Rents are showing signs of levelling out, according to letting agents, with void periods rising and fewer new tenancies.

Latest data from the Association of Residential Letting Agents shows that in the first quarter of this year, 50% of its members reported increased achievable rent levels, in line with news of rising rents across the UK. However, the proportion of ARLA members reporting this has fallen from 60% nine months ago.

Over the same timeframe, the average void period rose for the second successive quarter to an average three weeks.

ARLA members also reported a decline in the number of new tenancies being signed.

ARLA says that while this is not unusual for this time of year, and may also simply be because tenants are staying longer in properties, it could indicate decreasing demand, or be a reflection of tenants’ inability to afford the rents being charged.

Tim Hyatt, ARLA president, said: “Our data suggests that things could be changing in the private rented sector as the amount being charged for rent is beginning to stabilise in some parts of the UK. This could be due to a number of factors, including an increase in haggling, forcing rent levels down.

“Our members also report a decline in the number of properties coming on to the rental market because they can’t be sold, suggesting that the initial boom in ‘reluctant landlords’ is coming to an end.

“However, we know anecdotally that this is by no means a consistent picture across the UK, as there is still a huge demand for rental property in some parts of the country.

“Ultimately, the key challenge of under-supply has not been solved and there is still a need to provide the right housing, in the right places, across the wider housing market.”

ARLA based its report on responses from 726 member offices plus research among 1,505 landlords.

Landlords are set to be caught by a legal requirement forcing them to upgrade properties, involving them in unforeseen expense and delays.
A proposed new requirement for ‘consequential improvements’ means that if they want to replace broken boilers in their rental properties, they will be forced by law to install other energy-efficient measures.
The proposed ‘consequential improvements’ mean that one project could not be undertaken without the landlord having to commit to other work elsewhere in the property.

For example, anyone wanting to add an extension or convert a loft might have to upgrade existing windows in other parts of the property to double glazing, whilst installing a condensing boiler would typically mean a commitment to installing new insulation in walls and loft.

All consequential improvements would have to be done to full Building Regulations standards, although it is not clear whether in an emergency – for example, replacing a boiler – consequential works would have to be done at the same or could be done later.

If it is decided that consequential work must be done at the same time, it could mean lengthy delays and disruption for tenants left without hot water or heating, as consents are sought and different tradesmen organised.

Even the Federation of Master Builders is against the idea. Brian Berry, its chief executive, warned that the plans to force property owners to spend thousands on ‘green’ improvements will be practical, unpopular and counterproductive.

Under Chapter 4 of a consultation on Building Regulations, the Government is proposing to extend the requirements for ‘consequential improvements’.

This is the term that would trigger a requirement for extra energy efficiency works in a building where other ‘controlled work’ is already taking place.

The consultation says: “The reason for proposing these changes now is to recognise the urgency of reducing emissions from the existing building stock, and, in a time of rising energy prices, to make homes and non-domestic buildings easier and cheaper to heat. It would also take advantage of a new market mechanism which has the potential to remove some of the existing barriers to action – the Green Deal.”

The paper goes on to say that the objective is to ‘use the opportunity’ to get the overall energy performance of the building improved whilst other works are being carried out.

The Government plans to phrase in the requirement for ‘consequential improvements’ from April 2014.

The consultation on ‘consequential improvements’ closed at the end of March, and the outcome will not be known for some months.

The private rented sector already faces the challenges being posed by new-look EPCs, introduced last week, and the Green Deal, which is due to be implemented this autumn. In 2018, rental properties with the two lowest EPC scores are due to be banned from the market, meaning that landlords must have improved them by then.

 The Wiltshire and Hampshire  based agency (with offices in Salisbury, Amesbury and Fordingbridge) came second across the whole of the UK in the small estate agency category recognising them for their excellent customer service as voted for by their clients during the course of 2012. 

The awards were announced by Phil Spencer, the TV property expert at a lavish luncheon & ceremony at the Hilton Park Lane London attended by 550 of the UK’s top estate and letting agents.  

