MORE BUY-TO-LET LANDLORDS TURN TO BRIDGING FINANCE -
Gross lending in bridging finance is set to reach £800m for the first time this year, driven by a big increase in landlords who cannot raise money on the high street .
According to new projections provided by bridging lender West One Loans, the bridging industry has expanded rapidly to fill the gap left by traditional lenders.
The volume of loans advanced has risen 26% year on year as an increasing number of residential property investors have turned to the sector to finance their projects.
In 2009, 70% of loans were granted to the residential sector. Last year, this had risen to more than three-quarters. So far in 2011, 82% of all bridging loans by volume are to residential property investors.
The average loan term now stands at just under eight months, and the average LTV now is 48.4%, up from 42.5% a year ago.
Duncan Kreeger of West One said: “Having a clear exit strategy is the most important consideration when taking out bridging finance. The strong demand for accommodation means investors can be confident they can refinance easily when they are ready to rent.”
TAXMAN DECLARES WAR ON STAMP DUTY AVOIDANCE
Her Majesty’s Revenue & Customs is declaring war on stamp duty avoidance.
It is to mount a court challenge to determine the legality, or otherwise, of stamp duty tax avoidance schemes.
Central to the challenge will be the use of limited companies to buy properties, and then sell them to individuals – something which does appear to be completely legal.
Essentially, the purchaser sets up a Special Purpose Vehicle, a company or a trust with a property as its sole asset. The purchaser then buys shares in the company and is subjected to a tax rate of just 0.5%.
There are many companies offering stamp duty tax avoidance: a Google search yielded over 3,200 results.
The taxman’s move follows this year’s Budget when Chancellor George Osborne announced that he would be clamping down on stamp duty avoidance, whilst law firms have also warned that HMRC is on the prowl.
HMRC estimates the tax avoidance schemes have cost it millions in lost revenue. It is investigating 1,200 people it suspects of having underpaid stamp duty by a collective total of £35m, whilst it will also go after others who have avoided the tax altogether.
The many schemes that claim to legally exploit stamp duty loopholes frequently charge fees of around half the amount that would have been paid in tax.
It is thought that a number of property investors have set up a limited liability company to buy the property to sell back to the individual.
An HMRC spokesperson said: “The schemes rely on an interpretation of law that produces an outcome different from that envisaged when the law was enacted, and that HMRC does not accept.”
Law firm Boodle Hatfield has also warned against avoidance schemes of Stamp Duty Land Tax (SDLT).
Ian Montgomery, a solicitor at the firm, said: “There is a growing belief that it is possible to avoid paying stamp duty on the purchase of a property or land, but unless particularly aggressive tax planning is undertaken that is just not the case.
"It is a common misconception that it is possible to purchase a property using a company and avoid stamp duty.
"When a property is purchased through a company, whether based offshore or in the UK, it pays the same rate as if it were an individual. SDLT may be avoided by future purchasers when the company decides to sell the property.”
"This is done by the owner selling shares in the company rather than the property itself, but SDLT will be paid on the initial purchase."
Stamp duty on the purchase of shares stands at 0.5%, rather than the higher rate levied on property. If the company is based offshore, the purchase of shares is exempt from stamp duty entirely.
People who try to reduce stamp duty by paying separately for fixtures and fittings may have to prove to the taxman that what they paid for these assets did not exceed their true value.
COURTS SHOW THEIR TEETH … FINES FOR HMO LANDLORDS -
Two landlords have paid a heavy price in separate cases for failing to comply with HMO regulations.
Sikander Hayat has been fined £9,500 after being prosecuted for blocking escape routes, failing to ensure that the fire alarm system was working, and failing to ensure a constant supply of electricity at one of his rental properties.
Hayat pleaded guilty to seven charges of failing to comply with HMO regulations in respect of a property in Banbury, Oxfordshire.
Banbury Magistrates’ Court heard he also failed to make appropriate arrangements for disposal of refuse.
Hayat was prosecuted by Cherwell District Council and also had to pay the authority’s costs of £300.
In a second case, Graham Snowdon has been fined £10,000 by York magistrates for renting out an HMO without a licence.
