Tag Archives: Current News

11Apr 2011

Property Landlord advice: Lettings Sector set to grow on back of stamp duty reforms in buy-to-let market.

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by Nick Strong, MD www.SelectYourFranchise.com

Lettings agent franchise networks are understandably excited about the potential for market growth in the buy to let market sector in 2011.  In the recent budget George Osborne made it easier for large investors to enter the buy-to-let market. 

 The coalition government has identified buy-to-let as a way of solving the housing crises that has been exacerbated by the difficulty of first time buyers accessing funding over the past two years of recession.

 Buy-to-let opportunities have therefore been opened by stamp duty reform.  So much so that Aviva, which has been lobbying for reform for some time is seeking to put together a £1billion fund which could be enough to purchase 5000 buy-to-let properties. This is because stamp duty on the purchase of more than one property will now be calculated by the average value of the properties, not the bulk value, which the industry has campaigned for.

 It is understood that other institutions and pension funds who have eyed the sector are Aegon, Terrace Hill, Legal & General, and LaSalle Investment Management. Property agent CBRE has estimated that institutional investors have allocated £7.5bn for residential property.

 It is thought unlikely that these initiations will want to manage their own property portfolios given the difficulties that the likes of Countrywide experienced when they entered the property market.

 There is clearly the opportunity potential for Letting franchise sector business to grow if large investing corporate decide to distribute their buy-to-let portfolio via agents with significant access to market across the UK.

 Steve Roulstone, MD of Castle Estates said ‘I have been lobbying for changes such as this especially through the pages of this site, for some time now, as I firmly believe that by easing the way for Landlords to start investing again we will start to build confidence in the property market again. Nobody is asking for financial restraints to be removed completely, as nobody sensibly wishes to go through a period of unrestrained growth that could then result, but sensible steps such as easing tax burdens imposed on Landlords can only help’.

29Mar 2011

Current Property News: Letting Agent Kitemark – Yes Please!

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By Steve Roulstone

The National Approved Lettings Scheme (NALS) are to champion a new Kite mark for Letting Agents with compliant CMP (Client Money Protection) and as the owner of the Castle Estates brand, I would like to throw my weight totally behind the scheme and the principals that the scheme promotes. I have long stated through these pages that I firmly believe in and openly support any move towards confirming professionalism in our industry and can only congratulate those behind this move.

Public will benefit.

Every Agent should embrace this scheme, which is free for those who already have CMP. It is now down to every qualifying Agent to sell the system and advise our Landlords that we both embrace it and what the scheme means. In simple terms, every Agent who carries this Kite mark will by definition, protect and insure the Landlords money. It is time for us not to just sell the advantages but also make sure that both our existing and potential Landlords are aware of the implications of NOT being able to display the Kite Mark. It is time we stood loud and proud and waved the flag of Professionalism as often as possible!

Government take note.

But to me this is also an opportunity to say to the Government that as an Industry we believe they made the wrong decision in not following through with registration of Agents as recommended by the Rugg review of 2009. This is another reason why I champion the decision, if the Government will not support us as an Industry through legislation, then as an Industry we must legislate ourselves. I am not suggesting we do not need the Government, because as the report (link above) states, this is not law, but hopefully, sufficient Agents will adopt this opportunity that the Government has to take note and will in time back us with the type of legislation that will once and for all confirm our Industry as Professional.

Why do we need legislation?

As an Industry, like so many others in difficult times, we are offering our services at reduced rates through Competition. I firmly believe that no matter what price we offer our service, they should always be accompanied by the Guarantees offered by CMP and professional membership to bodies such as NALS and ARLA. Such membership does have its costs, which can be significant and along with having qualified staff to carry out the full range of services that a Professional Letting Agency should offer we can quite often find ourselves competing at a disadvantage to Companies that risk the implications of operating without Guarantees for their clients and at a reduced level of service.

Legislation equals Professionalism.

