NLA urges councils to prosecute rogue landlords

September 9th, 2010

An investigation by Shelter has found evidence of a minority of unscrupulous buy-to-let landlords having an adverse effect on their tenants.

184 environmental health officers (EHOs) were polled by the charity, with over 90% of those who dealt with private renters directly stating that they had encountered landlords harassing or illegally evicting their tenants. In addition, more than 90% said that they had encountered cases of severe damp, mould, or electrical or fire hazards in properties they had looked into in the last year.

Almost all respondents stated that they had come across landlords who persistently ignored their responsibilities, while half of the EHOs expressed a belief that the main reason for letting out unsafe properties was to make as much money as possible. More than six in ten of respondents said that more than half their cases involved people from vulnerable groups.

One officer cited the case of a property that had been rented out with no heating, hot water or electricity. Another found a mother and child living with no kitchen facilities and no fire precautions, with the house being warmed only by a halogen heater.

Shelter’s chief executive Campbell Robb, said: “It is simply not acceptable that people are handing over their hard earned cash to live in houses that are run-down, squalid and in some cases even dangerous.”

He said that far from there being “just the odd crook here and there,” the investigation revealed that there were actually such “ruthless” rogue landlords operating across the UK. He added that there was therefore an urgent need to tackle the problem on a national level.

Robb called on the Government to work with authorities to develop a hard-hitting programme of action that would root out rogue landlords. He said that it was important to prosecute and strike off the minority of landlords who did break the rules in order to prevent the exploitation of other private renters in the future.

National Landlords Association (NLA) Chairman David Salusbury also urged further action by councils, commenting: “We roundly condemn the worst excesses in the private-rented sector where a small minority of landlords choose to exploit their tenants by offering sub-standard property which can endanger lives. This is unacceptable and local authorities must act.”

He said that although “most private landlords are responsible and honest in how they deal with their tenants and look after the properties,” severe penalties had to be expected by landlords who wilfully ignored the rules and regulations designed to protect tenants.

He urged councils to adopt a ‘zero tolerance’ attitude to such landlords, adding that “if this rogue element within the sector goes unchallenged, then reputable landlords are tarnished and the image of the private-rented sector is damaged.”

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Squatters ‘an increasing problem’ for Wales and England landlords

September 6th, 2010

Squatters are proving to be a growing problem for landlords and homeowners in Wales, with their numbers having reached a 40 year high, as reported by the Residential Landlords Association (RLA) and WalesOnline.co.uk.

Ben Gower, a manager at the UK Bailiff Company, said that his firm had recorded an unprecedented rise in squatting across Wales.

He said that there were no available exact figures, as the police did not maintain a database. He said, however, that on the basis of the internal database of his company, there were around 100 squatter cases in Wales last year. He added that if the current trend was to be sustained until the end of 2010, a 40% year-on-year rise would be recorded. Furthermore, the estimates over a 15 year period suggested a 132% increase in squatting.

However, contemporary squatters often had a different profile to their counterparts of two decades earlier. Whereas many squatters had once been activists and protesters taking over the homes of others as a way of making a social or political statement, it was much more common today for people to move into abandoned or unoccupied properties simply out of financial hardship, hastened by the recession, increases in rents and house prices and a shortage of public housing.

It was thought that the greatest numbers of squatters in Wales were to be found in the larger towns of Cardiff, Swansea and Wrexham. It was also pointed out, however, that it was also a problem that could be experienced by families with holiday homes, particularly outside school holidays.

The problem, however, was that the Welsh police had no power to evict squatters given that it was actually legal in Wales provided that the unoccupied property was not damaged when it was accessed.  Instead, it was necessary to resolve squatting through civil courts, followed by employing bailiff companies that operated “within the framework of the law”.

It was estimated by Britain’s Advisory Service for Squatters (ASS) that around 22,000 people were squatting in England and Wales. This compared to only around 9,500 fifteen years earlier, in 1995, and to 15,000 in 2003. Gower said that the numbers were not necessarily representative of the true extent of the problem, given the lack of a centralised UK database that could have given more specific figures.

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Landlords list their ‘top priority’ law reforms

September 3rd, 2010

Residential landlords have listed the legislation reforms that they most believe would help to rejuvenate the private rented sector and “secure a better future for the UK’s stock of more affordable housing.”

The Residential Landlords Association’s (RLA) submission, to Deputy Prime Minister Nick Clegg, came in response to an invitation by the Government to pinpoint legislation that would be better off removed or altered to streamline the operation of a business.

The RLA said that self regulation was of particularly high priority to them. They said that they had identified nine specific areas for the Deputy Prime Minister to investigate.

