Tenant Fees Act is the most significant change to the private rental sector in recent years, and landlords will need full service traditional letting agents they can rely on.

“Having the right tenant referencing, contractual and deposit systems in place will become even more important, as will remaining compliant with the new legislation.”

He continues: “Letting agents can also prove their worth to consumers by providing a comprehensive, knowledgeable and personal service at a time of huge industry change, when people will need reassurance and expert advice.”

As many landlords consider their options following management fee increases brought about by the fees ban, agents can make their offerings stand out, by clearly showing the range of expert services that they provide for their fees.

“It’s this kind of approach with an emphasis on full service and demonstrating the value for money available to landlords, which will see the very best traditional agents take centre stage once the fees ban becomes law,” Seddington explains.

He adds that while, in some cases, management fee increases may be justified, agents don’t necessarily need to hike their fees to remain profitable from June onwards.

“It’s about finding a balance between charging a fair fee for what you offer, while remaining transparent and cost-effective,” Seddington says. “Many agents have also been looking to build additional revenue streams to replace lost fee income.”

He concludes: “Working with the best suppliers can help agents to earn referral fees and, subsequently, keep clients’ costs down. Meanwhile, providing access to leading utilities services, such as Virgin, Sky and Scottish Power, can also help to keep tenants happy, encourage them to stay for longer and, therefore, reduce void periods for landlords.”

Scottish Landlords must Prepare for Energy Efficient Scotland

Published On: May 29, 2019 at 8:00 am

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Categories: Law News

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Scottish landlords must start preparing for new regulations under Energy Efficient Scotland, which will come into force in less than a year’s time.

From 1st April 2020, all new private tenancies (even for existing tenants) in Scotland will require an Energy Performance Certificate (EPC) rating of at least E. This will extend to all private rental properties (including those on existing contracts) by 31st March 2022.

However, when there is a change in tenancy after 1st April 2022, properties must need a minimum EPC rating of D, while all private rental homes will require at least a D rating by the end of March 2025. More detail on how these standards will be applied will be set out alongside draft regulations later this year.

Landlords who fail to comply with the rules under Energy Efficient Scotland will face fines of up to £4,000.

Scotland’s First Minister, Nicola Sturgeon, first launched Energy Efficient Scotland in May 2018.

She announced that the Scottish Government is committed to improving the energy efficiency of homes in the private rental sector, so that tenants can enjoy housing that is warmer and cheaper to heat.

Private rental accommodation typically has poorer energy efficiency than other sectors in the domestic property market.

The Scottish Government has also proposed long-term domestic standards of EPC C by 2030, where it is technically feasible and cost effective. 

It has produced the following guide for landlords on improving energy efficiency in their properties: https://www.gov.scot/publications/energy-efficient-scotland-user-guide-private-landlords/

Energy Efficient Scotland mirrors similar rules introduced under the Minimum Energy Efficiency Standards (MEES) in England and Wales in April 2018. 

We remind all landlords across the UK to comply with relevant energy efficiency laws in the countries in which you own rental properties. We will continue to keep you up to date with your legal responsibilities. 

Housebuilding is Moving in the Right Direction, but Not Fast Enough

Published On: May 28, 2019 at 10:00 am

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Categories: Property News

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Construction industry impacted by cost of living crisis, inflation, and supply chain issues

Housebuilding across the UK is moving in the right direction, but is not fast enough to keep up with demand, according to the latest Dwelling Stock Estimates from the Ministry for Housing, Communities and Local Government (MHCLG).

In its most recent report, covering up to 31st March 2018, the Government department found that there were 24.2m homes in England – an increase of 222,000 dwellings (0.93%) on the same point of the previous year.

Of these, 15.3m were owner-occupied, 4.8m were private rental, while 4.0m were social and affordable rental homes.

Between March 2017 and March 2018, the owner-occupied dwelling stock increased by 226,000, while the number of private rental homes increased by 10,000. 

The amount of homes in the social and affordable rental sectors dropped by 1,000, with other public sector stock down by 13,000 dwellings.

