Written By Em

Em

Em Morley

Is the Introduction of Extended Contracts Bad News for Buy-To-Let Landlords?

Published On: July 12, 2018 at 8:00 am

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According to a leading letting agent, the introduction of mandatory minimum three-year tenancies by the Government could mean that accidental landlords and small scale buy-to-let investors will be confronted with more upheaval.

The proposal of a three-year tenancy by the Government could make it increasingly difficult for buy-to-let landlords to fund their property purchases. However, Partner at Carter Jonas, Fiona Bourke asserts that extended tenancies will increase pressure in alternative ways.

Despite the objective of the plan being to provide private tenants with a high level of security, enabling them to settle down, it is Bourke’s argument that these risks may exceed the benefit of financial security for the smaller scale buy-to-let investors in addition to the accidental landlords.

She comments: ““With more rights being given to tenants, the three-year term potentially has less value to the landlord should tenants decide to leave part way through their tenancy, which they will have the freedom to do.
“Should landlords potentially come across problematic tenants it will also become harder for landlords to manage them if they are locked into a longer-term agreement.

“In my area of Wandsworth [in south London], rental agreements are often much shorter than the national four-year average and we have a significant number of local, individual and accidental landlords who may reconsider their options in light of these changes in legislation.
“Furthermore, such reconsideration could be fuelled further by the prospect of rent rise caps in future.

“Venture capitalists and asset management companies will be buying up property with the ever so slightly more safeguarded guarantee of a long-term return on investment, it [the planned new rules] could bring about a new buy-to-let audience who recognise that we’re fast becoming more of a rental society and the new laws may give landlords more stability in the long run.”

Licensing Scheme Database Scheme from ARLA to help Agents stay Compliant

Published On: July 11, 2018 at 9:57 am

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A new database has been launched by ARLA Propertymark, in partnership with GetRentr, a technology platform created to automatically monitor property portfolios for compliance with all UK property licensing schemes.

This service has been made free for those who are members of ARLA Propertymark. It provides information on new licencing schemes coming into force during the next month, as well as those ending this month, and those which local authorities are consulting on and will come into effect in the near future.

For those of you who are ARLA Propertymark members, you will have the option to take a look at your local area and see the status of current licensing schemes. This is so that you will hopefully be able to understand which ones are needed, in order to avoid any penalties.

David Cox, chief executive of ARLA Propertymark, said: “There are hundreds of laws with which letting agents and landlords need to comply, and new licensing schemes are being introduced on an almost weekly basis, so it can be difficult to keep up.

“Those who aren’t compliant risk breaking the law, and could face banning orders or fines of up to £30,000.

“This new database, available to all members, will help agents mitigate these risks and comply with the ever-changing law.”

Orla Shields, chief executive of GetRentr, said: “While property licensing was introduced to raise rental accommodation standards, the proliferation to around 540 schemes has brought with it a huge administrative burden for landlords and agents.

“Remaining compliant is a never-ending task as new consultations or schemes can come into effect at any time, meaning compliance today does not guarantee compliance tomorrow.

“We’re really excited about our partnership with Propertymark as it will help protect agents from increasing fines, and ultimately help improve safety standards across the private rented sector.”

Landlord EPC Deadline April 2020 – Are You Looking to Prepare?

Published On: July 11, 2018 at 9:27 am

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In March this year, specialist Landlord Insurer Just Landlords commissioned research into the awareness of changes to Energy Performance Certificate (EPC) regulations, which revealed a surprising lack of awareness.

The new Minimum Energy Efficiency Standards (MEES) came into effect 1st April this year, and now require all rental properties on new lets or renewals to have a minimum EPC rating of E. Specialist buy-to-let mortgage broker Commercial Trust Limited has reiterated the consequences of not complying. If the MEES are not met, then landlords may find themselves with a maximum fine of £5,000.

From April 2020, these standards will apply to all tenancies.

The results from Just Landlord’s research showed that only 4% of the 400 landlords and tenants surveyed were aware of the new legislation.

80% responded that they were unaware that an EPC could be a clear indication of the environmental impact a property is having.

A guidance document on the MEES, in accordance with the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 has been made available by the Department for Business Energy and Industrial Strategy, to help landlords improve the energy efficiency of their property.

