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Em Morley

Councils are Failing Tenants and Good Landlords, the RLA Insists

Published On: November 29, 2018 at 9:00 am

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Councils across England and Wales are failing tenants and good landlords, according to a study by the Residential Landlords Association (RLA).

Two-thirds of councils in England and Wales brought no prosecutions against private landlords in 2017/18, the research found.

Almost a fifth of councils didn’t even issue any improvement notices during this period, which order a landlord to conduct certain repairs or improvements to a property.

Following the introduction in April 2017 of new powers for councils to issue civil penalties against landlords failing to provide acceptable housing, in 2017/18, 89% of local authorities did not use these powers. Half reported that they did not even have a policy in place to use them.

Analysis of the results from 290 local authorities replying to Freedom of Information requests from the RLA’s research platform, PEARL, shows that there is no clear link between a council operating a licensing scheme for landlords and levels of enforcement.

As MPs prepare to debate the private rental sector today, the RLA is arguing that the results of its study show that tenants and good landlords are being failed by a system that is unable to root out rogue landlords.

The RLA is calling for a renewed focus on enforcing the powers already available to councils. This includes: sustainable funding for enforcement departments; using Council Tax returns to help identify landlords; and councils doing more to find and take action against criminal landlords.

David Smith, the Policy Director of the RLA, says: “These results show that, for all the publicity around bad landlords, a large part of the fault lies with councils, who are failing to use the wide range of powers they already have. Too many local authorities fall back on licensing schemes, which, as this report proves, actually achieve very little except to add to the costs of the responsible landlords who register.

“Instead of policing licensing schemes, councils need to focus on finding and taking action criminal landlords.”

It’s been a Positive Autumn for the Lettings Market, Reports Your Move

Published On: November 28, 2018 at 11:22 am

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It’s been a positive autumn for the lettings market, according to the latest figures in Your Move’s Rental Tracker, which covers the month of October.

The South West led the way in October, with rent prices in the region rising faster than anywhere else. The average rent rose by 4.4% in the year to October, which is well above the average for England and Wales (2.2%).

Rents were down in just two regions in October – the East of England and London.

The average rent price in England and Wales was £861 on a seasonally adjusted basis, and £934 on a non-seasonally adjusted basis.

Rent prices

The standout performer in October was the South West, where a combination of strong local economic growth and high housing demand saw rents rise faster than any other region on an annual basis. A typical rent in the region was £686 in October.

But, despite the increase, the South West is still some way behind other parts of southern England. London remains the most expensive region to rent a property, at an average price of £1,271 per month.

However, rents in the capital are falling, by an average of 0.9% in the 12 months to October.

Rent prices in the East of England dropped by an average of 0.4% over the same period, with a typical property now let for £890 per month. It is the third most expensive region to rent.

Just ahead was the South East, which was the only one of the three most expensive regions to record annual rent price growth. Rents in this region – containing many London commuter hotspots – were up by 1.6%, to hit an average of £895 in October.

It's been a Positive Autumn for the Lettings Market, Reports Your Move

It’s been a Positive Autumn for the Lettings Market, Reports Your Move

At the other end of the scale, the cheapest region to rent a property in the country was the North East. Prices here rose by 0.8% in the 12 months to October, to reach an average of £535.

Elsewhere, prices in Wales were flat compared to October 2017, with rents standing at an average of £588 a month.

Month-on-month, the North East and West Midlands saw the greatest rent rises. Both regions recorded growth of 0.4% between September and October.

The North West was not far behind, and was the strongest performer of properties along the west coast. The region recorded growth of 0.3% on a monthly basis.

The East of England was the only region to record a decline in rents between September and October.

Rental yields

Each of the ten regions included in Your Move’s index posted the same average rental yield in October as it did in September.

Landlords in northern regions once again enjoyed the highest percentage returns, with average yields much higher than in southern areas.

The average landlord in the North East saw an annual yield of 5.0% in the year to October, while, in the North West, this figure stood at 4.8%.

London recorded the lowest percentage returns, at an average of 3.2%.

Across all of England and Wales, the average rental yield was 4.3%, which was the same as in September.

Rent arrears 

Between September and October, there was a decline in the number of households in rent arrears, according to the Rental Tracker.

In a boost to tenants and landlords alike, just 8.6% of tenancies had fallen behind with their rent payments in October, which is down on the 10.1% recorded in September. It is also lower than August’s total of 9.7%.

The proportion of tenants in arrears remains well below the recent and all-time highs recorded by Your Move. The all-time high of 14.6% was seen in February 2010, while the most recent high of 13.7% was recorded in July 2017.