Phil Spencer said “The ESTAS are the most important and valuable awards in our industry.  To win a national award requires a lot of hard work and total dedication over a very long period of time.” 

The results of the competition were determined by research carried out amongst customers who are asked a series of questions about the service they have received from their agent. Over 450 estate agents entered and over 33,000 votes were received making it the biggest consumer survey of its kind in the property industry. 

David Clayton, Managing Director of Bassets, said “Being voted second best estate agent across the whole of the UK is a fantastic achievement and very fitting given that it is our 10^th Anniversary this year. The award means so such because it is our clients who have rated us not a judging panel. We pride ourselves on providing exceptional levels of customer service and, as this award shows, we are clearly getting it right!”

The ESTAS are organised by Awards for Business www.theestas.com 
Agents can sign up for the 2013 now at www.theestas.com/2013-agent-signup/

Notes to Editor:

Economic conditions across the globe are ‘somewhat improved’ according to the IMF, which edged up its global growth forecast for this year from 3.3% to 3.5%. It makes a change to have some good news, but of course there are risks – unsurprisingly mainly from the Eurozone. The IMF is worried that low growth and a need to boost capital will cause banks to increase their pace of deleveraging. This would send another chill through the financial system and could jeopardise global recovery. It is a real risk but, for now, it is still just that. Maybe we should take heart that there was still appetite for new Spanish government bonds, albeit at a price. On top of this, the IMF’s success in obtaining pledges for an additional US$340bn, even without defining its purpose, might suggest that there is a slight improvement in confidence.

Monetary Policy Committee gets twitchy about sticky inflation. The minutes of the April Monetary Policy Committee (MPC) meeting contained a few hints that the Committee is getting fed up with inflation. The rate of price growth was expected to fall quickly this year as factors like higher VAT and fuel prices in 2011 fell out of the calculation. But it’s been stickier than anticipated and this has caused a shift of sentiment on the MPC, leaving David Miles alone in voting for more monetary easing. The MPC is now waiting to see what light May’s inflation report will shed on the outlook before its next move. Right now it seems unlikely that there will be more QE in May.

UK inflation rose for the first time in six months in March. Consumer prices rose by 3.5%y/y in March. It was only 0.1 percentage points above expectations but the news was taken badly. The culprits were food, clothing and recreation and culture. The rising costs of essentials put extra pressure on household budgets. But on the positive side downward pressure from electricity, gas and other fuels and transport took some of the heat off.

Real earnings growth fell – again. UK average earnings grew just 1.1% in the three months to February, but with inflation at 3.5% real earnings fell. A 6.2%y/y fall in bonus pay dragged down the overall earnings growth number. This is now the 22nd successive month that earnings growth has failed to keep pace with the cost of living. Average earnings in wholesaling and retailing grew fastest at 3.1%, but the finance and business services sectors saw no growth at all. Regional differences also abound. Since the start of 2008 the North East and Wales saw the largest gains in money wages, while Scotland, the West Midlands, Northern Ireland and the South East lagged behind.

UK retail sales surge in March. After a couple of sluggish months, retail sales rounded off Q1 in style, growing by an impressive 1.8%m/m in value terms. Even excluding the “jerry can” effect, ex-fuel sales were up a healthy 1.5%m/m, with strong growth in clothing & footwear. All told, this means that retail sales will have made a decent contribution to GDP growth in Q1. But retail sales don’t tell the whole story. Consumer spending away from the high street has been lacklustre and this will drag on consumers’ input to GDP.

UK unemployment fell unexpectedly in February. UK unemployment fell by 35,000 in the three months to February, bringing the rate down from 8.4% to 8.3%. This was the first fall since May 2011 and brought the number of people unemployed down to 2.65 million. The good news was also shared by the young. The rate of youth unemployment (excl. full time education) fell by 0.2 percentage points to 20.5%. But looking behind the data shows that all of the fall in overall unemployment was due to an increase in employment of part-time workers. The number of people settling for part-time work because they can’t find full-time jobs rose to 1.4 million, its highest level since records began in 1992.

On Tuesday 4^th October at the Victoria Team Rooms in Fordingbridge, Bassets Estate Agents hosted a talk by Wealth Management Specialist – Ian Hunter.