The case was brought after a licensing enforcement officer visited the premises in April for an unannounced inspection and found eight tenants living over four floors.
The council said that the premises did not have an HMO licence and was lacking in fire detection and prevention equipment. Other amenities were below the legal standard.
As well as a £10,000 fine, Snowdon was also ordered to pay costs of £1,216.50 and a £15 victim surcharge.
FIRST-TIME BUYERS OPT TO RENT WHEN MORTGAGES ARE REFUSED -
Nearly three-quarters of mortgage brokers could not find a mortgage for at least one would-be borrower during the third quarter of this year, helping to fuel tenant demand for the private rented sector.
Research by the Intermediary Mortgage Lenders Association (IMLA) found that 73% of brokers were unable to secure a mortgage for at least one of their clients during the period.
Of those clients who could not get a mortgage, 51% were disappointed first-time buyers.
Nearly half (47%) of the first-time buyers unable to find mortgage finance opted to rent instead.
Peter Williams, IMLA executive director, said: “Mortgage market conditions have been showing some improvement, but certain types of borrowers are still struggling to get on to the property ladder, particularly at the periphery of the mortgage market. First-time buyers are amongst those struggling to find mortgage finance.”
“Deposit requirements have improved over recent months, but this is still a sticking point for those trying to get on the ladder. For those without a substantial deposit or support from a family member, the rented sector is the next alternative.”
CHARITY LOSES HIGH COURT CHALLENGE OVER BENEFIT CUTS FOR PRIVATE TENANTS -
The Child Poverty Action Group has lost a legal challenge in the High Court against the Government over changes to housing benefit for tenants in the private rented sector.
The charity challenged two changes which were introduced in April. One was the new cap on Local Housing Allowance rates and the other was imposing a maximum size of four bedrooms that LHA will cover. The new maximum LHA that will be paid is £400 for a four-bed home, with caps set for properties of other sizes.
The charity argued that the cuts were contrary to the fundamental purpose of housing benefit – to prevent homelessness. It also argued that the cuts failed to have due regard to equality legislation because ethnic minorities and lone parents will suffer disproportionately.
It claimed that around 9,000 London households in private rented accommodation will have to leave their homes as a result of the caps, and that just over half, about 4,600, will have to leave London.
The Child Poverty Action Group argued that this could mean upwards of 20,000 children having to move, including 14,000 out of their local area, with ensuing disruption to education, health and social services.
Mr Justice Supperstone dismissed the charity’s claims. He said the purpose of housing benefit is not to prevent homelessness but to help claimants with their rent whilst also protecting the public purse.
He also held that there was nothing to prevent the Government from setting an overall cap. Finally, he said that the Government had shown due regard to equality issues by preparing an Equality Impact Assessment.
Alison Garnham, the charity’s chief executive, said: “We are greatly disappointed. Minority ethnic and lone parent families are already at higher risks of child poverty, and the cuts to housing benefit that we challenged will make this situation even worse, driving people out of their homes and disrupting children’s education.”
THE VIEW FROM WESTMINSTER - BY ED JACOBS
Since the last e-newsletter, peers have considered an amendment, drafted by the RLA and tabled by cross-bench peer Lord Best, to the Welfare Reform Bill calling for the Government to give tenants a choice over who the housing element of the universal credit should be paid to.
In his speech, Lord Best sought to emphasis the cross-sector nature of the campaign, supported as it has been by tenant and consumer organisations as well as organisations representing the social and private rented sectors. The amendment also found support from contributions by peers on all sides of the House of Lords.
Although the minister continued to oppose the move, under procedures within the Lords the amendment was not put to a vote, giving the RLA and the other groups supporting tenant choice an opportunity to consider the next step.
One suggestion raised by Lord Best in withdrawing the amendment was that tenant choice should be included within the Government’s pilot programmes looking at the payment of housing benefits under the new system of universal credit. In his response the minister, Lord Freud, argued that paying benefits directly to tenants promoted financial responsibility.
Thirteen MPs, including four Liberal Democrats, have tabled a motion to annul Government regulations that would increase to 35 the age up to which housing benefit claimants can claim only for a room in shared housing. Although the motion is highly unlikely to be successful, it demonstrates how contentious the Government’s reforms remain for many Liberal Democrats.
