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Em Morley

Help to Buy ‘An Unmitigated Success’

Published On: September 7, 2018 at 8:58 am

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Categories: Property News

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A recent report released by HBF illustrates how successful the Government’s Help to Buy equity loan scheme has been. The report, released as Government considers the scheme’s future, shows how it has achieved all the targets specified at launch to increase home ownership; increase housing supply, and generate economic activity.

The report also demolishes critics’ oft-made claim that the scheme has driven up new build house prices and demonstrates that the respective increase in price between new builds and second-hand homes is remarkably consistent. While new build prices have always traditionally been slightly higher than second-hand properties, that may not come with new appliances and may require remedial work, the rate of house price growth for new build properties continues to mirror price rises in the wider housing market.

Stewart Baseley, Executive Chairman of the Home Builders Federation said; “It is quite clear that the Help to Buy scheme has been an unmitigated success and has delivered handsomely on all its objectives.
It has enabled hundreds of thousands of people to realise their dream of owning a home, the vast majority of whom are first time buyers on average incomes. It has led to an unprecedented increase in house building activity, created tens of thousands of jobs and boosted local economies the length and breadth of the country.

“Government should celebrate its success and use the hard evidence now available to rebut the claims of its critics. As we look to tackle our acute housing crisis and deliver on the Prime Minister’s target to build 300,000 homes per year the scheme has a key part to play. The Government should reflect on the huge impact the scheme is having on individuals keen to realise their dreams of homeownership, on housing supply and on the wider economy

” Housebuilders continue to invest in the land, materials and people needed to deliver furthers increases in supply confident in the demand Help to Buy is underpinning. Certainty moving forward is now required to enable the increases in housing supply, and the associated social and economic benefits, to continue.”

Government Calls Quits on Plans to Introduce Three-Year Tenancies

Published On: September 7, 2018 at 8:06 am

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Categories: Law News

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The Government has reportedly scrapped proposals that will give tenants a three-year contract.

According to an article in The Sun, the Treasury blocked the plans due to concerns that it could deter people from investing in the buy-to-let sector.

The idea behind the intention was to offer private tenants greater security and enable them to put down roots. However, a number of buy-to-let landlords feared that the risks may far outweigh the benefits.

Aside from making it harder for landlords to deal with problematic tenants as they would be locked into a longer-term agreement, there were also concerns that three-year tenancies could potentially make it harder for buy-to-let landlords to finance their property purchases.

The move to scrap three-year tenancies has been described by Simon Heawood, CEO and founder of Bricklane, as a “baffling turnaround by the Government”.

Heawood is in favour of three-year tenancies as he believes that they are “better” for both landlords and tenants.

He commented: “Forward-thinking landlords like us are already offering three-year tenancies as standard, for commercial reasons.

“Giving tenants more security is not only right but also generating better financial returns for investors.

“Our customers value the fact that tenants are able to feel at home, without compromising investment returns, or having the responsibilities of being a landlord themselves.”

However, a recent study by online letting agent MakeUrMove has found the overwhelming majority of tenants do not want three-year tenancies, instead preferring 12-month contracts.

The research found that 30% of tenants want tenancies to last 12 months, and a further 20% want tenancies to last for no more than two years.

These findings show many tenants prefer flexibility and freedom when it comes to tenancies, with 31% saying flexibility was the most important factor when looking at the length of their tenancy.

Some 29% of tenants stated that they would actually like a tenancy to last significantly longer than three years, and 43% of the tenants questioned had spent more than five years in their current rental property.

MakeUrMove managing director, Alexandra Morris, said: “Many tenancy agreements are currently set at twelve months with six months break clause and we’ve found nearly a third of tenants are happy with this length.

“Our findings reinforce that the majority of people want either the flexibility of a shorter rental, or the security of a much, much longer term.”

Cleaning Trumps List of Reasons for Deductions to Tenancy Deposits, DPS reveals

Published On: September 6, 2018 at 10:00 am

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Categories: Lettings News

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Statistics released today by The Deposit Protection Service (The DPS) have suggested that landlords are most likely to seek deductions from a tenancy deposit to cover the costs of cleaning the property when renters move out.

