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Em Morley

The Challenges and Opportunities for Enforcing the Lettings Fee Ban

Published On: November 27, 2018 at 10:00 am

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Categories: Tenant Fees Ban

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Landlords ordered to make rent repayments to tenants

As part of the Government’s plans to enforce the upcoming lettings fee ban, a new lead enforcement authority will be established for the private rental sector.

According to the draft Tenant Fees Bill, which is currently moving through the House of Lords, Trading Standards will be responsible for enforcing the ban, while local authorities will be able to retain money raised through fines for non-compliance.

But, as has been proven in the past, new laws are only as good as their enforcement. So, what are the challenges and opportunities for enforcing the lettings fee ban?

The challenges for enforcement 

With thousands of letting agents operating across the country, it may be difficult for authorities to fully enforce the lettings fee ban and make sure that all companies are compliant.

Enforcement of existing legislation, such as the requirement for all agents to display their fees, has been, at times, problematic.

According to research in 2017 by the National Approved Letting Scheme (NALS), 93% of local authorities had failed to issue a single financial penalty for non-compliance with compulsory fee disclosure rules.

The Challenges and Opportunities for Enforcing the Lettings Fee Ban

The Challenges and Opportunities for Enforcing the Lettings Fee Ban

Almost two-thirds of councils surveyed admitted that they did not consider displaying letting agent fees a high priority. Furthermore, a third of councils said that they hadn’t allocated staffing resources to this work in 2016/17.

At the same time, 64% of local authorities said that they were yet to assess the impact that the fees ban could have on enforcement.

The Chief Operating Officer of proptech firm PayProp UK, Neil Cobbold, says: “The extra resource of a lead enforcement authority is welcome, but policing the fees ban will continue to be a challenge.

“Consumer awareness will be a key factor. More informed tenants and landlords would be highly likely to notify the relevant authority when agents continue to charge upfront fees or do not cap tenancy deposits.”

Enforcement being taken seriously

In September, it was found that funding for the National Trading Standards Estate Agency Team (NTSEAT) has been doubled. The team, which aims to protect consumers from rogue estate agents, has had its funding raised to £500,000 per year.

Cobbold points out that increased funds for regulating the sales sector may be a sign that more money could be made available to enforce the lettings fee ban over the next few years.

Introduction of the fees ban 

The Government has stated that the fees ban will be introduced in spring 2019 at the earliest, but, since its introduction to Parliament in May 2018, there have been no further announcements regarding the date of implementation.

“This has led people to assume an April start date,” Cobbold says. “Bearing in mind that there are still several steps for the draft Bill to pass through – including a report stage, third reading and amendments stage – we need to keep an eye on the movement of the Bill.”

He continues: “However, the fact that there has been no opposition and that, currently, there are no legal instruments required once the Bill becomes an act, the Secretary of State could look to sign the act into law as soon as the process is due to complete at the end of the year.

“It has always been advised that the CMP [Client Money Protection] legislation would be implemented first (April 1st 2019), so the fee ban being introduced at some point in April 2019 still seems the most likely outcome.”

Cobbold advises: “At this stage, agents should continue to monitor the news for Government announcements and prepare their businesses accordingly.

“Companies that take a positive approach to the fees ban and look to benefit from a more efficient business model are likely to thrive in the years to come.”

We remind all property professionals that we have a dedicated page for all news relating to the tenant fees ban: https://www.landlordnews.co.uk/category/tenant-fees-ban/

Campaigners Target NatWest Branch over Buy-to-Let Mortgage Terms

Published On: November 27, 2018 at 9:03 am

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Categories: Finance News

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Campaigners targeted a NatWest branch at the weekend over its so-called discriminatory buy-to-let mortgage terms.

The campaigners oppose the fact that mortgage lenders restrict whether landlords can let to benefit claimants. They attempted to voice their discontent by storming the Bristol branch of NatWest on Saturday.

Activists from campaign group Acorn demonstrated outside the branch in Broadmead. They handed out leaflets to customers and passers-by, as part of an organised protest against what they see as discriminatory buy-to-let mortgage terms.

The protestors did attempt to enter the branch, but were denied access by security and the police.

There are growing calls for the Government to tackle discrimination against benefit claimants, after it emerged last month that NatWest told one landlord that she would either have to evict her tenant of two years or take her mortgage business elsewhere, due to a blanket ban by the bank on tenants claiming benefits.

The bank’s own buy-to-let mortgage terms state: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

Research by the Residential Landlords Association (RLA) found that two-thirds (66%) of mortgage lenders representing 90% of the buy-to-let market refuse a loan where a tenant is claiming benefits.

Last week, the Work and Pensions Committee blasted lenders for adopting no DSS policies.