Ian highlighted the pitfalls of not having your Will correctly worded and the implications of the so-called “Classic Married Will”, which usually reads something like – “I leave everything to you, you leave everything to me and if it all goes horribly wrong, everything goes to the children”. What it actually means is very often quite different to what you would expect it to mean. 

Ian also covered the changes in legislation since October 2007 and stressed the need to have any Will written before that date reviewed to ensure that the clauses within it still apply appropriately. Most were written to gain an Inheritance Tax advantage in those days, since when the rules have changed significantly! 

The solution to most Estate Planning issues is the strategic use of Trusts and Ian explained exactly how these work in a clear and simple way, along with the advantages and benefits they bring. Sophisticated Estate Planning such as this is highly specialised. 

Finally, Ian looked at the costs of Long Term Care funding and steps that can be taken to reduce the risk of assets being sold from under your feet to fund Care costs. 

The presentation was very well received and the audience asked a lot of well thought out questions before breaking for a glass of wine.  Jill Gannon, Manager of Bassets in Fordingbridge said that the evening was a great success with many members of the audience wanting to ask for advice on their own personal situations. Jill said that she was so pleased that Bassets is likely to run a very similar evening in Salisbury early in the New Year. 

For more information, contact Jill Gannon on 01425 200690 or Ian Hunter on 01722 327427.

Guy Fawkes floral display. Michael Dyble (Bassets) with Reverend Elizabeth Moore-Brick (rear right) and Jane Bawden (front right)

Jane Bawden, Reverend Elizabeth Moore-Brick and Michael Dyble

The village of Farley held its own community flower festival over the weekend of 30^th October.

The event was co-ordinated by Jane Bawden of Farley Flowers, a resident of the village, and included a range of activities over the weekend including a wonderful concert given by really talented children from the Clarendon Team villages, a Taize service, and a film screening of Alice in Wonderland.

A wide variety of individual and distinctive floral displays, put together by local residents, were exhibited at the church.

Michael Dyble, the Sales Manager of Bassets in Salisbury who sponsored the event, said “We were delighted to be involved in supporting such a local community event. The range of displays was superb and included a spookily dressed floral Guy Fawkes!”

Jane Bawden said “Bassets were delightful to work with, and we are so grateful to them.  I would also like to thank Porton Garden Centre and Pitton Post Office for their generosity, not to mention the many private donors, and the residents themselves.  The effort and expense to which they have gone is astonishing. Farley and Pitton is certainly a great parish in which to live!”

It’s Friday, yeah! I am really looking forward to a warm glass of mulled wine and a home made mince pie at the Fordingbridge late night shopping evening. I have had a really positive week with an experienced new Property Manager who started with us on Monday and who is doing really well –  check- outs will be so much easier now! I will be in the Fordingbridge office from 5.30 this evening if you would like to pop in and unwind with a glass of wine. Have a good weekend, Faye Chandler, Lettings Manager, Salisbury Bassets.

The recession and subsequent housing market decline has created a wave of ‘reluctant landlords’ – homeowners who have to let out their property because they cannot sell it. But letting a property for the first time needs thought and consideration, according to the Association of Residential Letting Agents (ARLA).

Research conducted by ARLA showed that more than a third (34%) of member offices surveyed during Q3 2010 saw an increase in the number of rental properties coming onto market because they couldn’t be sold. This has caused an influx of former privately-owned homes.

“While homeowners forced to let out their home can reap significant benefits by holding on onto their property, becoming a landlord for the first time can be a stressful experience,” said Ian Potter, operations manager at ARLA.

“Successful letting isn’t simply about finding a tenant, signing a contract, and handing over the keys – there are important steps any every landlord should take when letting out a property that was once their home.”

