Focus on property management – but make sure you get it right!

Letting agents have been told today, that by focusing on lettings only and not offering property management, they could be losing out on “thousands of pounds of potential income”. New research from outsourcing supplier ARPM, reported in Letting Agent Today, shows that many agents typically offer let-only. By offering a full management service too, ARPM calculates they could boost average annual income by up to 80% per tenancy. That’s big money.

The report reveals an untapped market of almost one million landlords in London alone who only use letting agents to find them tenants – or don’t use one at all. With private rentals expanding across the country year-on-year and many landlords living remotely from their investment property, there is huge potential for growth. And a chance to claw back the estimated £400 per letting that agents are expected to lose as a result of the tenant fees ban.

Property management is not a business to be entered into lightly

But – and this is a big but – property management is a serious business. The government has agents in its sights right now and poor service in our sector is soon to be outlawed by the advent of stronger regulation and the need for recognised qualifications. So, like marriage, this isn’t a client relationship to be entered into lightly.

As chartered surveyors and professional managing agents, we have specialised in this service for many years. Our lettings division Life by Ringley, based in Manchester and servicing clients across the region, has a clear understanding of the differing needs of landlords and tenants. We provide both basic and full management services, with fees clearly stated from the start. Click here to find out more. https://lifebyringley.co.uk/

As well as managing rental property, Ringley specialises in leasehold blocks. Rather than a one-size-fits-all approach, our Blockcare offer has something for everyone from a basic service to fully managed options. Fees are charged according to the level of management you require. Sign-up is easy and almost everything from site reports, minutes, invoicing and accounts can be done online. We can take us much or as little of the hassle out of your management requirements as you want us to.

We even have a tailor-made package for you to use if you can’t afford a managing agent! Click here to find a package that suits your needs https://www.ringley.co.uk/property_management

Fees ban – the unintended consequences

The Tenant Fees Act came into effect in England on Saturday and there are already big question marks hanging over the new legislation. Both the government and the lettings industry want to make renting fair for tenants but agents are not convinced the new Act will work in the way that was intended.

What’s the impact?

Glynis Frew, the CEO of letting agent Hunters, said this week that good intentions could easily result in unintended consequences. We agree that a small number of rogue agents and landlords have charged what she describes as “mind-boggling” fees, but this isn’t representative of the industry as a whole. Instead of government opting to cap fees, they have been scrapped altogether. The likely results are rent increases, landlords leaving the sector in even greater numbers than they are already and letting agents shutting up shop – which as well as reducing consumer choice, also has a negative impact on our beleaguered high streets.

Our view is that the Act will mean agents looking closely at their all-inclusive management fees and having to pass on disbursements such as deposit registration costs to landlords. The industry will be looking to push extra products such as insurances, on which agents can take commissions to cover the shortfall in income. 

New fines for ‘prohibited’ payments

Local authorities, charged with enforcing the legislation, can fine landlords and agents up to £5,000 for levying a payment that is now prohibited (see yesterday’s blog at https://blog.planetrent.co.uk/tenant-fees-act-now-in-force/ for a list of allowable fees) and they can prosecute or impose a fine of up to £30,000 if an ‘offence’ under the Act has been committed. This is where a landlord or agent has been fined or convicted for a breach within the last five years and commits a further different breach.

Being a landlord has never been more precarious.  Reducing deposits from 6 weeks to 5 is no real protection against tenants not paying their last month’s rent and the Deposit Alternative products that are now springing up may offer landlords more protection but are of course optional, and cannot be forced on tenants.   Flexibility as to how tenants make payments is also diminishing as many landlords refuse to take rent or deposit payments by credit card as, understandably, they don’t want to pay the fees.

Future challenge

The challenge for agents will be to ensure they are providing an added-value service to landlords by having effective tenant referencing, contractual and deposit systems in place as well as ensuring compliance with the new Act.

What will the flat of the future look like?

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Fancy a wind turbine on your roof? Well, in a few years’ time, according to Aldous Hicks from Recircle Recycling, you could be seeing them everywhere on the skyline. Climate change is making an impact on the way we live and in future we will be installing a whole range of eco-friendly devices in our homes to help reduce our carbon footprint and ramp up our ability to reduce, re-use and recycle products that we now just throw away. Here are some of Recircle’s favourites.

