Written By Em

Em

Em Morley

Knight Knox’s New Platform Provides BTL Investors with ‘Exit Strategy’

Published On: June 6, 2018 at 9:33 am

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Categories: Property News

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Real Estate developer Knight Knox has launched a new online platform, designed to simplify the sale and purchase of buy-to-let property.

The purpose of Yieldit is to assist investors in selling certain property investments that may not be suited to traditional high street estate agents. According to the UK property investment consultancy, it has refreshed its resales arm with the launch of yeildit.

Yeildit will specialise in the sale of tenanted buy-to-let properties from investor to investor. Knight Knox states that is has access to 80,000 pre-qualified investors. It will operate on a nationwide scale and intends to revolutionise the market by providing a full-circle service, from valuation to completion.

Samantha Edwards, head of marketing at Knight Knox, commented: “The buy-to-let sector continues to grow, and we have been aware for a long time of the need from our investors for us to provide an exit strategy for their investments.

“Whether they’re looking to add to their existing portfolios or divest their investments in order to capitalise on the strengthening UK property market, the simplest way to achieve this is to sell or buy to like-minded individuals who already understand the nature of the sector.”

Previously, the platform was known as Intus Residential. Now known as yieldit, the platform, based in Manchester has already sold over £26.3m worth of property across the UK to investors situated in almost 100 countries.

Ryan Hughes, head of sales at yieldit, said: “Having operated in the sector for the past decade, we realised that there was a real gap in the market for an easy and effective way to sell buy-to-let property.

“Feedback from clients told us that they were fed up of dealing with high street agents and buyers who don’t understand how the buy-to-let market works. yieldit takes away this hassle by working with buyers and sellers who see the financial potential of a buy-to-let property and don’t get distracted by the little things, such as the colour of the curtains or whether they like the flowers in the garden.

“Being specialist property consultants, we’re well versed in the intricacies of buy-to-let and can therefore provide a service that’s bespoke to investors. The problem with most of the major online and high street chains is that they treat investment property the same way they treat your average house, and we know from experience that this just doesn’t work.”

Over 400 Landlords fined for Right to Rent Breaches

Published On: June 6, 2018 at 8:58 am

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Categories: Landlord News

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As a result of failing to meet obligations under the Right to Rent scheme, over 400 landlords have been fined by the Home Office.

As outlined by GOV.UK, the Right to Rent Scheme means that landlords need to carry out quick and simple checks on all new tenants to make sure they have the right to rent property in the country.

Since these Right to Rent rules were introduced, just two years ago, no fewer than 405 landlords have defied these rules, collectively receiving fines accumulating to £265,000, according to the Home Office figures.

The policy, which requires landlords to check whether potential tenants have a right to live in the UK will apparently face scrutiny during this week when a judicial review application hearing, brought by the Joint Council for the Welfare of Immigrants (JCWI), will be heard on the grounds that the strategy is incompatible with the European Convention on Human Rights.

In a recent report on the scheme, David Bolt, Independent Chief Inspector of Borders and Immigration, concludes the policy has “yet to demonstrate its worth as a tool to encourage immigration compliance” and that the Home Office is “failing to coordinate, maximise or even measure effectively its use, while at the same time doing little to address the concerns of stakeholders.”

RLA Policy Director, David Smith has said: “Faced with the fear of criminal sanctions many landlords are understandably playing it safe.”

“It is absurd to conduct a review of the scheme without looking at all the consequences. That is why it is vital that the Home Office suspends the scheme pending a full and detailed assessment of its impact on tenants and prospective tenants.”

David Smith has also said: “The Windrush scandal has shown that even trained immigration officers can make serious mistakes. This highlights how inappropriate it is to demand that untrained landlords become enforcers of government immigration policy.

“Those who cannot easily prove their right to rent with documents landlords are clearly familiar with are finding it increasingly difficult to access the homes they need.

“In reality the Right to Rent is creating a hostile environment for those who need, and are legally entitled to, housing in the UK but cannot easily prove it. This is causing needless tension and concern for tenants and landlords.

“It is time to suspend this controversial and unwelcome policy.”

Chai Patel, Legal Policy Director at the Joint Council for the Welfare of Immigrants, commented: “When asked for evidence that the hostile environment was working, Amber Rudd could only point to ‘anecdotes’. Sajid Javid said there were no measures in place ‘as such’ to evaluate it. We’re talking about the policies that inflicted so much harm on the Windrush generation, and our Home Secretaries are operating in the dark. But even now, the Home Office is opposing the Chief Inspector of Borders and Immigration’s strong recommendation that right to rent be independently evaluated.