On converting an existing private home into a property for rent, ARLA has the following top tips:

• Furniture: Decide whether the property will be fully, partially or unfurnished – if your furniture is precious then take it with you or put it into storage. But remember you may be able to charge more for a furnished property
• White goods: There are regulations governing the installation of electrical equipment in rental properties – make sure you’re clued up and that you have any equipment in your property regularly tested, as you will need to prove your property is safe. The same is also true for gas appliances, which must be certified and checked annually
• Do some DIY: It’s not strictly necessary to do it yourself, but you should pay some attention to the décor in the property. While brightly-coloured walls and purple ceilings may be to your taste, they may also make the property less desirable. In contrast, neutral colours are easier to re-touch at the end of a tenancy, make a property seem fresh and light, and will match any furniture. If you’re letting out a family home, perhaps even consider using a wipe-clean paint for potential budding da Vincis. Often, a well-presented property earns better respect from its tenants
• Hands-on?: Choosing to enlist a managing agent to look after your property can be a real help, especially if you are moving away from the area, or have a busy job. At the very least, working with a lettings agent to advertise and fill your home should make the process smoother. Either way, make sure you pick the agent carefully and only ever choose a regulated agent (all ARLA members are regulated) to ensure your money – and your tenant’s – is protected, and that you have access to a redress scheme should things go wrong
• Let go: Finally, in all the decisions you make about letting out your home, remember that it’s no longer your home – no matter how much you love it, it is now a home for someone else and, hopefully, an investment for you. The chances are that accidental damage or wear-and-tear will happen, and tenants will complain – so try and keep a clear, detached head when dealing with those kinds of issues, and don’t take it personally

The RBS has reported that they learned this month that two Monetary Policy Committee members voted for a rate rise in January. February’s meeting yielded no change in the Bank Rate but the divisions in the committee might well have got deeper. US growth is charging along and yet so far it is failing to have any positive effect on the labour market. The last two months provide worrying evidence that the unemployed are giving up looking for jobs. Meanwhile, inflation in the Eurozone is above target at 2.4%, but sovereign debt strains mean that the European Central Bank is unlikely to raise rates before Q3 this year.
(RBS 11/2/11)

Young adults are more attached to the idea of owning their own home than any other age-group, with 86% of under-30s identifying it as a key priority in life, according to a major survey from the Barratt HomeBuyers’ Panel.

But young people are often unable to take their first step on the property ladder and the average age of an unassisted first-time buyer is now 37.

Almost two-thirds (65%) of people under the age of 30 believe that they cannot afford to buy a home as big as the one in which their parents lived at the same age. This figure rises to 75% in the South East.

Young adults increasingly resent the housing wealth acquired by the over-40s.

Some 44% of respondents aged between 18 and 29 describe the housing wealth which the generation over 40 has accumulated because of rising house prices as “unfair”. By contrast, only 10% of respondents aged between 40 and 65 agreed.

People under the age of 30 are more opposed than any other age group to “Continental” models of tenure in which families routinely rent for the duration of their adult lives.

Some 90% of respondents aged between 18 and 29 would not be happy if they had to live in rented accommodation for the rest of their working lives. While 64% say that they would not be happy to start a family while they were renting and 43% would not be happy to get married until they owned their own home.

Mark Clare, Chief Executive of Barratt Developments, said: “The findings from this nationwide poll illustrate the extent of the housing crisis facing Britain and the depth of the public policy challenges we now have to tackle as a result.

“Signs of friction between the generations are now starting to emerge as a direct consequence of relative housing wealth. Significant numbers of people – especially those under the age of 30 – appear to be delaying key life decisions such as starting a family because they cannot take that all-important first step on the housing ladder.

“Because home ownership is becoming more not less difficult, it is likely that these problems will become still more acute in the decade ahead.”

Scrutiny of the Localism Bill continued in a recent Public Bill Committee hearing, where the Chartered Institute of Housing, the NHF and Shelter were among those giving evidence.

There many interesting points made on the potential knock-on effects to the private rented sector:

·         Campbell Robb (Shelter) criticised the Government’s decision not to bring forward regulation for the PRS: “What this proposal lacks, if the Government wish to go down this route, is any licensing or regulation of the private rented sector.  It will see a greater dispersal of very vulnerable people into the already least regulated sector.  One of the Government’s first moves was to remove any agenda in the Rugg review or any desire to put more regulation into the private rented sector.  That is a mistake.  If the Government were willing to consider further regulation, particularly in London or areas where that was going to happen, it might have potential.” This was in a response to a question from the CLG Minister Andrew Stunell MP.

