Vote Conservative and get Labour?

I like to keep abreast of current parliamentary commentary and reviews.   In one of my many researches, I came across a very interesting article by an industry commentator in one of the trade journals.  It is a thought provoking read, which does put a relatively new slant on the buy to let market.  See what you think? 

 If you want to know a whether buy to let, landlords and letting agents will be in the firing line for more punishment through taxation and regulation, keep a close eye on next week’s local elections. 

And perversely, look beyond the actual results. 

That’s because there’s a growing belief the Conservatives are just one electoral jolt away from hijacking some of Labour’s rental sector policies in a bid to woo younger voters. 

We saw some evidence of that view this week with the editorial in the right-wing political magazine The Spectator, blatantly advocating that the Tories steal Labour’s policies on rent caps and longer tenancies – or risk losing the next general election. 

The Spectator is influential because these days its leading supporters (like Boris Johnson, Liam Fox, David Davies and housing minister Dominic Raab) have roles in government.

 In the past, these well-to-the-right pro-Brexit politicians were more a ginger group than a mainstream movement. But no longer – they are the centrists now. 

Now if the Conservatives do badly in next Thursday’s local elections, the increasingly common view that the party should become more pro-tenant and more anti-landlord will become rocket-fuelled by a powerful force – electoral panic. 

Picture this: some political analysts say Labour will do particularly well next Thursday in London, where much of the electorate is young, diverse, multi-cultural and privately-renting. Because of the peculiarities of the electoral system, London is very heavily represented by MPs – enough, easily, to swing a General Election when it comes. 

So if the Tories lose local council seats in London next week, they will be demanding policies to win back disillusioned young voters in time for a General Election in 2022 – and where better to start, some will say, than further ‘reform’ of the private rental sector? 

Many may say, with justification, that there’s nothing left to reform. After all, haven’t the Tories managed to chip away at any benefit of being a landlord in recent years anyhow? 

Don’t you believe it. 

They could introduce rent caps, tailored to local salaries – a Labour idea, but when there’s an election at stake, that won’t matter. 

They could make 12, 24 or even 36-month tenancies standard – again, stolen from Labour.

They could also give additional planning advantages to Build to Rent, squeezing further individual buy to let landlords. They could raise stamp duty and capital gains tax; they could clampdown on incorporated landlords. 

The list goes on, and please don’t even think of saying “they wouldn’t dare” … because they have been daring the lettings sector on a continual basis for several years now. 

So next Thursday might be crucial in determining the next wave of rental sector reform. 

It’s just possible that for this coming poll, if you vote Labour you get Labour policies; and if you vote Conservative (but not in sufficient numbers) you might get Labour policies, too, because of the panic as MPs see their electoral future getting shorter. 

As a once-famous politician said: “It’s a funny old world.” And right now, it’s funnier than ever.

An update on the housing market – January 2018

Happy New year to all of our readers. I trust you had a merry one and may I take this opportunity of wishing you all a happy, healthy and prosperous 2018.

Although the year is still young, I would like to draw your attention to three things in particular, that have either just happened, or just been reported in the press in 2018.

The first is the Governments initiative to crack down on Rogue Landlords and extend the HMO criteria to include many more properties in this category. The second is the cabinet reshuffle and finally, I will cover and comment on the latest debate held in parliament for the tenant fee ban.

Alok Sharma, Minister for Housing
“Enough is enough and so I’m putting these rogue landlords on notice – shape up or ship out of the rental business.”

The government estimate an extra 160,000 HMO properties are to be licensed under the new proposals, which are likely to go live in April this year. It was announced in the press at the beginning of January, that Housing minister Alok Sharma is to proceed with plans to significantly widen HMO licensing in the UK, and has also published the range of criminal offences that will soon trigger letting agents and landlords being automatically banned from the sector.
These new measures will introduce significant additional responsibilities for landlords, letting agents and property managers, and stiff penalties for those convicted of certain criminal offences.

The HMO measures, which apply to England and are to be introduced in April 2018 (assuming parliamentary approval), will see some 160,000 additional properties brought into licensing. The proposals frame these as those housing five or more people from two or more separate ‘family groups’. This significantly widens the range of property types included within HMO regulations, which used to only include properties with three or more storeys. Now, apartments and smaller houses will have to be licensed if they fit the new criteria.

Also, bedrooms offered by landlords and letting agents within HMOs will soon have to meet a new minimum size standard of 6.52 sq. m if inhabited by one person, 10.22 sq. m if lived in by two people and 4.64 sq. m for a child of ten years old and under.

The government has also published the list of criminal offences that can lead to landlords, letting agents and property managers being banned from the property rental sector. These will include serious offences such as theft, blackmail, handling stolen goods, harassment and stalking.

“Every tenant has a right to a safe, secure and decent home,” says Alok Sharma. “But far too many are being exploited by unscrupulous landlords who profit from providing overcrowded, squalid and sometimes dangerous homes. “Through a raft of new powers, we are giving councils the further tools they need to crack down these rogue landlords and kick them out of the business for good.”
Strong words and a strong initiative to hopefully improve our industry. So how is he being rewarded by the prime minister for this bold move?

You may well ask! There was more confusion within the government as the Prime Minister’s Cabinet reshuffle appears to add both Alok Sharma’s title and job to that of his boss the Communities Secretary. Housing has been put at the heart of the Department of Communities and Local Government (DCLG) after Sajid Javid was today given the title of Secretary of State for Housing, Communities and Local Government.

Until now Sajid has been simply the Communities Secretary but, it is believed, PM Theresa May wants to raise housing up the political agenda and be seen to be doing something about the ongoing supply crisis. This throws the role of Alok Sharma into confusion until today DCLG’s Minister of State for Housing and Planning!

Now that Sajid has decided to take the helm at housing then the switch will make him the 16th holder of the title in just over 20 years. The average term of each housing minister has been approximately 16 months, so Alok’s tenure of the title may have been just six months. The announcement is unlikely to go down well within our industry. Only a few weeks Viewber CEO and former Douglas and Gordon boss Ed Mead let steam off within his own blog about being “totally fed up with the short-term nature of our political system” and complaining that the latest “housing minister, seems almost invisible”.

So, as well as a question mark hanging over Alok Sharma’s head, we need to remember that the cabinet reshuffle also comes at a perilous time for Sajid Javid, who must now steer the tenant fees ban through parliament following a debate on the subject this afternoon in parliament (Jan 8th, 2016). Sadly, the evidence of a history of short-term politics within the Housing Ministry is there for all to see. In fact, this is the list of previous ministers since 1997 to date (15 so far)! Alok Sharma, Gavin Barwell, Brandon Lewis, Kris Hopkins, Mark Prisk, Grant Shapps, John Healey (LAB), Margaret Beckett, Caroline Flint, Yvette Cooper, Keith Hill, Jeff Rooker, Charlie Falconer, Nick Raynsford and Hilary Armstrong.

It is not rocket science to see that this is not a political party issue, rather a UK political issue, as it involves all governments since 1997 and indeed for at least the last fifty years. My personal view is that until we have a politician that puts his country before his party, this gross mismanagement will continue. I also believe it is rather ironic, that politicians spend their time devising laws, advised by lobbyists (who have their own personal agendas), to stop the public, business and industry doing what they do for a living! It is almost worth considering why there is only one monopolies and mergers committee! But that would be silly wouldn’t it?