The RLA, meanwhile, has briefed the new shadow Communities and Local Government secretary, Hilary Benn, and Jack Dromey, the new shadow housing minister, on the challenges faced by the sector and how to support it to grow to meet ever-increasing demands, whilst ensuring that those landlords who bring the sector into dispute are properly targeted.
The appointment of both Benn and Dromey suggests a more left-wing approach to housing than from the more Blairite former shadow CLG secretary, Caroline Flint. Hilary Benn has already spoken of Labour’s desire for the sector to be “properly regulated … so every family that rents has security and choice.”
Similarly, Labour’s candidate for London Mayor, Ken Livingstone, has launched a campaign to highlight the problems which he argues some tenants in the capital face with poor private rented accommodation and high rents.
MPs and peers will get the chance to consider what more is needed to support growth in the sector at the next meeting of the All Party Parliamentary Group for the Private Rented Sector.
Professor Michael Ball will formally launch his report on the finances of the rental market at the meeting, and the housing minister and his Labour opposite number will respond. Currently with a membership of over 60, the interest in the group has proved the increasing political importance of the sector.
RENT CAPS - TORIES SAY ‘NO’ … LIVINGSTONE SAYS ‘YES’
Rent caps in the private sector have been ruled out by housing minister Grant Shapps – just as London mayoral hopeful Ken Livingstone has said he will bring them in if elected.
Answering a question in Parliament put by Labour MP Jeremy Corbyn, Shapps said: “Private rents are market led and, therefore, significantly driven by housing supply.
“Excessive regulation would drive up rents and reduce choice for tenants. Rent controls, historically, resulted in the size of the private rented sector shrinking from 55% of households in 1939 to just 8% in the late 1980s.
“Rent controls also meant that many landlords could not afford to improve or maintain their homes.”
Meanwhile Labour’s Ken Livingstone has said that if he wins the mayoral contest, he would bring in plans by which landlords would be unable to raise rents above a specific threshold.
He said: “Instead of a cap on housing benefit, we should have a cap on rents. We’re heading for a catastrophic housing problem. Poorer people are being squeezed out by higher rents.”
But Campbell Robb, chief executive of Shelter, said a rent cap would not solve problems. He said: “The only way to bring rents down in the long term is to increase the supply of homes.”
Livingstone’s plans would not just put him on a collision course with private landlords but also with the Government, as introducing a rent cap would almost certainly require parliamentary legislation.
LANDLORD FINED AFTER THREATENING REMARKS -
A landlord has been fined £650 after making threatening remarks to two of his tenants.
Mark Fortune, 42, lost his temper after the tenants fixed a broken lock and a shower at a flat he owned in Edinburgh and asked him to pay the £160 repair bill.
Fortune, said to be a millionaire car dealer, was angered that the tenants had changed the lock without telling him.
He shouted and swore, threatened to kick one of the tenants, and told them: “You go and find out who my friends are, OK? Three of them have just been locked up for shooting somebody.”
The incident happened last September and Fortune faced Edinburgh Sheriff Court this week as a result.
Fortune’s lawyer, Murray Robertson, admitted the outburst would have alarmed the tenants but described it as “bluff and bluster”.
He said the tenants owed Fortune rent and were later evicted, and that his client had been “aggrieved” when they asked him for money.
The tenants claimed they only did the repairs themselves after trying in vain to talk to Fortune about them.
In court, Fortune, who is thought to own around 39 properties across Scotland, admitted threatening the tenants and breaching the peace.
A second case was dropped. It had been claimed that Fortune impersonated a court official in phone calls to seven witnesses in a separate case in a bid to stop them going to court.
The case involved charges of unlawfully operating an HMO. In April last year, councillors ruled he was unfit to hold an HMO licence. He was subsequently fined £1,000 earlier this year after being convicted of operating without such a licence.
BIRTH RATE COULD FALL AS TENANTS STICK TO RENTING -
Family life is under threat because so many people are having to live in the private rented sector – where there is an inadequate supply of stock suitable for families.
As a result, younger people are putting off having children and forming households.
Yolande Barnes, director of residential research at Savills, told the Council of Mortgage Lenders conference, Future Housing that a falling birth rate could be a national consequence.
