Guest Blog by Rob Moore, one of the most successful property investors in the UK

We are so honoured to have a Rob Moore (co-founder of Progressive Property and owner of over 650 properties) writing a guest blog post for us.

Demystifying bad advice around about investing remotely:

Low yields, London, tax changes, Brexit etc all making people think & opening them up to 'investing up north'. Frankly this is some of the most dangerous advice being bandied around. I can count on one hand people who have successfully managed to build a significant portfolio remotely. It is the exception to the rule. I'm not talking 1-5 over 10-20 years, that's easy enough (though still much harder remotely), I'm talking a portfolio that can be a real pension, replace job etc. 

One of my good friends is one of the few. he has 60 properties in Newcastle but lives in Nottingham. He made it work because he had to, but it took him way longer & was much harder work & he himself says if he were to start over he'd have done it quicker & easier in Nottingham. Many, if not most of the 'horror stories' you hear about property are overseas, off plan/way up north/miles away from where people live. Here are some of the reasons:

1. Time away from family/life increases exponentially

2. Travel time increases

3. Travel cost increases

4. Opportunity cost of time away increases

5. Local mindspace (being sen, noticed & known) decreases

6. Control reduces significantly (out of sight, out of mind)

7. Ability to manage gets way way harder

8. Number of viewings gets harder/takes a lot longer

9. Specific knowledge of locality takes way longer if ever possible 

10. You get put 'bottom of the pile' with letting & estate agents because locals are seen more & around more 

11. Stress/worry/unknowns increase 

It takes less time, money, energy & emotional investment to invest as close to you as possible. If you are in a high value/low yielding area search as close as you can away from your area first and DO NOT chase yields in far northern cities for the sake of it or in reaction to a fleeting change in tax/government. If a gross yield on a single let is 2% better, the net result on a sub £100k property might be an increase of £100 to £120 a month net pcm (rough; always work it out yourself). 

ONE 100 mile train fare can cost that. You could be £150 gross income UP & £250 to £400 in extra travel, accommodation, maintenance etc costs DOWN. 

There are many different strategies that work in lower yielding for single let areas. Take time to learn what they are and do not be in a rush to chase yields up north. HMOs, SAs, lower loan to values, JVs, commercial conversions etc all may be viable in lower yielding single let areas. 

This is in the top 5 single biggest mistakes I've seen 1000s of investors make in the last 10 years.

There are some (rare) exceptions. If you are hellbent on investing ‘remotely’. Read on:

‘Invest locally', can mean 'a tight geographical area' and not necessarily 'a tight geographical area very close to where you live'. In a way this strategy is 'non-local local!’ 

If one finds a goldmine area that they believe to be the best based on good research that is 'remote', then they are wise to stick to that area for the long term to get the long term benefits (economies of scale, deep relationships, deep knowledge, etc). My friend did this too (Lives Nottingham, invests in Newcastle). 

But he is honest about all the extra pain and cost up front & he might start more locally if he were to do it over again. This is common feedback of people who do 'remote investing' when you talk to them privately, which in and of itself is not 'wrong' as stated here. 

Points of distinction & in summary:

1. The closer the area to you, when you start, that works (yield or strategy), the easier, cheaper & faster it will be

2. The bigger the portfolio (that works), the more incentive & reward there may be to go further out

3. If you are in a very low yielding very expensive area you may have to look outside of where you live (but it doesn't have to be 250 miles away)

4. If you choose to chase the highest yield furthest away, be prepared to make additional short term (and maybe medium term) sacrifices you wouldn't have to make if you invested closer to home (time, travel, cost, lack of leverage, wastage, etc)

5. There are alternatives to single let yield you should/could consider first (adding value, changing use, different strategy (HMO, R2R, SA, DP etc)

So you need to look at yield <<but add in these extra costs inc time>>, not just gross yield area by area. 