Later the same day, MPs put the new housing minister Sajid Javid’s tenant fees ban legislation under scrutiny and again it was proven to be lacking on several fronts. It was stated that landlords are likely to increase their rents across the tenancy to pay the extra costs of running a tenancy (which is what happened in Scotland), something the new law can’t stop, and that is a substantial risk. The local council will impose unjustifiably high fines on agents and landlords to finance enforcement, in the absence of government support, it was claimed. The other key criticism made during the session was that the draft bill is likely to be self-defeating – lower fees will mean letting agents are less incentivised to help landlords run their properties professionally.

In reality, all of these facts have been pointed out to other ministers some months ago but sadly fell on deaf ears. However, the reason that they were expressed, monitored and this time acknowledged, was that on this occasion, they came from the policy end of the sector, not letting or estate agents. When reviewing any facts, comments or initiatives, as well as understanding where they came from, I was always taught to ask four questions. “Are they logical”. “Do they make sense?” and “Could they happen?” and if they could, “What would be the consequences of such action?” It appears that the government’s policy is different.

The two-hour long session was held by the parliamentary committee that oversees Sajid’s department, the Select Committee that oversees the newly renamed Department for Housing, Communities and Local Government.

Tenant Fee Ban

The debate was headed up by MP Clive Betts plus 11 other MPs and it quizzed three experts in the field about how effective the bill will be. These were Shelter’s Head of Policy Kate Webb, the University of York’s Centre for Housing Policy Dr Julie Rugg and Professor Ian Loveland from the City Law School.

Several debates raged during the hearing including whether the bill was legally watertight enough and whether councils will have the resources to police it (they won’t, the experts said). It was felt that there was a weakness in the role of the new housing tribunal with the high level of fines (agents and landlords face paying up to £30,000 if they are caught flouting the new law). There were also concerns as to whether the bill will drive the quality of rented properties down as landlords seek to save money. Shelter’s Kate Webb also claimed controversially that the poorer the tenant, the higher the fees letting agents charge them (which clearly doesn’t make commercial sense at all), while Ian Loveland picked numerous holes in the bill’s drafting, which he suggested was not robust enough to withstand legal challenges given the huge fines involved.

MPs also debated how letting agents should be fined – and whether it should be based on the additional fees levied on a single property illegally or whether the bill should look at their whole portfolio and then fine them accordingly.

Sadly, it was only when I pointed out to another minister who took my concerns to the Housing Minister that it was realised the government minister, had not taken into account the student sector of the lettings market when drafting the bill and should it have remained unchanged, it could have decimated the student market (and had a serious impact on the university education system in the UK). It potentially left over 150,000 student homes unoccupied, literally millions of students without accommodation or best-case scenario, in Newcastle alone, there could have been twenty to thirty thousand students in properties with no proper tenancy agreement or referencing. That was just Newcastle upon Tyne, there are thirty university towns in England. Chairmen, chairwomen and senior names and faces from our industry and charities, had failed to realise the consequences of their planed actions and it took a small company from the provinces to point it out to them. I find that very concerning. Don’t you?

The draft Tenants’ Fees Bill will now go to report stage before a third reading.

If you would like to discuss any of these subjects or have a question that we may be able to help you who the letting or management of your property. Please feel free to call me at my Durham Office on 0191 212 6870.

Budget 2017 – Big news for first time buyers, landlords and tenants

Philip Hammond has recently announced a raft of housing measures, the biggest of which will abolish Stamp Duty for 80% of first-time buyers.

Chancellor Philip Hammond has made several key housing announcements that will impact both the sales and lettings sectors of the industry and which he said was part of a £44 billion package.

“House prices are increasingly out of reach for many and it takes too long to save for a deposit and rent absorbs too much of people’s ability to save for a deposit” he said during his speech. The most important of these announcements is that Stamp Duty is to be abolished for first-time buyers and, in more expensive areas of the UK such as London, the first £300,000 of a property’s sale value exempted from Stamp Duty if priced less than £500,000. This, the chancellor said, would remove any Stamp Duty obligations for 80% of first-time buyers.

Other measures included enabling councils to charge a 100% council tax premium on empty properties – which may force many landlords to either rent out their properties or sell them. “Penalising empty homeowners with a 100% council tax premium is unlikely to really be a deterrent for people who are likely to be high net worth,” says Nick Leeming, Chairman of Jackson-Stops. “If they don’t need the rent, this penalty probably won’t bother them either.”

The Chancellor also announced a building target of 300,000 new homes per year by the mid-2020s  a variation of a policy already previously announced.
Longer tenancies Philip Hammond also revealed that the government will look to encourage longer tenancies by incentivising landlords to offer them – although no concrete plans were revealed.

From our research, we find that the majority of tenants are just as likely as their landlords to prefer the flexibility afforded by six-month break clauses,” says Will Handley, Managing Director of recently-launched online lettings platform Homerenter. “So, whilst long-term tenancies can be of real financial benefit and security to both parties, we don’t see a one-size-fits-all approach working.”

Universal Credit

There was some good news for letting agents worried about the introduction of Universal Credit, which is that the government is to spend £1.5 billion on to make payment fairer and quicker, Hammond said. This includes removing the seven-day waiting period which, many agents had been worrying, would lead to mass evictions of tenants on Universal Credit who were then unable to pay their rent.
The issue has been much debated recently. A letting agent in Grimsby last week revealed that he had sent out hundreds of pre-emptive letters to his tenants ahead of the Universal Credit roll-out due to take place in the town on December 13th.

Credit competition

One surprise initiative in the Budget is a £2 million Fintech competition to help tenant creditworthiness by developing ideas to help them add their rent to their credit histories. “Rather than wasting £2m on a competition, the solution already exists,” says Sheraz Dar, CEO of CreditLadder. “We are already helping thousands of tenants have their on-time rental payments taken into account.”

What the industry says.. 

David Westgate, Group Chief Executive at Andrews Property Group
“Being a regular commentator on the need for Stamp Duty to be reformed, it is encouraging to see that the Chancellor has announced that stamp duty will be abolished for first time buyers on property purchases of up to £300,000 and for higher value areas such as London, on the first £300,000 of a property’s price.
“It doesn’t, however, go far enough in my view. “Stamp Duty is one of the biggest, if not THE biggest, obstacles in getting our housing market really moving and I, along with many others, would have welcomed the removal, or at least reduction, of the surcharge on second properties.”

Doug Crawford, CEO of My Home Move
“The Chancellor has pledged to make the dream of homeownership a reality for all generations, and scrapping SDLT for first-time buyers will undoubtedly be welcomed wholeheartedly by those struggling to get onto the property ladder.
“However, Britain needs to build, and while a new funding package for UK property development is a stride in the right direction, it will only help tackle our housing crisis if it is invested in the right places. The UK has been scraping the bottom of the barrel for affordable housing stock over recent years and it is vital that increased investment is used wisely to tackle such depleted supply.”

Nick Leeming, Chairman of Jackson-Stops
“I do feel the Chancellor has missed a trick by failing to reduce stamp duty levels across the board. “Stamp duty levels have acted as a brake across the entire market preventing the likes of downsizers and second-steppers from making their moves. “The housing market must be viewed as a whole, and comprehensive stamp duty reform would have increased overall fluidity to the benefit of all buyers.”