Alan Ward, chairman of the Residential Landlords Association, said that it was most important for permission to be given to responsible landlords who were members of an approved accreditation scheme to regulate themselves rather than remain subject to local authority control. He stressed that there would still be a requirement for landlords to comply with the same laws and that the only thing that would change would be the means of enforcement.

Ward also proposed alterations to the laws concerning power of entry, saying that it was currently possible for local authority officials to enter a landlord’s property without notice. He said that where a need for notice existed, it was important to inform landlords, and not simply tenants, when officials were entering their rented property.

He also said that under the 2004 Housing Act, detailed information was required to be given to the tenant by the landlord or agent receiving a deposit. But he said that a large amount of that information was provided by the scheme or was readily available already, adding that the RLA had its own ideas as to how to considerably simplify this.

Other suggestions of the RLA included changes to tenancy deposit penalties, the procedure for obtaining possession, the eviction of squatters, fire safety legislation and administration charges.

Ward commented: “The new government has shown a very welcome willingness to cut back on the amount of legislation that has crippled our business sector over the last few years. We believe that more effective answers can be found in local accreditation schemes to encourage a new generation of professional landlords who are better trained, better informed and better able to regulate our business, themselves, without the excessive burden of increasing legislation.

“Like many other businesses a huge raft of legislation has built up surrounding the private rented sector. Landlords are normally small business people, often part time, and they can easily be tripped up and penalised by complex regulations. At the end of the day, these do little or nothing to protect tenants anyway. The RLA believes that, if its proposals are adopted, the weight of burdensome and unnecessary regulation on landlords would be significantly reduced.”

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House prices ‘see greatest fall since April 2009’

September 1st, 2010

In news that may interest buy-to-let policyholders, house prices in England and Wales declined slightly during the past month as a result of an increase in the number of homes on the sales market and a fall in demand, as reported by the Press Association and other industry websites.

According to property intelligence group Hometrack, August saw a 0.3% fall in the average house price to £158,300. This compared to a 0.1% drop in the previous month.

A drop in the number of prospective home movers was said to have driven the decline, as demand for housing also fell for the second consecutive month, by 2.2%.

The number of new properties for sale also went up, with a 2.4% rise being reported in the number of homes that estate agents had on their books.

This most recent decline in demand was said by Hometrack to be representative of a trend seen over the course of the past five months, which had driven the falls in prices.

The group added that the average time that it took a property to sell had therefore heightened to 8.9 weeks, which was the highest that it had been for more than a year.

It added that sellers were also struggling to achieve their full asking prices for their properties, with the average proportion of the full price falling from 94% in July to 93.5% in August.

Director of research at Hometrack, Richard Donnell, said that there had been an unmistakable increase in the availability of homes on the sales market. He said that this had lessened the upward pressure on house prices from the shortage of housing for sale during 2009 and the early part of this year. He said that this came at a time when demand was increasingly weak, and at a level which did not seem to him to be a mere seasonal blip.

He added that the group anticipated more modest drops in house prices over the next few months.

On the more positive side for many home owners, however, there was a rise of 0.8% in the number of agreed sales over the month.

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Increase in rents as lettings market activity picks up, says RICS

August 31st, 2010

A continued rise in the demand for properties from tenants, coupled to a shortage in their supply, continued to push up rents in the last three months, according to the most recent RICS Residential Lettings Survey.

26% more chartered surveyors reported an increase rather than a decline in demand for property. This marked the second time in as many quarters that the pace at which lettings demand increased exceeded the long run average.

Although there was a rise in demand from tenants in every UK region, London and the East of England saw the strongest levels. More people sought to rent instead of buy, as a result of a continued inability to secure mortgage funding, concerns over a housing double dip and the large deposits demanded by lenders.

Rents increased for the second quarter in a row as a result, with 27% more surveyors claiming an increase rather than a drop in rent values. Conversely, at this point twelve months ago, rents were being pushed down by an oversupply of properties, with 29% more surveyors reporting declining as opposed to rising rents.

Interest rates remained at a record low, making property a potentially attractive investment option. However, insufficient supply was being caused by landlords’ inability to obtain buy-to-let mortgage finance. There remained little new property on the market, with supply having now declined for four consecutive quarters, although not at as quick a pace as before. In the run up to July the net balance of surveyors claiming a decline in instructions from landlords was -6, as opposed to the previous quarter’s net balance of -12.

However, there appeared to be little desire on the part of existing landlords to sell on their property, with just 4.1% of landlords saying that they intended to do so once their tenant’s contract expired.

Surveyors said that they expected a continuing rise in rents. 33% more surveyors anticipated an increase in rents rather than a fall over the upcoming quarter. Houses were expected to command marginally higher rents than flats, with the respective net balances looking forward being +34 and +31.

