Rents to rise 7.5% over next three years predicts Countrywide

Rents are likely to rise 2.5 per cent in 2019, then 3.0 per cent in 2020 and a further 2.0 per cent in 2021 according to Countrywide.

In a prediction report issued by the agency group’s upmarket brand Hamptons International, rents are expected to rise over the next three years roughly in line with average earnings - which is sharper than rent rises over recent years.

Countrywide says weaker economic conditions across the UK, affordability problems for buyers and stringent lending conditions mean demand for the rented sector will continue to grow. 

“The reduction in tax reliefs available to landlords will continue to weigh on landlord purchases and is causing some of the most indebted landlords to sell up” warns Countrywide. 

“In fact, since the three per cent stamp duty surcharge was introduced in April 2016, 120,000 more landlords have sold their buy to lets than purchased new properties and this is contributing to low stock levels in the rental market. Furthermore, a rising interest rate environment may mean that more landlords will review their portfolios” continues the agency.

However, it says that despite low stock levels and increasing demand, rental growth has been sluggish throughout 2018. 

Last month the rent on a newly let property rose 1.1 per cent year-on-year and just 0.1 per cent year-on-year in London. 

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/rents-rising-strongly-over-next-three-years-predicts-countrywide

Confiscation orders on landlords could set precedent for private rental sector

A local authority claims that a court decision may set a legal precedent for other councils across the UK using the Proceeds of Crime Act.

The follows a Crown Court judge’s order to a family of landlords who crammed 31 tenants into one property to pay thousands of pounds in fines, costs and confiscation orders.

Mother and daughter Harsha and Chandni Shah, along with Harsha Shah's brother Sanjay Shah, were pocketing around £112,000 a year by housing 31 people in a four-bedroom house in Wembley.

They were assisted by Jaydipkumar Valand, who was acting as their agent and collecting rent from the tenants.

Enforcement officers from Brent council also found a woman living in a lean-to shed in the back garden of the property during a raid on the premises in July 2016. 

The shack had no lighting or heating and was made out of wood offcuts, pallets and tarpaulin.

Her Honour Judge Wood of Harrow Crown Court made a Confiscation Order for the sum of £116,000 against Harsha Shah and Chandni Shah under the Proceeds of Crime Act 2002. Valand was also subjected to a confiscation order for the sum of £5,000.

Harsha Shah, Chadni Shah and Sanjay Shah were sentenced to pay £41,000 in fines. All the defendants were ordered to pay £82,367 in costs. The total payable amounted to £244,367.

A confiscation order was not awarded against Sanjay Shah because the court was not persuaded that he had benefitted from his criminal activity in running the illegal, overcrowded HMO. 

However, the judge held that that he had played a key role in facilitating the illegal operation and fined him along with the other defendants.

A Brent council spokeswoman says: "We will use every legal power we have to come down hard on landlords and agents who exploit tenants in Brent. Every house in multiple occupation needs a licence, which helps to create decent living standards in the borough. We will track down landlords who do not licence their properties and rip off tenants by housing them in miserable conditions."

During the raid in 2016, enforcement officers found some residents sharing a single bed with night workers swapping sleeping shifts with those who worked during the day. Four beds were discovered piled into the front room and three in each bedroom.  

Previous case law had indicated that confiscation orders could not be obtained in cases such as this. But Brent says councils from all over the country are now using Brent's historic legal win as a precedent.

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/proceeds-of-crime-case-may-set-legal-precedent-for-private-rental-sector

Bill giving tenants the right to sue is on verge of becoming law

A Private Members’ Bill which will allow private rental sector tenants to sue over the conditions of their properties is just a few days away from completing its passage through Parliament.

The Homes (Fitness for Human Habitation) Bill passed its committee stage in the House of Lords earlier this week and on Wednesday of next week, December 19, it goes to its Third Reading in the Lords.

This is regarded as a ‘tidying up’ stage before the Bill is sent back to the House of Commons for MPs to consider any amendments added by Peers; it will then get Royal Assent early next year.

The Bill seeks to amend the Landlord and Tenant Act 1985, and the Building Act 1984.

When it becomes law it will mean that 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 throughout and, where this is not done, the tenant will have the right to take legal action for breach of contract on the grounds that the property is unfit for human habitation.

ARLA supports the measure and says: “It will give renters greater protection against criminal operators, is a step in the right direction for the market, and as Karen Buck MP said, we look forward to working with her to achieve better enforcement against those who bring the sector into disrepute.”