Miles Shipside, Rightmove
“First-time-buyers should think about acting quickly to take advantage of this stamp duty ban before the extra demand it creates pushes up prices and starts to eat away at the extra cash this Stamp Duty exemption will free up.
“The Government has already put buy-to-let landlords on the back foot with its 3% Stamp Duty surcharge, so this extra advantage of no stamp duty gives first-time-buyers an extra edge.”

Ian Westerling, Managing Director of Humberts
“The Chancellor is sensibly trying to secure the youth vote with housing measures aimed directly at them. “The £300,000 cut off for stamp duty is a positive measure, one which should help to give our first-time buyers a leg up on to the property ladder. “Choosing to build is as always welcomed, however building 300,000 new homes every year by the mid-2020’s seems optimistic.”

Matt Robinson, CEO of online firm Nested
“Families in cities like London have been hung out to dry by Philip Hammond in today’s Budget, as he doesn’t do nearly enough to solve the capital’s stagnant market. “By only introducing cuts in Stamp Duty for properties under £500,000, the vast majority of London buyers will remain heavily penalised, where a modest family home can easily go for over one million pounds. “The Chancellor failed to provide any solution for those already on the property ladder and reliant on quick sales to downsize or move into their dream home. Far more still needs to be done to aid affordability and loosen up the market.”

Mark Hayward, CEO of NAEA Propertymark
“The announcement today from the Government to abolish stamp duty for FTBs will have a positive impact on the market. It’s a smart move to ensure the dream of homeownership for young people can become a reality and will help buyers across the UK, including London and the South East where property prices are higher. “We do however need to realise that this move will increase the demand for FTB properties and if we don’t have the supply it will push prices up. We have seen this in areas where Help to Buy is offered, as it attracts a great deal of interest from FTBs.”

Is it time for a redress scheme for all landlords? The government says so…

During his speech at the 2017 Conservative Party Conference in Manchester, communities secretary Sajid Javid announced a raft of proposed lettings regulations while also revealing that the proposed lettings fees ban legislation is about to be published.

The most radical it seems of the new proposals is to make it mandatory for  letting agents to join a professional organisation and “meet certain minimum standards”, effectively introducing regulation of the industry by the back door.
Sajid also said that although his party want to see more people own their homes, he admitted the chance of achieving this for many millions of Brits is now much slimmer than for previous generations. “People are three times more likely to be renting than before,” he said.

As well as saying that all agents must be regulated, he also revealed several measures aimed at strengthening the rights of those people who rent.
So what about the new redress scheme?
This would involve requiring all landlords to join a national redress scheme which would enable tenants to complain about poorly managed properties and rogue landlords, as well as a housing court where grievances will be heard and judged.

Also, as well as a compulsory minimum 12-month rental period for those who want it, Sajid revealed that he will seek to introduce a minimum three-month notice period for landlords seeking no-fault notices to quit.
His measures are not a surprise to most, problems within the lettings industry have been well publicised for some time now.

Recent research by Homelet revealed that 28% of tenants are not happy with their landlords while over 80% of tenants say they intend to rent for more than a year and only 8% want to rent for just six months.

What do the professional bodies say?

After 20 years of our campaigning falling on deaf ears, we’re very pleased the Government has taken the decision to regulate the private rented sector, says David Cox, CEO of ARLA Propertymark.
“This will be the single greatest step forward in a generation, in terms of consumer protection for private tenants, and will do more to clean up the image of the industry than the hundreds of smaller laws and pieces of legislation introduced over the last 20 years. However, regulation can take different forms and we need to see the detail of proposal to be confident that it will be effective for tenants and landlords.”

Isobel Thomson, NALS CEO said in response:
“The measures in the Minister’s speech are very welcome news, giving clear confirmation that the Government is adopting a coherent, strategic approach to the Private Rented Sector for the benefit of consumers,” she says.
“NALS and the Fair Fees Forum called earlier this year for both the fee ban and introduction of mandatory client money protection to be framed within wider regulation as the only way to ensure that all agents meet the same requirements and consumers are protected. We are delighted that Government has listened. We look forward to engaging with Government to take forward all of the measures they have announced.”

J B Henderson M.D. Acorn Properties (Jesmond) Ltd.
Sadly, the government are overcomplicating yet again. On one hand they complain they do not have the money to restructure and on the other hand they say they need to restructure.  There is a statutory mechanism in the British Constitution called the 10-minute Bill.  All they have to do is propose that any person (or body company etc.), that markets a property for sale or for rent, must be a member of an accredited body (i.e. NALS, ARLA, NAEA etc.).  Whereas there is an opportunity for more agencies to be created, there are already enough choice currently available. Then everyone in the industry would be accredited, have client money protection, full recourse via a property ombudsman and anyone acting outside of the law or the accreditation guidelines would be excluded and no longer allowed to rent or sell and fined appropriately. The cost to the government NOTHING! The benefits to the government; A fully compliant and regulated sector.   A vast reduction or complete removal (unfortunately unlikely) of rogue landlords, More tax revenues (from tax and fines for non-compliance) and a safer and fully regulated market sector.

Do you fancy a change? How about a new property to rent?

 Now is the time of year when a lot of young professional people are thinking about changing their rented property. In an ideal world most people would like to get on the property market but recent events have generally slowed that down.  The property market, bank / mortgage lending criteria, Brexit! Do I need to go on?  I saw a programme on the TV last night and in the nineteen seventies and eighties, the average time to save for a deposit was one to two years. Now it is ten to twenty!  Haven’t times changed!  Even the Bank of Mum and Dad is straining to keep up and when you are talking of average house prices of around £200,000 and deposits of 20-30% then £40-£60K is a big lump of dosh to find. 

This is why the UK is moving slowly towards the German model where rental is the norm. There are after all quite a few advantages. You can change location, upscale, downscale relatively easily as your personal circumstances change and you become much more mobile in terms of work opportunities and career moves. 

Rather than concentrate on the pros and cons of renting versus buying, basically the market is moving that way whether we like it or not so let’s look at what you can do to maximise your chance of getting a good rental property in your chosen location.  

Of course the first thing you need to identify is what the “minimum” requirements you need are. i.e. Bedrooms, bathrooms, reception areas, garage, garden etc. The next point is location.  Is it to be near to work for commuting? Or does it need to be close to friends and family? How about hobbies? Do you want to be close to your golf club or gym? The old adage is “Location, Location, Location and I would invite you to look at this situation in a slightly different light.  

Ashley’s law of requisite variety clearly states that the component, element or person in any system or situation, with the greatest degree of flexibility, is the component, element or person that will control that system of situation! Therefore by being flexible i.e. within three miles (10 mins drive or forty five minutes’ walk), should give you a greater area to search (and therefore a much greater chance to find), your perfect property.  Rather than “I want to be city centre”!  Ask is there a good transport infrastructure? Good road and rail networks for buses and trains.  Or in the Tyne and Wear area for instance, “Am I close to a Metro Station and how quickly and how much is it into the city centre.  I see this as good practice rather than just compromise. 

Most good agents and property portals (such as Rightmove and On The Market), will have a property search engine where you can specify a lot of the criteria you are using and then a few further questions with your agent or prospective landlord should help fill in that picture you are painting in your mind.