Be wary of advice of a few people saying 'I invest remotely and I have a successful portfolio' because you need to know what that exactly means. Very few people are going to be candid enough to say 'I have a remote portfolio & it was a nightmare for ages/is still a nightmare/I sorted it in the end but wish it was closer. Look at common sense: would you rather manage a property, portfolio, business (anything) very close to where you live or 200 miles away)? 400+ of my properties are within 7 mile radius, 200-300 more are within 25 miles. And they still are like a baby that you love but needs its nappy changing, lots of love and attention & gives you labour pains. There are always challenges. Plus the furthest away ones seem to take the most management. A 25 mile remote one can take more management than 15 local ones all close together. It's common sense. 

I'd love to see a remote investors deal analyser include travel costs, including train, fuel, car depreciation & maintenance, subsitence, and opportunity cost of time, because they are real costs of investing further away. I'm not saying this out of bias other than bias for what a. as worked for us (Mark's first properties were in Bulgaria in 2003 & he had nightmare after nightmare because he didn't have the experience) b. learning from all the mistakes we made and c. what I have seen MOST (there's always an exception) people succeed with for the long term (local or tight geo-area) and fail with (scattergun or a long way away). 

Many people are (& are being taught) to blindly run up from London to Newcastle to invest for yield. New investors doing this are very exposed & probably not aware of all these unknowns. 

I  also understand that it 'is OK for me because I live in a decent yielding area' - that is exactly why I can share this. When we started we invested scattergun, overseas, off plan, and none of it worked even 10% as well as local (tight geo-local) area. If I lived in Mayfair and wanted to invest in single lets for the long term, what advice would I give myself? 

1. Consider investing in Peterborough (or area like it). It is 70 miles not 300 miles away) as close as possibe but further away 'non-local local' 

2. Look for HNW investors who could leave all the cash in and consider more local properties

3. Look at what works closer (R2R, SA, etc)

4. Do not scattergun 

5. Be aware up front of the time & real cost of investing further away

Rob Moore is a property investor, entrepreneur & host of the “Disruptive Entrepreneur” podcast.

He co-founded the UK’s biggest property education company Progressive Property in 2006 with Mark Homer and has since helped over 100,000 entrepreneurs to achieve their property ambitions. He is also the best-selling author of  “Money” and “Life Leverage”.

REGIONAL CHANGES IN HOUSE PRICES AND PREDICTING THE FUTURE OF HOUSE PRICES

David Lawrenson of LettingFocus.com looks at a useful house price trend interactive chart produced by the BBC, but cautions against jumping to conclusions from limited data. 

Regional Changes in House Prices and Predicting the Future of House Prices

http://www.dailymail.co.uk/property/article-3451304/How-higher-house-prices-New-report-claims-values-double-560K-2030-number-homes-worth-1m-triple.html

I am returning to the subject of house prices.

This week, the BBC published a neat interactive map showing that in 58% of wards in England and Wales house prices were down in real terms, (after stripping out the effect of the rate of consumer general inflation), on what they were in 2007.

This will be a surprise to many living in the bubble of the capital where some London based journalists and housing activists seem to think that life stops outside the M25.

Very broadly, the East and South East of England generally have seen property prices rising by more than inflation over this time, whilst the North and West of England and much of Wales have seen them fall.

This points to the need to carefully consider where you buy and what type of property you buy too. (Generally, houses have done better than flats, so the type of property is important to consider too – more on that in a moment).

I often hear of supposed gurus telling would-be landlords to buy into their pet scheme in the north because the rental yields are so great there. But I always caution that great yields are not so great when the actual price of the property is falling over time.

And so, a lot of the consultancy I do with people involves helping them to figure out, using intelligent tools and research (which we help them with), whether one area will outperform another over time in terms of capital growth as well as rent levels.

Some Micro Areas Buck Regional Trends

What is interesting from the interactive chart is that even in the midst of parts of England and Wales where house prices have risen much faster than inflation, there are wards where house prices have fallen in real terms.

Taking a few random areas, St Radigands in Dover has seen prices fall by 16% in real terms, Badgers Mount in Sevenoaks has seen prices fall by 15% and Aylesbury Vale in Bucks has seen prices fall by a whopping 35%. All these wards are surrounded by neighbouring wards where house prices have gone up in real terms.

Conversely, in parts of the North of England and Wales, amid areas where house prices have fallen in real terms, you can find many wards that have seen strong price growth.