It provides advice on how to make relevant improvements to a home, in order to provide a better EPC. The document also makes suggestions on how a landlord can consider the cost effectiveness of particular improvements.

Some exemptions and exclusions may apply, which are outlined by this document. This may come in handy for those looking for clarification, and to learn what steps are necessary to register a valid exemption.

Landlords may also be interested to learn of how the enforcement of the framework will be executed, including the issuing of fines and other penalties.

It also discusses how appeals will work, specifically the steps that will have to be taken by a landlord to lodge an appeal.

Scotland’s New Tenancy Arrangements call for Letting Agent Qualifications

Published On: July 11, 2018 at 8:58 am

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Scotland has witnessed some major legislative changes to its letting sector, resulting in a lot of movement within the entire Private Rented Sector (PRS). However, Galbraith, Scotland’s leading independent property consultancy, believes that these changes are nothing to be feared by landlords.

In particular, one of the biggest changes includes Short Assured Tenancies by Private Residential being replaced by Private Residential Tenancies. This now offers tenants an increase in security of their tenure, along with a reduction of ways in which tenants may be subject to eviction.

The other notable change is that from 31st January this year, a new code of practise was introduced by the Scottish government, along with a mandatory register for letting agents. This new code has meant that key individuals in a letting agency must be trained to a certain level. They have until 30th September 2018 to receive the appropriate training, and if they fail to do so then they will not be allowed to continue letting properties.

Steps have already been taken by Galbraith to prepare its staff. Months before the new code comes into force, it has staff qualified at the highest level in all areas in which it lets properties. This includes Ayr, Castle Douglas, Cupar, Elgin, Galashiels, Inverness, Perth and Sterling.

Letting Agents could Benefit from Build to Rent

Bob Cherry, a partner with Galbraith who manages lettings activity for the firm, said: “Essentially these two legislative changes combined will add up to increased professionalism in the letting sector, particularly in terms of how letting agents operate.

“All reputable letting agents will already to a large extent be in compliance with the new code. What will happen is that fewer letting agents will set up in business and potentially fewer new landlords may come into the sector for the first time. As long as landlords take professional advice, they will be well supported to navigate the complexities of the new regulatory regime. In the medium term, rents are likely to rise, which can only be good news for landlords.

“Our lettings staff are supported to achieve the highest industry qualification delivered by ARLA Propertymark, the UK’s foremost professional body for letting agents. This provides reassurance to tenants and landlords that Galbraith adheres to the highest professional standards.

“Our local knowledge and national reach ensures that landlords can expect a hassle-free let for their property and tenants are protected from unscrupulous landlords.

“We find that most rented properties will find a tenant very shortly after being made available to let, often within a couple of weeks. Further legislative changes over the next 18 months, in terms of the change in the minimum energy performance certificate permissible in Scotland will help to raise standards for available property.

“We have already begun helping landlords to comply with these requirements and, in many cases, we are able to help landlords access funding for improvements to their property which bring it into line with the Energy Performance Certificate (EPC) regulations, often at no cost to them.

“Property is still viewed as one of the most popular and safest forms of investment and, with the right advice, can offer landlords a very appealing and long-term investment option, given the continued shortage of good quality housing supply.”

What Does the World Cup Mean for the Property Market?

Published On: July 11, 2018 at 7:55 am

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Much like the property market, the nation’s emotional state during the World Cup is also slightly unpredictable. However, do these emotions affect the rise and fall in UK house prices? And if so, to what extent?

 1966

Taking a trip down memory lane on the 30th July 1966 when the entire nation rejoiced at England’s victory, with consideration of the UK’s economy previously in 1996, the average house price was below £4000.

This was three times the amount of the average man’s wage and four times the amount of the bonus England received for their victory.

In regards to house prices, this would be the equivalent value of £61,000 in 2018’s climate. This is far from the average house prices we expect to witness today.

1970-1980

House prices experienced an increase at a staggering rate during the following months of July 1966, with house prices at an average of £70,246. However, these prices experienced a decline in value prior to the first World Cup of the 90s. It is blatant that as a result of England’s victory, UK house prices had experienced a £9,246 rise, showing that the World Cup does certainly have an effect.