The final section of this part of our hunt is the running costs. There are many websites (and apps), for nearly everything these days and one there are a few for council tax. Remember if you are on your own, most councils will offer a single persons discount of 25% off the standard council tax. One very good site is http://www.mycounciltax.org.uk/content/index  just pop in the postcode (you will need that for your Sat Nav if you are driving or walking anyway), it will tell you the correct amount.  Also if you are having a short let, it is worth remembering that you pay council tax monthly over 10 months with no money due in either February or March. If you have a 6 month let from say October 1st you will only pay four months tax, not six!   

Once you are in the property either the owner or current tenant should be able to give you an idea of running costs for gas, electric and water that plus your transport costs should help you budget and manage your money better. 

Once we have a short list of properties to visit we then need to go to the next level of our uber searchJ. What condition is the property in? I think you can always tell the type of landlord you will have by the way they look after their rental properties. You could always ask “Have you any plans to update? Or some such questions and if an agent is taking you should ask them to ask these questions to the landlord on your behalf. After all that’s what they are there for. 

Pen-ultimately you are most probably young (ish)J. Therefore there is a good chance you will be spending quite a bit of time in your property. Can you get a good mobile signal in the property? Is 4G and fibre broadband available in this postcode? After all you don’t want to find you cannot make or receive calls or have to change airtime provider to do so do you? 

Finally you will need to prepare yourselfJ. YES YOU!  You will need to be referenced and if you have not been working very long, or you may have a poor credit status (for many reasons, not all badJ), so you may require a financial guarantor. Better to have one lined up and ready. You will most likely require an employment reference, it is worth finding out who specifically will need to give this. You can put this on your application form and it could save days (if not weeks if you work for a large organisation like the NHS), if the correct person is identified early on. Be prepared, Fail to plan and you have inevitably planned to fail! Be prepared and it is unlikely that anything will go wrong (Murphy’s Law).  Just amble through and expect everything just to happen, then life will no doubt will bite you very hard on your bottom! 

Well there you have the basics of the professional property search. This is not the definitive search engine, just an “Aid memoir” to help you focus a little more clearly. In fact you have probably already thought of a couple of other things you need to check out. But hey this is what such blogs are all about. They should be interesting, entertaining and most importantly, thought provoking! Good luck with your hunt.  

How will the general election impact on our housing market?

I read a very interesting piece by John Philips last week who said “When you’re writing an article, it definitely pays to glance at the ‘Breaking News’ before putting pen to paper.”

In his case, Theresa May had just called a ‘snap’ General Election for the 8th June –currently predicated on her getting a two-thirds majority in the House of Commons but it seems like the Labour Party will support her, and I can’t imagine there’ll be another political party in Westminster who won’t relish the prospect of an electoral battle over the course of the next few weeks.

Indeed, judging by the opinion polls, you might have thought it would be the Labour Party who would be least keen to put their fate in the hands of the British public, and one can only sense that Jeremy Corbyn thinks they can achieve a political earthquake the same as delivered by one Donald Trump last year. However, the Labour realists – particularly those with slim majorities – might be considering whether a General Election five weeks away is actually really going to be a good option for them.

Even more bizarrely, given their near destruction in 2015, it could actually be the Liberal Democrats who gain most from this early election call. Clearly, they will be doing all they can to focus this election on Brexit, and one suspects they are already figuring out how they can align themselves with the 48% who voted ‘Remain’ last year, plus those who might well have had a change of heart since last June’s EU referendum.

While there will be many Leave Conservative MPs who have convinced themselves that the country as a whole has accepted that result, I suspect they could be surprised at the support the Lib Dems might garner from taking this approach, especially if they do hold out the prospect of a second referendum, whether that might be on the ‘deal’ arranged with the EU, or indeed on actually leaving the EU in the first place.

So, what does all this mean for the housing market? Well, at a time when RICs published its latest monthly survey recently which bemoaned the low levels of property coming up for sale, then a General Election is probably not going to do any of us many favours. Those who have been around the market during such periods – and let’s not forget we’re only talking about two years ago for the last one – will know that political uncertainty can be a real brake on activity levels.

Which might make the housing market – over what is traditionally a relatively busy period – even more subdued. Certainly agents we talk to are not exactly dealing with a glut of properties on their books anyway – issues such as the high cost of stamp duty have had a serious impact, not just for those existing homeowners who feel they can’t afford to stump up this money and instead seek to spend that on their existing properties, but also of course for purchasers – especially landlords – who are having to factor in the sizeable extra stamp duty charge. Perhaps, understandably, transactions are not exactly flying across the completion threshold.

And what about the latest voting trick for the conservatives “The banning of tenant fees” introduced by Philip Hammond in the Autumn statement. Some people I am told, have even said it was a throw away gimmick that they never understood in the first place, however I could not possibly comment on that statement! This has already entered its consultation period, and I was told at a recent conference in York where a member of the DCLG (the Department for Communities and Local Government) had come to update agents and landlords their representative told us that they were listening to various industry advisors such as Shelter, who appear to be more involved with Social Housing than Private rented and were very prominent in the banning of tenant Fees in Scotland (which incidentally led to a rent increase in Scotland of over 15% but Shelter have since claimed it was only 2%!) and the RLA who again some people have indicated appear more keen on taking landlords money and legitimising there status whilst urging government not to legislate against them (rather saying “do that via agents”), In my personal opinion having heard the RLA representative at York is that this only serves to further fragment our industry rather than address the issues that exist. It definitely does not help the industry as a whole it just serves to further divide it!

With campaigns coming into full swing, this topic is slowly being moved to the side but no doubt once the election campaigns get into full swing it will rear its ugly head once more.

Now we are getting a General Election, we are already seeing even more potential vendors and purchasers adopting a ‘wait and see’ attitude over the coming weeks. Even if the result looks inevitable from the polls – a Conservative Party win with an improved majority – we all know that the polls can get it spectacularly wrong and we are dealing with a much-changed political landscape where people might well change their voting preferences from those they made two years ago. Now of course this might work in Theresa May’s favour rather than against her, and the question of Jeremy Corbyn’s leadership, and his status as a potential PM, will undoubtedly be raised repeatedly but we might still see some noticeable shifts. Indeed just the other day we saw Boris Johnson in the news for his vitriolic person attack on Jeremy Corbyn which has been cited by some pundits as a typical Eton school boy approach. Sadly nothing new there!

You never know, the Lib Dems might just pick up some disgruntled Remain votes, and what of UKIP – given the result of the EU referendum and the perception that it is a one-issue party where the issue has been resolved, will we see its support fall away and, if so, who will be the beneficiaries of those votes? The leader of UKIP (Paul Nuttall), has also just confirmed he will be standing for parliament at the general election and in addition, he has also confirmed that his party will not be contesting marginal “Leave” wards so as to give these constituencies the best chance of keeping their “leave status” as that is in the best interests of his party.

The next few weeks really are an intriguing prospective if you’re a fan of political discourse and General Elections themselves, however from our housing market perspective I suspect there will be many wishing that Theresa May had stuck to the fixed five-year term. What we can say is that housing is likely to play a major role in the Election – indeed in his first interview post-Election announcement Corbyn mentioned this – and that every manifesto will have something interesting to say on how the housing market can be ‘fixed’.

Unfortunately we are all likely to be treading water while we await the outcome of the Election and to see how the winning party might put its plan into action.

I am afraid dear readers, “That’s life!