James Scott-Lee, RICS spokesperson, said: “Supply of lettings property continued to fall in the three months to July although at the slowest pace in a year which amid rising tenant demand has helped propel rents higher for the second consecutive quarter. Existing landlords keen to expand their portfolio may still be struggling to access the necessary finance despite improved market conditions.

“However, there is a possibility the lettings market could face a modest increase in supply in the coming months. The latest RICS Housing Market Survey shows a lack of funding has stifled demand from buyers which may cause some moderation to rents as more opt to let than sell.”

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Tenants told to brace themselves for further rent rises

August 31st, 2010

Tenants have been told to “brace themselves” for further increases in rent as demand for rental properties has continued to rise.

Caroline Kavanagh, Group Lettings Director of Badger Holdings, the parent company of estate agents Townsends, said that with many tenants still saving to purchase their dream home, with many finding it difficult to obtain the right mortgage, they were currently either renewing their tenancy agreement or looking for another property to rent. She said that this situation had continued to fuel demand, inevitably leading to heightened rental values.

She added that this, combined with there being insufficient properties on the market to meet the escalating demand, had already led to increased rents across the UK. This was particularly the case in areas where properties were well looked after, and possibly also in central locations. She forecast a continuation of this trend, warning tenants that they would have to be prepared to stump up market value for their desired property.

She added, however, that it was important to remember “that at the end of 2008 and during the course of 2009, we did see rents dip when an increase in reluctant landlords meant the market experienced an influx of properties. The rental market is always shifting to balance itself out and we are now simply in a situation of realignment to current conditions. Average rent prices are also still below what they were five years ago.”

Townsends recorded a particularly high proportion of tenants opting to renew their agreement at the same rent at the beginning of 2009. However, Kavanagh said that more tenants now had to accept price adjustments, stating: “We recently had a tenant in Putney who served their notice to try and look for another property. They couldn’t find what they were looking for and came back saying they wanted to stay where they were and would pay market value, so they had to increase the rent to stay in the property.

“Tenants who have been in a similar situation have already accepted the price adjustment. However, anyone who has an agreement coming to an end or is looking to enter the market needs to factor this change in and recognise it immediately. If tenants are unsure about what to expect in their area specifically then they need to speak to us, their local estate agent, for advice.”

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Steady growth in UK house prices

August 26th, 2010

In news that may interest buy-to-let insurance policyholders, average house prices increased by 6.1% in July compared to the same point a year earlier, according to the latest Assetz House Price Watch UK.

The average house price in the UK reached £200,913 during the month, compared to £189,344 in July 2009. This was a slight decrease from the two year high of £201,084 that was recorded in June. Nationwide house prices were just 6.6% shy of their October 2007 peak of £215,089. The six month rolling average showed 4% annualised growth.

The firm said that the annualised average data suggested continuing stability in the market, with house prices reaching more sustainable levels than the large fluctuations recorded earlier in the year.

Stuart Law, Chief Executive of Assetz, commented: “UK house price growth continued to slow in July, however, prices remain strong despite the very minor slip in month on month figures – indicative of the usual summer slowdown and as a result of the much greater than normal confusion over the election period.” He added that house prices had increased by over 3% since the start of 2010.

Law pointed out that the CML’s most recent figures on house purchase lending revealed a sustained rise in the number of new loans being secured, which he said suggested sustained buyer demand. He added that with the base rate expected to remain at 0.5% for the foreseeable future, even more potential buyers would be enticed back into the market, especially given the stronger than predicted recovery of the economy in the current low interest rate environment.

Law concluded: “The government’s austerity measures are likely to hold down house price growth in 2011 but we are yet to see these cuts reflected in the monthly data. Continued low interest rates and a lack of supply will boost prices this year and for this reason, contrary to most commentators, I still expect to see 5% overall growth for 2010.”

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Housing market slowdown tipped for second half of 2010

August 26th, 2010

In news that may interest buy-to-let insurance policyholders, the UK housing market is set to slow down in 2010’s second half, according to the Savills estate agent, as reported by several industry websites.

However, investors who were able to obtain buy-to-let mortgage finance could discover that they were well placed to avoid competition for properties at the cheaper end of the market.

Jacqui Daly, director of research at Savills, predicted that there would be a slowdown in the housing market as a whole, with the profitability of the mortgage market declining for the rest of 2010 as demand fell for products such as tracker mortgages. She added that there had been a levelling off of the amount of housing stock appearing on the market.

She described the housing market on a national level as “disparate”, saying that it was not being shaped by any one trend. Instead, the north and south of the country were being affected very differently, as were the different ends of the housing ladder. She added that she expected transaction activity to remain subdued.

