Written By Em

Em Morley

UK property medium term growth forecast lowered

Published On: July 14, 2015 at 11:19 am

Tags: house prices,property growth forecast,Stamp Duty

New forecasts indicate that the Government believes that house prices will continue to grow in the medium term, but at a slower rate than previously predicted.

Largely due to changes in lending criteria, the Office for Budget Responsibility predicts that overall, house prices will rise by 34.1% by the opening quarter of 2021. This represents a revision from the last guidance issued in March of this year.[1]

Changes

The Office for Budget Responsibility revealed that alterations to the regulatory environment, coupled with changes in lenders’ behaviour as a result of the Mortgage Market Review as the main reasons for the downgrade in growth forecast.

As a result, the new forecast is 5% lower than it was in March.

Additionally, the Office for Budget Responsibility has also changed its Stamp Duty revenue forecasts. Now, Stamp Duty is predicted to raise £11.5 billion in 2015/16, rising to £17.3 billion in 2019/20. This was in comparison to March’s forecast of £10.4 billion and £18 billion respectively.[1]

Short-term forecasts for Stamp Duty receipts have been altered due to an increase in property transactions at the end of the 2014/15 financial year. The Office for Budget Responsibility expects this trend to continue.

Hot summer?

Experts also predict that the selling market will continue to be busy throughout the summer months. Traditionally, the prime periods for selling property have been in March through to the end of June, with another surge in activity between September and October.

However, data from an investigation by real agent firm Knight Frank suggests that there has been a change in this trend in recent years, with sales continuing through the normally quieter summer period. The firm suggests that the number of properties sold by themselves between June and August 2014.

UK property medium term growth forecast lowered

‘The increase in summer activity is a reflection on a number of factors including the popularity of holidays being taken in the UK and thus being able to see a house more quickly,’ stated Rupert Sweeting, head of Knight Frank Country. He also said that the rise of the internet has allowed holiday makers to,’ browse their tablets and phones whilst relaxing.’[1]

We are seeing this happen again this year principally as the election made many buyers put their decisions on hold until after the result was known. As a result the market is six to eight weeks late. We already have a high level of house bookings going forward this month and in August,’ Sweeting added.[1]

[1] http://www.propertywire.com/news/europe/uk-house-price-forecast-2015071410743.html

Tenant Says Letting Agent Adverts are Misleading

Published On: July 14, 2015 at 10:57 am

Author: Em Morley

Categories: Landlord News

Tags: flatshares London,letting agent adverts,renting in london,three-bedroom flat London,two-bed flat London

One tenant says that letting agent advertisements are often misleading, especially in London. She has found that three-bedroom flats shown on Rightmove and Zoopla only have two bedrooms.

Tenant Says Letting Agent Adverts are Misleading

To form the third bedroom, the living room will have been converted.

Katie Morley says that this is not acceptable. She has been searching for somewhere to live with two flatmates.

She explains: “Most adults paying a big chunk of their salary on rent want a proper home – not one room to eat, sleep and socialise in. For that reason, communal living space is essential, not optional.”

She has discovered that two-bedroom flats are often unaffordable for two sharers.

Morley calculated that if three people moved into a two-bed flat, converting the living room into a bedroom, they would pay £733 per month, or £8,796 a year, each.

However, if two people moved in, they would pay £1,110.50 a month, or £13,326 per year, each. To afford this, they would both need to earn an annual salary of £60,000.

Morley believes that “thousands” of homes in London are being advertised misleadingly; by saying they have three bedrooms when they have two, or four when they have three.

This is normal, she has found, and is being pushed by landlords and letting agents.

She says: “In this day and age it should be illegal to misleadingly advertise rental properties and encourage tenants paying market rent to go without a living room or a kitchen.

“Sneaky practices as demonstrated by these examples are masking London’s escalating housing crisis. When young professionals with good jobs are being cattle herded into box rooms in run-down hovels with no communal living space, there is something very wrong with the system.