Landlords your legal and professional obligations to your tenants and yourselves!

 Please note dear landlords, this is a simple, overview guide NOT a definitive comprehensive one. It highlights some (but not all), of your obligations and is designed to demonstrate to you the need to ensure you are compliant and what you could expect if you ae not! If you use an agent, then any good accredited agency should follow all of the required legislation which is why it is well worth considering having your property managed in the first place. Naturally such a service comes at an additional cost, but it is a legitimate business cost and can be put against your profit to reduce your tax obligations. In addition, by having your property professionally managed (and fully compliant), this could also save you many thousands of pounds should there be an issue in your property that would have resulted in a fine (or worse)! So it should definitely be a consideration. 

There is a whole raft of UK laws that govern our property market in this country. Most landlords just do not have the time to keep on top of current legislation and I would remind you of a number of salient facts that are really very important to you.

  • There are now currently over 50 acts of parliament and over 70 further regulations that govern our market sector and you as a landlord are responsible for complying with. If you don’t you are liable for prosecution under the relevant legislation.
  • Ignorance of the law is no excuse and WILL NOT stand up in a court of law.
  • The fact that a lot of these laws are ill thought out and enacted by people who have no idea of the implications both short and long term is (sadlyL), no excuse either!
  • Like it or not landlords who were the saviours of the property market just a few years ago and actively encouraged with tax breaks and great mortgage facilities, are now are being deliberately targeted by government and actually sited by politicians as the cause of the property market issues. They have removed the tax breaks, plus new laws have been introduced with draconian fines and penalties for Non-compliance.

Before you get paranoid, let me reassure you that landlords are not alone here. Governments always blame everyone but themselves. That’s what politicians do sadly and that’s a fact! Not even an alternative factJ. The reality is that no government of any political persuasion, has invested correctly in the housing market for the last forty plus years. It is government’s lack of investment and greed, or lust for power that has caused a housing shortage not your entrepreneurial spirit!  The statistics clearly show this is the case.

 Just think back a few years where everyone was persuaded to but diesel cars. They promoted the diesel sector with less tax on fuel, plus less road tax on the cars. Yes the government of the day wanted and actively encouraged you to buy these cars. 

Now as the owner of a diesel vehicle, you have just been classified as the devils next of kin! If indeed you currently own such a vehicle and live in our English capital, then the mayor of London (bless his sycophantic soul) wants to double the cost of diesel cars in the congestion charge areas.  I rest my case!

The government’s strategy is simple. Governments over the years have paid millions in compensation to victims of Housing issues. People who die from carbon monoxide poisoning, or from fires, or explosions and so on. Therefore they are simply covering themselves by increasing the responsibility (and accountability) of landlords so they pay the compensation now, not the government.

So what are your responsibilities as a landlord? Or more basically just where do you begin? Well I have tried to put everything in a logical order so hopefully it makes sense to you.

Stock;

Firstly if you owe money on the property and you are renting it out, then it must be a “Buy to Let” mortgage and you are required by law to have such a mortgage. A residential mortgage is not acceptable and the Bank (or body), who has granted that loan can call your loan in immediately, if you have failed to specify the correct nature of the property use.

Equally your property should be insured and that insurance must be a specific “Buy to let” insurance. If you have residential insurance policy on it, simply you are not covered. So if there is a claim made on the policy, it is automatically null in void.

We are aware of a landlord who rented his property out for over 10 years with the same insurance that he had when he lived there himself. Unfortunately one of his tenants started a cannabis farm that was subsequently found and raided by the police.

There was well over £25,000 of damage (both structurally and cosmetically) and the insurers deemed that the property insurance was invalid due to the owner not informing them of the change of use. A very expensive lesson for that landlord who thought he could save a few pounds on his insurance!

Before your property can even be marketed for rent or sale, the property must have a valid EPC (Energy Performance Certificate), which givers both the actual and potential energy efficiency ratings. This law has recently been updated, so that from April 2018 only properties with a rating of A-E can be rented. Properties that are rated F&G will no longer be allowed to be rented after this date. If you are the owner of such a property please feel free to contact me and I will try and help you sort out this problem, it is not insurmountable and there are certain exemptions that you may qualify for.

Once your property is ready for the tenancy to commence, the next requirements are to make the property ready for occupancy.

Let’s start with the basic “utility” letting requirements as specified within the housing act “Landlord and tenant Act 1985” (landlord repairing obligations) and the Housing planning Act 2016.

Firstly if gas is present in the property, then you must have a valid Gas Safety CP12 certificate which is updated annually. The electrical safety is unfortunately much more complicated, but never the less equally important and I am told is most likely to be actioned in the case of an incident or accident where personal safety is compromised. Although their currently is no law that specifically states you must have a valid electrical safety certificate. There is already a clause in the Housing and planning Act 2016 that says an electrical test is a mandatory requirement. At the time of writing this article, this particular part of the act has not yet been made live.

However you need to be aware that there is already a clause in an earlier act that says “That your rented house must be safe and the electrical system in the house must be safe”. If you think about that statement for a moment it becomes very obvious that the only way you can prove your electrical system is safe is by having it checked and certified. So until the new part is enacted, it could still be argued (and probably would be in a court of law), that an electrical check is actually a legal requirement already. So please be aware of this.

We as a company advise all of our landlords to adhere to this and all of our managed landlords sign up in their agency agreement to have an annual visual inspection plus a full fixed wired inspection every 5 years. There is of course already a mandatory electrical check enacted in the HMO licensing scheme as part of the criteria for licensed certification.

The Electrical Equipment Safety regulations Act 2016 (which started on 8th December last year), is also very relevant to landlords, especially at the start of the tenancy, as now all electrical items must be checked prior to the start of any tenancy.  This is to ensure that the insulation is intact on both the appliance and the cables, so as to prevent arcing.  In addition, fuses (where possible) should be checked prior to the start of the tenancy to ensure the correct fuses are in the relevant electrical items.

The rationale behind this, is that in the previous tenancy the iron or kettle might have blown a fuse. This could have been replaced by the tenant, with the wrong fuse making the product dangerous. Although no accident may have occurred during that tenancy, it is still possible that such an accident could occur (power surge etc.) during the following, new, or even subsequent tenancies where different tenants could be injured (or killed), through no fault of their own. It is now legally the landlord’s responsibility to check this and if they don’t and an accident occurs.  The landlord will be held liable in a court of law.

There is also now a legal requirement for a “Legionella “Risk Assessment” (Health and safety Act 1974, 4th amendment L8 2013). This needs to be performed on your property either every two years, or at every time there is a change of circumstances. For change of circumstances read; New boiler, New pipework, or new tenants.

Basically you have to check all the pipes (that are available to view), to ensure there are no dog legs where water can collect and stagnate (allowing legionella bacteria to form). Secondly you need to check the temperature of the water (both hot and cold) to ensure they are to the current required legal standards. Then you need to record the outside temperature at the time the risk assessment was done. Finally you need to record this information and keep a proper record to prove that you have correctly performed a valid risk assessment should there be a case of Legionella in your property. The basic equipment you will require for these assessments are; a mug, a thermometer and a smart phone.  You can of course get the full requirements from the HSE website.

 However we would recommend that if you have a property with water tanks in the loft etc. that you employ an accredited company to perform this assessment (you do not want to contravene the health and safety at heights work act do youJ)!