So why is this happening? How can we explain what is happening at the micro level in Aylesbury Vale, Badgers Mount and St Radigands?

Well, in the case of St Radigands, Dover, (because I’m from nearby), I know that local problems with crime in a mainly council estate area has been a key factor. In the case of Aylesbury Vale, I guess worries about the route of HS2 may be the cause. At Badgers Mount I simply don’t know why prices have fallen in real terms, because I don’t know the area well. (If you know why, please tell me!).

Mix of Properties May Have Shifted

But it could be that there has been a change in the mix of properties in these areas. So, if these areas in 2007 were full of large detached houses and in the intervening years, a lot of smaller houses were built, this would skew things a lot and make it look like houses prices have fallen. They haven’t – all that may have happened is that the mix of properties has altered, thus driving down the average transaction price. The prices of the detached properties may not have moved at all.

To get a better idea of what is really happening for different property types, a good place to look is Rightmove’s house price comparison charts where you can separate out what is happening over time by four property types – so in a particular postcode, you can see what is happening for flats, terraces, semidetached and detached properties. Using the price comparison charts at Rightmove is also useful because it shows a time series too, so, any random, statistical single-month aberration that could explain the BBC charts, can be put into a longer perspective.

The BBC interactive charts are here:

http://www.bbc.co.uk/news/business-41582755

A link to the Rightmove price comparison table, in this case for detached properties for the postcode HP18, (which includes Aylesbury Vale) is shown here:

http://www.rightmove.co.uk/house-prices-in-my-area/marketTrendsTotalPropertiesSoldAndAveragePrice.html?searchLocation=hp18&sellersPriceGuide=Start+Search

So, the message is, when looking at past house price data, do your research and dig under the figures – and get to know your area well. Has the housing mix changed? Is the data skewed by a single month or months, in which only a few houses were sold, (i.e. a small statistically insignificant sample)?

Thinking about where house prices and rents will be headed in the future for any area involves more research still – this is an area of work we can help with.

Macro Trends in House Prices – The Big Picture

For the broad macro picture effecting UK house prices in general, readers should read my past blogs, see links below, and keep in mind that the key determinants of house prices include:

1. The level and distribution of household after-tax incomes
2. The size and make up (age, sex) of the population and trends in household size, including migration rates
3. Expectations about house price rises
4. Employment levels and the type of employment
5. Mortgage availability including interest rate levels
6. Government subsidies – e.g. Help to Buy and taxation levels, especially the taxation of property and level of government house building
7. Exchange rates
8. Level of confidence in the UK economy both here and abroad
9. The type of and amount of supply of property and the extent to which it meets local needs

http://www.lettingfocus.com/blogs/2017/10/regional-changes-in-house-prices-and-predicting-the-future-of-house-prices/

Housing market confidence falls to five-year low

What’s the latest?

Confidence in the housing market has dived to a five-year low with 20% of people predicting property prices will fall.

Halifax said sentiment towards the housing market had split in the past six months, matching the record drop seen following the result of the EU referendum.

Its findings are on the back of a survey of 1,968 British adults, which tracked consumer sentiment on whether they expected house prices to be higher or lower in a year’s time.

While half of those surveyed (50%) still expect house prices to rise over the course of 2018, one in five now think they will fall, the highest level since October 2012.

Those living in London, where property values have already declined, and people aged under 25 are particularly pessimistic.

Russell Galley, managing director, Halifax Community Bank, said: “Housing market optimism has declined significantly over the past year, with almost half of people expecting a general slowdown in the market.”

image: https://st.zoocdn.com/zoopla_static_cms_content_cms_document_assets_(498206).jpeg

Why is this happening?

Halifax said the fall in confidence in the housing market coincided with people’s confidence in the economy also cooling.

It is also likely to reflect higher inflation, which is squeezing households’ spending power, and uncertainty due to the deadlock with the EU over Brexit negotiations.

The fact that young people are most pessimistic suggests that people’s gloomy feelings about being able to purchase a property themselves may be translating into negative sentiment about the market as a whole.

Who does it affect?

Despite the fall in confidence, 52% of people still think the next 12 months will be a good time to buy a property.