She said properties in the private rented sector were geared towards providing apartments for single and childless people and she warned of “serious social implications”.
She said: “There comes a point when households stop forming, when there isn’t a property to move in to. We face a real danger in this country of a falling birth rate.”
She said there was scope for investors to expand into family accommodation.
ONE IN SIX LANDLORDS SAY THEIR PROPERTIES FAIL EPC
More than one in six landlords (17%) say that their properties fall into the lowest two categories of energy efficiency – meaning that they could be banned from the rental market.
From 2018 under the Government’s Green Deal proposals, properties with F and G EPC ratings will not be allowed to be let.
The finding emerges in the latest poll by the Association of Residential Letting Agents, which also discovered that over one-third of landlords (35%) do not know how their properties score with EPCs. ARLA called for the Government to help landlords to achieve minimum standards, asking for the Landlords Energy Savings Allowance to be extended.
Ian Potter, operations manager of ARLA, said: “The clock is ticking for the private rented sector to improve its environmental performance but the investment just isn’t there to ensure that this change takes place in the Government’s timeframe.
“ARLA has campaigned for the Government to incentivise – through tax relief – the improvement of rental properties. Otherwise it is going to be exceedingly difficult for the majority of landlords to find the funds to improve stock.”
While the Green Deal will offer landlords upfront access to funds, it is tenants, as users of the properties, who will have to repay the loan.
The survey questioned more than 1,500 landlords.
‘RETALIATORY EVICTION’ BAN OVER GREEN DEAL IMPROVEMENTS
Landlords could be prevented by law from ‘retaliatory evictions’ of tenants who ask for energy efficiency improvements to be made to their properties.
Minister Greg Barker, in a debate in the Commons that took in the Green Deal and private rented housing, said that the Department for Energy and Climate Change “has set up a working group involving a range of key stakeholders to explore the issue of retaliatory evictions in relation to the private rented sector provisions in the Energy Bill”.
This group is due to report next month.
Under the Energy Bill, private rented homes which do not meet minimum standards of energy efficiency will be banned from the market from 2018, but Barker said that the measure could be introduced sooner.
He said: “We are committed to working with the sector to encourage uptake of the Green Deal well ahead of 2018.
“For this reason, I have been clear that I see 2018 as the ‘finishing line’ as opposed to the ‘starting line’ for this policy. However, if we do not see the sector responding well ahead of this date, we could reconsider the timing and introduce regulations earlier.”
In addition to the 2018 deadline, from 2016, landlords will not be able to ‘unreasonably’ refuse consent to requests from tenants for ‘reasonable’ energy efficiency improvements, Barker confirmed.
See also the next story about the number of landlords who think their properties fail EPC requirements.
DO YOUR STUDENT TENANTS TRIGGER EXTRA COUNCIL TAX?
We would be interested to know if landlords with student tenants are encountering unexpected council tax demands, covering periods which the local authority considers to be outside the academic year.
Student lets are generally offered by landlords from September 1 to June 30 the following year. Typically, students submit their Student Exemption Certificates to the local council, so that no Council Tax is billed for those ten months. Landlords pick up the bill for July and August.
However, we have heard from one of our members about one authority which is taking the view that as the students’ course starts in mid-September and ends in mid-June the following year, then a multi-let property is liable for Council Tax for the first two weeks of September and the last two weeks of June.
But you may have to be careful if you allow student tenants stay on for longer than the usual ten months – which is fairly common.
The landlord who brought this issue to our attention allowed his students to stay on for a few months on a periodic tenancy and they continued to pay rent for that period.
What he did not expect was the council billing for the weeks the students stayed on. He will now need to divide up the Council Tax bill and invoice each student accordingly. However, his prospects of recovering this money may not be great. He had guarantors in place for each student but it is questionable whether the guarantee arrangement still stands.
We would be interested to hear from other landlords if this issue of Council Tax is causing them problems.
Either use the RLA forum, or email the RLA’s editor: rosalind.renshaw@gmail.com
SUSPENDED SENTENCE FOR FORMER LETTINGS AGENT IS A “KICK IN THE TEETH”
Lenient sentences handed down to the former owner of a letting agency and his accountant who pleaded guilty to offences involving tenants’ deposits have been described as a “kick in the teeth”.
