Posts with tag: Autumn Statement

Rent rises fall, but ban on fees will see them pushed upwards

Published On: December 1, 2016 at 11:49 am

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The latest data released by the Association of Residential Letting Agents has revealed that during October, rent increases fell to their lowest since last December.

However, the falls are not predicted to last for very long, given the decision to ban letting agent fees announced in last week’s Autumn Statement.

Rent rise falls

According to the figures, the number of letting agents experiencing rent rises for tenants was at the lowest since December 2015. Only 18% saw rent rises in October, down from the 24% recorded in September. In addition, this will well down on the 32% seen in March.

The table below indicates the percentage of agents seeing rent hikes for tenants over the last year:

Rent rises fall, but ban on fees will see them pushed upwards

Rent rises fall, but ban on fees will see them pushed upwards

[1]

Supply

During October, the number of rental properties managed per branch was 180. This was a significant drop from September, when a record 193 properties were managed per branch. What’s more, this was the lowest level seen since June, when there were an average of 176 properties per branch.

Demand from would-be tenants also fell during October, with 34 registered per branch, down from 40 in September.

David Cox, Managing Director at ARLA, said: ‘Just when rents were starting to stabilise, the Chancellor has thrown the biggest curve ball, meaning that rents will unpreventably rise when the tax changes and letting fees ban come into effect. In terms of supply and demand, this month’s findings reflect seasonal expectations and show the market is slowing in the final quarter. With fewer properties available to rent and a drop in the number of prospective tenants registering interest, tenants tend to stay in their current properties until the New Year arrives.’[1]

[1] http://www.propertyreporter.co.uk/landlords/arla-letting-agent-fee-ban-will-speed-up-rent-hikes.html

 

Are landlords set to shun letting agents?

Published On: November 28, 2016 at 10:24 am

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Buy-to-let landlords are once again under scrutiny, following last week’s decision in the Autumn Statement that letting agent fees will be banned.

Many peers feel that rents will rise as a result of the changes, with landlords looking to raise extra funds to cover their extended outgoings.

Rip-off agents

An industry peer has suggested many landlords should consider ditching letting agents as a result, particularly those that charge ‘rip-off’ fees.

Simon Lambert, editor of This is Money, observed: ‘Landlords are always ripe for a kicking in some circles, so it should come as no surprise that they were swiftly painted as potential villains in the ban on tenant fees.’[1]

‘The theory on the news that Chancellor Philip Hammond would ban tenant fees in his Autumn Statement was that buy-to-let owners would respond by passing on higher costs through rent rises,’ he continued.[1]

Anger

Continuing, Lambert said that buy-to-let landlords have a right to be, ‘as angry as tenants over letting agency fees.’[1]

‘Many landlords pay handsomely for letting and management already and the fees they pay are meant to cover many of the things that some unscrupulous letting agents also charge tenants for. A check with their agent on the level of double-charging going on would leave a landlord as grumpy as their tenant,’ Lambert observed.[1]

Are landlords set to shun letting agents?

Are landlords set to shun letting agents?

Lack of service

Mr Lambert also highlighted the fact that many landlords are sticking with letting agents who do not deliver a sufficient service.

He said: ‘Ask any long-term landlord and they will tell you that the difficulty is in finding a good letting agent, who takes all the worry of sorting any problems for you off your hands. They will have a network including plumbers, electricians, and handymen or women, who can get things fixed ASAP, do essential maintenance swiftly and at a fair cost and keep your tenants happy.’[1]

‘Happy tenants are the key to buy-to-let success, as unless you are in a hot property area such as London where places rent instantly, its vital to avoid rental voids. Even one month of your property sitting unlet but your mortgage and other bills needing paying, proves expensive. Yet many landlords stick with letting agents who don’t do a great job for them, overcharge them for maintenance, double-charge them and tenants for the same work, and upset tenants with demands for unfair fees.’[1]

Concluding, Lambert told landlords: ‘If your agent can’t explain exactly what the charge is for and justify the cost and why you aren’t already paying for this, leave.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/11/are-more-landlords-about-to-ditch-letting-agents-and-go-it-alone

 

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Published On: November 28, 2016 at 9:27 am

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The Society of Licensed Conveyancers (SLC) has offered a mixed reaction to the measures announced in last week’s Autumn Statement, which was delivered by Chancellor Philip Hammond.

