Tag Archives: Current News

09Dec 2011

Current Property News: Resolution Foundation Renting in the dark leaves GOOD Agents crying for the law!

⋅ Leave a Comment

By Steve Roulstone

I have now listened and watched the reporting of the new report from the Resolution Foundation about the rental market and have to object once again to the broad brush approach of in this case both the BBC on Radio 4’s ‘You and Yours’ programme and the ITV ‘Daybreak’ news report both from Thursday’s editions. Only this time, because any professional Agent would agree with the main push of the report, that regulation of our Industry is needed, yet again, to many generalisations were made about the problems of heavy Tenant charges being widespread across the whole Industry.

Proper processes.

Firstly, the Lady from the Resolution Foundation complained to Ian Potter (who once again represented ARLA members very well) by saying that very few Agents carry their charges on the Web, well no surprise there, because most Tenants would not understand what the charges were for and whether they apply to them and when, because we cover so many different scenarios, but what we do (Castle Estates) is list all possible charges on a document which we ask Tenants to sign after explaining what charges would apply to them in their individual circumstances. By ensuring they have read and understood them before we ask for a signature, we ensure we comply with ARLA recommendations.

Other issues

There are of course many issues raised by the actual report, but this is not the media to address them individually, but suffice to say, the rent levels quoted raise serious questions as to where the survey was carried out, they totally ignore the Law of Agency and our role (in law) on behalf of the Landlord, that local Government schemes introduce a third party to argue about costs and would further delay the deposit returning process, because actual cash is not involved, the amount required to move cannot include the actual rent, because if a Tenant cannot afford the rent, we cannot accept the Tenant (common sense for me!) and many more, but to get back to the media reporting:

Not all the same!

The second screamingly obvious point that struck me, was there was no clarification of whether the ‘Letting Agents’ contacted or referred to, where Estate Agents who offer a Lettings service ( because as I have stated so many times they can no longer afford to ignore our market having grown so significantly during the house price drop) or stand alone Letting Agents and I think this is a clarification which needs to be addressed, because the only true judge of our industry is to look at Letting Agents alone. The rate at which Estate Agents have turned to the rental market clearly dictates that the level of service for both Landlords and Tenants will have dropped. By judging the performance of both side by side, professional Letting Agents and ARLA members especially, will I am sure shine!

Government now damaging the whole!

Another implication for me is the harm that is done to all Letting Agents by such news reporting, which, whilst I do not question the content, is done in the normal dramatis style (especially by ITV) so as to catch the viewers attention.  The issue being because the Government continually states that it does not have the stomach to address the legislation required to regulate the industry, when publications and comments from respected bodies are released in this way, the whole industry suffers from the subsequent fallout and bad press.

PLEASE regulate our Industry.

If only the necessary regulations and licensing were introduced, bad practises from Agents, overcharging from Agents (which from my own experience is normally the realm of the Estate Agent who are used to generating large fees) and rouge Landlords who rent property in poor conditions would ALL be addressed. Once again you get the same tune from me – it is a pity the Government cannot change their tune!

Professional representation.

 Ian potter (ARLA secretary) quite rightly said that we were nearly their under the last administration and this one has stated there are more important matters to address. Well for me as each report and complaint is made and heard our case grows stronger because every report always requires the same solution and as we approach 20% of the UK housing stock under the banner of the private rental sector, the only remaining question is how long before it becomes important enough for the Government to take the right action.

 

06Dec 2011

Current Property News: George Clark campaign for Housing.

⋅ 4 Comments

By Steve Roulstone

I sat and watched George Clark last night in his new programme designed to get us all up in arms about the number of properties that have been boarded up and have been left standing unused during a period when we have without doubt a massive housing shortage, but affordable housing is what the market needs and Mr Clarkes programme is designed to embarrass the powers that be into working with him and allow his Company to make the properties habitable once again.

Non Political statement.

In the main Mr Clarke managed to put a programme together which did not have a political edge and in saying what I want to say about the programme, it is my intention to do the same, because my comments are purely factual and based upon both the law as it currently stands and what I believe to be the powers that are needed to assist in raising quality of housing in the UK.

DIY I really don’t think so!