However, the CEO of the Royal Bank of Scotland group, Ross McEwan, justified the clause in a letter to MPs: “In line with a number of other lenders… our mortgage policy for landlords with smaller property portfolios… includes a restriction on letting to tenants in receipt of housing benefit.

“This reflects evidence that rental arrears are much greater in this segment of the market and we are satisfied that this restriction does not contravene equality legislation.”

Regardless, NatWest has confirmed that it is now reviewing its buy-to-let mortgage terms.

Why Independent Inventory Clerks will be Essential Following the Lettings Fee Ban

Published On: November 26, 2018 at 11:09 am

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Categories: Tenant Fees Ban

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When the lettings fee ban comes into force for landlords and letting agents next year, independent inventory clerks may prove essential to the smoothness of managing rental properties.

News about rogue landlords and agents letting properties that are unfit for habitation, withholding money without cause, or charging extortionate fees while having little duty of care for tenants have led to a loss of confidence in the private rental sector, along with heaps of legislation.

Why Independent Inventory Clerks will be Essential Following the Lettings Fee Ban

Why Independent Inventory Clerks will be Essential Following the Lettings Fee Ban

Danny Zane, the Chairman of the Association of Independent Inventory Clerks (AIIC), believes: “A negative perception feeds into mistrust and disputes. That is why most letting agents seek out AIIC members as a quality assurance in their inventory process.”

In 2019, landlords and agents may no longer be able to charge fees to tenants under the proposed lettings fee ban. Different agents will use different strategies to deal with this; most will find ways to keep costs down. A positive perception will help them do just that, as word of mouth is a powerful tool – it means that people come to you.

Independent letting agents are already well positioned, as they are likely to live and work in the area that they let properties, so will have a deeper understanding of their communities. This allows them to sell the local amenities, as well as a home, building trust, relationships and their reputations.

“Independent agents have a lot in common with independent inventory clerks, creating a strong business alignment: our members’ independence gives the parties confidence that things are reported solely based on professional knowledge and expertise in an unbiased manner,” Zane says.

Corporate letting agents, too, have been active. The current stigma surrounding the industry has led many to self-regulate, in the hope that this will change the public’s negative perception. Another way to seed trust and enhance their reputation would be to engage with an independent inventory clerk for properties that they manage, market and/or let, even if they have an in-house inventory service.

Zane continues: “Because our members are seen in the marketplace as being fair, impartial and having no strings attached, they can help letting agents position themselves more positively in the public’s mind.”

Even landlords who manage their properties themselves cannot be sure that a positive relationship with their tenants will be as positive at the end of a tenancy.

“Our members always take the time to explain to tenants the inner working of an inventory report, and answer questions that may trouble both tenants and landlords, reflecting positively on the letting agent,” Zane adds. “A good relationship between the parties is vital and mutually beneficial, and I believe our members are part of that.”

Landlords, if you compile your own inventories, we urge you to read our guide on creating a professional report: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-inventories-and-avoiding-disputes/

Majority of Students Believe Accommodation is Good Value for Money

Published On: November 26, 2018 at 10:48 am

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Categories: Tenant News

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The majority of students in the UK believe that their accommodation provides good value for money, according to the first ever Student Accommodation Survey, which was compiled by Knight Frank between May-August 2018, in collaboration with UCAS.

This is the largest survey of its kind in the UK, highlighting the opinions of more than 70,000 British and international students.

Across the country, around 30% of full-time first year undergraduates live in purpose-built student accommodation (PBSA), which is owned or operated by private providers. This is up from 22% five years ago. A further 40% live in university halls of residence, while the remaining 30% live in the private rental sector or at home with their families.

The majority of students said that they were happy with their accommodation choice for the year, however, levels of happiness were slightly higher for those living in private PBSA (76%) and university halls (76%) than those living in the private rental sector (73%).

Majority of Students Believe Accommodation is Good Value for Money

Majority of Students Believe Accommodation is Good Value for Money

The key drivers of happiness in private PBSA were: location, the option to live with friends, and the quality of accommodation.

When it came to finding somewhere to live, the single most important factor was value for money. Some 97% of respondents rated this as being important to them, with around half rating it as extremely important.

The majority (67%) of students rated their accommodation as good value for money, with a further 12% saying that it was neither good or bad value. Good value for money was cited regardless of whether students were living in private PBSA, university accommodation or the private rental sector.

Parental involvement also had a role to play when it came to finding somewhere to live, especially for first year students, with 76% saying that their parents helped in making the decision.

This was much lower for second and third year students, with almost half (45%) saying that their parents had no involvement at all.

The survey also points to affordability being an issue affecting student wellbeing. Some 63% identified living costs as being very important when it came to their overall wellbeing.

