Written By Em

Em Morley

Warning after agents expelled from TPO

Published On: May 4, 2016 at 12:00 pm

Tags: landlords,letting agents,tenants,The Property Ombudsman

A warning has been issued by Britain’s largest property redress scheme regarding the actions of two letting agents.

Both agencies, ‘The Flat Agency & Michael Browns Ltd,’ and ‘Property Vibe,’ based in Southampton, were expelled from The Property Ombudsman for a minimum period of three years.

Complaints

The decision to remove The Flat Agency & Michael Browns Ltd’ came following complaints from local landlords and tenants. Cases brought against the agent were all similar and revolved around a delay or failure to pay monies owed. Several raised serious concerns with the Ombudsman, which moved to brandish the agents’ practices are both, ‘deceitful and dishonest.’

Having failed to pay the money owed or any compensation, the agents’ misdemeanours were referred to the scheme’s Disciplinary and Standard’s Committee (DSC). The DSC then moved to expel the agent from membership and registration of the Ombudsman.

Without registration, the two companies cannot legally trade as agents, with other redress schemes also wary of letting previously expelled agents to join. Landlords who lease their property with a letting agent that is not registered with The Property Ombudsman cannot have their dispute reviewed by the scheme.

Warning after agents expelled from TPO

Lack of regard

Gerry Fitzjohn, Chairman of the TPO Board, noted, ‘cases like these are extremely rare but this agent has demonstrated a complete lack of regard for its clients and failed to forward money to them which it should have been keeping in a separate clients’ money account. The firm committed several flagrant breaches of the TPO Codes of Practice for Residential Letting Agents and has been expelled as a result.’[1]

‘Both agents have failed to comply with the TPO Code of Practice by not providing any evidence to support their side of the story or demonstrate an appropriate complaints handling procedure. Their reckless management has caused avoidable aggravation, distress and inconvenience,’ Fitzjohn added.[1]

Mr Clive Robinson, Trading Standards Team Leader at Southampton City Council, noted, ‘Trading Standards can confirm that we have received information both from the Ombudsman and a number of landlords and tenants. Membership of an approved ombudsman scheme is a legal requirement for all letting agents as is the proper protection of tenant’s deposits and we will be working with the Ombudsman and others to address any identified breach of the law.’[1]

[1] http://www.propertyreporter.co.uk/landlords/property-ombudsman-expells-two-letting-agents.html

Barclays Launches 0% Deposit Mortgage for Homebuyers

Published On: May 4, 2016 at 11:24 am

Author: Em Morley

Categories: Finance News

Tags: bank of mum and dad,first time buyers,mortgages,property ladder

Barclays has launched a 0% deposit mortgage for homebuyers, as research suggests that 25% of all first time buyers need help from the bank of mum and dad to purchase a property.

According to data from Legal & General, family and friends are expected to provide deposits worth a total of £5 billion, averaging £17,500 per property, for 300,000 mortgages this year.

A total of 256,400 mortgage borrowers will receive parental support, 27,500 will get help from friends, while 22,500 will accept funding from grandparents.

Legal & General believes that a lack of housebuilding and the impact of low annual wage growth (2%) against rising house prices (currently increasing at 7.6% per year) are the main reasons that first time buyers are struggling to get onto the property ladder.

Barclays Launches 0% Deposit Mortgage for Homebuyers

The CEO of Legal & General, Nigel Wilson, comments: “If we are ever to end or reduce our reliance on the bank of mum and dad, we need a new innovative approach to housing. Helping first time buyers is necessary, but not the whole solution.

“We need to modernise housebuilding and make it more efficient so that we can increase supply and quality for all forms of tenure, and all income and age groups, from students to pensioners.”

He adds: “Families clearly cannot continue to use all of their net wealth to help their offspring onto the housing ladder without putting their own financial stability at risk.”¹

In London – which has the highest and fastest house price growth in the UK – this year, 51% of buyers will receive assistance with their mortgages.

However, Barclays has now announced that the 0% deposit mortgage has returned. With its family springboard mortgage, buyers will no longer need to put down a deposit.

This deal previously allowed those with a 5% deposit to get onto the property ladder, as long as someone else – often the homebuyer’s parents – put cash equating to 10% of the property price into a savings account linked to the mortgage.

Under the new deal, only the 10% contribution is needed. This cash will be returned to the borrower’s parents after three years, with interest added, provided the borrowers have kept up with their mortgage repayments.

The lender has also raised the maximum amount that homebuyers can potentially borrow as a multiple of their income under the deal. Those with an income of more than £50,000 per year will now be able to borrow up to 5.5 times their income, as opposed to 4.4.

A buyer with a 0% deposit could get a three-year fixed rate of 2.99% under the family springboard mortgage, while someone with a 5% deposit could get a rate of 2.79%.

Parents putting cash into the savings account will receive an interest rate of 2%.