London was the only region in which people thought it was a bad time to make a purchase, while potential buyers were most optimistic in the West Midlands and Wales.

But only 6% of people thought the year ahead would be an ideal time to sell a home, suggesting they expect subdued interest and hard bargaining from those who do want to go ahead with a purchase.

image: https://st.zoocdn.com/zoopla_static_cms_content_cms_document_assets_(498204).jpeg

Sounds interesting. What’s the background?

Despite warnings that the Bank Rate could be increased as early as November, only 15% of people considered rising interest rates to be the biggest barrier to people buying a home.

Instead, 61% cited the ability to raise a deposit as the main factor preventing people from getting on the housing ladder or trading up it, followed by 42% who said a lack of job security was an issue.

Just over a third of existing homeowners were concerned about their ability to pay their mortgage should the cost of borrowing rise, although this was down from 42% in 2014.

Galley said: “Even with a potential base rate increase on the horizon, it’s significant that buyers’ concerns continue to be centred on raising deposits and job security and, as such, we do not anticipate that an increase in the base rate will have a significant effect on the demand for properties.”

image: https://st.zoocdn.com/zoopla_static_cms_content_cms_document_assets_(498209).jpeg

Top 3 takeaways

• Confidence in the housing market has dived to a five-year low with 20% of people predicting property prices will fall
• Sentiment towards the housing market had divided in the past six months, matching the record drop seen following the result of the EU referendum
• People in London and those aged under 25 are the most pessimistic

https://www.zoopla.co.uk/discover/property-news/housing-market-confidence-falls-to-five-year-low/#Ok6uqw9EWurkWubm.97

Coming soon ... Guest Blog Post by Rob Moore

The legendary Rob Moore has agreed to do a guest blog for us. He will demystify the  bad advice around about investing remotely. So watch this space ..... 

About Rob Moore,

Rob Moore is a triple best- selling Property Author, public speaker, entrepreneur, and multi-million- pound Property Investor.  He co- founded the UK’s biggest property education company Progressive Property in 2006 with Mark Homer and has since helped over 100,000 entrepreneurs towards achieving the same, including consulting for many established Multi-millionaires and keynoting at some of the UK’s most important business events

Government considering new regulatory body for leasehold rentals

Plans for new measures regarding leasehold tenancies to help create “a fairer property management system that works for everyone” have been unveiled by the government.

Communities Secretary Sajid Javid has announced that the government is considering whether a “new independent regulatory body” is required to handle leasehold and private rented management, and letting agents.

A statement from the Department of Communities and Local Government this morning says: “While the sector is partly self regulated - through professional bodies such as the Association of Residential Managing Agents (ARMA) and ARLA Propertymark (formally Association of Residential Letting Agents) which have a code of conduct - other property agents operate outside of any system and can provide a poor deal for consumers.”

Javid has told the ARMA conference this morning: “This is supposed to be the age of the empowered consumer – yet in property management, we’re still living in the past. Today we are showing our determination to give power back to consumers so they have the service they expect and deserve, as part of my drive to deliver transparency and fairness for the growing number of renters and leaseholders.”

Now the government is going to contact lettings organisations to seek views on:

- whether regulatory overhaul of the sector is needed;

- measures to protect consumers from unfair costs and overpriced service charges

- ways to place more power in the hands of consumers by giving leaseholders more say over their agent;

- a possible new independent regulatory body for leasehold and private rented management;

- how consumers can be empowered in the market, including whether leaseholder tenants should have a greater say over the appointment of managing agents;

- how transparency can be increased in the system so that tenants and leaseholders know what they are being charged for and why;

- "ensuring fairness and openness around relations between freeholders and agents";

- looking at what qualifications are needed by agents to practice and how regulation can be improved.

Javid says that with over 4.2 million leasehold homes in the country and service charges reaching between £2.5 billion and £3.5 billion a year, the government is determined to fix the problems in the property management industry, drive down costs and protect consumers from the small minority of rogue agents.

“The problem isn’t just for leaseholders, but for some of the 4.5m tenants in the rental sector too – with overcharged costs for repairs and services often passed down to tenants.