In addition the Residential Landlords Association and National Association of Landlords both back the Bill. 

The Bill extends to England and Wales but will only apply to tenancies in England. The Welsh Government has already included similar provisions in relation to housing fitness in the Renting Homes (Wales) Act 2016.

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/bill-allowing-tenants-to-sue-over-property-conditions-on-verge-of-becoming-law

Massive fraud committed by three London letting agents

Three letting agents who failed to return tenants’ deposits or pass on rent payments to landlords have been convicted of fraud by a jury after a five-week trial.

The men, who ran companies in Islington and neighbouring London boroughs using the trading name Crestons, were convicted of carrying on business for a fraudulent purpose, leaving at least 19 victims around £105,000 out of pocket.

During the trial Blackfriars Crown Court heard testimony from more than 30 witnesses. 

Between 2014 and 2016, the men failed to refund deposits to private tenants at the end of their tenancies, failed to pass on rent to landlords, and failed to put tenants’ deposits in an approved protection scheme.

The investigation was triggered by complaints from tenants and landlords who had fallen victim to Crestons. The convictions follow an investigation by Islington Trading Standards and other departments of the council.

A local authority spokesman says: “This is a major victory for the council, on behalf of private tenants and landlords not just in Islington and London but across the country – sending the message loud and clear that rogue letting agencies cannot rip off their clients and get away with it.

“This business trading as Crestons, using various company names, alone would have dealt with a huge number of tenants in Islington and neighbouring boroughs and I am extremely proud of our Trading Standards team, who worked so hard gathering evidence and witness testimony to build a strong case and secure these convictions.

“Prosecutions like this are rare but vital in the fight for better standards in the private housing market. We won’t stop here.”

The council is now pursuing confiscation orders against the three men, to claw back as much money as possible for the victims.

The men will be sentenced next month.

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/three-london-agents-convicted-of-massive-fraud

Closed shops 'could be a boom for the private rental sector'

A new survey suggests that the demise of the High Street for shopping could lead to a surge in the supply of residential property to let.

The study by MRI Software, released this morning, says 66 per cent of property industry professionals believe redundant shops could be the largest available source for new homes, particularly suitable for flats to let.

Some 72 per cent of those surveyed see residential redevelopment of sites previously used by retailers giving the high street a new lease of life. 

The research - commissioned by MRI Software and entitled Charting UK Property Trends - suggests the vast majority of property investors, owners and developers believe that funding would be available for redevelopment or conversion of defunct shops, notwithstanding the political and economic uncertainty surrounding Brexit.

“The research shows we will see a far greater number of people living in town centres, which will give a boost to [remaining] retailers on the High Street while feeding other businesses such as gyms and entertainment venues” explains Dermot Briody, executive managing director for Europe at MRI Software. 

The survey took the responses of 144 senior property experts from a range of organisations, including investors/owners/developers, consultants, contractors, property managers, sales and lettings agents, service providers, and business occupiers.

“The vast majority were bullish on the outlook for the sector … Even where Brexit is concerned, the positive outweighed the negative, as two-thirds maintain that even a Hard Brexit won’t hurt their ability to get funding for property development” says Briody.

The skew towards newly-developed or newly-converted residential units on High Street is accentuated by other elements of the research.

These show that 82 per cent of the property professionals responding say Generation Rent – young adults unable to purchase a home due to high housing prices – is here to stay, with little likelihood buying conditions will improve.

The same proportion say that tenants are renting for longer, thus driving demand for higher quality properties, and an even greater proportion believe the rental sector will become more important to the overall UK residential market over the next 18 months.

Aside from residential considerations, just over four out of five respondents say co-working and shared office space operators such as WeWork are likely to be users of former retail premises in UK town and city centres.

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/closed-shops-could-be-a-boom-for-the-private-rental-sector

Big rise in rental deposit numbers according to leading provider

Deposit protection provider The Dispute Service says it has seen a big rise in the number of deposits it protects in the last financial year.

A statement from TDS says that in the 12 months to the end of March this year there was a 6.8 per cent rise on average across the UK, with Northern Ireland in particular seeing a 13.85 per cent surge. 

TDS operates tenancy deposit protection schemes in England, Wales, Scotland and Northern Ireland. 

Sister company, SafeDeposits Scotland followed suit, generating an 8.0 per cent rise in the number of tenancy deposits protected. In England and Wales, The Dispute Service trades as Tenancy Deposit Scheme grew 6.52 per cent over the year.