Martyn Alderton, the National Lettings Director of Your Move, says: “The focus of the rental market has now well and truly shifted away from London. Prices in other regions are growing much faster and offering higher percentage returns for landlords.

“The South West was the star region this month, posting faster rent growth than anywhere else.”

He goes on: “Investors in the North East and North West continued to enjoy higher percentage returns than other areas, with some areas looking at a 7.5% yield. Properties by the North West coast prove to be very popular. And, with the area ideal for those who enjoy outdoor activities such as running, biking and walking, it’s understandable why tenant demand is high and why landlords are choosing to buy here.

“All in all, there are positives across much of England and Wales, including the fact that tenant arrears are falling.”

Property Market Slows in October Amid Uncertainty

Published On: November 28, 2018 at 10:42 am

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The property market slowed in October, amid wider uncertainty across the economic and political landscapes.

NAEA Propertymark (the National Association of Estate Agents) has issued its latest Housing Report, covering the month of October.

Demand for housing

During October, the number of home hunters registered per NAEA Propertymark member estate agent branch dropped by 13% on average, from 338 in September to just 294.

This is the lowest number of buyers recorded for the month of October since 2012, when 265 were registered per branch.

Supply of properties

The supply of available properties to buy also fell by 13% in October, from an average of 46 per branch in September, to just 40. This is the same level recorded as in August, when the heatwave triggered a lull in the property market.

Property sales

The number of property sales agreed per NAEA Propertymark member branch decreased in October, from an average of nine in the previous month, to eight.

Since sales to first time buyers hit a three-year low in August (at 20%), the percentage of properties sold to this group has been on the rise, up from 22% in September to 23% in October.

Recent Stamp Duty figures from HM Revenue & Customs show that the Government’s tax relief for first time buyers continues to help them onto the property ladder.

Mark Hayward, the Chief Executive of NAEA Propertymark, comments on the report: “Last month’s findings prove that uncertainty surrounding Brexit is having an impact on the sector. It’s possible that many buyers and sellers are putting their plans on hold, while they wait for clarity on what the UK’s future relationship with the EU will mean for them and the property market.

“We’re also entering a quieter period seasonally, where we typically see the market slow down, as people put their moving plans on hold until the New Year. With fewer prospective buyers interacting with the market, it’s important those currently trying to sell their home ensure it is priced competitively and is presented in the best possible way.”

If you’re looking to sell your property in the near future, NAEA Propertymark has compiled its list of the most common mistakes that sellers can make, which may prevent a successful sale. Here’s how to avoid them: https://www.landlordnews.co.uk/common-mistakes-property-sellers/

Tenants in Camden Spending Most on Rent of any London Borough

Published On: November 28, 2018 at 9:51 am

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Tenants in Camden are spending the highest proportion of their salaries on rent of any London boroughs, according to a new study by OnTheMarket.com.

The property portal found that, when renting a one-bedroom property in Camden, 61% (£1,944,28) of the average tenant’s salary is spent on rent. For a two-bed, this drops to 46% (£1,471,05), while a three-bed eats up 51% (£1,614,44). Four-bed homes will eat up 60% of a tenant’s rent (£1,911,65). These percentages are based on one tenant per bedroom.

The average gross salary of tenants in Camden is £3,181.17 per month.

However, the data shows that Camden does not, in fact, boast the highest average rent price in London. Instead, it is the borough where private tenants are spending the highest proportion of their wages on rent, in relation to the average salary for that specific borough.

Tenants in Camden Spending Most on Rent of any London Borough

Tenants in Camden Spending Most on Rent of any London Borough

Kingston upon Thames is the borough with the lowest percentage of earnings spent on rent across the capital. The average gross salary of a tenant in the borough is £4,352.78 per month.

When renting a one-bed property in Kingston upon Thames, the percentage spent on rent is 25% (£1,099.15), while a two-bed is 17% (£740.65). A three-bed is 15% (£648.55) and a four-bed is 14% (£627.40). This also assumes one tenant per bedroom.

Vikki Bennett, the Spokesperson for OnTheMarket.com, says: “Costs within the London rental market have been driven up in recent years, as first time buyers have battled to enter the housing market and second steppers have struggled to trade up while prices have risen.

“While it’s no surprise that cost remains the most likely primary factor when considering a new home, our analysis shows some stark variations across each borough of salary percentages being spent on rent. So, while London rents remain high across the board, considering all available options, such as moving to a nearby borough just a few miles away, can prove to have significant cost savings.”