Of course if you have what we would describe as a “typical or updated property” i.e. Combi boiler, kitchens, toilets and bathrooms. Then you can complete this assessment (initial exercise probably 40 mins to one hour) and subsequent assessments (providing no new pipes), in 20-30 mins max dependant on the size of your property. We provide all of our own tenant find landlords with a free Risk Assessment form (and guide of how to do the Risk Assessment), with every confirmation of let. For our managed landlords we do the typical or updated property for our managed properties as an integral part of our property management package.

You will also require a professional inventory. By that I mean an inventory (or schedule of condition), that shows and describes the property as it is at the beginning of the tenancy. This needs to be signed and dated by the tenant at the beginning of the tenancy. This is in effect a definitive description which can be used to by the landlord for two main reasons. The first is to identify any damage or cleaning requirements at the end of the tenancy which could result in the deduction of monies from the deposit at the end of the tenancy. The second and equally important reason for the inventory is that the landlord has a definitive list of his property where he or she can identify any “Wear and Tear” issues and upgrade, replace or redecorate, where appropriate after the tenant has left and before the next tenancy.

Your tenant;

That completes the basic preparation stage for the property, now we need to look at what you need to do with your potential tenant.

Well once you have agreed in principle (subject to referencing and the correct payment of monies and the arranging of on-going rent payments). Firstly you need to do a financial reference on the tenant(s), to ensure they can afford to rent your property. We would also suggest a previous landlord reference and an employment reference to ensure they are who they say they are and are suitable occupiers of your property (we also in addition gain additional information on our tenants to help keep us ahead of the game.  In addition, since 2014, you now need to do a “Right to Rent check” The latest update was the upgraded “Immigration Act 2016” which now makes it a Criminal Act for landlords (or agents), who fail to comply, as opposed to the 2014 Act where it was simply a civil offence.  A very big change with very serious financial and or custodial prison sentences for non-compliance!

Theses checks are to establish that your tenants are legally allowed to be in this country and that (if relevant), they have (if required), the correct and appropriate visas and work permits etc. to be in and work in this country.

It is important to note, that if the permit expires during their tenancy, it is your responsibility to ensure they have valid documentation at all times they are your tenants. Therefore you need to record (and keep appropriate records), when these visas, permits, etc. expire and if they do not re-new, you must report this to the border agency.

Failure to do so will result in a hefty fine and could even include a custodial sentence as it is now a criminal offence to fail to comply. If we manage your property, we take this responsibility over from you and monitor this on your behalf.

You also must register your tenant(s) damage deposit in the appropriate government approved scheme within the required time limit and any monies taken initially must be deemed to be the deposit. If a deposit is taken initial monies received cannot be used as rent until the deposit element has been registered and lodged. It is worth reminding you at this point that there are some twelve different considerations that must be adhered to in the lodging of a deposit including time periods to lodge, prescribed information to be issued including the lodging and identifying of the “relevant person” (if there is one etc.). Recording the “Relevant Person on the prescribed information, providing the relevant Person with a copy of the prescribed information etc.  Non-compliance on ANY of these considerations (if reported), can lead to a mandatory fine of minimum one times the deposit, maximum three times the deposit plus the deposit, which goes directly to your tenant.

It is also worth pointing out that there is a six year statute of limitation on this legislation (Localism Act April 6th 2012), which basically means that your tenant has six years to make a claim from the time they gave you the deposit. Just to add insult to injury, we are aware of companies that are setting up offering “No Win No Fee” options for tenants that want to make a claim. If you want to check this out just google “Tenant Deposit Claim line” and watch their promotional video.

That basically covers the pre-tenancy stage. Once they have moved in then of course you enter the next stage where you have all the responsibilities of your repairing obligations as a landlord (Landlord and tenant Act 1995 and Housing Planning Act 2016 just to name two of the fifty plus Acts of Parliament. There are also regular property visits during the tenancy, the correct legal notices to serve, the obligation to provide your tenant with the correct legal notices and timed notice for such visits to ensure you are not disturbing their legal right to “Quiet enjoyment”.

Following the tenancy obligations, the last stage is when your tenants finally want to leave either at the end of the fixed term or during the periodic term that automatically follows the fixed term. This includes the checkout and returning of the deposit either in full or part whichever is agreed with either your tenants or via the deposit arbitration service. This is where your professional inventory is worth its weight in gold. If you do not have an inventory you cannot legally claim a penny from the deposit as you are unable to prove in law the state of the property at the commencement of the tenancy which invalidates any damage done during the tenancy as no proof exits.  This is why your tenant needs to date and sign the inventory in the first place at the beginning of the tenancy. 

At this point it is probably worth mentioning perhaps the most important fact of all when choosing an agent to help you let or manage your property. Regardless of who you use, YOU and You alone are legally responsible for what happens in your property NOT your agent! The tenancy is in your name not the agents and even if the agent is managing your property it is only their address on the tenancy. You are the legal owner, you are the person whose name is on the agreement and YOU are the person that will be prosecuted if anything goes wrong! If you use someone who offers you a cheap price and they are not accredited then the chances are they will be a limited company which simply means they have limited liability for themselves, if anything goes wrong and if they don’t know the law which is very often the case, then the chances are it probably will at some point, chances are they will simply close the company down and leave you to face the consequences on your own.  We have seen this situation so many times.

A few years ago I visited a property at the coast where a landlord was (in their words), “Dissatisfied with their current agent” and wanting to explore the possibility of using us as a managing agent.

 “So how much would you charge for managing my property” was the first question I was asked. 12.5% for the service you have requested I replied.  “Well I get my management for 8% can you match that?”  was the haughty response.  “I am so sorry I can’t” I said in all honesty you just could not effectively manage a property for that amount of money. “However” I responded “That was indeed a very keen price indeed. Why on earth would you want to move when you have such a good deal? 

“Well they have disappeared and gone off with eight months of our rent, never contacted my tenant and never even visited the property indeed they didn’t even have a tenancy agreement! Basically they just took my money and didn’t even give any of it to me!”

Well I am sure I don’t need to tell you my response to that!J.  

Anyway we got the management and everything ran smoothly from then on. They paid £35 per month extra (In total £1,170 fees a year and they also received £6,630 on top of that in rent payments. If you compare this versus their previous agents who provided no service whatsoever, did not even get a tenancy agreement in writing, did nothing but collect the landlords rent and kept it themselves, providing a loss of £5200 with their previous agent in only eight months.

There are currently thousands of agents in the UK. At the last time I personally counted, there were sixteen agents within 500 yards of our Jesmond office and approximately one hundred and eighty to two hundred letting agents in Newcastle upon Tyne!

Some working from their bedrooms (with a fancy website so you wouldn’t know), some were landlords who had a number of properties they owned themselves and thought it would be easy to make money letting other people’s properties as well as their own. This also gives such people the opportunity to let their own properties first at the expense of their clients (although not all do so).  Whereas a lot of these people are well meaning, they have no idea of the legislation that needs to be covered for their own (or anybody else’s) property(s).

There are of course (sadly the minority), others who are fully accredited, bona fide letting agents who are registered with all the relevant authorities and carry “Client money Protection” insurance (The property industries version of A.B.T.A) that ensures any money your tenant (or yourself) gives the company, is protected at all times.