The first issue barely given time in this programme was the ability that people will have to affect changes themselves as a method of keeping the cost of renovating these houses down. But in every property visited or discussed, Electrical issues mainly with re-wiring were highlighted.  This of course is a job which just cannot be carried out by anybody who is not qualified (currently to Edition 17 of the IEE regulations) under Part P covering electrical installations in the home. Please Mr Clark, let’s get the facts right,  and let’s also be honest, electrical, heating including Gas and window replacement are the major jobs required when renovating a house, so without consideration being given to any possible structural work, there are regulations protecting people for all such services and they cannot be ignored!

Poor quality housing.

He then went on to take us around a rented property in poor condition (Could not help but wonder if the problems were the result of a failed DIY attempt?) and a property owned by people who had left it empty because they could not afford to rent it out (despite pointing out that the major problem with both properties was bad wiring!!) Sorry but I did not understand the point of this, because both houses on the face of it appeared to be in poor condition, so other than an appeal for cheap funding any point missed me by.

Proper controls needed.

What did strike me was here was yet another issue surrounding poor quality housing which would be addressed if licensed Agents were in a position to approve the property for the market prior to anybody being allowed to either let or rent the property. You cannot disagree, again from what we were shown, that both of these houses needed work, Surely this is a role that letting Agents would both wish to adopt and are in a position to carry out with ease and professionalism.

Large concern.                                                

Now far be it from me to throw a dampener on what Mr Clarke is trying to achieve here (Castle Estates joined forces with an attempt made by Prince Charles some seven years ago to resolve the same issue, which unfortunately failed) even though his own feelings about the subject seem to be the driving force, rather than any co-ordinated practical financial plan. But from the look of his web page, his own Business will be heavily involved in any solution, but the real source of the problem, which the area he covered in the first programme was created by the drive to build better housing in communities where property was emptied and or demolished, is much deeper and needs to be addressed on a much bigger format than this amicable gent will achieve, in the meantime I wish him well, providing he is realistic about what can be done under the label of DIY!

29Nov 2011

Current Property News: BBC report House prices Falling and Rising – Honest!

⋅ Leave a Comment

By Steve Roulstone

I am not a lover of the way the BBC report most issues, far too much political bias for my liking, but yet again this week one of my old chestnuts has risen its weary little head again, as the BBC news stated that house prices have dropped this year in total 2.6% according to the Land Registry and that the average price for a house is now around £162,347. I heard this report on the news as well as being able to read about it on the BBC web site.

House prices in dramatic rise.

The BBC have reported that average house prices are now at an average of £241, 461! Wow that’s good, when you consider the first report was dated September 2011 and the second November 2011, that’s a rise of just under 50% which gets even better when you see that the period reported upon was also September 2011!! But wait, what is this I hear?

House prices rise by 1.6%!

According to the BBC in a report dated today! House Prices have risen by 1.6% in the last year, now I know that these reports are all from differing institutions and organisations, but please somebody explain what is the truth? Are prices falling? Is the average price rising? When will we ever know? What are we supposed to believe?

When will the BBC explain?

This to me is exactly the style of reporting which the BBC (this organisation that was once trusted to be the eyes and ears of the nation) now use in all areas of news reporting, in trying to compete in TV world, that proves just how far they have dumbed down to the extent that they are only interested in sound bites with no depth what so ever. No doubt other markets are treated with the same scant regard. Proof for me for our industry, is that whenever they have an ‘In house representative’( to discuss this important issue in less than 30 seconds) it is never the same person, proving that they do not have an ‘in House’ expert when it comes to housing issues!

There to report the news.

I know this is not all their fault, because they did not publish the figures in the first place, but it is a fact they like bad news (which is why I probably only heard about the average price drop) and they never give an argued or reasoned debate about what the figures represent and why such figures differ. To me this is the crux of the matter, because if Mr and Mrs Average are ever to understand what the BBC is telling us, then if they quote so many figures, they should explain so many figures and why they use them all, because they SHOULD be the organisation we rely upon to explain matters to us! That surely is what we pay our license for, is it not?

24Nov 2011

Property Landlord advice: Government Housing Policy energy standards picking at the wrong sector!