On 1st October 2018, 634,453 vacant dwellings were recorded in England – up by 28,562 (4.7%) from 605,891 on 2nd October 2017. Empty homes account for 2.6% of all housing stock.

Long-term vacant dwellings numbered 216,186 on 1st October 2018 – an increase of 10,893 (5.3%) from 205,293 on 2nd October 2017. Long-term empty homes make up 0.9% of all housing stock.

Joseph Daniels, the Founder of modular developer Project Etopia, comments on the report: “This ten-year high for the creation of new homes in percentage terms is a welcome milestone, appearing as it does in the long shadow of ambitious housebuilding pledges set out by the Government at the last election.

“That manifesto commitment equated to nearly 200,000 new homes a year, though there remains a question mark over whether the Tory pledge related to the building of new homes or just the delivery of new stock, which can include the creation of new homes through other means including change of use.”

He continues: “However, even if the Government was to argue all additional dwellings count towards the manifesto commitment, the rate of progress is still too sluggish to render its commitment for a further 500,000 homes by 2022 a safe bet.

“The country is moving in the right direction, just not quickly enough, so it may take further incentives or policy changes to inject a bit of urgency into the growth in these figures.”

All Parties must do their Research on Deposit Replacement Schemes, Proptech Provider Urges

Published On: May 28, 2019 at 9:40 am

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Categories: Law News

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As alternatives to the traditional deposit protection schemes continue to gain popularity, it’s important for landlords, letting agents and tenants to fully understand how these systems work, before committing to using them, PayProp insists.

Deposit replacement schemes, sometimes referred to as zero deposit schemes, require tenants to pay a non-refundable fee of around one week’s rent, instead of the more traditional upfront, refundable security deposit (which will be capped at five weeks’ rent under the Tenant Fees Act).

The tenant’s fee is used as an insurance guarantee, which landlords can claim compensation for in the event the tenant is responsible for damage to the property. After compensating the landlord, the deposit replacement scheme will then recover the costs from the tenant directly.

Recent research from Your Move suggests that tenants are increasingly interested in alternatives to traditional upfront deposits.

Some 50% of almost 4,000 adults surveyed said that they were interested in alternative or insurance-backed schemes, while 70% said that having the choice to pay an upfront deposit scheme would influence their decision on whether to rent a specific property.

Over half of those taking part in the study were aged between 25-44-years-old with children at home, or private tenants aged 45+.

All Parties must do their Research on Deposit Replacement Schemes, Proptech Provider Urges

Neil Cobbold, the Chief Operating Officer of PayProp, says: “It’s clear that tenants’ awareness of deposit alternatives is growing, and many are interested in how the system could work for them and they could soon become a key piece of criteria for some movers.

“This means now is a good time for letting agents and landlords to carefully consider the options available to them, including the range of different providers and product variations now on the market.”

With more providers offering deposit alternatives and an increasing number of letting agents promoting these products to consumers, it’s important that agents who haven’t yet entered the market get to grips with what they’d be offering landlords and tenants, and how the system works.

Cobbold explains: “Some of the key things agents need to look out for is the product’s level of cover and who the insurance policy is underwritten by.

“It’s also vital to consider how deposit alternatives fit into the tenancy process and how the system will work at the end of a tenancy if the landlord wants to charge the tenant for damage or missing items.”

Providing more choice is a necessary step in catering to a growing, increasingly diverse population of private tenants.

“Upfront deposits may not be as much of an obstacle for the higher number of older tenants and family renters living in the private rental sector, who may also prefer to put aside a larger sum of money for the duration of their tenancy, which they can get back at a later date,” says Cobbold. “That said, for those who find sourcing funds for a traditional deposit a moving deterrent, alternative products are a welcome addition to the marketplace.”

He continues: “It’s also very important for tenants to do their research and think about what is best for their circumstances.

“A small upfront fee and subsequent insurance policy may seem more appealing, but it might not always be the best option in the long-term.”

Cobbold concludes: “Whether you’re an agent, landlord or tenant, it’s essential to do your research to make sure your aware of the benefits and drawbacks to deposit alternatives. The new choices available can only be a good thing if everyone involved fully understands what they are agreeing to.”