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.

How to get better returns from your investment – go north!

blog 5

Are you looking for better returns on your rental investment property? As I wrote in this blog in December, the UK’s 2.5 million private landlords are coming under the cosh from a seemingly never ending host of extra taxes and new regulations. This is a trend that shows no sign of letting up in 2019. So getting good yields on their rental property is becoming ever-more important for buy-to-let investors who are having to think on their feet. And many are now heading north for better returns.

Property firm Your Move reported this month that the North East and North West are particularly attractive markets now because a combination of low house prices and large student populations in many areas mean good yields and fewer void periods for landlords. According to their rental tracker, the average investor in the North East enjoyed a rental return of 5% in the year to November 2018 while in the North West, returns were only slightly lower at 4.8%.

Landlords can get better returns in the north of England
Landlords are looking north for better returns

With landlords keen to buy and good transport links and job prospects attracting more people to the region, both housing transactions and rental demand are going up – while interest in the London market gently slows down.“Properties in the North appear to offer high percentage returns to property investors and, as a result, they are attracting interest even more,” Martyn Alderton, national lettings director at Your Move said. However, with massive interest now being shown in cities like Manchester and Liverpool from large-scale build-to-rent (BTR) operators, BTL landlords can’t afford to rest on their laurels.

In Manchester the city centre has seen an 8% increase in supply, leading to those inevitable questions about the possibility of the market overheating. Ringley now has a strong presence in the Manchester market, working with landlords, developers and investors in the city thanks to our 2018 joint venture with local property manager and lettings agent JP Hay.

We are now managing both BTR property and more traditional BTL rentals in the north of England, so our advice to BTL landlords is to ensure that your rental property is well-maintained, well-equipped and exactly matches the description that you or your agent is advertising .

There is certainly plenty of demand out there – but there is also a plentiful supply of new builds so competitition is fierce. But not everyone wants to live in a modern BTR apartment block – so if your rental property is older, is a house rather than a modern flat, or is located in the suburbs, it still has as much chance of appealing to a tenant as a brand new purpose-designed city centre studio or duplex – as long as it is well-presented and offered at the right price and you ensure that you fulfil your obligations as a responsible landlord.

As Your Move rightly said last week, landlords who are prepared to invest in their property will undoubtedly benefit from higher yields and better occupancy rates.

 

Forget the Beast from the East – get ready for the Polar Vortex!

stormThe Beast from the East is so last year. Instead, for 2019 we have the Polar Vortex! This sounds absolutely terrifying but in fact it is just another spell of very cold weather which is predicted to hit us in a week or two. For landlords, this is the time of year when tenants are most likely to start complaining about faulty boilers and central heating systems. And if you’re not vigilant, you could even find yourself facing insurance claims for leaking roofs and damage caused by blocked gutters.

So before you do anything else, check that your landlord insurance is up-to-date and that you have enough cover. Then, should the worse happen, at least you can be sure that any claims will be dealt with as quickly and efficiently as possible.

One of the most common boiler-related problems in winter is frozen pipes. According to Direct Line, there has been an increase in insurance claims for faulty boilers in recent years and with temperatures expected to plummet towards the end of the month, insurers are predicting the record for boiler claims could be broken again this winter.

Here are a few quick and simple tips. Ensure you have the boilers in your properties serviced regularly; bleed the radiators on a regular basis to keep the system working efficiently and ask tenants to keep the heating on low in very cold weather to help prevent external condensate pipes from freezing. Insulating the pipe also helps. If you have properties standing empty, unless the water system has been drained and utilities switched off, it is worth keeping the heating ticking over at a low level to prevent frozen or burst pipes. If you have a maintenance contract in place, your contractor should cover all these issues but it’s still worth talking to them to make sure this is the case. We can help you find maintenance suppliers if you don’t have a service contract and feel you would benefit from one.