New storage batteries currently in development promise to unlock a range of in-home energy production methods. Batteries will then be able to store power at a local level and perhaps even distribute power across a community. But what will we use to generate power?

That could be solar tiles – which are a step up from the bulky panels we’re all familiar with because they are smaller and more flexible. They can be retrofitted onto any property with a roof, although the drawback is the low energy production they offer in less sunny countries. So in the UK, we may be stuck with solar panels for a bit longer.

Back to those wind turbines. Imagine fitting an attractive and super-efficient wind turbine on your roof that’s a piece of art as well as generating almost all the power needed. Take the Liam F1 Urban Wind Turbine from Dutch tech firm, The Archimedes, shown above. The spiral design resembles a big rotating flower. At 80% efficiency, it is a forerunner of the high-efficiency turbines of the future.

Something really exciting is the bio-fuel synthesiser. Scientists are now working with microorganisms that can break down organic material and CO2, passing the energy straight into a battery. Food waste and human excrement will feed the machine, providing energy-free sewage treatment and no need for composting. Bio-fuel synthesisers will be fitted to our toilets and waste disposal pipes, turning our organic waste into clean energy.

But what about other kinds of waste? A closed-loop economy means processing products and packaging back into their original form, or equivalent. At the moment, we can’t do this because of the high cost and low-reliability of separating out different materials for recycling.

So ReCircle is working on a home and business appliance to do this. It will use a sensor to ensure different materials are never put together. This means the inherent material value is not lost due to being mixed with other different materials – the major problem with the current recycling system.

The near-pure used-materials are washed, ground or compacted to contaminant-free sized-reduced pure products ready for storage. The pure close-loop recyclable products will then be collected on-demand from buildings when the storage containers are full.

It may even be possible to combine technologies like a recycling appliance and a 3D printer, ensuring that everything you print can be reprocessed into future ‘ink’ to make more products. Individual homes and other buildings could instantly become closed-loop in themselves.



 

Section 21 changes: making them work

Yesterday’s blog looked at the problems that could be caused for the rental sector by the proposal to scrap “no-fault” Section 21 evictions.

The government proposes to effectively make tenancies open-ended while at the same time strengthening the rights of landlords who want to recover their properties by giving the Section 8 process more teeth. Getting this right will make or break the planned change in the law. Get it wrong and the government risks seriously damaging the rental sector – which is already struggling to meet the demand for housing.

The average time it takes for a private landlord to repossess a property via the current system is nearly four months, according to data from the Ministry of Justice published in Landlord Today this week. This is completely unacceptable. All landlords know that eviction of any kind is a last resort. And even official figures point to the fact that only 10% of tenancies are ended by the landlord, not the tenant. All other things being equal, they have a better investment with a long term tenant where there is no void rent loss and less move-in-move-out wear and tear.  But there are legitimate reasons why a buy-to-let landlord may need to evict someone when they have a change of circumstances and that situation must be supported by an efficient court process.

In Scotland, where court reform was rolled out prior to scrapping their equivalent of Section 21, the new regime seems to be working. So paying attention to Section 8 will be vital if the new regime is to be fair to landlords as well as to tenants.

Not surprisingly, there has been a strong reaction to the government’s plans from the lettings sector, with more than 6,000 people responding to the Residential Landlord Association’s survey asking what a post-Section 21 private rented sector should look like – a record response for the trade body. The RLA survey closes on Monday and the results will be used to respond to the government’s formal consultation when it is launched, so go to the RLA website at https://rla.onlinesurveys.ac.uk/possession-reform-ensuring-landlord-confidence-apr-may to have your say.

Landlords and tenants – you need each other!

Fixed-term tenancies for private renters should be scrapped. Landlords should also stop evicting tenants just because they want to sell their homes. These are just two of the reforms called for by leading thinktank, the Institute for Public Policy Research (IPPR) in a recent report.