⋅ Leave a Comment

By Steve Roulstone

The new Housing Policy released earlier this week, makes specific reference to two areas that I feel are linked, in the standards being set in one and the Government requirements for the other. I am referring to Decent Home Standards and Energy Performance levels.

Walking away from business.

This week alone, as a Letting Agent, we have walked away from two properties where the standard of accommodation that the Landlord was offering, we felt, dropped below what should be offered in our market place. As I pointed out in my Blog earlier this week, self policing, because we are professional Agents. The fact that other Agents (Estate Agents) were prepared to market the properties, in one instance without basic instruction which could result in the Landlord being the result of a financial claim against him, is both alarming and a subject that I repeatedly Blog about until blue in the face, if you do not legislate for fitter and proper Agents, the market will continue to suffer from bad Management!!

Market protection.

So with the knowledge that professional Agents will advise Landlords what should be done before they will market property, let’s just confirm, we now have a situation where we are raising standards automatically – just what the Government are asking for!! But wait, what do we have here? A comment in the same release, stating that Rented properties that do NOT reach certain energy standards will, by 2016, NOT be allowed to be offered to the market!

Is it the financial link?

So why are the Government targeting the rental market and not the sales market? There appears to be reference to review Building Regulations, which ensures new properties reach these energy standards, but nothing to address property sales, so why not? To me it is purely because they can and for no other reason. I would guess that the reason given would be that if Landlords are to make profit from renting property, then the profit must be gauged against the standard of the property. A good argument and I am not saying I disagree, but if that is the case, why not apply the same regulations to Mortgage Companies who profit from providing a Mortgage to the ‘House buyer’?

Too radical?

This to me is not a level playing field and we as an industry have five years to address it. The facts are quite clear in both statements included in the Government release on the rental market, the best standards of properties can be found in the rental market and the best energy efficient housing can be found in the rental sector. And yet in this report they further target (an easy target?) our sector for improvement. My point has to be, that under a heading of a thriving market sector, rules are being introduced which will place further unbalanced costs on the Landlord, when set against any decision against selling.

 

Action Needed.

We have plenty of time between now and 2016 to ensure this is not the case, so I ask our Industry representatives to ensure that our market will not be given a disadvantage at such a critical time in its popularity and development. If I am right and if this is left unattended we could be left with a problem, the time to act is now!

21Nov 2011

Current Property News: A housing strategy for England. But is it for the rental Industry?

⋅ Leave a Comment

By Steve Roulstone

Today the Government have released their Housing Strategy for England, which is designed to give a kick start to housing sales across the UK, which most would agree is something that is badly needed and a view point that I totally agree with and have commented so in these pages on many occasions over the last eighteen months. But Housing Sales are not the only consideration nowadays and for once the Government have acknowledged this, with a section and strategy purely designed to encourage Landlords to start buying more property for the rental market.

Rounding a square peg.

I recognise that one problem the Government had to address was how to encourage growth in an area that had come under such criticism (Profit from rising property prices) for the perceived effect profit on Property values had had on the current financial situation and current property price de-valuation. What I did not expect but can perfectly understand is the decision to encourage growth through Business organisations rather than individuals. This very comfortably  delivers possibility of growth, which according to conversations I have recently had with Management at one of the larger National Property houses, whose clients include the organisations targeted by this policy, who are actively buying property in numbers at the moment, will be well received.

Using Council powers.

What I still cannot understand and accept, is that Local Government will be the answer to what is described as the ‘rouge Landlords’ who still flaunt such legislation as the Tenants Deposit Scheme and Houses of Multiple Occupation standards or as mentioned, the Decent Housing standards, for certainly where we are based in the Midlands, all Councils that I have come in too contact with have confirmed that they do not have either the man power or time (ability) to pursue Landlords and therefore deliver a local deterrent.

Working with the Industry.

It is very encouraging to see a whole section giving information about what the Industry can deliver and I am sure the ringing endorsement of the ‘Safe Agent scheme’ has been well received by the Industry in general, but I cannot make comment about this situation without pointing out that if the Government really wanted to get rid of rouge Landlords at the same time as increasing standards, then the Industry is here with open arms! Surely the fact behind the figures quoted that more property in the rented sector is of better quality than in the hands of owner occupiers says it all. I know that all of the properties in our Management would pass with flying colours, because we would not manage property that failed these standards.

