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Call for lettings agent fees to be banned in England
Letting agents’ fees in England should be banned to protect tenants in the private residential rental sector, a hard hitting new report has urged. According to new evidence uncovered by a charity, Citizens Advice, tenants are frequently ripped-off by fees often hidden by letting agents to the tune of £337 on average. These charges come on top of advertised rent prices and deposits and in some cases can force people into debt, the report says, adding that letting agents have refused to adopt measures that were supposed to bring transparency and competition to the market. Most agents charge for checking references, but costs range from as little as £6 to £300, according to the study. Renters can also be hit by charges ranging from between £15 to £300 for simply renewing their tenancies. Some agents charged £300 for credit checks that are widely available for £25. Even when moving out of a property, almost half of the 353 agencies polled by Citizens Advice said they charge an average ‘check out’ fee of £76. Despite an Advertising Standards Authority (ASA) requirement introduced in 2013 that agents should give clear information about fees, this study found that only a third provided full written details. The requirement will become law later this year which will mean agents have to publish fees on their websites and in their offices. But Citizens Advice is concerned this will have little impact. The report says people face a lot of pressures when looking for a property and the main priorities amongst tenants is location and the price of rent. Fees often do not get disclosed until later in the process and only 25% of tenants told this study that they took fees into account when leasing a property. The charity says it does not call for a fees ban ‘lightly’, but said alternative measures have not worked. It adds that if charges are to be made, they should fall on landlords as they are in a better position to shop around and pick the best agency. A fees ban was introduced in Scotland in 2012 and there is no clear evidence to suggest it has led to an increase in rental prices, the report adds. Almost 90% of renters told the report that the charges caused them problems. A fifth said they went overdrawn on their bank accounts as a result and 42% had to borrow from friends and family. ‘Letting agents hold all the cards meaning tenants are open to abuse. Renters are regularly stung by arbitrary fees which can range from modest amounts to hundreds of pounds,’ said Gillian Guy, chief executive of Citizens Advice. ‘Our research confirms renters don’t shop around for letting agents, they shop around for properties so the idea that transparent fees will solve these problems is misguided. Landlords can hold agencies to account so it is right that they should shoulder the responsibility of fees. That would end once and for all the situation in which letting… Continue reading
Planning permission in London too low to meet new housing targets
The current rate of planning permissions in London mean that just two thirds of the target number of homes that government officials say are needed will actually be built, according to new research. London’s planning system is allowing new homes at an annualised rate of just 27,470 as of the end of 2014, or just 69% of the target for 40,000 finished new homes each year announced by Chancellor George Osborne and London Mayor Boris Johnson in February and underlined in March’s Budget. An analysis of planning applications across the city by London estate agents Stirling Ackroyd shows just 6,780 homes were given planning permission in the last quarter spread over 826 different sites. These approvals represent 80% of all potential homes receiving a planning decision in the fourth quarter 2014. This is out of plans for 8,632 possible homes in the quarter. By contrast, if 100% had been approved, this could have allowed an annualised rate of up to 34,530 new homes, or 86% of the official target rate. In reality the number of homes reaching completion stage currently stands at an annualised rate of just 18,440 after the final quarter of 2014 saw just 4,610 properties finished in the space of three months. Despite this low base, London has seen an acceleration in finished homes. Last quarter’s figure represents a 30% increase from the third quarter of 2014. This is almost twice the acceleration in home completions seen outside the capital as across the rest of England there was a 17% uptick. However, new home starts were far lower last quarter, at just 3,040 or an annualised rate of just 12,160 homes per year. If this pace of housing starts continues and is reflected in the annual rate of completed homes it would mean failing to reach even a third of the government’s annual target. Out of all London’s boroughs, Tower Hamlets gave permission for the greatest number of new homes in the final quarter of 2014 at 1,197 dwellings spread over 25 different sites. This means more than one in six homes receiving planning permission in the capital was in Tower Hamlets, or 17% of the quarterly total. Second to Tower Hamlets in absolute terms was Croydon, where 682 homes came through the planning system, followed by Richmond with 591 dwellings approved in the quarter. At the other end of the scale Lewisham allowed just 11 new homes in the final quarter of 2014 out of a potential 18, while Kensington and Chelsea approved 13 out of 16 possible new homes and Lambeth only 17 homes out of a total of 40. Comparing the number of homes given permission to the total number of potential dwellings applied for via planning applications, boroughs vary by the leniency or rigour with which they have interpreted their guidelines. Greenwich and Hammersmith and… Continue reading
Prime property in UK university towns could be snapped up by buy let pensioners
People in the UK who are able to take money out of their pension pots from next month can be confident that if they choose to invest in buy to let they are likely to see strong returns, it is claimed. Recent research by IPSOS MORI suggests over 15% of the estimated 200,000 expected to cash in their pension will choose an investment in property. Management and investment company Grant Property Investment, said it has already seen a 28% rise in property sales in the last quarter of 2014 compared to the same quarter the previous year and expects a further rise when the pension changes take effect in April. For those who do enter the market, there is the potential to enjoy the potentially higher returns than the 3% to 4% pensioners could receive when buying an annuity, the firm believes and points out that investors would also own an asset that can substantially grow in value in the future. ‘As a business, we only source prime traditional Georgian and Victorian properties in areas that have high occupancy and can produce a high rental yield. Consequently, on behalf of individual and institutional investors we are very active in 12 UK cities, including Edinburgh, Stirling, Dundee, Glasgow and Aberdeen,’ said As Peter Grant, chief executive officer of Grant Property. Grant acknowledges that recent analysis from the Halifax suggests UK house prices are firming, while various experts expect house price growth of 4% in 2015. In addition to this he believes prime property in places such as Edinburgh will continue to offer a solid return, including for those who seek alternative ways to utilise a pension pot. ‘Our own expectation is that the properties in prime city centre locations, outside London, will increase in value by a further 3% to 5% in 2015 and achieve rental yields of 6% to 8%. This is significantly better returns than in London where some view prices as overheated and yields are as low as 2% to 3% in prime areas,’ Grant said. ‘It’s also our experience of the market that high quality traditional residential property consistently outperforms new build developments from a capital growth and yield perspective,’ he added. The firm recognises that those of pensionable age may be wary of tax implications, investing in a single asset class and variations in future interest rates and therefore it always recommend clients take independent advice before making any decision. ‘As an alternative to an annuity, investing in a prime buy to let property gives you and your offspring an asset and potentially rental income higher than returns from an annuity. Many parents of offspring heading for university may also see the benefit of investing in high quality property that can support their child through education and provide monthly rental if let to fellow students,’ Grant pointed out. ‘We expect the buy to let will remain a standout investment for 2015, especially in hotspots like the university cities of… Continue reading
