The majority of landlords in England don’t use letting
agents to manage their rental properties, according to the latest English
Private Landlord Survey, covering 2018.
The Government report found that more than half (52%) of
landlords did not use a letting agent to let or manage their properties in
2018. A third (34%) used an agent for lettings services, while one in ten (9%)
used an agent for both letting and management services.
The remaining 5% only used an agent for management services.
These figures arrive ahead of the introduction of the Tenant Fees
Bill this year, which the industry believes will reduce the number of
landlords that use letting agents.
Under the new law, letting agents (and landlords) will be
prohibited from charging upfront fees to tenants. As a result, it is believed
that letting agents will increase their charges for landlords, in order to
recoup some lost income.
The Government research found that landlords that entered
the sector more recently were less likely to use a letting agent than longer
standing landlords. A third (32%) of those who had been a landlord for three
years or less were using an agent, while that proportion increased to almost
half (46%) amongst those that had been landlords for between four and ten
years.
More than half (53%) of landlords who had been in the sector
for 11 or more years used an agent.
Comparing this to the Government’s previous data, in 2010,
43% of landlords stated that they had, at some point, used a letting agent to
undertake the lettings and management of their property portfolios.
It will be interesting to see how these figures change once
the ban is introduced, and its effects felt across the industry.
At the same time, landlords were asked whether they
currently or previously belonged to one or more of the main private rental
property professional organisations. The majority of landlords (75%) had no
current or previous membership of any group.
13% reported current or previous membership of the National
Landlords Association (NLA), while 9% were part of the Residential Landlords
Association (RLA). 5% reported current or previous membership of another
professional organisation.
We remind all landlords of how valuable the services of both
letting agents and professional organisations can be in operating a successful
and compliant lettings business.
Fewer properties were sold over the year to the fourth quarter (Q4) of 2018, compared to the same period of the previous year, according to the latest Quarterly Stamp Duty Land Tax Statistics from HM Revenue & Customs (HMRC).
On a quarterly basis, property transactions increased by 3%
to 316,200 between Q3-Q4 2018, but were down by 5% on an annual basis. HMRC
notes that this is partially due to the devolution of Stamp Duty Land Tax
(SDLT) to Wales in April last year.
Q4 2018 Stamp Duty receipts totalled £3,291m, which is 3%
higher than in the previous quarter, but down by 5% on Q4 2017. Residential
property receipts remained broadly the same on a quarterly basis, while
non-residential receipts rose in value by £102m.
60,700 transactions claimed first
time buyer Stamp Duty relief in Q4, making a total of 241,300 claims since
the relief’s introduction. The estimated total amount relieved is £570m.
Liable residential property sales in Q4 were 38,600 lower
than in the same quarter of 2017, with most of this fall being seen in the
under-£250,000 band. This partly reflects devolution of SDLT to Wales.
Non-liable transactions have increased by around 23,700
since 2017, due largely to the first time buyer relief.
90% of all Stamp Duty transactions were for residential
properties in Q4. Between Q3-Q4, sales rose by 2% (6,500) to 286,000, but were
down by 5% (14,900) on Q4 2017.
Since Q1 2018, only two thirds of residential sales were
liable for Stamp Duty, which is the lowest proportion since Q1 2014. This
reflects recent changes in Stamp Duty rates; liable transactions increased in
Q3 2016, due to the new rates on additional properties, but dropped in Q4 2017
when the first time buyer relief increased the liable threshold to £300,000.
Additional dwellings are required to pay the standard
rate of Stamp Duty, plus 3%. Between Q3-Q4, transactions for this type of
property, including buy-to-let, rose by 3%, to 60,000. However, compared to Q4
2017, they have fallen by 8% (5,300).
For the past four quarters, additional property transactions
have accounted for around 33% of all liable sales, and have generally increased
as a proportion of residential transactions.
The proportion of income spent on rent by private tenants
has fallen over the past decade, according to new official figures.
The latest English Housing Survey, for 2017/18, shows that
the proportion of income spent on private rents was an average of 32.9% in the
period, which is down from 34.3% in the previous year and 36.4% in 2014/15.
With the Government considering how to increase the length
of private tenancies, the Survey also found that the average time that a
private tenant has spent in their current home was up from 3.9 years in 2016/17
to 4.1 years in 2017/18.
The Government’s new Private Landlord Survey for 2018, which
was published at the same time, reports that 70% of landlords kept their rent
prices the same when renewing their most recent tenancies, indicating that
landlords prioritise keeping good tenants for the long-term.
Owner-occupation
The latest English Housing Survey found that, of the
estimated 23.2m households in England, 14.8m (64%) were owner-occupiers in
2017/18. The proportion of homeowner households increased steadily from the
1980s to 2003, when it hit a peak of 71%.
Since then, owner-occupation has gradually declined to its
current level. However, the rate of homeownership has not changed since
2013/14.
After more than a decade of decline, the proportion of
35-44-year-olds in owner-occupation has increased. In 2017/18, 57% of those in
this age group were homeowners, which has risen from 52% in 2016/17.