These are the agents to put your trust in. At best they know the law and protect your property ensuring you are compliant. At worst you have redress through all the relevant legal bodies and they are covered by the relevant legal insurances to allow you to receive any compensation if appropriate. Your rental property(s), could well be a bigger investment than your own home. It could be your family income, please don’t gamble or risk your investment with non-compliant companies who do not have your best interest at heart.

Business is not about what is cheapest. It is about what is best value, longevity of income and the maximisation of both rental income and capital growth.  If you would like to discuss your rental letting and management needs, please feel free to call me at my Durham Office on 0191 212 6970 and I will be happy to discuss.

 

 

Do you own an older style property that you rent out? Are you ready for the upcoming change in legislation on Energy Performance Ratings?! If not it could prove extremely expensive for you, as you may not be allowed to rent it after April 2018! Please act now

 

The government has a wonderful habit of giving landlords surprisingly long notice of intentions to change laws and then, because the period is so long, landlords often due to their “hectic and exciting” lifestyles tend to forget and can be caught out with substantial consequences!

There are currently over 50 acts of parliament and over 70 further regulations, making property letting one of the most regulated sectors after finance in the UK today, making it incredibly difficult to keep up with the changes. Sadly most of the recent legislation includes draconian fines (usually in the £ thousands)! So it is really worthwhile dealing with people (and companies), who know and understand UK property law. 

The change of law I am referring to in this particular blog is part of the green deal initiative. Initially conceived in 2010 and enacted into law in 2012.  This legislation was driven by the Climate Act 2008 which legislated for a reduction in the UK carbon emissions of 34% by 2020 and 80% by 2050. It set legally binding carbon budgets for the next 12 years (up till 2020), across all sectors of the UK economy including our homes, rental properties, communities and places of work.

From 2016 new rights came in for tenants to request additions to the property to reduce costs of heating (additional insulation, new energy efficient boilers etc.). However the really big part of this act of parliament will come into force in just over one year and this is what I really want to draw your attention to now, as you should ignore it at your peril !

As from the 1st April 2018 there will be a requirement for any properties rented out in the private rented sector to normally have a minimum energy performance rating of E on an Energy Performance Certificate (EPC). The regulations will come into force for new lets and renewals of tenancies with effect from 1st April 2018 and for all existing tenancies on 1st April 2020. Therefore, it will be unlawful to either market or rent a property which breaches the requirement for a minimum E rating (unless there is an applicable exemption and I am informed there are only three, which have to meet very exacting and specific criteria).  A civil penalty of up to £4,000 will be imposed for any breaches prosecuted. This guidance (see link below),  summarises the regulations. There are separate regulations effective from 1st April 2016 under which a tenant can apply for consent to carry out energy efficiency improvements in private rented properties. (N.B. just copy and paste into your browser for link directly from the RLA website;  https://www.rla.org.uk/landlord/guides/requesting-energy-efficiency-improvements.shtml).

So basically I would firstly advise you to check that you have a current EPC. It became law in 2007 and they are valid for ten years so you may well be ready to renew, as it is illegal to market ANY property (unless there are legal exemptions), for either sale or rental, without a current EPC.

Next I would  sugest that you check your current EPCs to make sure that it is either E or above, as from April 2018 if your property comes up for rent and your EPC is F or a G, basically you can’t rent it!

If you have tenants currently in tenancy, then you do have a further two years to make the necessary changes (as long as they do not leave and you cannot renew either during this period it is periodic status only), but even if your tenants are still there in April 2020 and you haven’t done the improvements then your tenancy ceases to be legal and you can be fined up to £4000 plus any civil actions for compensations from other interested parties (i.e. tenants, guarantors, relevant persons etc.). 

I still believe it is worth noting that although the energy grants are not what they used to be, there is still money available and we are currently working with suppliers and providers to try and get our clients savings on any essential work required. Funding is currently based on carbon footprints and again the way the government determine grants will be changing once more in April 2017, so again I advise you to act swiftly if you are to achieve any potential savings on what could well be essential work to allow you to continue renting your property. 

If you have any questions on this blog or any other letting or management issues you would like to discuss, then you are welcome to call me at either our Durham office (0191 212 6970), where I am normally located, or our Newcastle head office (0191 212 2020) and just ask for me.

 

 

No more tenant fees, Whoopee. Sounds too good to be true? Read on and make your own mind up.

uk-hopIt would appear that the government are pretending to favour tenants in the hope of getting back the feel good factor during the Brexit void, possibly with the hopeful double whammy of additional votes at the next election. Don’t be fooled though, the reality of this situation is actually very different indeed.

Wednesday November 23rd marked yet another milestone for the Letting Industry with the government choosing more soft targets. Accredited agents, responsible landlords and in this case far more importantly, tenants! The obvious rationale being to woo tenants into liking (and hopefully voting for) them, by offering a blanket “No Fee” structure for them across England & Wales.  Sounds a great deal for tenants doesn’t it?

Is it really as good as it sounds? Let’s just look at the proposed deal little more closely and you can decide for yourself.

Last week’s proposal in the chancellor’s statement certainly caught the letting sector by surprise, so why on earth didn’t we see it coming? Let’s face it, is not a new proposal by any means.

Could it have been because Theresa May has already voted against this initiative twice before becoming Prime Minister? Or that less than three months ago (September 2016), the current housing Minister Gavin Barwell was equally against this becoming law?  I will outline their concerns later, having first briefly covered the history of the proposal / initiative for you.

It is of course important that you have a fair and balanced take on this situation if you are making an informed decision on this proposal as I urge you all to do. At this point it’s also important to remind you and I must stress, this is currently only a proposal but the government have already said on the day, that they want to implement this as soon as possible.  Yet just one week later Rachel Williamson from the Department of Communities and Local government indicated that the tenant fee ban won’t come in until at least 2018 with the consultation in the New Year!

Despite certain individuals and politicians trying to take credit for this initiative, I believe that the instigation for the decision actually came from the housing charity Shelter who have actively petitioned against tenant fees in England since 2013. Whilst I very much appreciate that Shelter are well-meaning in their approach to campaign against homelessness and lack of adequate social housing, they are unfortunately  achieving quite the opposite, in truth making the problem much worse. The root of the problem (lack of adequate, affordable social housing) has been masked yet again and the blame put on to Landlords, who in reality are providing a very necessary service in the absence of any governmental support.

You may well be aware of the current law in Scotland introduced in 2012 banning tenant fees north of the border. Shelter again was the driving force behind this and although I am no authority on Scottish law, I understand that there was actually no law in the first place, allowing the charging of fees in Scotland anyway. The situation in England is entirely different. In fact the Consumer Rights Act 2015 states, estate and letting agents can be fined up to £5000 by Trading Standards for not displaying their letting fees both in their offices and on their website.

I was recently made aware of one gentleman that was so concerned at the lack of compliance on this new law, he either rang, visited, or checked websites of 100 agents to see if this law was being upheld.  He found that less than 30% were compliant. Its more than a little bit concerning that these laws are passed and not even upheld or enforced!

Sadly (in my opinion), this is the reason this country is in such a state of disarray. We have career politicians making laws they truly don’t understand (especially the implications of), imposing heavy draconian fines that never happen because they don’t have the finance to police the laws they pass.