Since 2010, government has taken action to require all letting and management agents to belong to a redress scheme, and we have introduced a range of tougher measures to target rogue landlords and agents in the private rented sector” he adds.

Anecdotal evidence of poor management cited by Javid included:

• a group of leaseholders charged ten times the market rate to have a new fire escape fitted – with the £30,000 contract handed to the freeholder’s brother
• one landlord charged £500 by his agent for repairing a shower door
• a London-based property agent who tried to charge a leaseholder almost £5,000 to transfer ownership of a parking space to other leaseholders

The call for evidence consultation period will last for six weeks from today.

https://www.lettingagenttoday.co.uk/breaking-news/2017/10/government-considering-new-regulatory-body-for-leasehold-rentals

What does the London property ladder look like now?

The property market has changed and the buying habits of home buyers have changed with it. Here are the five key stages in 2017.

The London property market has changed beyond all recognition in the past eventful decade and Londoners' expectations have had to change with it.

Successive stamp duty changes have increased the cost of moving home and investing in property, while stratospheric price rises means there are now far fewer rungs on the ladder than in the past, with many no longer able to rely on the equity in their current home to make their next purchase. 

Here we look at the five key rungs on the property ladder now, and how buyers can get there. 

FIRST-TIME BUYERS

Who are they?

With the average first-time buyer deposit in London hitting £100,400, very few can afford to buy anything within spitting distance of inner London, even with substantial help from the Bank of Mum and Dad, who are a shadowy presence in the background of many first home purchases, says Robin Chatwin, head of Savills south-west London residential. Buyers who aren't fortunate enough to have an enormous donated deposit must now seek out other routes to the first rung of the property ladder, be it Help to Buy or shared ownership.

Where?

The 21st-century first-time buyer has rippled their search out to the wider reaches of London. Chatwin's south-west London buyers are humouring their parents – who are footing almost all of that £100k+ deposit – by viewing flats in established Putney or Richmond. But Brixton is the ultimate goal, with the holy trinity of nightlife, good transport and green space. Balham, Clapham and Wimbledon will all do too. Otherwise, those without significant help from beneficent parents are seeking out the regeneration zones of the future before the diggers and Tube links arrive

What are they buying?

Two-bedroom flats close to public transport if possible. Not too long ago the first flat would be a two or three-year commitment, before cashing in on a healthy capital gain and probably a payrise and trading up the ladder. Nowadays, however, moving is expensive and the payrise is non-existent, so buyers expect to spend a good five years in their first home and need to account for all the life changes that may entail. And while first-time buyers might not start the buying process with the intention of becoming experts in the finer points of grouting, many of them get a bit of a shock when they see just what their budget will buy.

How much?

The first-timer’s budget starts at £300,000, says Chatwin, but for that they’ll have to get to know Tooting, or even Croydon, rather than Fulham or Clapham. With a very well-paid job and some serious parental help, the budget can sometimes stretch to £700,000, in which case they won’t struggle to find a nice two-bedroom flat anywhere in south-west London or across the capital.

£775,000: a two-bedroom, two-bathroom flat in Clapham

SECOND STEPPERS

Who are they?

Fast forward a few years from that first buy and many starter home owners have settled down, partnered up and may have at least one child running riot in that now nicely fixed up flat. While they may have thought that getting on the ladder was the most difficult thing to achieve, many would-be second steppers are now finding that moving up it in or near where they currently live in is nigh on impossible. And they're discovering that maybe it's not as essential as they once thought to be able to stumble home from the club in 10 minutes or less.  

Where?

Savills research shows net out-migration from London of those in their thirties rose 68 per cent between 2012 and 2016. Second steppers are seeking space and are quitting the capital to find it. Their jobs are still in the city, though, so their new digs must be an easy commute, meaning the Home Counties are getting a new lease of life. 

What are they buying?

If you’re moving out of London for a more family oriented lifestyle, you can’t beat a house with a decent garden in a pretty Chiltern village, says Chris Moorhouse, head of Savills Beaconsfield office. Penn is the archetypal traditional village with a village green, duck pond, deli, village shop, sports and social club, three pubs, two churches, and two junior schools. Other villages are less well equipped but you can get “about 10 per cent more house for your money.” The ideal house for this demographic is “probably an old rectory with a traditional character outside but iPhone-controlled lighting and Sonos inside,” Moorhouse says.