Where does the problem lie?

I am also well aware that the figures state that some of the worst quality housing is in the private rental sector as well. Now with the information that we do not manage them and with the firm belief that neither do other professional Letting Agencies, it does not take such a massive leap of imagination to realise where these properties do actually lie! So what is the answer? Simple, involve us in managing or looking at these properties, so that all Landlords have to be connected with some professional licensed Agent. There are further issues raised for the rental sector by this statement especially surrounding Green policies, which I will address through these pages later this week.

10Nov 2011

Current Property News: Buyers feeling the freeze!

⋅ Leave a Comment

By Mike Edwards

Banks approved 6% fewer house purchase mortgages in September than in August, with 17,000 would-be first-time buyers left out in the cold.          The figure of 33,130 house purchase approvals was, however, 8% higher than in September last year though the comparison is with a very flat month from 2010. To compound this figures from the British Bankers Association show the number of remortgage approvals in September was also down on the August figure, by 8%, although about the same as in September 2010. There are some commentators who may suggest this lessening of remortgage money is not such a bad thing in terms of how over borrowed the country and individuals are.       

The BBA reports that growth in gross mortgage activity is being driven by the buy-to-let market and it is clear that a modest stimulus to gross mortgage lending is coming from the buy-to-let sector as rental yields continue to improve as we commented on recently. Indeed any recent improvement in gross lending can almost certainly be put down entirely to buy-to-let landlords taking advantage of the current rental market than a much-needed surge in lending to first-time buyers. Strict lending criteria and absurdly high deposit requirements are continuing to keep mortgage finance out of the hands of the average first-timer, and this is flooding the private rented sector with demand.    

The only problem on the horizon though for Landlords is given the additional supply and even allowing for increased rental demand, the likely sluggish future growth in the capital value of their properties may continue for some time. And if they decide to sell their portfolio what sort of market may they be selling into? Latest calculations indicate that each month there are 17,000 more frustrated buyers than before the downturn having to rely on rental accommodation because they are unable to buy. This is driving up competition for accommodation in both the flatshare sector and the wider rental market. For many investors, these conditions are too attractive to ignore, hence the growing investment in buy-to-let.         

While this continued buy-to-let interest may well alleviate some of the pressure on the current stock of rental homes, the supply will have to increase at a much faster rate to match growing demand and limit further rent rises. The CML says that in the 12 months to August an average of 15,800 first-time buyers a month secured mortgages, compared to an average of 33,100 a year between 2002 and 2007. These are staggering figures and do not bode well for the future of the housing market for several years to come. Without first time buyers the market is eventually bound to seize up – or see spectacular price falls. 

Whilst the mortgage market is doing its best to stagger on the ailing economy is entering a state of rigor mortis, and the crisis afflicting Europe makes any resurrection of growth look unlikely.   The temptation for lenders to pull further back from an unsure market and recoup equity over the winter is becoming overwhelming. Supply of credit remains painfully restricted, meaning there is almost no margin for lenders to grow their loan books, so they are being understandably cautious and focusing on targeting borrowers with big deposits.

04Nov 2011

Current Property News: Trapped renters equal half of the UK rental sector.

⋅ Leave a Comment

By Mike Edwards

This information is taken from Rightmove’s Quarterly Consumer Confidence Survey out today. Trapped renters, tenants who would like, but cannot afford to, buy, make up 55% of the rental sector, with one in four of them over the age of 40, according to the portal’s latest Consumer Rental Forecast. Thus, this group faces the prospect of having to choose between a heavily reduced mortgage term to pay off any mortgage they do eventually take before they become pensioners, or continuing to pay off a mortgage into their 70s and beyond.