·         Richard Capie (CIH) also expressed concern over a lack of quality housing in the PRS: “We also have concerns about the discharge of the homelessness duty into the private rented sector, not over whether that might be a positive solution for supporting people with options, but over whether we have sufficient quality and provision in the private rented sector at this time, particularly in the light of changes and reforms to the housing benefit system, as was discussed in the Lords yesterday.”

·         Heidi Alexander MP (Lab) asked a question on whether the PRS can cope with demand: “In your opinion, what capacity do you think the [private rented] sector has at the moment to cope with additional demand?  What, in your view, will that additional demand do to rent levels in the private rented sector?”  Campbell Robb replied: “Everything would suggest a marketplace with an increased demand and no increase in supply, where the prices will go up and up.  We have pushed and pushed the Government on this, for their evidence as to what it suggests, and we have pushed the Department for Work and Pensions and the Ministers for the evidence, and they have shown us none.”

·         Ian Mearns MP (Lab) also raised concerns over rent levels, and said: “I see a particular problem where a number of properties may have been bought recently for a buy-to-let process, and I cannot see any mileage in terms of rents coming down, because, from my understanding, mortgages have not depressed massively in the recent past. How will landlords manage to bring rents down if they are determined to keep a particular level of rent in order to pay the mortgage?”  Campbell Robb responded: “It is the Government’s assumption that landlords’ rents will come down. We do not believe that landlords will put their rents down.  National Landlords Association surveys have shown that it does not expect landlords to put their rents down either.  We would love to see the Government’s evidence on which they are basing the assumption that landlords will put their rents down.  I do not see that happening.”

Mortgage Trust has launched a range of fixed and tracker rate buy-to-let mortgage products with attractive criteria.

The six new products are only available via intermediaries for purchase and remortgage, and include tracker rates starting from 4.30% and fixed rates starting from 4.89%. Mortgage Trust is accepting online applications only via the www.MTon-line.co.uk website and all applications are subject to a fast track credit score based underwriting process.

In addition, the lender has launched two ‘Rapid Remortgage’ deals, which benefit from a low 1% fee and free legals and valuation. These deals include a 3.99% two-year tracker and a 4.99% two-year fixed, both at 75% LTV. The deals must be completed by 29 July 2011.

The buy-to-let mortgage product range includes:

Fixed
2 year fixed at 4.89% (65% LTV)
2 year fixed at 4.99% (70% LTV)
2 year fixed at 5.09% (75% LTV)
Tracker
2 year tracker at 4.30% (65% LTV)
2 year tracker at 4.40% (70% LTV)
2 year tracker at 4.50% (75% LTV)

Rapid remortgage
2 year tracker at 3.99% (75% LTV)
2 year fixed at 4.99% (75% LTV)

The products are available for single, self-contained properties only. The product fee across the range is 1.75% (1% on the Rapid Remortgage range) and the rental calculation is based on 125% at 5%, or the product rate if greater.
Mortgage Trust, which is a sister brand to Paragon Mortgages and part of The Paragon Group of Companies, returned to buy-to-let lending in April.

John Heron (right), Mortgage Trust Managing Director, says, “These products offer attractive rates and criteria and we are confident they will appeal to intermediaries and landlords from across the spectrum. We have been pleased with the strong response to Mortgage Trust’s return to the market in April and believe these products will cement Mortgage Trust’s position as a major brand in the buy-to-let market.”

Paragon Mortgages continues to focus on professional landlords, catering for complex buy-to-let requirements, such as Houses in Multiple Occupation, limited companies and multi-unit blocks. Paragon’s product range can be found at www.paragon-mortgages.co.uk

Loans for house purchase increased in April, but were down year on year.

There were 40,900 house purchase loans, up 8% from 37,900 in March, but 2% lower than in April 2010.