In total, the number of tenancy deposits protected by the not-for-profit organisation grew from 1,386,572 in March 2017 to 1,481,485 in March 2018 across the UK.

Steve Harriott, group CEO of The Dispute Service, says: “The growth we have experienced is due to both the increasing size of the private rented sector and the quality of the service we provide to our customers..

“Over the last year, we’ve invested significantly in our people, products and customer service. We’re consistently meeting government targets for call and email answering times across the UK, and were awarded the Customer Service Excellence accreditation earlier this year.

“There’s a lot of interest in the private rented sector and particularly in tenancy deposit protection. The sector continues to grow but there is very little in the way of published data on tenancy deposit protection.”

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/big-rise-in-rental-deposits-according-to-leading-provider

Politicians again hurting our industry, say agents and landlords

Agents and landlords have united against what is being seen as the latest attack on the private rental sector by the government.

In May the government said it would cap deposits at six weeks rent but yesterday it reneged on the agreement saying it would be five weeks for annual rentals of under £50,000 and six weeks for above.

The industry is furious.

David Cox, chief executive of ARLA Propertymark, says: “Once again politicians are attacking the industry for their own purposes. Tenancy deposits have worked perfectly well for over a decade, and there is no basis in research that these amendments are necessary. This move will do nothing but push the most vulnerable in our society away from professional landlords and agents, and into the hands of rogue landlords and agents who will exploit them.”

David Smith, policy director at the Residential Landlords Association - which had already voiced its disapproval about the idea when it was suggested last weekend- now says: “In doing a complete about turn on this, it is unfortunately vulnerable and elderly tenants who will suffer, just as ministers stated when they initially approved a six week cap. Those who will now find it more difficult to secure a home to rent will include those on benefits and those who have a pet as a companion.”

He continues: “In May, Ministers argued that a cap of six weeks offered a balance between affordability benefits and financial risk to landlords and providing confidence for them to rent to higher risk tenants. They considered that a five week cap did not offer that protection. Nothing appears to have changed since.”

And Jon Notley, chief executive of the Zero Deposit scheme, adds: "It is not sensible to impose a cap that - after a single month’s rent - leaves landlords with very little protection. The objective in terms of improving tenant affordability is both clear and necessary but there are already services on the market that offer the same protection as a traditional six-week deposit for the landlord at the cost of just one week's rent to the tenant. The rental market needs reform, but not in areas where solutions already exist to address its problems.”

The only support for the initiative appears to be from an online lettings agency.

James Davis, founder of Upad, says: “The industry may well respond negatively to this afternoon’s announcement and suggest that landlords will simply increase rents to compensate for what they lose in deposits, but this is somewhat short-sighted as in all reality, it’s not going to change things that much.

Yesterday’s U-turn came in the form of an amendment to the Tenant Fees Bill.

Other amendments to the Bill include protecting tenants from fees by limiting the type of default fees that can be charged by landlords and property agents.

This change means that during the tenancy landlords and agents will only be able to charge fees to replace lost keys or for late rent. Landlords will still be able to claim back costs for damage through the tenancy deposit at the end of the tenancy.

https://www.lettingagenttoday.co.uk/breaking-news/2018/12/politicians-again-hurting-our-industry-say-agents-and-landlords

Revealed: where to find the highest buy to let rental yields

Research released this morning reveals that university cities offer some of the highest buy to let yields in the country.

The Free Credit Report company surveyed over 580,000 properties across England, Scotland, and Wales to rank postcodes by their buy to let yields. 

The research showed locations with a high student population — like Nottingham, Liverpool, Manchester, Leeds, and the North East — boast some of the UK’s highest rental yields.

Nottingham has two postcodes featuring in the top five. NG1 takes first place with an average rental yield of 11.99 per cent and NG7 takes fifth place with an average yield of 8.89 per cent.

Property prices in Nottingham are also affordable, averaging £152,631 and £160,269 respectively — far below the UK average of £226,906. It has a student population of over 37,000.

Liverpool takes second place, with two postcodes in the top five, and five postcodes in the top 20. It has an approximate student population of 70,000, as well as three universities, which is thought to contribute highly to its strong yields.

Postcode L7 takes second place and has average rental yields of 9.79 per cent. L1 also performs well, taking fifth place, with average yields of 9.33 per cent.

Newcastle’s NE6 takes sixth place, with an average rental yield of 8.43 per cent. Property prices here are far below the UK average at £118,789, with Newcastle and Northumbria universities approximately 30 minutes away on public transport.

