Posts with tag: letting agent fees

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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Categories: Property News

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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?

Hammond Should Have Addressed Stamp Duty, Insists eMoov

Published On: November 24, 2016 at 9:40 am

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Categories: Finance News

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Yesterday, Chancellor Philip Hammond delivered his first Autumn Statement, detailing his fiscal plan for the near future. While housing featured heavily in the strategy, Hammond should have addressed Stamp Duty, insists a leading online estate agent.

Hammond focused on easing the current housing crisis in his first address, including measures to deliver a property market that works for everyone.

However, eMoov.co.uk believes that little has changed in terms of the message being delivered during the Autumn Statement and insists that Hammond was wrong to leave Stamp Duty out.

Housing market boost 

Commenting on yesterday’s Autumn Statement, the Founder and CEO of eMoov, Russell Quirk, says: “The main headline where today’s Autumn Statement is concerned is yet another cash injection for the beleaguered UK property market, with Mr. Hammond pledging £2.3 billion for infrastructure to support 100,000 new homes and £1.4 billion to build 40,000 more affordable houses in the places they are most needed, plus a further boost to Right to Buy.

Hammond Should Have Addressed Stamp Duty, Insists eMoov

Hammond Should Have Addressed Stamp Duty, Insists eMoov

“Talk is cheap, even if the numbers being bandied about today are not. And it remains to be seen how the announcement and the money will actually lead to more houses being built in practice.”

He continues: “Mr. Hammond must forgive the nation for welcoming this announcement with a degree of scepticism, as, like many a chancellor before him, these words often equate to little more than regurgitated rhetoric and a shortfall of 100,000 new homes a year.

“The Government must realise that these announcements are all well and good, but it isn’t the funding that is the issue and, until they address the mechanism itself, little will come of it. Where is the land going to come from? How will the planning process be expedited? These are all questions that need answers with actions, not just words, if the current crisis is to be tackled head on.”

Tenant referencing fees ban 

He discusses the letting agent fee ban, also announced during the Autumn Statement: “Today’s announcement on rental fees is nothing more than opportunistic tokenism and, surprisingly, is stolen straight from Labour’s manifesto. Interestingly, the Chancellor’s own Housing Minister, Gavin Barwell, described banning lettings fees as ‘a bad idea’ as recently as September.

“It is ironic that the Government should be turning its guns again on the private rental sector, given that the absence of Government action in building affordable homes to rent in the social housing sector has led to private landlords having to fill the gap on their behalf.”

He explains: “A ban on tenancy referencing fees is great on the face of it, but the reality is that the agent will make their money regardless, and this will be passed onto the landlord and in turn the tenant through higher rents.

“We’ve seen the same thing happen in Scotland, whereby the landlord must charge more to the tenant in rent to cover the increase charged by the agent. You would think the Government would have known this.”

Stamp Duty 

But while the Chancellor may have addressed certain issues facing aspiring homeowners, he missed the chance to make vital changes to the Stamp Duty system, believes Hammond.

“More of a Stamp Duty refrain, rather than a Stamp Duty reform, by Mr. Hammond today. Stamp Duty is an archaic tax and one that the industry has been crying to be changed in a manner than benefits UK buyers.

“Rather than penalise struggling UK buyers, the Government needs to flip Stamp Duty on its head and make the seller accountable for paying it. This would help those buyers already paying the price of homeownership, whilst those that have benefitted from the appreciating price of their property are in a better position to stomach the sour taste of Stamp Duty tax.”

How will ban on letting agent fees impact landlords?

Published On: November 23, 2016 at 4:07 pm

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Categories: Landlord News,Tenant Fees Ban

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Today saw Chancellor Philip Hammond announce a ban of letting agent fees to be charged to tenants. Unsurprisingly, this move has not gone down well in the sector, with key industry peers fearing that these costs will instead be passed down to tenants.

However, research from TheHouseShop.com has revealed that the would-be financial impact on buy-to-let investors might not actually be as bad as first feared.

Fees

Data from the investigation shows that the average fees charged to tenants in Britain is around £300. In London, this figure rises to around £700.

Letting agents typically charge a buy-to-let landlord between 10-15% of their rental income for a thorough management service. Based on the average UK rent for October 2016 of £902 per month, this will amount to around £95 per month. This in turn is roughly £1,140 over the course of a year’s agreement.

When the additional cost of tenancy fees, (around £300) are factored in, this adds up to an extra £25 per month.

Returns

While this will undoubtedly leave some landlords upset, TheHouseShop.com feels it will not seriously harm their return on investment. Taking the average rent of £902 per month and the average UK yield of 5%, it has calculated the loss in rental income and yield from proposed increase in fees for landlords.

The results can be seen below:

Letting agents fees pictures

[1]

Nick Marr, co-founder of TheHouseShop.com, notes: ‘The figures above show that even if letting agents are forced to pass on the costs of tenancy fees directly to landlords, it will not have a significant impact on the landlord’s overall yield and profits. In fact, the additional loss in returns could be as little as 0.14% when compared to the existing landlord fees structure.’[1]

How will ban on letting agent fees impact landlords?

How will ban on letting agent fees impact landlords?

‘Some landlords will undoubtedly raise their rents as a result of the ban – as we have seen in Scotland – but many will be able to absorb the costs of this new system without substantial losses, meaning tenants should not face a barrage of rent rises once the ban is in place. The other side of the argument here is that perhaps it should be the letting agents themselves who swallow the loss in fees, but tight margins in the High Street lettings market make this an unlikely scenario,’ he continued.[1]

Ban

Addressing the wider impact of a letting fees ban for both agents and landlords, Marr said: ‘Opponents of the proposed ban are claiming that a “short term fix” may seem appealing at first, but that in the long run it will be tenants who suffer as landlords raise rents to cover the higher costs of agency fees.’[1]

‘However, this is not necessarily true. The extra financial pressure on landlords will almost certainly result in them shopping around and trying to find the best price, and as landlords explore alternative options to the traditional letting agency service, I have no doubt that we will see a significant increase in the number of private landlords taking a more DIY approach to renting their properties.’[1]

Concluding, Marr stated: ‘It essentially comes down to a trade-off between convenience and costs, and good, reputable, hard-working letting agents will still be able to justify their costs to landlords.’[1]

[1] http://www.propertyreporter.co.uk/landlords/how-could-the-ban-on-letting-agent-fees-actually-affect-landlords.html