Unfortunately the papers are still full of Offices that have collapsed because of discrepancies in Client accounts (monies held). Confirming the continued need for legislation, especially at a time when so many have been attracted to what is unusually at present, a growing market. Further proof of this is the Financial Increase we are currently paying for continued CMP cover. An increase which comes about purely because of claims made against the scheme. In summary, this Industry is doing something positive to combat the difference to services available, but the Government can make it happen through Law. The Kite Mark is therefore very welcome, but legislation is still needed and as soon as possible please, in the meantime we can show our commitment by joining and letting the public know, why and what difference professional Agents make to this growing industry.

15Mar 2011

Current Property News: Rental mortgage barrier not excusable.

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By Steve Roulstone

It was my misfortune to come across this very situation myself at the end of last year, when I rented my home out, not because I could not sell, but because I had an opportunity which made very good sense to me as a house owner. It seems to be the house owner piece of that statement that the mortgage companies are ignoring, for one aspect of my situation did not make sense any way that I look at the circumstances.

Confirmation I am not alone.

A recent report in Property drum (An excellent monthly magazine which I wholeheartedly endorse) confirms that this practise is still happening and for the same reasons! It seems that some mortgage companies are just taking the opportunity to make more money and others are just downright rejecting the possibility without giving the circumstances any consideration at all. It is the situation where the amount of risk to the mortgagor is low that gives me the most concern. In my case, I only owed at a most conservative valuation no more than 20% of the property value. In the reported case this figure was 30%.

Where’s the risk?

I am unable to confirm in the reported case, but in mine the return was twice the mortgage that I was due to pay at that time and yet the answer I received confirmed that it was not a matter of any circumstances fitting the bill, rather that they were unprepared to consider any rental situation at all. In the reported case it was that the owner (Look up the meaning of the word!) was charged 1% for the privilege, or take out a new buy to let Mortgage, which would of course result in more fees being paid. I can at least understand that, but why just say no, especially when we still had to go through the application system?

No understanding of the market?

It could just be that they do not understand what is happening out in the real world, or just that decisions have been made with no consideration to the market that they operate in, but isn’t that no better than giving mortgages and therefore money with such ease that was the cause of the problems we are living through in the first place? It does not sound right does it? But I would love some other explanation that did make sense because at present, the rental market is growing year on year, we have a shortage of housing for the number of Tenants approaching the market and for the first time in history, the private rental sector should overtake the public, this year.

No excuses that make sense.

The reasons listed above are not alone, indeed other reasons are given and can be found through a little research, but none of the reasons make sense to what is actually happening on the high street and in housing estates up and down the Country. This includes the statement that mortgage companies are ensuring the mortgagee can afford the re-payments. Excuse me for stating the obvious, but how can generating more income from the property put the mortgage at risk? Surely all such matters can be assessed using the standard application methods?

Stand alone.

In my humble little way, I just ask that Companies make decisions because they make sense are considered and have the best interest of us all at the heart of the process. So please stop making mass decisions when it seems that they are not needed that do exactly the opposite and cause upset to people’s lives which are hard enough at the moment, especially using excuses that just do not hold water!

04Mar 2011

Current Property News: Approved Agents would provide improved Housing.

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By Steve Roulstone

It’s time for me to bang on the same drum again, as another slice of news has appeared on my desk and the opportunity to improve a situation by ensuring that licensed or approved Agents and or Landlords looked after the Private rented sector through a Government sponsored (but in my opinion Industry monitored) system immediately suggested itself. Well it does to me and I would welcome commitment or debate about my thoughts!

33% of Private rented stock in poor condition.

 

This information is taken from the recent English Housing Survey, just released by the Department of Communities and Local Government. This figure is a surprise, especially as the same paper suggests that Social housing is in better condition (some 23%) The headline figures for the Social and Private rented sectors are now very similar, with 17% of stock forming the Social sector and 15.6% the Private sector, this translates in big round numbers to 850,000 Social houses and over 1 million Private houses. But my own experience would suggest that the majority of these lie in the self managed sector, for in my own Company (as I would expect from all professional agencies) we would recommend what was needed for property to be acceptable to offer to the rental market before accepting the property on our books. This of course means we will not manage property that was unfit and I have indeed wiped my feet on the way out of many houses in the past. Of course, most Landlords follow our advice and repair, renew and renovate as needed.

Professional Industry creates Professional standards.