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

The Chancellor Missed an Opportunity in the Autumn Statement, Insists the SLC

Firstly, the SLC welcomed the news that the Land Registry will remain in public ownership, which the society has lobbied for over several years. It claims that this will take away any uncertainty for the CEO of the Land Registry, Graham Farrant, and his team, so that they can concentrate on increasing the coverage of the register and eliminating the backlogs in first registrations and more complex transactions.

However, the SLC was disappointed that the Chancellor did not take the opportunity to reverse the “very damaging reforms” brought in by his predecessor, George Osborne, on private landlords.

The increased Stamp Duty obligation and reduction in mortgage interest tax relief will not only increase rents for tenants, particularly at the lower end of the market, warns the SLC, but will also contribute to a slowdown in the housing market in terms of transaction levels.

The Chairman of the SLC, Simon Law, responds to the Autumn Statement: “We are delighted that the Land Registry is going to remain in public ownership and we look forward to working with their executive in a number of areas that should improve the overall home buying and selling experience for consumers.

“We are less than happy, however, that the Chancellor has not heeded calls to reverse the very damaging attack made by George Osborne on private sector landlords. The level of housing market transactions will be adversely impacted in a way that is damaging to the economy, and will ultimately put up rents for hard-pressed tenants.”

In addition, the SLC is not convinced of the benefits of the Chancellor’s plan to ban letting agent fees for tenants.

“At the end of the day, these charges will end up being paid by tenants in rent and will thus be less transparent than when applied directly,” Law believes. “It will be more difficult to identify the behaviour of rogue agents.”

Do you believe that the letting agent fee ban will have a detrimental effect on the private rental sector?

What regions have the highest and lowest letting agent fees?

Published On: November 25, 2016 at 12:31 pm

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New research from online letting agency Urban.co.uk has claimed to reveal the highest and lowest letting agent fees charged to tenants across the UK.

The investigation comes after the controversial announcement by the Chancellor in the Autumn Statement that letting agent fees are to be banned.

Fees highs and lows

Urban said it accessed 400 agencies in total-including some online-in more than 150 towns and cities in the UK.

Data from the report indicates that on average, the five most expensive areas for tenant fees are in:

Basingstoke-£621.67

Slough-£543.33

Cirencester-£535.00

Reading-£530.62

Alnwick-£530.31

On the other end of the scale, the five cheapest areas for letting agent fees were found to be in:

Harbrough-£136.67

Worksop-£139.00

Market Harborough-£153.00

Lees-£162.98

Newham-£164.00

Costs include the preparation of a tenancy agreement, contract fees, referencing, Right to Rent checks and guarantor fees.

What regions have the highest and lowest letting agent fees?

What regions have the highest and lowest letting agent fees?

Oddities

As part of its research, Urban looked at what some agencies charged tenants for and found some shocking results. These include:

  • £200 to change the name on an agreement
  • £40 to live with your partner, if not married
  • £7.50 to access keys
  • £90 to move in on a Saturday
  • £25 for extra copies of the tenancy agreement

Adam Male of Urban, noted: ‘The additional costs that some tenants are required to pay can often be easily explained however, and this is something that letting agents often struggle to get across.’[1]

 

‘For instance, speedy moving and name changes on tenancy agreements can be due to additional solicitors fees, so we recommend tenants ask up-front what fees they might be subject to and compare them with others in the local area to ensure they get the best deal,’ he added.[1]

[1] http://www.mirror.co.uk/money/750-pick-up-key-40-8186288

 

Government Still Doesn’t Understand the UK Property Market, Insists Expert

Published On: November 25, 2016 at 9:37 am

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Following Wednesday’s Autumn Statement, delivered by the new Chancellor, Philip Hammond, many experts in the housing, buy-to-let and financial sectors have spoken out about its effects on the UK property market.

But one sentiment seems to stand out more than any other: The Government still doesn’t really understand the UK property market.

Government Still Doesn't Understand the UK Property Market, Insists Expert

Government Still Doesn’t Understand the UK Property Market, Insists Expert

While some believe that the Government has delivered yet more empty promises on housebuilding, others claim that the letting agent fee ban will force landlords out of the sector and raise rents, causing yet more difficulty for tenants.

Some believe that Hammond was wrong to leave further Stamp Duty reform out of the Autumn Statement, while others, predominantly tenant groups, have welcomed the lettings fee ban.