“The Right to Rent scheme imposes costly red tape on every landlord in the UK, and the government has no evidence it’s working. Meanwhile, landlords themselves tell us it encourages them to discriminate against foreign nationals. Denying individuals, the right to rent property only increases the power of exploitative rogue landlords and employers.  We have been forced to bring this legal challenge because Theresa May and Amber Rudd would not listen to the evidence. We hope Sajid Javid takes a more rational view.”

Who is going to pay for the Tenant Fees Ban?

Published On: June 6, 2018 at 7:59 am

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Categories: Law News,Tenant Fees Ban

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Written by TheHouseShop

2 years ago it was announced that tenant fees would be banned. So where are we now?

Let’s rewind a little

In 2016 the government planned to ban letting fees paid by tenants. The aim was to create a more affordable private rented sector and to subsequently improve the fairness between landlords and tenants. And, if you ask us, this has been long overdue!

For too long renters have been paying excessive prices to letting agents and landlords. On average, people spend around £404 everytime that they move home, and some cases have seen fees exceeding £800. It is excessive payments such as this that spurred the government to create a fairer playing field for tenants.

And that is where the Tenant Fees Bill comes in. This bill plans to remove hidden costs for tenants by implementing new rules that will change how people rent.

So what are these rules?

(scroll down if you want to skip the boring legal stuff)

The bill, if passed by parliament, will:

  • Ban letting fees.
  • Cap tenant deposits at 6 weeks rent.
  • Cap holding deposits at 1 week rent.
  • Create a fine of £5,000 for those who breach the ban, making it a criminal offence with an overall maximum penalty of £30,000.
  • Modify the Consumer Rights Act 2015 to clarify that letting agent transparency requirements will also apply to property portals (like Rightmove, TheHouseShop, Zoopla etc.)
  • Instruct Trading Standards to impose the ban and subsequently make provisions for tenants to be able to recover unlawfully charged fees.
  • Reduce the charges for a change in tenancy to £50 (unless the landlord can prove that the cost exceeded this amount).
  • Prohibit landlords from claiming possession of their property via the Section 21 Housing Act 1988 procedure, until they have repaid any and all unlawfully charged fees to the tenants.
  • Allow local authorities to retain any finances gained through penalties and utilise this money for future local housing enforcement.

Agents and landlords will only be able to charge tenants for:

  • Rent.
  • Deposits.
  • A change in terms, or an early termination of a tenancy (only when requested by the tenant themselves).
  • Utilities, Council tax etc.
  • Damages or costs accrued by the tenant, as fault of the tenant, such as replacing a lost key.

(you can stop scrolling now)

As the fees are taken away from tenants they will inevitably fall to landlords and letting agents costing them around £82.9 million and £157.1 million, respectively. This is an extortionate financial hit and landlords and letting agents will have to be prepared. That money is going to have to come from somewhere and letting agents will either have to absorb those fees or re-direct them, and it is no surprise to hear that landlords are most likely to take the hit.

The government have even admitted this themselves, claiming that they ‘expect that landlords using letting agents will see their fees rise by an amount equivalent to 50% of what their letting agent was charging their tenant.’

Since tenant fees account for around one fifth of a letting agent’s revenue, they are going to be left short once the bill comes into play. Two thirds of letting agents have already said that they plan to salvage the subsequent losses by claiming the costs from their landlords to avoid absorbing the cost themselves.

So letting agents are going to cope by shifting the fees to landlords, but how are landlords going to cope?

The biggest concern is that landlords will continue this knock-on effect by increasing rent for their tenants to cover the costs that the ban will pass to them. This assumption comes from past experience, as a similar ban was put in place in Scotland in 2012 and subsequently landlords increased rental prices by 6 to 8%. It is very possible that we will see a similar situation once the Tenant Fees Ban comes to fruition in England. But doesn’t this kind of make the Ban redundant? We will let the landlords decide…

It seems that landlords will be taking the full brunt of the Tenant Fees Ban, making the whole ‘fairer playing field’ idea slightly questionable. So what should landlords do now?

Many landlords may begin to question their relationship with their letting agents and start to re-evaluate their financial situation. And with a looming £82.9 million fee increase overshadowing them, it is no surprise that many may decide to ditch their letting agents and go it alone.