How much?

London leavers are saving an average of £246,655 by selling a London home and buying outside the capital instead. Many of those moving from expensive parts of inner London are likely to have a bigger budget to play with and are moving to spread out, rather than release capital. Moorhouse estimates that many of his buyers have between £1m and £4m to play with.

£1,375,000: traditional on the outside, modern on the inside at this family house in Beaconsfield

HOLIDAY HOME BUYERS

Who are they?

Living in London or the Home Counties these 40-somethings are looking for an easily accessible seaside spot. Their children are too young to need help buying their own place and still happy to spend sporty weekends windsurfing or sailing with their parents so an inheritance windfall or bonus from work – most second home buyers on the east Dorset coast work in property development or finance, according to Keith Fensom, head of Savills Canford Cliffs office – will be invested in a holiday home.

Where?

The stretch of coast between Bournemouth and Poole is enduringly popular with landlocked Londoners looking for a seaside retreat, which they can get to in two hours or less on a Friday evening after work, traffic permitting. Sandbanks, the small spit of land crossing the mouth of Poole Harbour is the most prestigious, spot but this entire coastline fits the bill.

What are they buying?

There are restrictions on letting out apartments in this area for less than six months, says Fensom, so there is little additional income to be made from a seaside home. It also means properties are likely to stand empty for extended periods so the more secure and the less maintenance required the better. For this reason many second home buyers opt for modern lock up and leave flats with maintained grounds and high security, rather than leaky but charming period houses. Two or three bedrooms are plenty for the weekend but that coveted sea view may command too large a price premium.

How much?

Budgets range from £250,000 to £2 million but the number of buyers has fallen from 32 per cent in 2016 to 24 per cent this year since the three per cent stamp duty surcharge was introduced for second home buyers last April, says Fensom. A UK holiday buy is still seen by many as a safer investment than one in Spain or Portugal though, especially with an unfavourable exchange rate. Nonetheless, “a second home is a discretionary purchase, you don’t need to buy one so people are put off by political uncertainty,” he says.

£2,495,000: a three-bedroom flat at the top end of the typical Sandbanks buyer's holiday home budget with direct harbour access

INVESTORS

Who are they?

The three per cent stamp duty surcharge, increasing mortgage regulation and reduced tax relief have all helped dampen investors’ appetites, especially in increasingly pricey London but with low interest rates making savings look pitiful, there’s still some demand from investors looking for a decent long term return. And despite higher rates of stamp duty in Scotland than in England, Peter Lyell of Savills Edinburgh says the Scottish capital is still enticing London investors with the promise of long-term capital gains.

Where?

University towns are popular with investors for the obvious reason that they provide a ready turnover of students needing homes, and Edinburgh has six higher education institutions. It also has excellent links with London for the professional market so the city’s reputation as a safe investment is unsurprising. “Edinburgh’s been remarkably resilient through the financial crisis, the independence referendum, the election and it has recovered quicker than other Scottish cities. There’s a perception that capital values are more likely to rise here than elsewhere in Scotland,” says Lyell.

What are they buying?

Attractive, period stone-built houses in central locations close to university buildings and the city centre, which have already been converted into student lets are an easy buy for Edinburgh investors.

How much?

The buy-to-let market is dwindling, so investors tend to have amassed a lump sum, either through inheritance or by releasing equity from their main home and are buying with cash, says Lyell. This means budgets tend to be between £200,000 and £500,000, where the stamp duty burden is also less punitive.

£545,000: a classic stone-built Edinburgh student flat in New Town

DOWNSIZERS

Who are they?

Downsizers are regarded by everyone below them on the ladder as the ultimate winners of the property game. The over-65s own £1.5 trillion in combined housing wealth having seen the value of their family homes, often large and in popular areas, increase to unprecedented levels. They’re aware of their good fortune and many of them are only too eager to help their children onto the ladder. If that means exchanging the family house for a glamorous new home abounding with luxurious features, so be it.

Where?