The need to raise the huge deposits required is often named the main barrier to getting onto the property ladder by first time buyers. Recent research by Barclays found that 35% of prospective buyers are forced into asking their parents for help.

A separate study by Experian shows that 27% of Britons aged 55 and over have given financial support to someone to help them buy a house, despite 15% saying they are not financially comfortable themselves.

¹http://www.propertyindustryeye.com/bank-of-mum-and-dad-is-a-top-ten-lender/

Landlords, Be Aware of the Risks of Investing in Student Accommodation

Published On: May 4, 2016 at 9:23 am

Author: Em Morley

Categories: Landlord News

Tags: property investors,student accommodation,student landlords,student property

Student accommodation in the UK is a booming market, according to estate agent Savills. However, landlords are being warned to be aware of the risks involved in investing in this type of property.

Savills reports that £5.8 billion was invested into the student accommodation market last year, with private developments springing up in prime city centre locations.

These blocks of high-spec, boutique rooms, complete with en-suites and flat-screen TVs, promise the student a luxury experience.

Landlords, Be Aware of the Risks of Investing in Student Accommodation

Since 2006, the private sector has gone from providing 18% of rooms to a huge 41%. On top of this, the latest NUS-Unipol survey found that the average weekly rent for student accommodation in the UK now stands at £147 – up by 18% on 2012-13.

Student numbers are also expected to rise for the foreseeable future, thanks to George Osborne lifting the cap on how many students each university can take. A recent study by UCAS shows a 0.2% increase in applicants for 2016-17, in part due to a 6% rise in students from EU countries.

While demand and prices may remain high, a leading student property investment specialist, The Mistoria Group, is warning of the pitfalls associated with letting student rooms.

The firm’s Managing Director, Mish Liyanage, insists: “If investors are considering student rooms, otherwise known as student pods, they need to look at not only the opportunity, but also the risks too.

“Unfortunately, a major disadvantage of student pods is their resale value and capital growth potential. The value of property will fluctuate with the market and the pool of potential investors is much smaller than for other types of student accommodation, such as HMOs [Houses in Multiple Occupation] and flats.”

Liyanage continues: “With a normal buy-to-let, you can sell the property at any time on the open market through a reputable estate agent, and expect a reasonable capital appreciation. However, selling a student pod will encounter problems. For example, who decides the market value? As a piece of real estate per square metre, it is very expensive (double the average market value), there is no established resale market. Who will sell it? Is it an investment or is it a piece of real estate?

“There is also the issue of guaranteed returns of 7%. The guarantees are only as good as the person or firm that is promising it. Investors need to weigh up whether they think providers of student pods are robust enough to stand behind the guarantee. They also need to be aware that the 7% guarantee may not stand in five years’ time, when their investment could have devalued as new developments have been released.”

He adds: “However, despite the big pitfalls of student pods, student property is a very profitable asset class giving robust returns. For example, in the North West, a high quality HMO, which will house four students, can be purchased for £160,000. The return on investment is very attractive too, with 13% (8% cash rental and 5% capital growth). Unlike student pods, you can apply for a remortgage and there is a buoyant market for this type of student property. If you are building a portfolio, you can lend on your equity in the HMO to fund further investments.”

If you are considering an investment in the student accommodation sector, remember to fully evaluate the risks involved with this market.

High demand and low supply to drive rents up

Published On: May 4, 2016 at 8:57 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,buy-to-let landlords,housing supply,rents,residential landlords

A director of leading letting agents in Britain has warned that rents will continue to increase over the coming months.

Adrian Gill, director of Your Move and Reeds Rains, feels that there will be a cut in housing supply in the private rental sector, with many buy-to-let landlords leaving the market.

Alterations

According to Gill, the recent tax changes, including the additional stamp duty charges, is driving many residential landlords out of the sector. This is turn is set to drive up an early chronic shortage of properties in many areas.

Mr Gill notes that, ‘ultimately, this will only punish tenants, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them.’

He went on to observe that Spring represents the calm before the summer storm, with demand for homes in the sector driven by a flow of jobs and a flux of a general more mobile workforce.

‘This reflects the strengths of private renting, the opportunity for young, independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy and will depend on the freedom to invest as a landlord,’ Gill added.[1]

High demand and low supply to drive rents up

Restraint

Just last week, a survey from the Association of Residential Letting Agents (ARLA) found that 65% of landlords will not look to purchase any more buy-to-let properties in light of the tax alterations.

61% of ARLA agents said that rents will rise even further as a result of the tax changes.

David Cox, director of ARLA, said, ‘whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/rents-set-to-rise-as-demand-grows-and-supply-falls

Which London Mayoral Candidate Will Solve the Housing Crisis?