Brandon Weston was given a suspended jail sentence and ordered to carry out unpaid community work.
Weston, the former boss of Premier Places Lettings in Worcester and Redditch, should have ensured the cash was put into a ring-fenced client account.
But instead he used deposits from 203 tenants totalling £137,660 to fund other businesses, said Simon Phillips, prosecuting at Worcester Crown Court.
His actions contravened rules laid down by the National Approved Lettings Scheme and The Dispute Service.
Weston, 42, pleaded guilty to four counts of fraud between April 1, 2007, and February 28, 2009.
His book-keeper, Chris Williams, 47, who forged an accountant’s signature, pleaded guilty to three counts of forgery between June 1, 2007, and February 28, 2008.
Weston was sentenced to 12 months’ jail, suspended for two years, and 250 hours of unpaid work. Williams was given eight months jail, suspended for two years, and 150 hours unpaid work
The tenants, who had lost amounts ranging from £400 to over £1,000, had to be paid through insurance. The Tenancy Deposit Scheme paid out over £63,000.
Steve Harriott, chief executive of the Tenancy Deposit Scheme, condemned the sentences. He said: “Not only were their actions fraudulent, they served to undermine the excellent work of properly self-regulated agents.
“Criminals like this should go to jail, not have their sentences suspended. They have defrauded private individuals and brought disrepute to the private rented sector.
“The law requires deposits to be protected through authorised tenancy deposit schemes, and this case highlights once again the need for regulation of the private rented sector and for the courts to take these frauds and the protection of consumers more seriously.”
LONDON PRECEDENT FOR COMPULSORY LICENSING
A London borough could become the first local authority in England and Wales where every single private landlord and rental property within its boundaries must be licensed.
Other local authorities are expected to follow suit, by applying selective licensing across their entire areas.
Newham Council has launched a consultation on compulsory borough-wide licensing. Inviting views, the council says: “Newham has a thriving private rented sector that provides affordable housing options for local people; but the council is concerned about possible overcrowding and anti-social behaviour in some properties.
“Therefore, the council is thinking of licensing private landlords and properties in the borough – in order to ensure that landlords, managing agents, tenants and owners operate legally and professionally."
The consultation runs until December 4.
Newham estimates that around one-third of households in the borough are in the private rented sector, numbering around 35,000 homes. It has already piloted a smaller scale licensing scheme for over a year.
Sir Robin Wales, mayor of Newham, said: “We want to ensure that private sector rented properties are well managed and meet a good standard. We also want to deal with the crime and anti-social behaviour that is sometimes associated with bad private sector rented housing.
“There are good landlords in Newham and we want to work with them. Unfortunately there are also some unscrupulous ones – which these proposals would target.”
Shelter welcomed the Newham move. Kay Boycott, director of communications, policy and campaigns, said: “We urge other local councils to follow Newham’s lead in sending a clear signal that enforcing the law against rogue landlords is a priority.”
RLA LEADS LHA ALLIANCE
The RLA is leading an alliance of 15 landlord associations (both social and private) and other organisations which want to see housing benefit tenants being given the right to choose whether they or their landlords receive the benefit.
The Welfare Reform Bill, currently making its way through Parliament, does not contain this provision. As things stand, the Government proposes that the housing benefit element of the new Universal Credit will always be paid to the tenant.
This will affect both private and social landlords.
As many RLA members will know to their cost, the current system with Local Housing Allowance means that housing benefit is paid to tenants. This means that landlords do not always receive their rent, with some tenants preferring to spend it on other things. Tenants have to be two months in arrears before landlords can take action.
Yet research shows that many tenants themselves would prefer the landlord to receive the rent.
In a recent survey carried out by the research consultancy Policis, working with the National Housing Federation, 93% of tenants in the social rented sector argued that it is better for housing benefit to be paid direct to landlords.
On Thursday (October 13) Lord Best is due to propose an amendment to the Welfare Reform Bill in the House of Lords, which is aimed at giving tenants choice as to who – they or their landlord – will receive the housing benefit element of the Universal Credit.