1990

Due to West Germany having secured the World Cup winning title in 1990, in addition to Brazil taking this from them in 1994, the UK property market saw an 18% decrease in 1992. During West Germany’s victory in this month, the average price of a property in the UK was £57,245. Furthermore, by the time Brazil had won the World Cup in 1994, this figure had dropped by £5,514, meaning that the average house price stood at £51,731.

The Noughties

House prices during 2000 and 2007 began to experience a recovery. However, this was followed by a 21% drop again in the second quarter of 2009. By 2011 things had stabilised, with the northern, southern divide narrowing in addition to house prices in London presenting the least growth at 63% compared to 102% in the North.

2018 World Cup

It wasn’t until the early 90s that house prices decreased. Since then, it’s taken six decades (six World Cups) for the market to recover, with the average house price being £188,559 during the time Germany won the World Cup in 2014.

From 2014 onwards, house prices have experienced a development, despite the uncertainty of the climate. 2018 should be a good year for house prices.

Lastly, here at Landlord News, we sincerely wish England the best of luck with their upcoming game

ARLA Propertymark Gives Evidence to Welsh Assembly for Tenant Fees Bill

Published On: July 10, 2018 at 10:05 am

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Categories: Lettings News,Tenant Fees Ban

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Further discussion about the Welsh Tenant Fees Ban has arisen, as ARLA Propertymark gave evidence to the Welsh Assembly on the Renting Homes (Fees etc) (Wales) Bill as to why the company should be exempt from certain factors.

The Welsh Tenant Fees Bill was introduced in June this year, sharing a common goal with the one currently in progress in England, to put an end to letting fees. The first stage of the bill is now in progress, with oral evidence sessions currently taking place. The second session took place last Thursday.

Welsh Labour politician John Griffiths began the session, which was attended by David Cox, chief executive of the Association of Residential Letting Agents (ARLA) Propertymark, Charlotte Burles Corbett, managing director of Welsh estate agency Parkmans, and Isobel Thomson, chief executive of the National Approved Letting Scheme (NALS).

During the session, they discussed current fees and whether they reflect the costs incurred by letting agents.

David Cox said: “I would say they do reflect the reasonable costs that are incurred by agents. Research from within ARLA’s membership indicates that the average fee from ARLA members is about £202 per tenant. That is England and Wales; I’m afraid I don’t have Welsh-specific figures.

“Last year, we did a survey of over 1,000 agencies—1,008 to be specific—on what they actually do for the fees that they charge. It came out that, on average, it takes about eight hours to start a tenancy. It covers three main topics, which is tenant referencing, which, when thinking about it, in a sales transaction, is probably akin to a mortgage application fee; contract negotiation—translate that across to sales, that’s probably your conveyancing charges; and then the inventory, which is akin to a survey.

“If you think that, in a sales transaction, you pay three different parties, you generally pay them a lot more than £202. In a lettings transaction, you pay it to the agent that does it. The buyer pays that in the sales; the tenant pays that in in the lettings transaction.”

Isobel Thomson commented: “We accept that agency fees can be perceived as onerous additional payments, with little or no understanding from the tenant’s perspective of why they’re being charged. But we believe that the fees charged are a fair reflection of the time spent, particularly at the start of a tenancy.”

David Cox also mentioned that last year the ARLA commissioned Capital Economics, a leading market research agency, to analyse the possible economic impact of the ban. He said: “Agents are likely to pass through 75% of the costs of the loss of tenant fees on to landlords. Landlords are likely to pass on 50% of those costs to tenants, and therefore tenants are likely to see a £103 per tenant, per year rent increase as a result of this.

“…At £103 per year, that is less than the £202 on average that is charged. Therefore, tenants that move on a regular basis will see a saving as a result of this. But when we are talking about longer term tenancies, Westminster has issued a consultation only this week…when everybody is trying to encourage longer term tenancies in the private rented sector, the over-under of this policy is two and a half years, and therefore whilst encouraging longer term tenancies, this Bill is actually going to increase the costs for those people who live in longer term tenancies.”

The full progress of the Renting Homes (Fees etc.) (Wales) Bill is available to see on the National Assembly for Wales website.