 

My own point being, that improving the state and condition of property in this Country is rightfully a main target for Government (no matter what colour) by ensuring those responsible for the care and standard of rented property were approved and this approval relies on the correct standards, then the improvement in property would be dealt with, I would suggest, very efficiently and rather quicker than any Government targets are currently achieving.

Same old same old.


It is not the first time I have championed professional membership or approval schemes and it will not be the last. What we need to do and what I do at every given opportunity as a Professional Letting Agent, is to open this debate with and actually put our conclusions in front of those who make the decisions at every given chance. What I hope is that the bodies that represent our Industry are continuing to do the same. I would think it would be difficult to argue against my conclusion in this case and only those who could not afford to renovate properties currently rented would find a reason for doing so, but is this not the objective? Because then the alarming figure of over 1 million properties rented in poor condition would be removed from the market, allowing better quality property to replace it. This of course is providing Landlords can get the right Mortgage to allow renovation or buy new housing stock – but that is another topic for debate.

21Feb 2011

Current Property News: Good practise stops Fake Agents operating!

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By Steve Roulstone

A report in the press at the weekend, has stated that Tenants should look out for fake ‘agents’ operating through the web, as false sites have been set up to mimic the way in which the sites for genuine registered agents appear, even including the logos and details of the industry approved bodies such as ARLA. As a professional member of ARLAjust as a Letting Agent, I always look at articles like this and compare what would happen to anybody visiting my agency, Castle Estates.

Good practise

I am pleased to confirm that our good practises would ensure that this could never happen with us. Meaning, that by ensuring good practises are always offered to our clients, they should be the wiser as well. Of course the only way good practises can be widely known, is to respond to such articles by advertising them, that way, hopefully, more people will be better informed in the future, ensuring they do not get caught out in this manner. So what we would always ensure is:

Deposit at the start of the Tenancy.

Any deposit is refundable under law, if the subject for the deposit is not purchased, entered in too or commenced. Therefore, there is no way that any Deposit should be taken until the day that the Tenancy commences. This will ensure at a stroke that no monies are lost through paying for a property which does not exist. This is because the contract does not actually exist until it is signed and Tenants under most circumstances, should sign at the property, on the day of the start of the Tenancy, when keys are released and monies become due (Rent)

No viewing – No fees accepted.

It has long been a golden rule within our Company that no Tenant is allowed to pay the initial Referencing and Documentation fee, without first viewing the property in person. This was introduced to ensure that our Landlords were not left with a tenant that we had not seen (Difficult to justify ensuring Tenants sourced through us are acceptable without meeting them first) either pulling out when they do see the property because it was not as expected, or ending up being a poor Tenant and not respecting the agreement. There have been occasions where the reason behind the request has been genuine, but that is where relatives or Company representatives can carry out the role and give us a situation we can work with. Not forgetting that all applications would be referenced as well.

Simple principals, Best outcome.

So our advice to avoid disappointment, as the saying goes, is to follow these simple rules, then Tenants will not fall fowl of criminal activities of this nature. Of course it is once again professionalism and education that will ensure such matters are well known by all. I say once again, because nearly every scenario where our industry is either poorly represented or open to corruption such as these false agents operating on the web, would be answered by professional standards and registration of agents. This will provide the insurance and education that our customers, as either Tenants or Landlords, need as they will know what to ask for and expect when renting property. Of course, traditional methods of visiting the Companies premises and or viewing in person take care of the problem in one fell swoop, which is why I still feel that we are some way from an industry which is solely represented by web presence alone!

08Feb 2011

Current Property News: NLA Chairman fights back, but legislation is still needed!

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By Steve Roulstone

I was busy doing those Saturday morning chores this weekend, when I report on BBC Breakfast caught my attention. What I then heard was the BBC once again doing what they do best, trying to put a negative slant on a housing matter, this time the report was about the standard of rental property nationwide. Answering the main point that a large proportion of rental property in the private sector in the UK is in poor condition, was the Chairman of the National Landlords Association, Mr David Salusbury. Very calmly and with clear comments he put the presenter straight about the standard of the majority of rental property in the Country, to the extent, I thought of reducing the length of the report as I felt the presenter had very little left to pick at once David had made his point with such authority and presence!