While owner-occupation remains the most prevalent tenure for
this category, there has been a considerable rise in the proportion of
35-44-year-olds living in the private rental sector (from 13% in 2007/08 to 28%
in 2017/18).
Private renting
After a period of substantial growth, the proportion of
households in the private rental sector has not changed for five years.
Meanwhile, the share of households in the social rental sector has not changed
for over a decade.
In 2017/18, the private rental sector accounted for 4.5m (19%) households. Throughout the 1980s and 1990s, the proportion of private rental households was steady, at around 10%. While the sector has doubled in size since 2002, the rate has hovered around 19-20% since 2013/14.
Proportion of Income Spent on Rent has Fallen, Reports English Housing Survey
Social renting
The proportion of social tenants who expected to buy their
own homes has declined, but no such drop was observed among private tenants.
In 2017/18, 25% of social tenants expected to buy a property
at some point in the future, which is down from 30% in 2016/17. A greater
proportion of private renters expected to buy – 58%, which is unchanged on
2016/17.
The social rental sector had the highest rate of
overcrowding and the lowest rate of under-occupation.
In 2017/18, 8% of households in the social rental sector
were living in overcrowded accommodation (compared to 6% in the private rental
sector and 1% of owner-occupied homes).
Meanwhile, 10% of homes in the social rental sector were
under-occupied (defined as two or more spare bedrooms). While under-occupation
remains less prevalent in the social rental sector (54% of owner-occupied homes
and 15% of private rental homes), it rose between 2016/17 and 2017/18, from 8%
to 10%.
Energy efficiency
The energy efficiency of English homes has increased
considerably in the past 20 years, but has not improved since 2015.
In 2017, the average Standard Assessment Procedure (SAP)
rating of English dwellings was 62 points, which was up from 45 in 1996. This
increase was evident across all tenures.
However, the increase appears to be slowing, and there was
no change in the average SAP rating of homes between 2016-17 (in any tenure).
Decent homes
There remains a lower proportion of non-decent homes in the
social sector than in the private rental and owner-occupied sectors.
In 2017, 13% of homes in the social rental sector failed to
meet the Decent Homes Standard. This is lower than the proportion of private
rental (25%) and owner-occupied (19%) homes.
Over the past ten years, the proportion of non-decent homes
has dropped from 35% of all stock in 2007 to 19% in 2017. This decline was
observed across all tenures, but has stalled in recent years.
Positively, the number of homes in the private rental sector
with a Category 1 hazard has plummeted from 31% in 2008/09, to 14% in 2017/18.
Comments
John Stewart, the Policy
Manager of the Residential Landlords Association (RLA), responds to the Survey:
“What emerges from the wealth of data out today is a picture of
continuing improvement in affordability, security and standards for private
tenants.
“The figures also debunk the myth that landlords are
always increasing rents unreasonably and looking for every opportunity to evict
a tenant.
“We recognise that, whilst this data confirms that the
vast majority of landlords enjoy good relationships with their tenants and want
them to stay on long-term, there are still too many unscrupulous landlords who
bring the sector into disrepute and they should be driven out of the market.”
Dan Wilson Craw,
the Director of tenant lobby group Generation Rent, had a different opinion: “With house prices slowing and
landlords now paying more tax, it has become slightly easier for renters to buy
their first home. However, for the remaining 4.5m private renters,
unpredictable rents and tenancies that the landlord can end without needing a
reason mean they have no stability. We need much better protections from
eviction and regulation of rents if renters are to enjoy long-term homes.
“These numbers suggest that most tenants
already have a landlord who wants to provide a long-term home. But, because
tenants have so little power in the market, there’s no way to actively avoid
ones who don’t. Tenants should expect that paying rent means they get to stay,
and that they shouldn’t face unaffordable rent rises. With most landlords already
on board with this, the Government should crack on and raise standards for the
whole sector.”
A rental platform is welcoming new plans for wide-ranging
reform of the housing redress system, but warns that landlords need to be given
plenty of time to prepare.
The call by RentalStep comes after the recent announcement
by the Housing Secretary, James Brokenshire MP, which outlined various
proposals to reform
the housing redress system.
At the heart of the reform is the formation of a housing
complaints resolution service, which would create a one-stop-shop for all
complaints relating to every tenure of housing.
Furthermore, under the new rules, all private landlords
would be required to join a redress scheme, with fines of £5,000 for those that
fail to comply.
The proposed changes will be discussed, reworked and revised
later this year by a redress reform working group, which will include existing
redress schemes, as well as the Government.
Mike Georgeson, the Founder and Chief Executive of
RentalStep, insists: “While the planned
reforms are a positive move – protecting tenants and giving them a fair right
to redress – it’s also vital that landlords are given enough time to adjust to
yet more changes and new regulation.
“This is another measure
for landlords to be aware of and another cost to bear, so they need to be given
fair warning of when the reforms are coming into play and what exactly they
will involve.”
He adds: “Landlords will
have to pay to join a redress scheme and could also be fined in the event of non-compliance
– the prospect of these extra expenses could be a cause of concern for many.”