Similarly, Newcastle’s NE1 has yields of 8.16 per cent, and is within walking distance to both universities. Property prices, however, are slightly higher at £161,035, but are still below the UK average

London, by contrast, struggles. 

North London in particular was a poor performer, with five postcodes in the bottom 10. Highgate in N6 was the worst postcode in the capital and third from bottom overall, with paltry yields of just 1.93 per cent.

E6 in East Ham offers the best London yields at 4.81 per cent with Stratford (E15), Plaistow (E13), Poplar (E14), and Chingford (E4) all ranking in the London top 10.

The research has been commissioned by TotallyMoney, whose head of brand and marketing communications, Mark Moloney, says: “Since so many students are looking for accommodation, landlords may use this as an opportunity to drum up competition between them.”

https://www.lettingagenttoday.co.uk/breaking-news/2018/11/revealed-where-to-find-the-highest-buy-to-let-rental-yields

Agency in ‘viewing charges’ controversy has had protests in the past

Letting Agent Today can reveal that the agency at the centre of the scandal over alleged charges for viewings has been the focus of controversy in the recent past.

Flintons is a single office agency based in London. Its website describes itself as “the London and international residential property specialist offering a full range of related services that help our clients buy, sell, let, rent and manage their homes and investments.”

Yesterday it hit the headlines when it was accused by the BBC’s Victoria Derbyshire programme of effectively charging prospective tenants hundreds of pounds to even view properties. 

Flintons itself denies the accusation that it charged for viewings - its response is published in full below. 

However, LAT has now discovered that in September the agency was the focus of a protest against its wider approach to fees.

Anonymous posters on Twitter circulated a call asking people to protest outside the agency’s office in September.

LAT has invited Flintons to put its side of the protest story but has not received a response on that specific point.  

Meanwhile there has been widespread condemnation by industry figures of Flintons for allegedly charging potential tenants hundreds of pounds for just viewing a property. 

Former RICS residential chairman Jeremy Leaf said on Twitter that the revelation made by the BBC“highlights the need to tighten rule further - and as soon as possible.”

Victoria Whitlock, a buy to let landlord and the Evening Standard’s columnist known as The Accidental Landlord, tweeted that the matter was simply “indefensible.”

Industry trainer and consultant Mike Day, who runs Integra Property Services, also took to social media to ask: “A new low for the lettings industry?”

The Victoria Derbyshire programme claimed yesterday that Israel Kujore and his friend Harry responded to one of Flintons' adverts.

“He said they had gone to see an agent who had told them they needed to pay a deposit to see a room but that the money would be refundable … They had paid £300 each to see a property, but Israel soon realised something was wrong” said a BBC report.

The BBC also quoted Labour’s housing spokeswoman Melanie Onn calling for the government to give greater protection to renters.

"Letting agents as well as landlords should be properly regulated" she said. "Of the 8,000 letting agents we've got around the country, only about half of those are voluntarily signed up to a code that means that they will operate to the highest professional standards. That means that half of them are not.”

However, Flintons continues to deny the allegations in full.

Flintons told Letting Agent Today: “We deny any allegation that prospective clients are asked to pay a holding deposit to be able to have a viewing. A holding deposit is only taken where a prospective client wishes to exclusively reserve a property for themselves and the property is then taken off the market and not offered to any other person.

“Whilst we have been informed of 3 instances where prospective clients had raised complaints, we provided suitable responses and believe that we demonstrated that the version of events that the complainants had provided were not entirely accurate and there was clear knowledge that any deposit taken was non-refundable. As the BBC have confirmed, all had signed holding deposit forms clearly stating that the deposit was non-refundable as it states at the beginning of the document and is clearly visible and is not something that can be missed or overlooked. It is not accepted that they were given the form after payment had been taken nor was there any assurance that the holding deposits were refundable. 

“We note that the BBC also undertook an undercover investigation where they used undercover reporters to look into our practices. They have confirmed that their undercover reporters were clearly told that any deposit would be non–refundable prior to any funds being requested when they showed an interest in a property. This we say clearly supports our position. 

“We confirm that we are an agency that assists numerous clients and the complaints raised only form a very small percentage of people who have engaged with us and the vast majority of our clients are happy with the service that we provide. Notwithstanding our position, we have reviewed our procedures and have provided further training to staff and have also now amended our holding deposit form to further highlight that the deposit is non-refundable if a prospective client changes their mind." 

https://www.lettingagenttoday.co.uk/breaking-news/2018/11/lettings-agency-in-viewing-charges-scandal-has-a-history-of-controversy