Missed opportunity.

Of course what David could not do in any depth, was to get the conversation round to what should have been the made drive of the report, which the BBC report failed to do, namely that legislation recommended by the Rugg review and rejected by the current Government, is what is needed to address the issues that do exist with rogue Landlords.

Councils to look after us.

The Housing Minister Grant Shapps, has stuck to the line that Local Councils have the powers already, but two things struck me from what was stated that really have an effect on what is actually happening on the ground. Firstly and most importantly, Councils may have the powers, but there is no way they have the man power to carry out this role! I remember being advised when the HMO regulations came in, that it would take our Council several years to inspect the property they already knew was due for inspection, before they even got around to investigating the property they did NOT know about! (Therefore the property where real action was needed) because we all know that the property the Council are aware of is that owned by responsible Landlords (probable members of such organisations as the NLA or managed by professional agents!)

Let’s not forget the work carried out so far!

Secondly, what is not mentioned is how the market has improved greatly over the last ten years. I can remember being asked to look at some property in the past where I have wiped my feet on the way out not that long ago! Now Landlords listen to what we agents say, because they know they need to compete in this market and prepare in a way to ensure prospective Tenants want to live in their home, not the opposite.

Let’s catch the rest.

So what needs to happen is recognition that bad Landlords do not operate through professional Agents, we need as a profession, to keep making this blindingly obvious statement until bodies such as the BBC and more importantly the Government, listen to us. This is why the registration is so important, because it would catch everybody who does not operate in this way and if our industry could be self policing, which could be operated through a qualification needed to operate for both Landlords and Agents, then what problems do exist, would be dealt with very quickly.

Conclusion.

 This is why I keep stating the same point again and again! Stop emphasising the bad points, speak about the good, let’s get a balanced opinion of our industry, housing and the need for more and then we just might start to get positive ways forward. And for what it is worth, my way would be a simple qualification that all Landlords and Agents would need to qualify for, run within the industry, by the industry, which, when Landlord or Agent fall foul off, would remove the ability to trade in this way. (on a sliding scale which could include penalties dependent upon the severity of the offence, right up to dismissal from the scheme, removing the ability to Manage property themselves)

This would force bad Landlords to be Managed by professional Agents and would stop any bad Agent from trading at all.

Now, let’s consider what effect this would have on the quality of rental housing stock in the UK?

05Feb 2011

Current Property news: Property reports show opinion not facts!

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By Steve Roulstone

I have stated on several occasions, and will continue to do so, that the reporting of issues relating to housing are constantly being reported as negative views rather than in the true light of what is actually happening. Nobody is denying that the property market is difficult at the moment (except of course for Letting agents as we have continued to show growth year on year as owners look to our market as the solution to their inability to find a buyer) but several reports all taken from one issue of a property magazine (who will remain nameless!) all have a different reflection of what I actually see happening ‘on the ground’ at the moment.

Firstly, A lifetime of renting.

The initial report states that young people do not want to rent for life, well surprise surprise! I doubt you will get many of the same people stating in a survey that they do not want to work either for the same employer or in the same industry all of their lives, but many will! I find this a report about nothing, the point of which misses me completely. The facts are that more and more people are renting and I can clearly state from my experience and in my opinion, that more and more of them are young professionals, who are just starting out in their first job. But that is all it is, my opinion and this report is nothing more than somebody else’s opinion derived from a survey, which in my opinion is worthless!

New home sells stalling, honestly?

One of the many roles carried out by our organisation is Block Management, looking after sites which nearly always nowadays, have a Management Company to address communal areas and facilities. One of these sites is in the Midlands, near Halesowen and as a new build development I can report is selling well. I had a meeting yesterday with a colleague from Milton Keynes. Because of a similar connection to local builders, we were discussing how well new build was selling in Milton Keynes. So the report looks as though it should be re-titled ‘New homes stall in London’ because clearly that is the content of the report and the Editor should remember that there is life outside of London! But some of the blame is placed on Mortgage supply

Mortgage approvals still falling.