Roofs and guttering are also very susceptible to damage in winter storms and a little preventative maintenance goes a long way. Look out for broken tiles, any issues with pointing and rendering, and cracks in chimney stacks. Any of these problems should be tackled straight away. Every time we experience heavy rain, strong winds or snow, landlords who haven’t bothered to keep on top of maintenance at their properties end up having to deal with costly leaks and damaged roofs which can also lead to the need for extensive – and expensive – internal and external repairs, to say nothing of angry tenants.

And don’t forget the guttering. Faulty, blocked or broken guttering will not direct water away from the external walls of your property and, again, can cause hundreds or even thousands of pounds worth of damage. So do make sure that gutters are checked regularly to ensure they are free of leaves, moss and other debris, and that any missing guttering and end caps are replaced.

Also, don’t forget to talk to your tenants. Make sure they know how to find the stopcock in case they need to turn off the water supply if there’s a leak and know how to contact their property manager in an emergency.

And finally – talk to us. If you need any help with winter maintenance issues, we are only ever a phone call away.

Right to rent: unfair to landlords and tenants?

passportShould landlords be expected to act as border control officials when renting to a new tenant? This is the question that a Judicial Review of the government’s controversial Right to Rent policy, which obliges landlords to undertake immigration checks on prospective tenants, will be asking as it gets underway today.

The Right to Rent scheme was rolled out nationwide in 2016, meaning that landlords must now check the immigration status of would-be tenants. Understandably, this initiative has proved really unpopular. Landlords are already under pressure from government (see my blog Landlords under fire, posted on 11 December) and certainly don’t want to take on responsibility for ensuring that tenants have a legitimate right to rent a home.

When the scheme came into effect, the Joint Council for the Welfare of Immigrants (JCWI) thought it was so potentially discriminatory that it put forward – and won – a legal challenge, gaining the right to launch a High Court case against the Home Office. As I write this blog, a full hearing is taking place before the High Court today and tomorrow.

The JCWI’s legal challenge is being supported by the Residential Landlords Association (RLA) which has carried out research among landlords to find out how they feel about the scheme. The RLA found that, as a result of the Right to Rent policy, 44%  are now less likely to rent to someone without a British passport , mainly because they are scared they may be prosecuted if they get something wrong. Landlords also say that, as a result of Brexit and the continuing uncertainty around the future status of EU nationals in Britain, they are now less likely to rent property to anyone from the EU or the European Economic Area.

According to Landlord Today, the RLA is calling for Right to Rent to be scrapped, arguing that it discriminates against those unable to easily prove their identity and foreign-born nationals who have documents unfamiliar to landlords. It is also calling for urgent guidance for landlords to be issued by the government, explaining clearly the rights of EU citizens to rent property, especially in the case of a no-deal Brexit.

The whole situation is reminiscent of the Windrush scandal that came to light earlier this year. Landlords are not government officials and shouldn’t be expected to act on behalf of the Home Office or to make a judgement call around who is and isn’t legally entitled to rent a property. Landlords are under enough pressure from excessive taxation and a new raft of regulations without being expected to act as immigration officers too.

Brexit: what’s the impact on property?

BrexitHarold Wilson, who delivered the UK’s first European referendum in 1975, said a week is a long time in politics. This week, Brexit has been the only story in town.

In October, Zoopla reported that the impact of Brexit “…has been limited so far”. Housing fundamentals such as affordability, tax changes and mortgage regulation were thought to be the main factors of the slowdown in London – where average prices are falling by 0.4% –  and the Brexit vote has been a compounding factor, said the online property portal.

However, continuing uncertainty created by the Brexit process is now starting to take its toll. According to the latest RICS Residential Market Survey, this is causing both buyers and sellers to sit tight in increasing numbers.

The results from the latest survey show a weaker trend in sales than in previous months, with the headline indicators for demand and supply falling once again. Almost half of the agents responding to the survey blame the political uncertainty around Brexit for people’s reluctance to either put their home on the market or take out a new mortgage.