Published On: May 4, 2016 at 8:38 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,London,London mayoral election,Mayor of London

Tomorrow, Londoners will vote for the capital’s next mayor. But which London mayoral candidate will work best towards solving the housing crisis?

Housing remains the number one issue for many living in the capital, with a lack of supply causing spiralling house prices. Research from ComRes confirms that the housing crisis will be the main determining factor in who is elected tomorrow.

In a bid to address the capital’s chronic shortage of supply, the leading London mayoral candidates have put housing at the core of their manifestos, with front-runners Sadiq Khan and Zac Goldsmith both calling the election a “referendum on housing”.

The Residential Landlords Association has also released its own London mayoral manifesto, detailing what it thinks should be done to solve the housing crisis.

As house prices soared under the two most recent London mayors – Ken Livingstone and Boris Johnson – the next mayor will be put under great pressure to do more to make London more affordable.

Which London Mayoral Candidate Will Solve the Housing Crisis?

Residential property prices are now at least ten times the average salary in 28 of London’s 33 boroughs, with prices in many of London’s most expensive areas now out of reach for all but the super-rich. Worryingly, however, it is believed that even the wealthiest of Londoners are having to turn to the private rental sector.

So which candidate will solve the capital’s housing crisis?

Sadiq Khan

Labour’s Sadiq Khan has promised to deliver 80,000 new homes in London every year, 50% of which will be affordable. He plans to build these homes on brownfield land. Khan also wants to form a new homes division in City Hall, set up a not-for-profit letting agency, restrict rent rises, and invest more in the London Affordable Homes Programme.

Zac Goldsmith

Zac Goldsmith, the Conservative candidate, has also vowed to focus on releasing publicly owned brownfield land for the construction of more residential properties, hoping to deliver 50,000 new homes in London per year by 2020. This would be financed in part by a new pan-London investment fund for overseas investors. He also aims to bring thousands of empty homes back into use, clamp down on rogue landlords, and introduce longer-term tenancies.

Caroline Pidgeon

The Liberal Democrat candidate wants to boost new housing supply in the capital, including a substantially higher amount of council homes at affordable rent prices. She also plans to make all private landlords in the capital registered, introduce a right to buy scheme for tenants if their landlord decides to sell, abolish letting agent fees for tenants, and introduce three to five-year tenancies.

Sian Berry

The Green Party’s Sian Berry would like the Mayor of London to be given greater rent controls, as part of an effort to help private tenants in the capital. She also believes there should be a voluntary register of landlords, as well as a new Renters’ Union, financed by City Hall, designed to provide tenants with greater support and advice.

Pete Whittle

Peter Whittle, of UKIP, has pledged to lobby for sensible migration levels to help restrict demand for housing, alongside boosting housebuilding levels. He claims that producing a comprehensive registry of all London brownfield sites is crucial to increasing the supply of land for housebuilding. Whittle plans to tax buy-to-let landlords at a higher rate if they leave their properties empty, and offer long-term residents in London priority when it comes to social housing.

Who will you be voting for?

Rogue Landlord in London Faces Prosecution for Overcrowded Property

Published On: May 3, 2016 at 11:21 am

Author: Em Morley

Categories: Landlord News

Tags: landlord licensing,London,overcrowding,rogue landlords

A rogue landlord in Wembley, northwest London faces prosecution for renting out an overcrowded property in the area.

Rogue Landlord in London Faces Prosecution for Overcrowded Property

Raids by Brent Council found 11 people living in the three-bedroom house, after the council committed to increasing efforts to ensure landlords with unlicensed properties are held accountable for their actions.

Enforcement teams entered the mid-terrace house to find 11 people packed inside. The property was also in a general state of disrepair, says the council, with the landlord looking to face prosecution.

Brent Council’s heightened enforcement activity in recent months has lead to up to five prosecutions per week since the start of the year.

In January, it was announced that the council would be one of 48 local authorities to receive a portion of £5m funding from the Department for Communities and Local Government to tackle rogue landlords.

Earlier this year, a raid on rogue landlords in Wembley found 23 people, including ten children, living in a semi-detached house. The council also raided a shed in the back of a second property, where it found evidence that it may have been illegally rented out as private accommodation.

The Cabinet Member for Housing at Brent Council, Councillor Margaret McLennan, comments: “These types of raids demonstrate the importance of our landlord licensing scheme. It ensures that properties are not overcrowded, are let out to an acceptable standard and are properly managed.

“It also reduces anti-social behaviour and illegally dumped rubbish, which can have a significant impact on local neighbourhoods and property prices. Everyone in the borough benefits from licensing.”¹

This news arrives as Derby City Council announces plans for a new scheme to tackle rogue landlords. More about how the system would work and what it will do for the private rental sector in the city can be found here: /derby-proposes-new-measures-tackle-rogue-landlords/

¹https://www.brent.gov.uk/council-news/april-2016/wake-up-call-for-rogue-landlords/