“A clear minimum standard for renting must be enforced without delay.”¹

¹http://www.propertyindustryeye.com/tenant-says-letting-agents-adverts-are-misleading/

Council opts against challenging licensing ruling

Published On: July 14, 2015 at 10:13 am

Author: Em Morley

Categories: Landlord News

Tags: blanket licensing proposals,Enfield Council,licensing schemes

A local authority has opted not to go to the Court of Appeal to try and ascertain a legal decision on its blanket-licensing proposals. This was despite earning the right to challenge the initial outcome.

Proposals

Approaching a year ago, private landlord Constantinos Regas, who owns just a single property, took Enfield Council to a judicial review in London. The move followed the Council’s decision to bring in selective, borough-wide licensing schemes, which were due to come into force in April of this year.

However, Mr Regas was successful in his bid to have the proposals quashed. On reaching the decision, Judge McKenna ruled that the changes were not lawfully designated.

Initially, the Council was refused leave of appeal by the High Court, but after petitioning, a right to challenge the decision was then officially granted.

Surprisingly, despite going to these lengths to secure the right to appeal, Enfield Council have decided not to press ahead and as such have accepted the initial result.

Difficulty

Enfield Council’s cabinet member for housing and housing regeneration Clir Ahmet Oykener, said, ‘we have been granted permission by the court to appeal the decision on the landlord licensing scheme in Court but the Government has, since we began this process, changed the law on licensing.’[1]

Council opts against challenging licensing ruling

‘As a result, even though our advice is that we have a good prospect of success in the courts, we will be faced with difficulty in implementing the present selective licensing scheme because of changes in the law relating to the conditions and general approval for introducing selective licensing,’ Oykener continued.[1]

‘In effect the goalposts have moved. We also want to revisit the case for additional licensing for Houses in Multiple Occupation,’ Mr Oykener concluded.[1]

Enfield Council’s experience will interest two other London councils, namely Lewisham and Barnet, who also plan on introducing additional licensing schemes in the near future.

[1] http://www.propertyindustryeye.com/council-wins-right-to-go-to-appeal-over-blanket-licensing/

Crisis Urges Public to Protect Homeless Young People

Published On: July 14, 2015 at 9:57 am

Author: Em Morley

Categories: Landlord News

Tags: homeless young people,housing benefit 18-21 year olds,housing benefit cuts,housing benefit payments,youth homelessness

Homelessness charity Crisis is calling on the public to protect housing benefit for young people, after the Government proposed restricting the payment.

Crisis Urges Public to Protect Homeless Young People

The majority of young people can either afford to rent or live with their parents, but many cannot. Some must escape violent or abusive homes and sometimes there is not space for them in the family home.

Housing benefit ensures they have a roof over their heads.

You can get involved and support Crisis’ campaign to protect housing benefit for young people. Crisis has written a message that you can send to your MP. Complete the form and make a change here: http://www.crisis.org.uk/pages/roughing-it.html

The Government’s plans could have huge consequences for thousands of young people.

The leading cause of homelessness in this age range is not being able to live with parents. Ministers claim that they will protect those with nowhere else to go, but it is very difficult to identify when someone is out of options, until it is too late.

Being homeless can have a terrible effect on your life. Research has revealed that if someone has been homeless when they are young, they are likely to become homeless again and have poor health for many years.

Housing benefit provides support when a young person is moving to find work; if they lose their job, they won’t lose their home. If a person’s parents live in an area with little job prospects, removing this support will give them even less options and could cause long-term unemployment.

This is why Crisis is urging the Government to ensure that all those who cannot live with their parents and are at risk of homelessness are protected.

Birmingham Letting Agent Expelled from Property Ombudsman

Published On: July 14, 2015 at 8:52 am

Author: Em Morley

Categories: Landlord News

Tags: Birmingham letting agent,residential letting agent code of practice,The Property Ombudsman membership,TPO code of practice

A Birmingham-based sales and letting agent, MT Properties Central Limited (MTPC), has been expelled from membership of The Property Ombudsman (TPO) for a minimum of two years.

An investigation revealed that MTPC failed to comply with elements of TPO code of practice for residential letting agents. MTPC also did not cooperate with TPO’s investigation and to date has not paid the £2,300 award.