Over the last year, 63% of landlords that enter The DPS’ Dispute Resolution Service cited cleaning amongst their reasons for a claim, with over half (53%) reporting the need to repair damage caused by tenants.

Managing Director at The DPS, Julian Foster commented: “These statistics give an indication of the types of issues that landlords can face when tenants move out – and of the need for a system of tenancy deposits to protect both parties.

“Many of the problems that lead to deductions can be avoided when both tenant and landlord are aware of their responsibilities and stay in regular communication throughout the tenancy.

“Around 98% of tenancies end without any dispute between landlord and tenant over the deposit, but in the rare occasions they cannot agree, access to a free, impartial dispute resolution process helps ensure that everyone is treated fairly.”

Redecoration costs formed part of 37% of claims disputed by the tenants, with rent arrears the fourth most common reason within such claims (23%).

Other costs cited by landlords include gardening (16%), replacing missing items (16%) and outstanding bills (4%).

Top five most common cleaning tasks at end of tenancy

Alexandra Coghlan-Forbes, Head of Adjudication at The DPS, provides her ‘top five’ cleaning tasks that landlords must undertake after tenants leave the property based on a decade of adjudication:

1. Ovens – I’m always amazed how many tenants have lived in a property for maybe a year or so but say they have “never” used the ovens
2. Extractors – not cleaning or replacing filters is a very common issue
3. Toilets –the photos I’ve seen could turn your stomach!
4. Kitchen sinks – it’s usually the sort of dirt and discolouration that builds up over time (food stains, watermarks etc) if not cleaned regularly, especially with light coloured sinks
5. Skirting boards and light switches – these just often seem to get overlooked

Top 10 Student BTL Hotspots

Published On: September 6, 2018 at 9:31 am

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Categories: Landlord News

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Student property remains a highly profitable investment available to landlords, with great yields of almost 12% presently on offer.

With returning students heading back to university over the next few weeks, demand for student housing is currently high, but which locations can buy-to-let landlords investing in the student property sector expect to achieve the highest yields?

Recent research provided by online letting agent Urban.co.uk identifies which UK universities offer the best rental yield surrounding the campus.

According to the study undertaken, Birmingham has the highest return for the price of the property, in comparison to rental prices.

The UK’s second largest city is home to both Aston University and Birmingham City University in outcode B4, which share the same rental yield of 11.66%, with an average annual rental price of £15,672.

Teeside University in Middlesbrough (TS1) offers the third highest rental yield at an average of 10.73%.

LS2 in Leeds, where both the Leeds Art University and the University of Leeds are located, is home to a rental yield of 9.22%.

The University of Edinburgh in EH8 has the sixth highest rental yield at 8.61%, closely followed by Nottingham Trent University in NG1 with an 8.41% rental yield and Bangor University in LL57 with 8.1%.

Buy-to-let landlords can expect a rental yield of 7.65% near Edinburgh Napier University in EH11 and 7.55% when investing in property surrounding De Montfort University in Leicester LE1.

In order to calculate the rental yield surrounding each UK university, Urban used the local outcode to find the average property and rental prices of the area and divided the annual average rental cost by the average property price, giving the percentage of the rental yield of that outcode.

Adam Male, the Founder of Urban.co.uk, commented: “The buy-to-let market will always be a profitable business close to the nation’s university campuses despite the impositions that have been forced on the buy-to-let market of late, as thousands of students are in desperate need for accommodation every year.

“For those looking to get on the rental ladder, looking to invest near a university guarantees an annual income and one that is often footed by the Government via student loans. While it does have its negatives and can result in higher upkeep costs, investing near to one of these universities can make a great sense financially.

“Although the housing market is stronger in London and the South East in terms of actual prices, the Midlands and further north provide a much more attractive proposition in terms of rental yields and these areas are also home to some of the UK’s top universities. These are the sort of factors that buy-to-let landlords need to consider in the current landscape when looking to invest.”

 

 

New Homes Required for Growing Number of Life-Long Renters

Published On: September 6, 2018 at 9:00 am

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Categories: Tenant News

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While most private renters in the UK aspire to buy property, the reality is that many people simply cannot afford to get a foot on the housing ladder due to high house prices, with many people, particularly millennials, set to rent for the rest of their lives.