The centre of town. Savills analysis shows that 59 per cent of downsizers moved to urban locations, lured by cinemas, theatres, shops, restaurants as well as easy access to hospitals and proximity to children and grandchildren. “In the past five or six years in Bristoland Bath we’ve been seeing very much an inward migration,” says George Cardale, head of Savills new homes. “Bristol city centre has really changed, it’s become a nice place to live.”

What are they buying?

Downsizers accounted for one in five Savills new home buyers over the past four years but, while they may be releasing some equity by moving, they don’t want to sacrifice on space for visiting family and a lifetime’s worth of treasured possessions. With large budgets at their disposal they are often trading up in terms of luxury, opting for developments that offer all the best facilities as well as impeccable design and specification.

How much?

Most people want to sell their home and buy a new one at around 50 per cent what they sold for,” says Cardale. “So if you sell for £1 million, which a nice family house in suburb of Bristol would cost, you can give your children some money for a deposit, pay off bills or supplement your pension and then spend the balance of £500,000 on a flat in the centre of Bristol.”

£500,000: a Bristol new build property with view across to the ss Great Britain

https://www.homesandproperty.co.uk/property-news/buying/what-does-the-london-property-ladder-look-like-now-a114516.html

Government plans crackdown on 'overpriced' property service charges

Ministers considering changing law to protect leaseholders, as well as tenants facing large bills for repairs and services

 In England the total annual service charge on leasehold properties is estimated to be between £2.5bn and £3.5bn. Photograph: Murdo Macleod for the Guardian

Proposals to crack down on “overpriced” service charges and “unfair” costs paid by renters and leaseholders in England have been unveiled by the government.

Sajid Javid, the communities secretary, said ministers were considering changing the law to create a fairer property management system and make it easier to outlaw “rogue” letting and management agents.

The planned crackdown is the latest series of measures relating to tenants and leaseholders. In July the government proposed a complete ban on the sale of newly-built houses as leasehold in England, alongside restrictions on ground rents that could limit them to as low as zero. And in late 2016 ministers announced proposals to ban letting fees for tenants.

Now the government has service charges in its sights. These are the fees most leaseholders pay to cover their share of the cost of maintaining their building. According to official data, there are around 4.3m leasehold properties in England, and in 2014, total annual service charges were estimated at between £2.5bn and £3.5bn. Meanwhile, there are 4.5 million tenants in the rental sector, some of whom were being hit with “overcharged costs for repairs and services,” said the Department for Communities and Local Government.

Service charges are frequently the subject of controversy: in September, the Guardian reported on the case of a woman who has seen the annual service charge on her London flat increase from about £500 to more than £7,600. She claimed the £640 a month she had been asked to pay for her three-bedroom flat above a shop in Brixton was “extortionate”.

The DCLG said anecdotal evidence of poor management included a group of leaseholders charged 10 times the market rate to have a new fire escape fitted, with the £30,000 contract handed to the freeholder’s brother; one landlord charged £500 by his agent for repairing a shower door; and a London-based property agent who tried to charge a leaseholder almost £5,000 to transfer ownership of a parking space to other leaseholders.

The DCLG quoted research published by consumer organisation Which? in 2011. This claimed that leaseholders were “losing out to the tune of £700m a year because of excessive fees and hidden costs contained within their service charges”. It added that others such as the all-party parliamentary group on leasehold believed that the total could be as much as £1.4bn.

The department said it was seeking views on:
• whether a regulatory overhaul of the sector was needed;
• measures to “protect consumers from unfair costs and overpriced service charges”; and
• ways to place more power in the hands of consumers by giving leaseholders more say over their agent.

It will ask if a new independent regulatory body is needed. While the sector is partly self-regulated through professional bodies such as Arma (the Association of Residential Managing Agents) and Arla Propertymark, other property agents operate outside of any system and can provide a poor deal for consumers, said DCLG.

Measures to be considered as part of the call for evidence include looking at how transparency can be increased in the system, “so that tenants and leaseholders know what they are being charged for and why”.

The department said: “The government is determined to fix the problems in the property management industry, drive down costs and protect consumers from the small minority of rogue agents.”

https://www.theguardian.com/money/2017/oct/18/government-property-service-charges-leaseholders-tenants