Landlord and tenant: PRS reform must consider the needs of both
Landlord and tenant: PRS reform must consider the needs of both

Under the law as it stands, without giving a reason, private landlords can issue a ‘Section 21’ eviction notice to tenants whose assured shorthold tenancy has ended. This puts millions of private renters in the UK in a precarious position, says the IPPR, as they never know when they may be forced out of their home. The thinktank is calling for increasing security for tenants through an ‘open tenancy’ and wants to prevent landlords from selling in the first three years of a tenancy agreement, giving renters greater peace of mind .

There is no doubt that for many renters, the PRS is insecure. Around one in 10 tenancies comes to an end because the landlord has terminated them through a no-fault eviction. Tenancies ended by landlords were the biggest cause of homelessness in England in 2017, accounting for almost a third of all local authority homelessness acceptances.

The IPPR believes tenants face unaffordable rents, poor conditions, a lack of tenure security and limited control over their rented home. In response, among other things, the thinktank wants to see changes to recent welfare reforms to help struggling tenants and a national landlord register to help drive up standards in the rental market.

Tenants undoubtedly stand to gain from these proposals. But are they fair to landlords? The majority of landlords in the UK own just one or two buy-to-let properties. Many are ‘accidental’ landlords who have inherited a property and may be renting it out simply until they can make a profit by selling it. Most take their responsibilities seriously and many are happy to offer their tenants a well-maintained home for as long as the arrangement suits both parties. The property they rent out is theirs – why shouldn’t they be able to take it back if they want to?

The IPPR agrees that landlords need to be treated fairly. It proposes that the Government should launch a review of all taxation relating to private landlords. Reforming the tax system  would promote socially responsible landlordism and a long-term, high quality and stable rented sector as well as challenging wealth inequality, says the thinktank.

There is no doubt that private renting causes hardship for many, especially those on benefits. However, the PRS has grown substantially in the last two decades. It is now home to 20% of households and many more people expect to rent for longer. If it is to continue to thrive and to provide high quality homes for more of us each year, any reforms that are put forward must take into consideration both the profitability and the rights of landlords as well as those of tenants.

Property agents in the spotlight

 

Leasehold reform is badly needed to protect the public from rogue operators and to promote the reputation of professional property agents. After years of being deaf to the sector’s  problems, government is now listening and has set up working groups to look at the key issues.

Property agents could soon be working with a brand new set of rules.
Property agents could soon be working with a brand new set of rules.

The framework within which all property agents work is one of the areas being considered and block management is on the Government’s agenda. At the moment, anyone can set up in business as a property manager. You need no professionally-recognised qualifications and there is no industry-wide code of practice to safeguard residents. Chartered surveyors working as property managers are governed by the Royal Institution of Chartered Surveyor’s professional standards. In this way they maintain their reputation and protect their clients’ interests. Property management companies which are members of the Association of Residential Managing Agents (ARMA) must meet their trade body’s quality benchmark or risk losing their ARMA member status. And the Institute of Residential Property Management qualifies property managers to a standard that most employers recognise and respect. But there is no legislation in place to back best practice across the board and the sector is open to potential abuse.

All this could be about to change – for the better we hope. The Government has set up a Regulation of Property Agents working group chaired by Lord Best. It aims to come up with recommendations on mandatory qualifications, a code of practice and regulation of residential property agents, across sales, lettings and block management. The aim is for this new regime to be consistent across the whole sector. it would mean tenants, homebuyers and sellers could be confident they are getting a professional service from their property agents – and are being charged fairly for it.

The group will report back to government this summer, but it could be some time before new legislation – if this is the recommendation – is fleshed out and put to Parliament. So, in the meantime,  if you are responsible for appointing a property manager for your block, what should you look out for?

Well, qualifications are a good start. Using an ARMA member firm or one that employs RICS or IRPM-qualified staff (or both) ensures you have some comeback if your property manager doesn’t perform. ARMA and the RICS both enforce a complaints system on their members and the organisations themselves deal with problem members.

The other important aspect is experience. Does the property manager you are considering have other blocks on their books that are similar to yours? If so, contact their residents’ association if they have one, or try and find a friendly flat owner or renter who you can talk to. Find out if they are satisfied with the company’s performance.

Property management is a people business, so interiew several potential firms to find one you and your fellow residents will feel confident and comfortable working with. And finally, resist the temptation to go for the cheapest fee. Your block manager will be looking after your biggest asset – your home – so make sure he or she is properly qualified and will deliver the level of service you expect.