41% of final year students intended to remain in the city in which they studied when they graduate. Graduate retention was highest in London (67%), followed by Edinburgh (47%), Manchester (46%) and Birmingham (41%).

Thinking about where they intend to live following graduation, more than half of students would move directly into a property in the private rental sector, while 31% would move back into the family home.

The Global Head of Student Property at Knight Frank, James Pullan, says: “The focus on student accommodation has never been so acute and, with several universities facing financial challenges, as well as the potential impacts of the Augar Review on tuition fees, universities must ensure that they get their accommodation offering right.

“Our survey comes at a time when the private PBSA sector in the UK faces its own set of challenges; not least from policy and from competition in what has become an increasingly global market for higher education.”

He continues: “The private sector now accounts for the majority of new PBSA development, and, as universities become more reliant on outside investment to provide new PBSA, greater focus is likely to be placed on the strength of the relationship between the private sector and universities. The ability for both to work together and bring new product and innovation to market will be key to future success.”

Are Developers Pushing Up House Prices through Help to Buy?

Published On: November 26, 2018 at 9:57 am

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Young first time buyers looking to get onto the property ladder can now do so two years earlier than before, thanks to additional support from Help to Buy schemes, according to new research from Compare My Move. However, are developers actually pushing up house prices by taking advantage of the schemes?

Compare My Move found that it takes young first time buyers in the UK an average of 12 months to save the 5% deposit needed to take advantage of the Help to Buy Equity Loan scheme, while renting a property from a private landlord. This compares to the three years that it would take to save the necessary 15% deposit required if not using the Help to Buy scheme.

As a result, it would save first time buyers more than £10,000 to use the Equity Loan scheme.

However, this is a growing level of discontent with the Help to Buy scheme, as developers have been accused of selling new build homes to first time buyers at hugely inflated prices.

New data, compiled by reallymoving.com, shows that homes being sold under the Government’s Help to Buy scheme are routinely overpriced, by almost 10%.

Many experts believe that property firms are trying to cash in, as they know that first time buyers who use Help to Buy can borrow much more money, which is why a growing number of people are now opposed to the scheme.

The findings reflect another study by property investment platform British Pearl, which found that 31.5% of Britons do not support Help to Buy, with many believing that it has actually made housing less affordable.

Surprisingly, millennials were the least likely to support the scheme, which was set up specifically to benefit this group of buyers.

So, although young first time buyers can now get onto the property ladder an average of two years earlier through Help to Buy, is it actually benefitting the market at large?

In his Autumn Budget, the Chancellor announced an extension of the scheme to 2023.

Government Minister to Address Renting Conference in Wales

Published On: November 23, 2018 at 10:57 am

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A Government minister, Justin Tomlinson MP, will address the Residential Landlords Association’s (RLA’s) Future Renting Wales conference next week.

The Minister for Family Support, Housing and Child Maintenance will be sharing his insights into the future of the private rental sector in a keynote speech at the event on Thursday 29th November, with the Welsh Housing Minister, Rebecca Evans, promising a major announcement for landlords in a video address to delegates.

The RLA’s Future Renting conferences have welcomed hundreds of landlords and property professionals through their doors over the last 12 months, with the Mayor of Greater Manchester, Andy Burnham, using the RLA’s Manchester conference to exclusively announce controversial plans to buy up homes from rogue landlords.

Justin Tomlinson MP, whose portfolio includes financial support for housing and Universal Credit, heads a line-up of respected industry experts, who will address the conference in Cardiff on everything from Rent Smart Wales and the tenant fee ban to Brexit.

Speakers include television personality and the Founder of Landlord Action, Paul Shamplina, and expert lawyer Dr. David Smith, while the event is hosted for the second year running by BBC Wales’ Lucy Owen.

The private rental sector in Wales is growing, with 20% of all homes in the country expected to be privately rented by 2020.

And, with heaps of new regulations coming into force, there is no better time for landlords to make sure that they are ahead of the game and fully equipped for the challenges ahead.

The conference will be held at Jury’s Inn, Cardiff next Thursday (29th November) and is open to anyone with an interest in private rental housing, from landlords with a single property, to those with larger portfolios, letting agents and their staff, Assembly Members, local authorities, journalists and housing charities.

Douglas Haig, the Vice-Chair and Director for Wales at the RLA, who will also be speaking at the event, says: “We are delighted to announce Justin Tomlinson as our keynote speaker for this year’s Future Renting Wales conference. More than 200 landlords attended last year’s event, with feedback overwhelmingly positive.

“The legislative landscape is ever-changing, and it is vital that all residential landlords keep themselves up to date, armed with the knowledge they need to continue to run successful businesses in the private rental sector of the future.”

Tickets are £40 for RLA members and £45 for non-members: www.rla.org.uk/conference/future-renting/wales/