A report will appear in the next edition of the RLA’s magazine, Residential Property Investor.
SERVICE SPOTLIGHT: THE RLA HELP DESK
One of our most unique and popular services is the RLA Help Desk, a professional advice line, accessible to all members via the RLA website and over the telephone from Monday to Friday (9.00am – 5.00pm).
The RLA Help Desk is viewed by many of our member’s at the most important service we offer. Any question can be asked and we can ensure all information you receive is in total confidence, pertinent, up to date and above all, legally practical.
The team who run our helpline also deliver RLA training courses, so you can be sure that you are getting advice from experts with decades of experience in housing law, tenancy management and landlord issues.
Our help desk saves our members both time and money as it offers an excellent alternative to many of the paid advice services available elsewherre. This service is exclusive to RLA members and is included within our membership fees, which start from as little as £75 per year, most of which goes back into campaigning on behalf of members, making certain legislation is kept fair, thus protecting you and your business.
Here’s what some of our members have said this month:
“Because of the support given (language used that i understood) i have decided to renew my subscription on a yearly bases. ”
“Excellent as usual, well done team.”
“a quick response with advice to help solve a difficult situation”
“The requested call back came in 20 minutes - marvellous.”
BUILDING SOCIETY LAUNCHES BUY-TO-LET LENDING
A building society has entered the buy-to-let mortgage market, whilst a bank has changed its buy-to-let lending criteria to allow loans to novice landlords.
Yorkshire Building Society has launched its first buy-to-let products through its Accord Mortgages arm.
The first buy-to-let mortgages are restricted to properties in London and selected postcodes in the South-East, and are only available through two brokers, London and Country and The Buy-to-Let Mortgage Business.
The buy-to-let landlord has to be aged 30 or over, or 35-plus if they are a first-time landlord, and must earn a minimum income of £35,000. It is also a condition that the rental property is no more than a 40-mile drive from the applicant’s home.
Yorkshire expects to roll out the products to more areas later in the year.
Jeremy Law, head of buy-to-let at Yorkshire, said: “Initially, we plan to offer products for properties located in London and the South-East to ensure a manageable entry into the market."
“However, we hope that we may be able to extend our geographical spread later in the year once we have our operation up and running.”
Yorkshire obtained a buy-to-let mortgage book when it acquired Chelsea Building Society two years ago, but this is its first new lending.
Meanwhile, new British bank Aldermore has strengthened its buy-to-let product criteria, so that it now accepts first-time landlords and has increased the maximum borrower age to 85.
Charles Haresnape, managing director of residential mortgages at Aldermore, said: “We expect these enhancements to our buy-to-let criteria to be well received."
“These additional benefits make the product more flexible and help to open up the buy-to-let market to new customers.”
Aldermore markets its residential mortgages only via brokers.
1-IN-5 LONDON TENANTS FAIL REFERENCE CHECKS
Rising numbers of tenants in London are failing to pass their reference checks because they do not met the salary requirements being demanded as rents soar.
Instead, they are having to use guarantors who do pass the checks or put down up to a year’s rent.
Most credit referencing companies now insist that a prospective tenant earns around 30 times the monthly rent, or two-and-a-half to three times the annual rent. A tenant’s savings are not taken into account.
Rents have risen by as much as 20% in parts of London, according to agents Ludlow Thompson.
Lynn Hilton, partner for residential lettings at Cluttons agents, said that one in five tenants is now failing a credit referencing test. Four years ago, fewer than one in 20 failed.
Of those who fail, around half are opting to fork out a bigger deposit instead – up to a year’s rent upfront – or produce a rent guarantor whose financial ability satisfies the referencing firm.
The problem of tenants failing the checks is even catching wealthier individuals because, for example, they do not have assets listed in this country for tax reasons, or while they have savings, they do not have jobs.
MORE MORTGAGE FINANCE BOOSTS LANDLORDS’ CONFIDENCE
Better availability of mortgage finance is raising the expectations of landlords. Almost a quarter are feeling more optimistic about the prospects for their property portfolios, rental income and yields.
Over one in five landlords (22%) in the second quarter of this year said that finance was reasonably available, compared with 17% in the first quarter.