Two points here, if the report above is blamed on mortgage approvals falling and the subject is worthy of a report in its own right, why is the BBC reporting that Mortgage restrictions are falling and secondly did anybody notice the weather last month? Again, in my opinion, this is reporting a negative because the press think bad news sells. It probably does; apparently, we are more liable to read something that scares us rather than something that will make us smile, so headlines reflect this fact. But it seems to me the report would have been more factual to have concluded that Mortgage requirements are easing because of a fall in approvals and that the future could be easier because of this, rather than just concentrating on negative views, after all, the only true reflection of these figures can be made once we see what has happened in January as the backlog that developed has worked its way through.

Assumptions.

For anybody, press or otherwise, to quote definitive statements as news, they should be able to back it up with facts and trends that stand up and only when the news that is reported is factual in this way, will we see a true picture of the subject of the report (for housing is not alone in Having facts taken out of context) and as I state in what I write, this is my opinion (that is what Blog writing is all about) and I do not deny that housing sales are still slow, but it is also my opinion that they will stay that way longer if the only way they are reported about is in a negative fashion.

26Jan 2011

Current Property News: HMO Licensing could cost £millions.

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By Steve Roulstone

I am not one to look at matters with a doom and gloom outlook, but I do believe in being factual about the outcome of actions when there is a danger that there could be far reaching implications of a change to legislation, or changes carried out by any legislative body, as is the case with the decision by Oxford City Council in reference to ALL of the Houses of Multiple Occupation within the City.

 The decision.

What they have done, is to decide that every property that falls under the description of an HMO will, on a timetable spread across the next two years, need to be licensed by the owner with the Council, in order to improve the standard of the property and in order to receive approval from the Council to continue to operate as an HMO.

What is an HMO?

The HMO’s which fall under Mandatory Licensing are those under the three storey and five people rule, but any property where more than two unrelated people abide as their main residence, is an HMO as designated by the 2004 Housing Act. Not as so often been mistaken in the past, mandatory licensed property only. Indeed, the legislation confirms that all HMO’s are subject to exactly the same safety regulation inspection as the licensed properties. And this is the potential problem for every Landlord who operates Houses of Multiple Occupation.

The implications                   

This applies on two fronts, firstly the charges for licensing every property, as every license has to be paid for by the Landlord, are set by each local Council respectively, so charges can both vary and are entirely at the whim of the Council’s concerned. Reports for Oxford state that this number could be as many as 4000 properties in the City. Should they decide to charge the average cost as confirmed by a Communities and Local Government survey (Executive Summary) £387 per application (The range goes as high as £1500 per application) then Oxford City Council at a time of great austerity, would raise a total of £1.5 Million. Even allowing for the stated intent of the act that charges should reflect the cost, this kind of income has to be looked at seriously. (Although what should happen with a major increase in licenses to be issued is a reduction of the average cost) It does not take a huge leap of faith to see how much this could interest any Local Council at present as Local Councillors struggle to cope with achieving budget targets imposed by Government. (At a time when suggestions such as heating swimming pools with heat generated by crematoriums are being put forward and seriously looked at, all such methods of income are bound to be considered) Secondly, the result of any inspection by the local Council, may not result in lifts and fire escapes all round, but my experience is that minor recommendations, such as fire doors and walls when deemed necessary, could result in costs up to £1000 per property with ease.  

Who pays?

Well this is where the effects of any such move are always badly judged in my opinion, because whilst the bill will of course become the Landlords, the costs are almost bound to be passed on to the Tenants. Especially where there is knowledge that every rental property is being treated in the same way! So improved accommodation is the stated desire, increased rents is the effect, but unusually for me, I would finish by repeating the warning, Landlords beware, Licensing may be just around the corner for your HMO, even if it is a Bungalow or any other form of ground floor accommodation!

18Jan 2011

Current Property news: Mortgage demand providing a good platform.

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By Steve Roulstone

Even as early as the second week in the New Year, agencies are reporting a big increase in Mortgage demand and the majority seems to be in the rental sector as Landlords continue to react to the need for an increased number of rental properties. Indeed, as a Country that normally follows what happens in the USA by way of financial trends, it could be argued that we are right on the heels of trends in America as they start to ease the availability of mortgages across the pond.