As the costs of letting a
property continue to rise, any way that landlords can reduce their monthly
outgoings should be fully explored, Georgeson believes.
“With the ever-growing
financial pressures on landlords, reducing costs where possible is a wise and
pragmatic move,” he explains. “Cost-cutting is an especially important
consideration at a time when Brexit uncertainty, the prospect of increased
management fees, as a result of the incoming ban on tenant fees, and other new legislation is squeezing landlords
more than ever.”
Landlords, make sure you
stay on top of all new regulations, including redress reform.
Scotland should be used as a model for lettings across the
rest of the UK, according to a letting agent based north of the border.
DJ Alexander Ltd, one of the largest family-run property
management businesses in Scotland, believes that the Government’s upcoming ban on lettings
fees is good for business, and will strengthen the relationships between
landlords and tenants.
The firm insists that charging tenants administration fees
is both unnecessary and bad for business.
DJ Alexander Ltd, headed up by brothers David and John
Alexander, argues that the lettings experience in the Scottish private rental
sector should be the model for the rest of the UK.
The regulations included in the Tenant Fees Bill in England
and Wales have been in place in Scotland since 2012. Additionally, Section
21 eviction notices no longer exist north of the border, while the Scottish
Government recently introduced much
greater security for private tenants.
Scotland should be the Model for Lettings across the UK, Agent Believes
David Alexander, the Joint Managing Director of Apropos by DJ Alexander
Ltd, says: “In
many ways, Scotland has led the way in improving the rights of tenants, and
changing the relationship between landlord and tenant. Too often, this
relationship has been confrontational and divisive, with each side pitted
against the other. Rather than resolve any disputes or problems, the attitudes
and the regulations seem to be established to dispose of any complaint by a
tenant, rather than address it.
“The
Tenants Fees Bill simply rights a flawed piece of legislation that allowed
unwarranted and unfair charges to develop under the camouflage of
administration expenses, often with little or no explanation of what these were
for or why they were being applied. With many letting agents operating a business
model where such charges account for a quarter to a third of income, it is
clear that they were not motivated to end these charges, reduce their levels,
or to have them examined in too much detail.”
John
Alexander believes that the ban on fees will result in higher charges for
landlords, which will concern many investors.
He
explains what happened in Scotland: “When these charges were ended in 2012, and
they were never as substantial a part of the Scottish market as they have been
in England and Wales, there were doom-mongers who predicted the end of the
lettings market. But this did not happen; the market adapted, landlords were
charged more, but the best agents and the best landlords adapted and realised
that this was fairer for the tenant, and, in the long-term, created a better
relationship between the two.
“Equally,
the ending of the no faults ground for eviction notices and introducing much
greater security of tenure for tenants was feared by some in the property
market as a sign of them losing control. On the contrary, it gives agents,
landlords and tenants the opportunity to develop a relationship built on trust,
on fairness and on developing a long-term relationship to their mutual
benefit.”
Do you
agree that Scotland’s lettings model would work across the rest of the UK?
The Law Society has urged the Government to improve the
current redress system in the private rental sector, rather than introducing a
specialist housing court.
In a response to a Government
consultation on the proposed new housing court, the Law Society stated that
housing claims suffer from numerous procedural delays and system failures, but
a separate court is not the solution to fixing them.
The organisation believes that it is wrong to radically
change the system in favour of a “relatively small” number of private landlords
demanding change.
Instead, the Law Society backed improvements to resourcing
existing courts, and signposting parties to advice and information, to ensure
that cases are dealt with in a timely and efficient manner.
Its response suggested that it was not clear what funds
would be used to resource a specialist housing court, nor was it clear that a
sufficient number of housing courts would be made available and accessible
across England.
The Law Society said: “The case for a housing court has not been properly put
and further evidence is needed as to why improvements within the current system
will not suffice. Some private landlords do not understand the complexities of
their case and are often reluctant to pay for legal advice. Such advice would
ensure they understand the defences and counter-claims available to
tenants, as well as the built-in safeguards within the legal process. However,
without this knowledge, landlords often complain about perceived ‘delays’.”
The
delays that exist around listings, orders, warrants and enforcements are
“fundamentally due” to insufficient court staff, court closures and
insufficient judicial time. The Law Society said that “extreme difficulties”
remain in getting information from the court over the phone, and the Government
would be better advised to look at how courts are coping with housing cases.
Extra
support for court users should include a duty adviser for tenants, guidance for
litigants in person (LiPs) and checklists for what they could expect at court,
it added.
The
increase in the number of LiPs has led to delays in the process, due to a lack
of understanding and preparedness, with housing advice deserts created in some
areas, where there are not enough solicitors.
In
another response to the consultation, the Civil Justice Council (CJC) said that
money would be better spent elsewhere, rather than on a court designed to
provide a single path of redress for landlords and tenants.
If
there was a need for judges to be more specialist, then the CJC believes that
this could be resolved by a system of ticketing judges to deal with housing
issues, as happens in family cases.
The
Communities Secretary, James Brokenshire MP, has said that the housing court
would help landlords and tenants access justice when they need it, and create a
fairer housing market.