And although this seems like a good idea, to stick it to the man and save yourself some extra dough. Landlords might want to sit and think about what their lettings agents actually do for them…

With over 400 regulations and 145 individual laws, landlords cannot legally afford to go it alone and manage their properties themselves. Doing so would mean that they need to be well versed in the legalities of the rental sector and must be fully aware and confident in their compliance. A difficult task for even the best of landlords. Almost 1 in 5 landlords admitted they find  it ‘impossible’ to keep up with constant regulation changes. So maybe cutting ties with a letting agent isn’t the easiest decision. As a result, landlords have found themselves between a rock and a hard place. Stay and incur millions of pounds of fees, or leave and face the legal world on their own.

So what’s the key to beating the Tenant Fees Ban?

Landlords can breathe a sigh of relief as TheHouseShop offers some well needed cushioning. Keeping landlords compliant and profitable, their property management service offers the same comprehensive level of service that they were receiving, or would expect, from a traditional letting agent, but for a fraction of the price!

For £59.99 a month, no matter the rental income, TheHouseShop will cover anything from rent collection to legal advice, 24 hours a day, 365 days a year.

The comprehensive, professional management service offered by TheHouseShop, will manage your rental property, deal directly with your tenants and will ensure that you are fully compliant with all legislation. A landlord can save, on average, £732 in fees each year!

More and more landlords have started exploring cheaper alternatives to traditional high street agents. In fact, TheHouseShop say that they have seen a significant increase in the number of landlords showing interest in the fixed price management service. This is a result of all the recent press coverage about the potential negative consequences of the fees ban for landlords.

You can check out TheHouseShop’s fixed fee property management service in more detail here:

https://www.thehouseshop.com/property-management

So, what are you waiting for? Save yourself money and beat the Tenant Fees Ban now!

Give them a call on 0800 048 8910 or visit their website for more information…

Automated Payment Systems can Reduce Letting Agency Fraud

Published On: June 5, 2018 at 9:44 am

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Categories: Lettings News

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Proptech firm PayProp have stated that the automation of rental payment administration can reduce the incidence of rogue letting agencies withholding client money for dishonest reasons.

The firm says that the use of payment systems can increase transparency, as it provides an automatic, unalterable digital record.

Increased regulation and automation to combat fraud

This claim by PayProp follows the recent confirmation that membership of a Client Money Protection (CMP) scheme is to become compulsory next April. This development follows the discovery of a number of fraudulent activities by letting agencies, resulting in those agencies being expelled by the Property Ombudsman.

CMP schemes protect landlord and tenant money in the event an agency goes out of business or misappropriates the funds.

Fines will be introduced from April 2019 for agencies that aren’t members of an approved scheme. They may be charged up to £30,000. For agencies that don’t display the details of their CMP scheme membership on their website and in their office, they will be dined up to £5,000.

Landlords and tenants still losing significant sums of money

Earlier this year, the Property Omsbudsman Scheme made the announcement that three agencies had been expelled for various payment issues. These issues included one agency withholding over £12,000 of rent, and another not putting a deposit in a protection scheme, amongst other failings.

The expulsion of another agency was due to it making no record of a £1,375 deposit and advance rent payment, which it subsequently withheld.

Neil Cobbold, chief operating officer of PayProp in the UK, said: “Cases of rental payment fraud are relatively rare, but there are still too many examples of landlords and tenants being left out of pocket by unscrupulous letting agencies.

“These are significant sums of money for consumers so there should always be documentation and evidence of all payments received by agencies.”

Agencies need the right systems to manage payments

Cobbold went on to add: “The introduction of mandatory CMP membership for agencies will be a crucial step towards reducing the chances of rental payment fraud occurring. This much-needed regulation, combined with an increase in adoption of automated rental payment systems, can improve transparency across the rental sector.”

Around 80% of agencies are thought to already be members of an approved CMP scheme, which leaves approximately 3,200 firms that need to register with one before April 2019.

He also stated: “Mandatory CMP will ensure that consumers’ funds are protected, but it’s also important that agencies have the systems in place to manage payments efficiently and accurately.

“An automated, bank-integrated payment system allows agents and landlords to see the live status of a portfolio, providing digital reconciliation which can be vastly more accurate.”

A reduction in fraud can boost the whole industry

“The prospect of reduced rental payment fraud through the introduction of mandatory CMP scheme membership and increased digitisation of payments can boost the whole industry,” Cobbold continued.

“It can contribute towards improving the public perception of letting agencies with fewer negative headlines in the mainstream press. Tenants and landlords, meanwhile, can continue to operate safe in the knowledge that their money is protected.”

“Increased regulation of the rental sector combined with effective utilisation of PropTech can help letting agencies to thrive and become more profitable in a market that continues to grow rapidly,” he concluded.

PayProp is a bank-integrated automated payment platform, which, since launching in the UK in 2015, has grown to manage the payments on more than 23,000 active tenancies.