Making particular reference to the availability of mortgage finance, Daly said that there was greater activity at the higher than lower end of the market.  She suggested that it was probably the latter, which was very strongly associated with mortgages, which was the slowest part of the market.

She suggested that properties that were priced to tempt buyers were partially driving activity across the market as a whole.

According to recent figures released by Santander, in excess of one million homeowners were unable to sell their properties over the past year. 17% of respondents pinpointed an inability to find the right home in the right area as being most at fault for their failure to sell their property.

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Buy-to-let confidence lessened by CGT increase

August 25th, 2010

The confidence of landlords in buy-to-let has declined in the last three months, but remains strong, according to the most recent quarterly landlord sentiment survey from LSL Property Services plc, as reported by myintroducer.com and other industry websites.

42% of landlords said that now was a good moment to invest in property, a slight decline from the first quarter of 2010 (48%). However, only 2% stated that it was now a good time to reduce their portfolios.

32% of landlords in the poll said that they were likely to add to their portfolios in the coming year. There was a 6% increase, to 19% in the number of investors contemplating leaving the sector in the last quarter. Also included in this figure were landlords who planned to leave the market for retirement or lifestyle reasons.

David Brown, managing director of LSL Corporate Client Department, said that landlords had been able to reap bumper annual returns at the start of 2010 as a result of rising rents and house prices. He said that the revival in confidence, which had declined again slightly due to falls in house prices and the increase in Capital Gains Tax (CGT), reflected this. He added that the vast majority of landlords maintained their commitment to buy-to-let. Increasing yields, along with rents just £12 per month short of their peak, were upholding investors’ confidence about the sector.

Increasing demand from tenants helped to lessen the impact on landlords of lower capital gains. An increase in tenant demand was witnessed by 37% of landlords, with one in ten respondents claiming a substantial growth. A decline was seen by just 7% of landlords. 63% of investors anticipated a continuation of this rise in demand over the next two years. This compared to the one in twenty landlords

who expected demand to drop.

Despite the slight increase in buy-to-let lending in the last three months, only 21% of respondents cited the availability of cheap finance as a positive element of investment in buy-to-let. This was still 8% higher, however, than in the first quarter of the year.

The firm said that the hike in CGT for higher band taxpayers was instrumental in the modest decline in landlord confidence.34% of landlords who regarded the market as currently attractive to investors stated that property still offered better capital returns than alternative investments. This was 7% less than in the previous quarter.

The average landlord held three properties, and had built up capital gains of £152,219 since they purchased their properties. If they sold their properties now, they would pay £39,793 in CGT, compared to £25,581 before the Budget.

Even landlords with just one property saw average capital gains of £75,111. They would pay CGT of, on average, £18,203 if they offloaded their properties today, an increase of £5,201 compared to the previous regime.

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University towns ‘boost buy-to-let portfolio values’

August 25th, 2010

Private landlords with properties in university towns may discover that their portfolios are of greater value, according to figures from Lloyds TSB which showed that the majority of cities that are home to the educational establishments have seen increased house prices.

According to the Lloyds TSB University Town House Price Review, Aberdeen, home to 29,300 students, saw an average house price increase of almost 40% since 2005. This compared to house price growth of 14% in Scotland as a whole in the same period, and resulted from a 54% rise in the city’s student population.

The towns that saw the largest increases in their student populations were those that recorded the highest house price increases. Overall, more than 60% of university towns saw their house price growth outperforming their region in the last five years.

The Coleraine campus of the University of Ulster campus caused a 30% growth in the city’s student population and saw a similarly high price rise of 34%, compared to the Northern Ireland average of 24%. Prices in Winchester increased by 30%, well ahead of the 2.5% rise across the South East, as the town’s student numbers rose by 78%. The average Winchester house price of £385,713 was 114% higher than the £180,501 UK average.

However, for some of the UK’s most popular university towns there were more mixed results. Edinburgh, London and Glasgow recorded only modest house price rises despite huge expansions of their student populations. In Birmingham, house prices were actually 3% lower than in 2005, and just over 11% shy of the West Midlands average, despite a rise of two thirds in student numbers in the city.

Leeds, Manchester and Nottingham all recorded rises of more than a third in their student populations, but the West Yorkshire city was the only one with an average house price exceeding of its region.

Lloyds TSB housing economist, Nitesh Patel said: “Growing student numbers have had a big impact in boosting house prices in some university towns – where the increase in demand has led to the local market outperforming the rest of the region. However, it’s a very mixed picture for some of UK’s largest university towns that have seen student population increase significantly without impacting on house prices.

“In the past five years population across the university towns in UK has increased by nearly a million students. Naturally, this has boosted demand for property and land to provide suitable accommodation for students.”

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