 Follow that lead!

I have stated before and would repeat with this very current news of increasing demand, that we are building up a head of steam which would when the market releases a product that would be acceptable to Landlords, result in an increase in sales for the coming year, which I believe will at the very least aid the recovery (if not start the recovery) of the housing market in the UK. There is no doubt that the Mortgage houses are looking at what demand would bring as they continue to sample the market place with short term offers, and this is producing strong demand, confirming my beliefs that the demand is high amongst Landlords, who are only delaying because they do not wish to be tied in too the wrong style of mortgage for their investment portfolio.

Strong Rental demand

There is no doubt that the demand is continuing to grow and this at what is normally a quiet time, even allowing for the spike of demand caused by the extended Bank Holiday blues! As Agents, at Castle Estates we are gearing ourselves to be ready for a year of high demand by ensuring we have the right technology to supply our Tenants demand for information and ensuring we remain competitive in an industry where Tenant charges can sometimes be difficult to justify. We have always maintained that the relationship with our Tenants is the key to the art of good Management and we wish to ensure we supply the service demanded by an ever increasing technically knowledgeable customer.

Producing higher rents.

For the result of the current shortage of rental property will result in higher rents for the Landlords, that is what market forces will dictate, even with the knowledge that affordability will be a large part of any increases in the current financial climate that we are living through, so giving Landlords even more reason to increase their portfolio of property. The market professionals and providers know this and will be looking for sustained signs before releasing the products that the industry requires. There is no doubt that this continued increase in demand will be playing a large part in providing that very proof!

12Jan 2011

Franchise News: Letting agents WANT ‘The Hook’

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By Steve Roulstone

It may seem that I am paranoid about the BBC. My wife would probably agree, far from it, I always start with the BBC before any other channel whenever I turn the TV on. But there are times when I do despair about the way in which they report matters and it is not just the Housing market or in particular the Letting Industry that grabs my attention, just listen to the bad news angle taken within the weather forecasts and you will know what I mean!

Popular news reports.

One of the automatic results of being the BBC is whatever they write, especially within the news, they always get ‘Star billing’ within Google. Well done to them, after all we are all looking for better placement, but over the last couple of weeks, a report by the BBC from back in June 2010 has kept appearing within the criteria of my Google search. It is entitled ‘Letting Agents let off the hook by Government’ so this morning, when it appeared again, I read it.

Principals .

One of the important principals about writing anything for publication on the web, if you wish for people to find your scribbling, is to make sure that your article explains the title, so it falls in the ‘what it says on the tin’ principal, or at least that is what I have always been taught.  However, having read the article I would have to describe this as a tenuous link at the very least. The comment within the article that the title refers to is about agents who I assume are not part of any professional body, as either the ARLA spokesman did not confirm this in what he said, or only part of his comment was printed.

Actual intent.

What is confirmed by ARLA and indeed the CAB is that the legislation was both welcome and good in its intent. That some will take advantage of the decision is a matter of conjecture, as professionals, we believe the legislation would have stopped that happening.  So the actual meaning of professional agents (and in my opinion letting agents are qualified individuals, letting agencies are offices!) is not differentiated in the article headline.

Now for the rub!

And the reason I list this as Franchise news, because the result of the visibility such articles get through Google, is that hundreds of people will read the title and without even reading the article, my Industry will be tarred with a brush, that when you read and understand the article, we do not deserve! It is difficult enough to prove that my industry is not suffering in the same way that House selling has suffered over the last few years and indeed that we have benefitted in so many ways. I do not ask that we have good news just to suit my Industry and I would not state or write anything that I cannot support, but it is time that the BBC went back to the agency that reports the news in a factual manner and stopped looking for elements of bad news so often in its reporting.

The reality is different.

Because they are who they are, the BBC have far more influence that such practises deserve, in the meantime how many people have written off a Property Management Franchise on the back of articles and reports like this that give what in my opinion is a negative approach, when in actual fact, as an Industry we would welcome such legislation and the article says just that. Pity the title the BBC chose disagrees!