She points out: “Hampstead, within the borough of Camden, is likely to be of high significance as to why Camden comes out with the highest percentage, due to the exceptionally high rental prices within this particular area.”

Mark Birch, the Director of Lettings at estate agent Jackson-Stops in Teddington, looks at Kingston: “Kingston upon Thames is an ancient market town located on the banks of the River Thames and nestled between London’s two largest Royal Parks. It’s an attractive place to rent for many people, offering many things such as great shopping and leafy walks in beautiful parkland. It is also cheaper than neighbouring areas, such as Richmond.

“It’s easy to see why so many commuters might choose to settle here and benefit from being outside the hubbub, while remaining close enough to connecting transport links into London.”

And Charlie Benn, the Director of Lettings at Bexley estate agent Anthony Martin, also comments: “It takes around 45 minutes to an hour to get from Bexley into central London. This is ideal for city workers, especially at a time where two-hour commutes are on the rise.

“City workers living in Bexley are in easy reach of central London, while also benefitting from the affordable rental prices.”

They add: “This makes Bexley attractive to those working in the City who want to keep a higher percentage of their salary for disposable income!

“Next year, the borough will be within an easy commute to the highly anticipated Crossrail Link (at Abbey Wood), providing even more time saving commutes.”

Will PPI Companies Start Chasing Tenancy Deposits?

Published On: November 28, 2018 at 9:00 am

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As the PPI deadline looms, could these companies switch their business models to chasing tenancy deposits that weren’t properly protected?

A new study of more than 1,000 Britons in the UK’s private rental sector has uncovered a worrying lack of knowledge surrounding tenancy deposit laws and tenants’ rights when a landlord does not comply with the rules.

As such, our sister company, Just Landlords, which commissioned the research, believes that PPI companies may latch onto this naivety and chase the substantial rewards that tenants can claim when their landlord is non-compliant.

Under the Housing Act 2004, landlords in England and Wales must protect their tenants’ deposits in one of the three Government-approved schemes. If they don’t, they could be liable to pay the tenant up to three times the amount of the initial deposit, plus the full deposit amount.

Will PPI Companies Start Chasing Tenancy Deposits?

Will PPI Companies Start Chasing Tenancy Deposits?

When respondents were asked how much of the original deposit the tenant could claim for when they leave the property, if the landlord has not complied with the law, just 2% could correctly identify the right answer – three times the amount, plus the deposit. This means that a staggering 98% of those involved in the private rental sector do not understand tenants’ rights.

We remind all involved in property to read our helpful guide to understanding tenancy deposit law, and why it’s important to comply with it: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-tenancy-deposits-2/

Perhaps even more worrying is the fact that, of those aged 55+, 70% thought that the maximum amount available to a tenant was the full amount, plus their deposit. This age group includes some of society’s most vulnerable renters, so they may be at risk of being taken advantage of by rogue landlords.

Landlords, too, must be aware of the law, as they could face large fines and significant payouts to their tenants if they do not comply.

Just Landlords’ study also asked respondents where a tenant’s deposit should be kept during a tenancy. The majority (66%) could not identify the correct answer – with a Government-approved deposit protection scheme – and, amongst those aged 18-24, the number of correct responses dropped to just 16%.

This should ring major alarm bells, as most 16-24-year-olds (65%) live in rental accommodation. Worryingly, they may be missing out on money that they are legally entitled to.

8% of respondents believed that the deposit was held in the landlord’s personal bank account, while almost a quarter (24%) thought that the letting agent looked after it.

Following the PPI scandal of recent years, the survey also looked at whether or not attitudes to consumer rights, particularly tenants’, had changed, and whether or not Brits are more or less likely to look into which processes should be followed.

37% said that it had not made any difference to their attitude towards their consumer rights, with just under three-quarters (74%) saying that the PPI scandal hadn’t changed their awareness when it came to reading the terms and conditions of a signed agreement.

Rose Jinks, the Spokesperson for Just Landlords, comments on the findings: “It’s shocking that so few people understand their rights when it comes to tenancy deposits, especially as more people than ever rent from a private landlord. We believe that the companies currently seeking PPI compensation for consumers may turn to unclaimed tenancy deposits when the deadline comes into force in August next year.

“Tenants may find that they could claim back three times their deposit, plus the original deposit amount, if their landlord didn’t comply with the law, while landlords could be faced with a significant bill. We urge all of those in the private rental sector to understand their rights and responsibilities surrounding tenancy deposits.”