In rough terms recent surveys show that over half of those in rented accommodation would like to buy now, but can’t make the sums add up and, as a result, are trapped. The global economic woes that have left first-time buyer numbers at record lows will shatter the goals and aspirations of many as they face the reality of renting for far longer than they originally planned. Indeed those trapped and still renting when over the age of 40 could face the prospect of being an OAP mortgagee, or face difficulty getting a 25-year mortgage term if it takes them beyond lenders’ retirement age criteria. Generally most front line lenders will take age plus mortgage term to a maximum of 75

There is also a growing gap between demand and supply and demand continues to set records. But available stock is down 5% on the last quarter as the supply of new rental properties remains muted and tenants stay in properties for longer. The lack of supply means renters are resigned to paying more, with 53% of them expecting rents to rise in the next 12 months and 39% can see themselves still renting in three years’ time. On an Assured Shorthold Tenancy a properly served Section 13 notice to increase the rent leaves tenants with little option provided the newly sought rent is in line with local market levels for similar properties. The other danger for longer tenants is that it does not matter how much the rent is increased by, only that it reflects current trends. So any tenant that has been enjoying a fairly soft rent might find themselves with a nasty surprise if the Landlord or their agent monitors local rent and increases levels accordingly.

This of course is all good news for investors holding the type of property in demand especially in sought after locations. This combination of high tenant demand and upward rental pressure will be particularly appealing to long-term investors. Many investors say that attractive yields from rental returns, compared to returns on their other investments, are their main reason for investing in property. With the stock market continuing to offer the certainty of a stressful rollercoaster ride and safe cash investments delivering below inflation returns the solidity of bricks and mortar combined with high tenant demand and rising rents has growing investor appeal as a physical asset that could prove to be a better long term hedge against inflation.

28Oct 2011

Property Landlord advice: DPS sister Company applies to run the TDP scheme for Scotland

⋅ Leave a Comment

By Mike Edwards

The Letting Protection Service Scotland the sister company to the Deposit Protection Service in England and Wales) has applied to run a tenancy protection scheme in Scotland. Though part of a tender process the DPS rightly emphasises it will be the only contender in Scotland to have had any experience of protecting deposits.

In its activities for England and Wales the DPS has protected more than 1.7 million to date, amounting to more than £1.3bn in value. Its application is fully expected to be approved and will trigger implementation of compulsory tenancy deposit protection in Scotland where, unlike England and Wales and argued by many very sensibly, insurance-backed schemes will not be authorised.

Instead, landlords and agents who take deposits must put the money in a banking or ‘custodial’ scheme and from the date the Scottish scheme launches from that date they will have 30 days (not the 14 as in England and Wales) to protect deposits for all new tenancies. Landlords holding deposits for existing tenancies will have nine months’ from the launch of the first scheme to protect their tenants’ deposits.

Under the Tenancy Deposit Schemes (Scotland) Regulations 2011, which came into force in March 2011, landlords and letting agents will have a duty to protect tenants’ deposits as soon as the first approved scheme launches. This is thought likely to be from April 2012 or if not soon after.     
               
There has been constant criticism of the English decision to allow three schemes, two of them insurance backed and in effect promoted by vested interests. In reality The Dispute Service in effect is for agents and Mydeposits.com is for Landlords enabling both to hold onto the deposit monies.

This was seen by many objective commentators as rather defeating the object of TDP which is to keep the tenant’s money – and all too often it is forgotten just whose money the deposit actually is – 100% safe and protected from abuse by others.

24Oct 2011

Property Landlord advice: Keeping the House warm!

⋅ Leave a Comment

by Steve Roulstone

At our office in Stafford, at this time of year, we like to remind our Tenants on behalf of our Landlords, especially in relation to their Insurance, that during the winter months they have the responsibility of keeping their rented property at the right temperature to combat our winter weather. We do this every year to ensure that property is left unprotected during holidays, be it skiing, a winter break or just over the Christmas period that Tenants are away, the home still needs protecting. Especially after the hard spells we experienced last year, which were a timely reminder ensuring we do not take any year for granted as far as the weather in this country is concerned.

Correct temperature recommended.

Of course one of the most important pieces of advice, in amongst information on emergency procedures and confirmation of responsibility, is the correct temperature that an empty house should be maintained at and it is this one figure that I wanted to highlight today, because should you ask any group of people what temperature they should maintain their own house at whilst away during the winter months, it would be my position that very few would be correct in their estimate!