Housing complaints are about to get easier

 

Housing complaints will be easier to resolve in future thanks to a new Housing Complaints Resolution Service announced in January. The government has been taking a long hard look at leasehold in recent months. Its package of new reforms aim to make the property market fairer and more transparent. As part of this, the Communities Secretary James Brokenshire plans to set up the new housing complaints system to give dissatisfied homeowners and tenants somewhere to go for help. The idea is to create a single point of contact when they can’t resolve disputes over problems with their homes – such as repairs and maintenance.

Got a housing complaint? Resolving it could soon get a whole lot easier
Got a housing complaint? Resolving it could soon get a whole lot easier

At the moment the housing market has a number of different complaints bodies, depending on what type of property you live in. This can make it difficult to find out where to go and who to talk to. By setting up a single housing complaints service for all residents – no matter whether they rent or own their home – the government hopes to help people avoid battling with their landlord or builder to resolve issues on their own. The new service is also expected to make it easier to claim compensation where it’s owed. The Housing Complaints Resolution Service will be developed by a new Redress Reform Working Group made up of representatives from across the property market, working with industry and consumers.

At the moment, there is no obligation for landlords to register with a complaints system. This leaves  thousands of renters with no easy route to resolving a problem if their landlord refuses to act. In future, private landlords will be legally required to become members of a redress scheme – with a fine of up to £5,000 if they fail to do so. New redress schemes are also on the cards to make it easier to lodge complaints about freeholders in relation to the management of leasehold property, park homes and student accommodation.

In the meantime, the first port of call whether you are a leaseholder or a renter is your  management company. At Ringley we are always here to help. We offer a service guarantee and always strive to handle complaints quickly and efficiently. Go to our website to find out more.

Back build-to-rent, drive up quality

Build-to-rent is really gaining momentum around the UK. The number of build-to-rent homes being built across the country has increased by nearly 40% in the last 12 months, according to new figures released in January. Last month, a new build-to-rent developer, Core Living, hit the market with a target of 2500 new homes across the north of England by 2020. In Manchester, the 35-storey Angel Gardens – one of the biggest schemes outside London – is nearing completion and north of the border, planning has just been granted for some of Scotland’s first purpose-built for rent homes on Clydeside.

Over the last few months, the government has put the rental sector firmly in the spotlight. Ministers are determined to drive up standards for tenants and improve affordability and security of tenure. Locally, councils are being called on to clamp down on rogue landlords. They have been allocated funding to encourage them to do this.

This build-to-rent PLATFORM_ development in Bedford has its own yoga studio.
This build-to-rent PLATFORM_ development in Bedford has its own yoga studio.

But according to one developer, PLATFORM_, there’s a quicker and cheaper way to do this. Give more support to the build–to-rent sector, he says.  PLATFORM_ managing director Jean-Marc Vandevivare believes that another way of driving up standards – less costly for the taxpayer and less time-consuming for local authorities –  is to back the growth of the build-to-rent sector. Rather than using public money, BTR developers are using institutional funding to build thousands of quality homes. In turn this could drive improvements for renters.

Large-scale developers need to attract renters into their block rather than the one next door. They have a vested interest in excellence. The quality of build-to-rent homes varies but most are professionally managed, offer a sense of community, and provide a growing range of amenities that cater to modern day working and lifestyle trends.

The success of build-to-rent to-date pays testament to this business model. As the January figures show, build-to-rent is set to take an increasing share of the UK rental market and at Ringley we are committed to being part of this via our new brand Life by Ringley. With mandatory qualifications on the cards for property managers and a tranche of regulation on its way, as a professional property agency we are delighted to be offering management services to this exciting sector as it develops and expands.

Rent control – do we really need it?

Every so often the thorny issue of rent control raises its head. Rent control was in the Labour Party’s 2017 election manifesto and it has the backing of London Mayor Sadiq Khan. The Mayor has now said he intends to outline a plan for stabilising and controlling rents for the 2.4 million renters now living in the capital. The London Mayor’s powers don’t extend to bringing in rent control across the city but he has said he will campaign for it and lobby the Government for his proposals to be accepted.