Paradigm Teams up With Precise to Offer Semi-Exclusive BTL Mortgage

Published On: June 5, 2018 at 9:03 am

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Categories: Finance News

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Paradigm Mortgage Services now has access to a semi-exclusive buy-to-let product from specialist lender Precise Mortgages. Members of Paradigm are now able to access this two-year 2.89% fixed rate product, available up to 75% loan-to-value (LTV).

Loan-to-value refers to the financial term used by lenders to express the ratio of a loan to the value of an asset purchased. By banks and building societies, the term is used to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property.

Available for a limited time only, this mortgage deal benefits from a reduced rate of 0.2% below Precise Mortgages’ standard product, a condensed fee of 1%, compared to 2% on its standard product.

Head of Paradigm Mortgage Services, John Coffield, reports: “Our close relationship with lenders allows us to secure access to market-leading products on both an exclusive and semi-exclusive basis, so we are pleased to be able to offer this Precise Mortgages deal to our member firms.

“It [the mortgage deal] comes with a very competitive rate and fee – both reduced from the lender’s standard offering – and should stack up well for advisers looking for a quality deal,” he added. “As mentioned, it will only be available for a limited time so Paradigm members are advised to act quickly if they believe this deal is suitable for their landlord clients.”

This product has attached with it, a reversion rate of 5.5% and Expense and Cost Recovery System (ERCs) of 4% in year one and 3% in year two.

Alan Cleary, Managing Director of Precise Mortgages, commented: “This new buy-to-let product will help provide an alternative choice for customers who are looking to benefit from lower up-front costs and monthly repayments.

“We’re pleased to support Paradigm in offering this shared exclusive and are confident it will be well received by its advisers and customers alike.”

 

Merger Announced for Leading Hybrid Estate Agents Emoov, Tepilo and Urban.co.uk

Published On: June 5, 2018 at 8:01 am

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Categories: Lettings News

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Last week an announcement was made by Hybrid Estate Agents Emoov and Tepilo that they will be making a £100m merger, also incorporating Urban.co.uk. This will create the second-largest digital Estate Agent in the UK.

Emoov is leading this consolidation of the property sales sector, which will be a boost to its current success of propositions such as Pay Only When Sold, ensuring its ‘customer first’ ethos is always met.

Together, the three brands have attracted over 60,000 customers to their value proposition to date.

The merged business will be headed by Emoov CEO Russell Quirk and led by a strategic and experienced management team of CFO Frank McGlade (Just Eat; Deutsche) and CMO Lucy Milne (Just Eat; EE), along with COO Guy Halfhead, former COO of Bookatable.com and CTO & Co-Founder Ivan Ramirez, former Global VP of Product at Groupon.com, plus Adam Male of Urban as Director of Lettings.

Russell Quirk, Emoov’s CEO, said: “This is a pivotal move in the fast-growing digital sales and lettings sector and is designed to place us as one of the absolute winners in the space. We’ve joined together two of the best known fixed fee estate agency businesses to make the ‘Number Two’ contender; along with one of the UK’s most established online lettings companies, and a war-chest of £15m in new cash and media power. Strategically, this is a powerful combination and with the very best senior team to deliver on our plan to improve and further dominate the estate agency industry”

Richard Martin, Northern & Shell’s Commercial Director, said: “Tepilo was one of the first businesses we worked with as part of our media for equity initiative and we are delighted that Tepilo, along with Urban, is now part of Emoov. Together, they represent an exciting and competitive business with the critical mass and management team to become a major force in online estate agency and lettings.”

Sarah Beeny, Founder of Tepilo commented: “I founded Tepilo in 2009 with the intention of putting the customer at the centre of their own property transactions. This deal creates a truly powerful partnership of property experts that are focussed upon doing right by the customer and improving the home buying, selling and rental process for all. I’m truly delighted with the combination of the Emoov, Tepilo and Urban families to form such a valuable proposition.”

Adam Male, Founder of Urban.co.uk remarked: “Being part of a much larger group of property specialists with significant resources to deploy for growth, is truly exciting. I’m proud to be joining the senior team at Emoov to advance our progress as the go-to player in better value home sales and rentals.”

Vinay Solanki, Head of Channel 4’s Commercial Growth Fund, said: “This is an exciting time for Emoov and presents a great opportunity for Channel 4 to get involved with disrupting a fast moving and competitive sector in digital transition. We’re looking forward to working with Emoov on their first TV campaign as a newly merged major industry player to help the brand achieve the reach and awareness that only TV advertising has proven to effectively deliver at scale.”