Remortgages fell sharply month on month. There were 24,700 remortgage loans in April, down 28% on March but up 1% on April 2010.

The latest report from the Council of Mortgage Lenders also says that, with Bank of England data showing a fall in house purchase approvals in April, there could be a ‘lull’ in house purchase completions in the next few months.

The number of loans to first-time buyers increased by 8% in April from 14,700 (worth £1.7bn) in March to 15,800 (worth £1.9bn). However, the number of loans to first-time buyers rose by just 1% year on year.

First-time buyers borrowed on average 80% of their property’s purchase price in April, more than for most of the last two and a half years, but still well below the 90% that first-time buyers typically borrowed.

Michael Coogan, CML director general, said: “The market continues on a stable footing and the increase in house purchase lending is a good sign that the stability will continue throughout 2011.

“However, the economic outlook, coupled with Bank of England subdued approvals data for April, suggests a muted summer for mortgage completions, so we do not expect further increases in lending over the coming months.”

David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains estate agency chains, said: “Any growth in monthly mortgage lending is welcome news for the UK’s army of frustrated homebuyers, but a comparison with 2010 shows we’re far from out of the woods.

“You still have to jump through a lot of hoops to get a mortgage, and deposits for first-time buyers need to be more than 50% larger than they were three years ago. The market is still showing no signs of a sustained recovery.

“While the slight improvement in the affordability of first-time mortgages gives some encouragement, there is a long way to go before buying property becomes a realistic ambition for large numbers of first-time buyers who are struggling to pull together the very large deposits still required in most cases.”

David Whittaker, managing director of Mortgages For Business, said: “Activity will remain subdued this year with month-on-month rises and falls being the norm, and until there is a significant sea-change in the amount lenders are prepared to issue to borrowers, we’re unlikely to see a dramatic recovery in the mortgage market.

“Lenders and the Government must come up with a sensible balance of capital requirements and lending targets. If they don’t, the market will be stuck in the doldrums for a long time to come.”

Door knocking, cold calling and ‘continuous’ attempts to canvass for new business are all highlighted as examples of poor practice in new guidance on touting.

It comes from the Property Ombudsman, who says that touting has been the subject of complaints.

The Ombudsman also makes it plain he will frown on letting agents who target tenants ‘by whatever means’ to get details of their landlords, so that they can make unsolicited approaches to landlords.

The Ombudsman also makes it clear that in any flyer for touting, the agent should make it clear that the seller could be liable to two sets of fees. As a matter of best practice, if the agent does win the business, the seller should sign a declaration confirming that they have understood the potential liability.

As well as the guidance on touting, the Ombudsman is introducing new Codes of Practice for both estate agents and letting agents from August 1. Among the major changes is the need for member agents to have separately designated client money accounts to protect money they receive.

As well as the guidance on touting, there is also guidance on agency contracts as well as the Consumer Protection from Unfair Trading Regulations.

The latter guidance also highlights touting, saying that ‘aggressive’ practices such as uncontrolled leafleting could result in criminal prosecution.

The two new Codes of Practice have been pending for some time while awaiting approval from the Office of Fair Trading.

Bill McClintock, chairman of the TPO operating company, which oversees membership matters, said: “We were delayed because we were waiting for OFT approval for the Sales Code revisions and were hoping to have the Lettings Code included under the OFT’s Consumer Codes Approval Scheme.

“But in the end, we decided we could not wait any longer as the Codes are intended to improve levels of service and remove confusion for member agents that may arise through recent legislative changes.

“I have been pressing the OFT for almost three years in the case of the Lettings Code approval and for many months for the Sales Code improvements, but so far without success.

“Regular meetings with member agents and other industry bodies mean I am familiar with issues that need to be addressed. I am sure the revised Codes will be of great help.”

Until August 1, agents will be governed by the existing Codes and these will apply to all cases reported to the Ombudsman that arise from agents’ actions before that date.

TPO currently has 8,179 member firms operating 11,503 sales, 8,195 lettings, 216 commercial and 31 international offices.

The new Codes of Practice and the guidance notes can be downloaded from the TPO website members’ section at www.tpos.co.uk