Rents in London are extremely high as a percentage of earnings compared to other parts of the country and private rents rose on average by a whopping 38% between 2005 and 2016. According to Mr Khan the arguments for rent control are “overwhelming” and it is vital the Government acts to improve the quality of millions of lives. Londoners seem to agree with him. A recent survey confirmed that 68% of Londoners were in favour of capping the amount private landlords could charge tenants. But is rent control really the answer to renters’ problems?

Rent control: could it be coming your way?
Rent control: could it be coming your way?

The argument against capping rental levels has always been that it will impact supply as landlords, unable to make a profit, take their properties off the market. As the majority of private landlords only own one property this is a distinct possibility, especially as higher taxes are already eating away at profitibility in the buy-to-rent market. This would certainly add to the problems tenants already have in finding a suitable home to rent. Build to rent developers may also take a step back from the London market if they can’t make the figures add up on new developments. However, the rental market’s loss could be the housebuyer’s gain if there is a sudden flood of former rental housing onto the market.

In other major cities such as New York and Berlin, rent control has been in place for decades. The lesson to learn from the experience in these markets is that in tandem with bringing in rent control, it is important to provide a supply of social housing to mop up the shortfall in private rentals when some landlords, inevitably, decide to quit the market.

Mr Khan has invited Karen Buck, the MP behind the Homes (Fitness for Habitation) Bill, to work with James Murray, the deputy mayor for housing and residential development, to work up proposals for future rent control laws. This is clearly not as straightforward as it may at first appear and the additional social housing that Sadiq Khan has also pledged to provide for London must be brought into the mix, otherwise rent control could be completely self-defeating and simply hurt the people it is intended to support.

So will London follow the lead of other major cities around the world and become the first place in the UK to enforce a rental cap? Watch this space – the next few years could be interesting.

Guaranteed for renters – a home fit to live in

The government aims to ensure a decent home for renters is guaranteed as part of the new Homes (Fitness for Human Habitation) Act. A Private Members’ Bill allowing tenants to sue over the condition of their rental properties completed its paslawsage through Parliament just before Christmas and will become law on 21 March.

The new Act makes changes to the Landlord and Tenant Act 1985, and the Building Act 1984. So what does it mean? Well, from the date the new Act comes into force, all landlords in the social and private sectors must ensure that their property is fit for human habitation at the beginning of the tenancy and stays that way – essentially  guaranteeing that their rented home is fit for purpose. Where this is not the case, tenants will have the right to take legal action for breach of contract on the grounds that the property is unfit to live in. The new Act only applies to tenancies in England. The Welsh Government has already included similar rights for tenants in the Renting Homes (Wales) Act 2016.

The Residential Landlords Association and National Association of Landlords are backing the changes set out in the new Act but some individual landlords are not so keen. They are worried that the new law could mean tenants refusing to pay rent until the freeholder carries out repairs, etc. leading to landlords getting caught up in costly litigation while rogue tenants are given free rein to cause damage.

A simple way to get around this issue is to carry out regular inspections and ensure tenants sign these off every time. Any damage caused can then be noted and a paper trail created that can be used by both sides to prove that what should have been actioned has been done and the tenant charged for repairs where appropriate.

In fact, where not carrying out repairs counts as a breach of contract, tenants have had the right to take their landlord to court since 2015 under the Consumer Rights Act, so that hasn’t really changed. What is new though, is that what defines  ‘fit for habitation’ is now enshrined in law over and above the existing ‘hazards’ that are listed in the Housing Health and Safety Rating System. This is already used by local authorities to ensure that rented housing is of an acceptable level. At the end of the day responsible landlords have nothing to fear from the new Act – after all, any property that is let should automatically be guaranteed to be of an acceptable standard.

As part of a bigger package of reforms that tackles housing problems, the government has also announced  a new Housing Complaint Resolution Service. This guarantees protection for homeowners as well as tenants and gives them a single point of contact to sort out disputes over repairs and maintenance. All private landlords must sign up to the new scheme. If they don’t they could face fines of up to to £5,000. A new Home Ombudsman is also on the cards, so watch this space. All good news for renters and flat owners we think.