With the number of new homes being built across the UK still significantly below the level needed to meet demand from buyers, Britain’s housing shortage has now reached crisis point, with the number of prospective renters also dramatically outweighing the volume of homes on the market.

The latest figures from ARLA Propertymark show that the supply of homes available to rent dropped last month, while demand from renters hit a near 12-month high, and this trend looks set to continue moving forward, as reflected by the slump in the UK home ownership rate, owed largely to fast rising house prices and pitifully meagre wage growth since the financial crisis.

Owner occupiers in the 35-44 age group, for instance, has fallen from 71.6% to 52.4% over the last 11 years, while private renters have increased from 11.4% to 28.5% over the same period. Social renters in this age group have risen slightly over the same period from 17.0% to 19.1%.

But the housing market is simply not prepared for the growing numbers of life-long renters as the number of new-builds coming onto the market remains significantly below the rate required to meet demand, according to DJ Alexander.

Aside from the low number of new homes coming onto the market, the property management firm points to the fact that many buy-to-let landlords are contemplating leaving the property market due to recent government changes to the financing and regulation of the sector, which is also having an adverse effect of rental supply.

If the private rented market shrinks while social housing growth remains relatively flat there is a risk that the much larger number of life-long renters may find their options limited by a lack of housing stock.

David Alexander, managing director of DJ Alexander Ltd, said: “The BTL market has become much tougher in recent years with changes to affordability, access to finance, and a reduction in the tax benefits of property investment.

“All of this has led to a softening of the market and the option for many landlords of either leaving or contemplating leaving the marketplace.

“The result is potentially a fall in the number of private rental properties available although this will be different across the UK with some rental markets stronger than others.

“Therefore, many life-long renters, of whom there are a growing number in their thirties and forties, may find their choice limited by a smaller marketplace.”

With a growing number of life-long renters emerging there is going to be an increasing need for more social housing, more private renting, and more affordable homes across the country, according to Alexander.

He added: “The government and local authorities need to work together with the private sector to ensure that we have a sufficient housing stock to serve the changing needs of the UK population.”

“This means the freeing up of more land in areas where demand is high for property development, a steady and continuing programme of social house building, the encouragement of the private sector to build more homes in areas of greatest need, and the encouragement of a strong and vibrant private rented sector.”

The Property Ombudsman Alters Complaints Process to Speed up Disputes

Published On: September 6, 2018 at 8:05 am

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Categories: Lettings News

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The property ombudsman has implemented changes to its complaints system in an attempt to appear fairer and to speed up the process.

Previously, an agent would witness the outcome first of a complaint if it was upheld against it, while a consumer would be informed first if their complaint was rejected, prompting claims of bias on both sides.

However, now both agents and their clients will see the outcome of disputes simultaneously.

Agents and clients will also be able to track upcoming deadlines and who is managing their case on its RESPOND system.

TPO’s board and council have also been substituted by one unitary board chaired by Baroness Diana Warwick.

Gerry Fitzjohn, former Chairman of the board, and Michael Stoop, former Vice-Chairman of the board, will take up the positions of non-executive directors on the new unitary board.

Stoop will also take on the role of chair of the industry forum which will feed back industry matters and concerns.

A separate consumer forum will be chaired by Mark McLaren, an independent board member.

TPO said its membership as of mid-August was 19,557, with 1,169 agents from single offices and 507 branch offices joining in the past six months.

Katrine Sporle, Property Ombudsman, commented: “Despite being at the centre of complaint handling, it is apparent that the industry sometimes struggles with how to approach complaint handling in a consistent way.

“In response, we are committed to driving up standards by putting even greater emphasis on education, giving agents the right tools to handle complaints more effectively themselves.”

In another change, agents are to be given access to online training on complaints handling.

The first 1,000 agents who purchase TPO’s Consumer Protection from Unfair Trading Regulations (CPRs) course will receive the complaints handling course for free.

Completion will earn agents continuing professional development (CPD) points.

Full details are available at http://training.tpos.co.uk/