Birmingham Letting Agent Expelled from Property Ombudsman

MTPC was inspected after landlords complained of several issues relating to tenancies at two properties. TPO discovered evidence of poor record keeping and administration, and upheld complaints about the collection and payment of rent to landlords, alongside poor service.

The agent’s poor record keeping made it difficult to determine the rent that had been received and what had been paid to the landlords. However, TPO decided that four months’ rent was owed to the landlords regarding one property.

TPO was critical of the fact that the agent had named itself as the landlord on the tenancy agreement for the other property, instead of the actual landlords. It was observed that if this stopped the landlords pursuing the rent arrears, the agent should do so on behalf of the landlords.

TPO also noted the agent’s poor communication with the landlords, failure to pursue one tenant for full rent payments and poor complaints handling.

Additionally, TPO upheld a complaint about the handling of the termination of the contract with the landlord.

Due to poor record keeping, TPO did not reach a conclusion on a complaint about tenants being accepted by the agent without references. However, TPO said that the agent should have clearly documented that they had advised the landlords that it was not in their best interests to accept the tenants.

Following the investigation, TPO awarded the complainants a total of £2,300 compensation to cover the inconvenience and distress caused as well as outstanding rent. MTPC has not yet paid the award.

Property Ombudsman Christopher Hamer says: “My role as Property Ombudsman is to impartially review complaints made by members of the public against agents based on the evidence that is submitted to me. I aim to promote a resolution in full and final settlement of a complaint, and will determine appropriate redress where I am satisfied that the actions of an agent have disadvantaged a complainant.

“In examining the issues involved in this case, I determined there were severe shortcomings in the agent’s approach, I supported four of the five complaints and made an award in favour of the landlord.

“The agent, however, has failed to meet his obligations to pay that award and has now felt the consequences.”¹

When agents join TPO, they agree to comply with its code of practice, including agreeing to cooperate with investigations and pay any awards made. MTPC did not do that.

The disciplinary and standards committee of TPO believes those are serious breaches of the code of practice and decided that MTPC should be expelled from voluntary membership of TPO for a minimum of two years.

¹https://www.landlordtoday.co.uk/breaking-news/2015/7/letting-agent-expelled-from-redress-service

Mortgage Approvals Rise in Q2

Published On: July 13, 2015 at 4:59 pm

Author: Em Morley

Categories: Finance News

Tags: house purchase secured lending,mortgage approvals,mortgage rates,remortgaging rates

Mortgage approvals in April and May were higher than the first quarter’s (Q1) average, as mortgage rates are still at record low levels, revealed the Bank of England’s (BoE) Q2 credit conditions review.

Remortgaging approvals also rose in Q2, however, mortgage approvals for house purchases and remortgages are still considerably lower than in the years before the financial crisis.

Mortgage Approvals Rise in Q2

The monthly net flow of mortgage lending grew slightly in the three months to May, however, the BoE found that some major lenders now expect total gross mortgage lending in 2015 to be fairly similar to 2014, compared with initial predictions of an increase.

The most recent data reveals that demand for house purchase secured lending dropped substantially in Q1 for the third consecutive quarter, but was expected to rise in Q2.

Mortgage rates continued to fall in the last few months, remaining at record low levels, meaning the overall effective rate on new mortgages decreased in the three months to May.

The most quoted fixed mortgage rates – the rates offered to borrowers – also declined during Q2.

The report claims that in recent discussions, most major lenders do not expect rates to drop much further at lower loan-to-value (LTV) ratios, but some said there is some room for reductions in higher LTV products.

Lenders also said that the availability of secured credit to borrowers with LTVs above 75% rose in Q2, although their desire to lend at LTVs above 90% was unchanged. Market share objectives and a changing attitude towards risk are believed to have boosted credit availability slightly.

The study also found that lenders reported a slight easing in credit scoring criteria and in the future, the availability of secured credit is expected to rise slightly in Q3.

Demand for secured lending for house purchases grew significantly in Q2, according to respondents to the survey, after falling in the past three studies.

Respondents reported a huge rise in demand for prime and buy-to-let lending, and the BoE mentioned the Royal Institution of Chartered Surveyors’ new buyer enquiries balance being positive in Q2.