The lack of new stock coming onto the market means that agents are reporting only having, on average, 42.1 homes for sale and the number of valuations is also down in comparison to this time last year. With little choice for new buyers and fewer people interested in moving, the number of agreed sales fell in November.

Caution is now clearly visible among both buyers and sellers, says RICS chief economist Simon Rubinsohn, and where deals are being done, they are taking longer to complete. The worry now is that this uncertainty may spill over into the development pipeline, making it even harder to secure the uplift in construction that is so badly needed to address the housing crisis.

So much for the big picture, but what about the story closer to home? Fewer than 20 weeks are left to arrange the UK’s departure from the EU and businesses around the country are having to consider what they may need to do after 29 March next year.

According to a new report aimed at British business from lawyers CMS, Ready for Brexit?, only 22% of large businesses are well prepared. Another 11% expect to prepare but haven’t started yet and just 59% of small businesses expect to make any preparations for a chaotic exit from the EU.

It is easy to assume that Brexit will have little impact on the way letting and managing agents run their businesses. After all, we have nothing to import or export. The regulations we adhere to may change but that won’t happen overnight. However, Brexit may well impact the people we employ. There has been a lot of talk around recruiting British workers after Brexit.  At Ringley we have a proactive recruitment and training policy and are an Ambassador for Apprenticeships. We are passionate about training staff in-house and, regardless of the way Brexit pans out, we will continue to recruit staff who fit our company culture and develop our people in order to deliver the very best service to our clients.

Manchester in the spotlight

blog 3New research from commercial agents Cushman & Wakefield revealed last week that the Manchester property market really is the place to invest for buy-to-let landlords and institutional investors alike.

Second only to London, Greater Manchester has a dynamic, rapidly expanding economy which continues to attract both large and small businesses to the area. In turn, this is bringing talent into the region, with people looking to relocate for work and creating ongoing demand in both the housing and private rental markets. The booming economy is certainly turning Manchester into a buy-to-let hotspot and, according to one local estate agent, the city offers some of the most attractive yields and rental returns in the country, outperforming all other core UK cities when comparing house price inflation. London and Leeds ranked poorly compared to the 9% rise in Manchester.

If you’re looking to invest, Cushman & Wakefield says properties in the M14 postcode can be expected to deliver yields of 10%, with current asking prices averaging at £194,733 and rental prices averaging at £1,636 per month. The M19 postcode – which includes Levenshulme, Burnage, Heaton Mersey, Heaton Chapel and Reddish – and M20 area also came out well in their report, showing yields of up to 8.6%.

Manchester uniThe other success story for the buy-to-let market is the student factor. Landlords in Manchester really benefit from the substantial student population which is attracted to the city by its four highly sought-after universities. Properties located near to any of the universities are in high demand, creating a very dependable local student market. As noted above, Fallowfield in M14 has such high yields because it is heavily populated by students, meaning that you can buy a house and rent it out per person per month.

All these factors also add up to make the city a build-to-rent hotspot. The British Property Foundation said recently that BTR development in the regions is now out-performing London and Manchester is really pulling out ahead.  More than 11, 000 residential units are currently under construction in the city centre, with BTR dominating the market. At Ringley we have joined forces with Manchester-based JP Hay and we are working together to expand their BTR offer in the city. Together, we believe we are delivering a winning offer to clients in the region – combining our considerable  block management, proptech and lettings experience. We will also be building on our success in the Manchester market to deliver these services to BTR clients further south.

The future certainly looks bright for Manchester’s property market. The city has been a popular area for property investment for years and according to a recent report in Landlord Today, “Despite punishing tax changes and political uncertainties… Manchester remains as resilient as ever…” Cushman & Wakefield predict  house price growth of up to a staggering 57% in the city by the end of 2028. The agent believes that rising demand combined with the popularity and affordability of new properties will continue to make Manchester a great proposition. So now could be the perfect time to invest.