According to Paragon Mortgages’ Q2 Private Rented Sector Trends Report, 23% of landlords feel more optimistic than in Q1, particularly if they are professional landlords, with 30% stating they were more optimistic, compared with 15% of smaller-scale landlords.
On average, landlords expect to have 13.1 residential properties in their portfolios in a year’s time, compared with 12.6 properties now.
This is the first time in two years that landlords have predicted an increase in the number of properties in their portfolios.
Nearly three out of ten landlords (29%) have increased rents during the second quarter, the majority of whom reported an increase of between 2% and 4%.
Landlords are also more optimistic about the net value of their portfolios, with a growing proportion expecting an increase in value (14% in Q2 against 13% in Q1), and fewer are forecasting declining values (12% Q2 vs 19% Q1). The majority of landlords (74%) expect net values to remain the same.
Also highlighted in the report is a shift in the types of property that landlords are looking to add to their portfolios during the third quarter. Of those looking to purchase during the quarter, terrace houses are the most popular choice, with more than half of landlords saying they expect to buy this type of property.
However, there have also been significant increases in the popularity of semi-detached houses (up from 28% to 41%) and detached (up from 9% to 22%).
MORE PENSIONERS SELL UP … AND BECOME TENANTS
More older people will be selling their properties in future to move into private rental accommodation in order to fund their old age, according to tenancy referencing firm HomeLet.
The firm has reported a rise of 16% in the number of people aged between 66 and 70 who have sold up in order to rent over the last 12 months.
In that time, says HomeLet, 1,074 people in that age group have gone from being home owners to private tenants.
It found that 43% of new tenants aged over 66 were previously living in a home they owned, compared to 37% a year ago.
The firm said the figures suggest that more older people are selling their homes to release equity to fund their rising living costs.
John Boyle, managing director of HomeLet, said: “Pensioners are already feeling the pinch with the spiralling costs of fuel, energy bills and basic food. Combined with a reduction in income, old people are increasingly struggling to pay to live through their retirement."
“This suggests that the number of pensioners having to sell their home to move into rented properties could increase even more over the coming years.”
The HomeLet rental index survey gathers data on agreed, rather than asking, rents from more than 3,000 letting agents across the UK.
The latest survey shows that rents rose 2.2% in July to an average UK rental of £680, and an average of £1,154 in Greater London.
GOVERNMENT REFUSES TO REGULATE LETTING AGENTS
Despite being warned of a spate of crooked letting agents, the Government has said it does not believe that all letting agents should be made to have client money protection insurance and belong to an Ombudsman scheme.
Confirmation of the Government’s stance came in a letter to the chief executive of the Association of Residential Letting Agents, Peter Bolton King.
He had written to housing minister Grant Shapps after a number of letting agents went out of business taking with them money belonging to landlords and tenants.
He wrote pointing out some of the recent cases, but has now received a reply which he describes as “not unexpected”.
The Government has repeatedly said it does not want to regulate letting agents, despite some notorious cases of theft and fraud – some of which are ongoing.
The reply from the Department of Communities and Local Government said:
“As you are aware, the lettings industry is not subject to statutory regulation; however, it is in the interests of the industry to maintain consumer confidence in the services provided and we look to organisations such as NFoPP [National Federation of Property Professionals, of which ARLA is a part] to take a lead in that work."
“As part of this, the Department continues to explore with its industry partners how best to counter poor practice by letting and managing agents without resorting to regulation."
“As you will also be aware, between a third and a half of agents belong to voluntary schemes which ensure that members have the right protections for consumers in place."
“We always suggest that anyone considering using a letting agent checks to see that they belong to a trade body or accreditation scheme such as the Association of Residential Letting Agents, the National Association of Estate Agents, the National Approved Letting Scheme or the Royal Institution of Chartered Surveyors."
“In view of the existence of well developed voluntary regulation in the sector, Ministers do not believe that regulation is the answer at present. But they are keeping a watching brief, and information about poor practice is always useful in that context.”
Bolton King said: “While I am pleased that they continue to understand the benefits of using one of our members, they are clearly not yet swayed by the argument that all lettings agents should have CMP and belong to a redress scheme.”