If our politicians used common sense or sourced industry specialists to assist with important decisions, they would realise they have just created a self-funding proposition, which would cost nothing to operate, in fact it could actually make them money. In addition this would increase employment and finally monitor responsibly this industry sector more effectively, and improve this situation for all concerned. It is a matter of simple business logic.

So, if it has been such a success in Scotland (as shelters many blogs on the subject would have you believe), why not do it in England? Good call, what clever and astute politicians we have. Right? However even ignoring the last paragraph, I mentioned earlier that both Theresa May and Gavin Barwell were against this until this week. So why was that?

In Scotland it is well documented that when the ban on tenant fees came into place in 2012. The cost to landlords went up to cover the lost tenant fees and as a knock on effect, to mitigate the hit on their income, landlords  simply put up the rents to cover their additional costs. Whilst I have no definitive evidence of the current impact in Scotland other than several online investigititive blogs (from all sides) and a BBC website that shows what the average rent in each area of the UK is.

If you go to this website; http://www.bbc.co.uk/news/business-23234033  you will clearly see that a mid-priced 2 bedroom property for rent in Newcastle is £595, Durham, £410   Sunderland £475, Glasgow £595, Edinburgh £800 and Aberdeen £750

A three bedroomed mid-price property for rent in Newcastle is £700, Durham, £472, Sunderland £525, Glasgow £650, Edinburgh £1065 and Aberdeen £950.

I have heard anecdotally that Scottish rents have increased by 20%. Shelter quote 3% and the BBC quote 9% and City Index (Scotland’s equivalent to right Move) have quoted 15.3% from 2012 -to 2016, The Scottish statistics as I have said come from City index, the English regions are taken from the office of National statistics (ONS), so I would say having looked at the figures below, the rents above I believe, speak for themselves.

Rent increases 2012 – 2016

East Midlands –                  5.9%

East of England –               7.1%

London –                           10.6%

North East –                        2.2%

North West –                       2.4%

Scotland –                         15.3%

South east –                         8.3%

South West –                       5.8%

West Midlands –                5.5%

Yorkshire & Humber –     4.2%

It’s also quite obvious that whereas the tenants in Scotland were indeed better off when this law was very first passed, now that the rents have increased overall they are in fact considerably worse off. We recently had a potential tenant in our Durham office who commented that like for like our properties were considerably less expensive than where he was moving from (which was Aberdeen). This seems to move the statistics above from anecdotal information, well into the realms of fact.

So why would our politicians want this clearly poorly thought through decision?

Well that’s really for you as a reader to make your own minds up about. All I can say is that my company and most other competent, fair, accredited law abiding agents are against the banning of fees. and not as a matter of profit, our fees have to be paid regardless. We simply recognise it is just not in the best interest of tenants who after all are our customers. We need and appreciate good tenants and landlords which we have to look after, if we want to attract and keep them as our clients.

Even if landlords are hit with higher charges (which is inevitable), they are of course legitimate business expenses (something politicians are very well versed in this area if you believe the papers), so they will be able to offset some of the additional costs against tax, the rest they will simply cover by increasing rents.

What if the tenants won’t/ can’t pay the increased rents. Simply put the proposal is potentially forcing tenants into lower quality accommodation at a higher price so who loses out? Tenants of course!

Ultimately, we, and our accreditation providers, see our role as agents, as appearing transparent and fair. To be able to walk a straight  line between both the tenant and landlord whilst not being ‘on either side’ We currently offer impartial advice to both sides often helping to broker deals and find a way around issues for all concerned so a let can take place and a harmonious relationship between landlord and tenant can evolve.

We currently charge both parties equally and our role is to help and support everyone involved. If we are forced by the government to only be responsible to one party (the landlord), where does that leave the poor tenant? I personally think this is neither just nor fair.

Finally, you may well at this point be questioning my motivation in this matter. Is it sour grapes? Am I just angry because I am going to lose money? Let me clear that one up for you straight away.  Yes I am angry, not because I am going to lose money because I am not. I am angry because it is a flawed proposition and in my opinion it is totally and utterly morally wrong. Once again I refer you to the Scotland situation and the ongoing repercussions to the tenant.  These costs had to be covered from somewhere so the agents passed the cost to the landlords.  The landlords in turn increased their rents to cover their additional costs which in turn increased overall the amount of fees that the agents charged and received.

This means that in Scotland, both the landlord and the agent have benefited from this legislation and it is ONLY the tenants who are suffering as a result. We simply feel that what the government are proposing to tenants is not in their best interest, it is morally incorrect and definitely not resolving the real issue which is a lack of adequate affordable social housing, bad landlords and equally bad, unaccredited agents.

What in my opinion is really required, is a complete overhaul of this very complicated, over regulated under scrutinised market place that has been meddled in by politicians for far too long, either for their own gain, whether that be financially, votes, or as it now seems to appear, both.

What is very apparent to me (and hopefully you) from this whole episode, is that government is clearly listening to the wrong advisors and they don’t appear to understand the dire implications of their draconian actions. What is sorely needed now is a common sense approach to make it a fairer place for all involved. That however is another story for another day!

If you want to discuss this article or your letting needs, please feel free to call me at my Durham office on 0191 212 6970.

Hot off the Press

Now having read my article, if you agree that this proposed act of parliament is not to the benefit of the tenant (as they would have you believe), then I would urge you to sign the online petition below. Everyone deserves a voice, everyone deserves the best service and that includes all parties. The choice is yours and as we live in a real democracy I hope you will exercise your democratic right, to vote for what you believe to be right, fair and decent for all concerned. Thank you.

Just click this link to sign the petition “Remove the Ban on agency fees and set a cap for fees instead.”

https://petition.parliament.uk/signatures/28802365/verify?token=9dMELXBA8azw0IGGENqa

 

Tax Horror! Nearly half a Million Landlords forced into higher tax bracket due to change in law!

According to Warren Lewis, who writes very interesting property articles for the property industry, well over 400,000 landlords will find themselves forced into a higher tax bracket thanks to the changes in landlord taxation. This could have a devastating effect on the rental market and he has basically explained the situation and highlighted the options below.  Please read.

22% of landlords who pay the basic rate of tax will be forced into a higher tax bracket from April 2017 as planned changes to landlord taxation come in to force.

According to the National Landlord Association the changes, once fully phased in by 2021, will mean landlords will no longer be able to deduct mortgage interest payments or any other finance-related costs from their turnover before declaring their taxable income.

Currently, mortgage interest payments are one of a number of expenses that landlords can deduct as a business cost, including insurance premiums, letting agent fees, and maintenance and property repair costs. 

However, while 440,000 basic-rate tax payers will be forced into a higher bracket, all landlords could be at risk of seeing their tax liability increase regardless of their existing rate of tax, with landlords in Central London (31%), the East of England (30%), and the West Midlands (28%) particularly hit.

The amount by which landlords will be affected will depend on their personal circumstances, including whether or not they generate income from any other sources.

Richard Lambert, Chief Executive Officer at the NLA, said: “When the Government announced these changes last year, it claimed they would only hit a small proportion of higher-rate tax payers. We now know that is complete tosh.

“The Government must look to amend these tax changes and minimise the impact on landlords and their tenants – something that could easily be achieved by applying the rules to only new loans written after April 2017.

“Unless this happens, landlords will face an impossible decision of whether to increase rents and cause misery for their tenants, or to sell-up, and force their tenants to find a new home”.

Watch this space!