And the Managing Director of Nova Financial, Paul Mahoney, agrees that the ban may not be as detrimental as expected: “Some have viewed this as a negative, however, I believe it is a storm in a teacup. The fees aren’t generally exorbitant and it should encourage letting agents to be more efficient in the way they structure their revenue, as opposed to hitting tenants with fees they often can’t afford.”

He also claims that any expectation of a U-turn in the mortgage interest tax relief changes was “always a long shot”.

However, he adds: “The raising of the no tax threshold to £11,500 and the higher rate tax threshold to £50,000 will benefit mum and dad investors, who can split their rental income.”

But in terms of boosting the UK property market, was it all bad news?

Mark Lawrinson, the Regional Sales Director of Portico estate agent, explains: “The announcement of additional funding for affordable housing across the UK and new homes in areas ‘of high demand’ is good news for the housing market.

“The planned budget of £2.3 billion on infrastructure surrounding these homes is also a sensible move, but I cannot help but feel the Government still doesn’t truly understand the property market in the UK.”

He goes on: “The schemes the Government launch are typically geared toward the first time buyer, yet what we really need is a way of helping the second steppers move up the property ladder, which would stimulate the market, but also increase stock for first time buyers.

“If we found a way to encourage property owners to move, we would create both greater demand and greater supply. Ultimately, we need to enable the entire market to turn over – and as much as first time buyers are an important part of that, we can’t forever build starter homes. People need to move into bigger houses and different areas as their lives change, so the natural movement of the market needs re-establishing.”

He adds: “Further focus is also required on the red tape and processes surrounding building, and I believe this should be streamlined under one governing body, rather than individual local authorities. This holds up the development of sites through the amount of planning applications required, and more needs to be done on allowing sites – including brownfield sites – to be freed up for development.”

Will Lettings Fee Ban Force Landlords Out of the Sector?

Published On: November 24, 2016 at 11:32 am

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Following yesterday’s Autumn Statement announcement, the industry fears that the lettings fee ban may force landlords out of the private rental sector.

Will Lettings Fee Ban Force Landlords Out of the Sector?

Will Lettings Fee Ban Force Landlords Out of the Sector?

In his first Autumn Statement, Chancellor Philip Hammond revealed plans to ban lettings fees “as soon as possible”. He believes the ban will save the country’s 4.3m private tenants hundreds of pounds.

But the lettings fee ban may have a detrimental effect on how many landlords still make a profit from renting out homes, believes Paul Shamplina, the Founder of Landlord Action.

“Although there had been some whisperings, confirmation of this announcement will be a big shock to the industry,” he believes. “It is realistic to assume that the ban on letting agent fees to tenants, which will leave a black hole in agents’ profits, will need to be partly recuperated through letting and management fees.”

He explains how this will affect landlords: “At the end of what has already been a tough year for landlords, and with uncertain times ahead, agents hiking up fees could be the final straw for some landlords and see them exit the private rented sector. Those that wish to hold onto their rental properties will have to increase rents in order to cover their costs. We could even see a surge of landlords opting to self-let and manage, which I believe will have a detrimental effect on rental property standards.”

He advises letting agents: “Agents will need to be forward thinking about how they can absorb some of this cost and the loss through other areas of their business. It has never been more vital for agents to educate less experienced landlords on the importance and benefits of a managed service, making sure they are compliant with industry legislation and preventing them from exiting the private rental sector altogether.”

But could the lettings fee ban be a good thing?

Simon Thompson, the Director of AccommodationForStudents.com, says: “With a recent report revealing the housing shortage in some university cities has driven rents up by as much as 10%, the scrapping of agent fees will be welcome news to students. Until now, students had no choice but to pay varying fees in order to secure the accommodation they want.”

But he is also wary of landlords choosing to self-let: “However, this could also have a negative effect on the rental market in the long term. It is likely that agents will be forced to increase landlord fees to cover their losses, which in turn will see landlords increase rents even further, negating any saving made to tenants in the first place.

“Those landlords that typically choose to appoint an agent to manage their properties are usually either less experienced than self-managed landlords, or do not have the time to manage their properties. If more landlords choose to self-manage to save on letting agent fees, this could lead to a rise in poorly managed and maintained properties.”

How will the lettings fee ban affect your investment in the sector?