Plumbers and Insurance agree.

The surprising thing was that the recommendation was agreed by both the Insurance companies (written as part of the policy) and the plumbers we spoke to, namely that the house should be kept between 12c and 15c. (I know that in my own house, and even in the rented property I now occupy, I have never aimed to keep the property at this figure) However, what matters here is that as Agents we advise the Tenants in a manner that they both realize their responsibilities and are advised in a way that the implications are understood.

Co-operation required.

If it is part of a Landlords Insurance policy that a minimum temperature be maintained when a property is empty, then it is important that Tenants are reminded at least once a year and that the reminder is timely, with the beginning of the winter being the best time to renew the instruction. There is no doubt that cold snaps such as we experienced last year may not come every year, but then there is just as much chance that they will and this is something that the Landlord cannot ignore, because should an Insurance Company be able to prove that a property has not been maintained correctly, then they have the ultimate sanction and could refuse to accept any subsequent claim!     

Clear advice and implications.

What we would all seek to avoid in such circumstances, is a situation where the Tenant can be held responsible for damage caused because they did not follow what was required of them so it is important that they are both made aware and advised of the clear implications that could follow from not carrying out there responsibility. What we do know from previous experience, is uncommon to popular belief, the majority of Tenants do understand and are sympathetic to what they need to do in these circumstances and therefore when advised properly and informed on time, they will co-operate and help to keep ‘burst pipes’ to a minimum!

21Oct 2011

Property Landlord advice: Utility providers recognize rental growth.

⋅ Leave a Comment

By Steve Roulstone

For years the biggest issue Letting agents had with Utility providers was that they did not understand how the rental system works and that whilst a Landlord has Tenants in the property, any costs generated were not Landlords responsibility.  The end result was invoices sent willy nilly to all and sundry in an attempt to get somebody to pay for supplies. From day one we have always sent faxes at both the start and end of tenancies confirming changes, names and forwarding addresses.

Too busy.

This was always reliant upon utility providers supplying fax numbers where this information could be sent, but on one classic occasion the manner in which they addressed rental properties shone through, when I was faxing British Gas and because the phone was on a speaker rest, I quite clearly heard the BG employee at the other end say ‘we have had enough fax’s today I am going to turn this machine off’!! Sure enough, it took three days before we could get through again.

Change in approach.

It is hard enough sometimes to find out who Tenants have changes suppliers too, but typical of utility providers, who along with the practice of firing invoices right left and centre never mind how many times we sent them clear information (including on many occasions in the name of the Letting Agent, who of course can never be responsible for costs generated at any property) and sending highly inflated invoices for periods between Tenants (this is a particularly popular practice with the water companies, who when multiplying the cost out charged at up to twice the annual rate for one or two week periods) they have now managed to get legislation introduced which means they may now charge the property owner if they do not have sufficient Tenant details.

A justified approach?

Of course if the services are not contacted and it is the responsibility of the outgoing and incoming person who pays bills to advise of the change, then one can understand their motivation. But if a Tenant does not advise of a forwarding address when they leave, then Landlords could find themselves responsible for the Tenants failure to advise correctly. Because this is part of what we always do as Letting Agents, we should never fall fowl of this new legislation, but Landlords who manage property themselves can no longer hide behind the excuse that it is not their fault. They must now ensure that they supply the information at the end of a Tenancy, even if a property is abandoned, doing nothing is no excuse and contact and information known should be supplied.

Only for water.

The legislation is contained in section 45 of the Flood and Water Management act of 2010 and is therefore at present only available for water utility companies, but I am sure that once the electric and gas providers realize (if they have not already done so) that this is possible, they will quickly lobby for the same powers. For me the biggest problem is that for years they treated the rental industry as a nuisance and now that the figures are obviously much bigger, seek legislation to protect themselves. A pity they could not just be efficient in how they go about dealing with changes at property and adapt themselves to the market, because by using legislation they are implying that they are protecting themselves from people who wish to defraud them through the law, when I believe that the reality is that the legislation has been smuggled through the back door to save them money in coping with what is a major change in trend in this country through efficiency and having to introduce workable but time consuming solutions. How much easier just to invoice the registered property owner!