House Prices Up in Prime Central London, as Activity Rises

Published On: November 27, 2018 at 10:30 am

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House prices have risen on an annual basis in prime central London, as activity has increased in the market, according to London Central Portfolio’s latest Residential Index.

The latest report from the real estate investment firm covers October 2018.

Prime central London

The average property value in prime central London (excluding new build homes) stood at £1,870,774 in October, following an annual increase of 4.2%. This reflects higher levels of activity in the high value sector, although growth is slowing.

Over the year to October, transactions dropped by 15.4%, to 3,671. This marks a 40.0% decrease on 2014.

The average house price for a new build was £2,846,856, which represents a 61.1% premium over existing housing stock. New build sales fell by 8.0% year-on-year in October.

The CEO of London Central Portfolio, Naomi Heaton, says: “Average annual prices in prime central London (PCL) in October now stand at £1,870,774, representing growth of 4.2%. This is a result of greater activity at the higher end of the market, due to the significant discounts available and attractive exchange rates for foreign buyers. Nevertheless, price growth has been slowing, suggesting headwinds around Brexit are taking their toll.

“Annual transactions have also dropped to 3,671, just above 70 sales a week. This is a fall of 15.4% over the year, with sales now running at a lower level than during the Global Financial Crisis (GFC).

House Prices Up in Prime Central London, as Activity Rises

House Prices Up in Prime Central London, as Activity Rises

“Transaction levels continue to have a very real effect on London estate agents. Foxtons have closed their flagship office on Park Lane as part of a cost cutting exercise. Moore Stephens reported in July that 27% of high street estate agents are struggling to survive. As the PCL market has seen the most dramatic fall in transactions across the UK over the last few years, it is likely that it will not be the last we hear of this in the coming months.

“It has been hard to avoid the incessant brouhaha around the Brexit negotiations over the last few weeks. There is no doubt that the Prime Minister, Theresa May, faces challenging times ahead. Even though there is no crystal ball as to what will happen in the coming months, one could expect property transactions to remain at very low levels until there is more clarity.

“Nevertheless, we are seeing increased activity in PCL, as price discounting seems to have reached a level which investors are finding sufficiently compelling to re-enter the market.”

Greater London

In Greater London, the average house price in October (excluding new builds) was £631,987. This follows a monthly increase of 0.2% and nominal annual growth of just 0.8%.

Annually, transactions in the market continue to fall, to 89,096 in October, marking a drop of 5.6%, due to higher taxes and continued uncertainty.

New build home sales show far greater declines, of 15.5% over the year. The average property value of a new build was £784,351, noting a 21.0% premium over existing stock.

Heaton comments: “Average prices in Greater London now stand at £631,987, a minimal monthly rise of 0.2%. Prices on an annual basis have stalled completely, with an increase of 0.8%.

“Transactions are at their lowest levels since the GFC and now stand at 89,096. This is a fall of 5.6% over the year and 25.0% down on 2014. Sales of new builds have also fallen a massive 15.5% over the year.

“No doubt, this a contributing factor to the strife that estate agents are currently having to weather. Countrywide, the UK’s biggest estate agency, has seen their share price fall by 98.5% over the last four years.

“On top of this, there are still many hurdles to jump in the Brexit negotiations and there is still no final road map on the table. This is not the news that the market needed to hear and it is hard to see any light yet at the end of the tunnel, with so many vested interests at play both in the UK and EU.”

England and Wales 

Across England and Wales (excluding Greater London), the average house price in October was £264,987. This represents a monthly rise of just 0.1% and annual growth of 2.7%.

Transactions totaled 806,403 in the 12 months to October, marking a further fall of 0.7%, as uncertainty persists.

New build prices stood at an average of £292,985, highlighting a 14.9% premium over existing stock. Sales of new build homes have risen annually by 5.1%.

Heaton gives her thoughts: “England and Wales (excluding Greater London) is not faring much better than the capital. There was nominal price growth of just 0.1% over the month and 2.7% on an annual basis. Average prices now stand at £264,987.

“Transaction levels throughout England and Wales have also fallen by 0.7% across the year and are now at 806,403.

“Whilst most of the properties in England and Wales have not been as heavily impacted by the recent changes to tax legislation as London, it appears the political climate surrounding Brexit has created considerable uncertainty. This has resulted in a fall off of activity, exacerbated by lacklustre price growth, which deters potential sellers from putting their property on the market.

“It is unlikely that any significant reversal will be seen until there is more clarity over Brexit. Whilst transactions in the new build sector have increased by 5.1%, this may not be sustainable at the 14.9% premium it currently commands compared with older stock. New build sales currently only amount to just 93,329 transactions.”