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UK seeing a crisis in private rented sector due to tumble in landlord confidence
Landlords’ confidence in the buy to let sector in the UK has collapsed to an all-time low and is now worse than levels witnessed during the financial crash, according to the country’s biggest landlord association. Richard Lambert, chief executive officer of the National Landlords Association (NLA), told delegates at the Building Societies Association’s (BSA) annual meeting for mortgage professionals that the situation is worrying. He explained that confidence in landlords’ business expectations has tumbled by more than a third over the past year, down from 67% to an all-time low of 43% and the current level of confidence in the sector is now 5% lower than levels witnessed after the financial crash in 2007. He pointed out that the actions taken by the Chancellor in last year’s Summer Budget and Autumn Statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector (PRS) by another million more households over the next five years. It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. The net effect will be that the PRS be smaller by up to 136,000 properties. The data, from the latest NLA quarterly landlord panel survey, also shows that the proportion of landlords looking to sell in next 12 months has more than doubled since July 2015, up from 7% to 19%. Over the next few years some 28% of landlords don’t plan purchase any more properties, 10% plan to reduce their portfolio and 5% plan to sell up completely. ‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few buy to le products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success. But there is no guarantee that these will be the one or two bedroom flats or small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas,’ he explained. ‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small scale part time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector,’ Lambert told the meeting. ‘What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?’ he added. Continue reading
Draft code of practice for lettings agents released in Scotland
The Scottish Government have released a draft code of practice for letting agents which will mean a huge shake up in the industry before it comes into force in 2018. The Letting Code of Practice (Scotland) Regulations 2016 has been structured in eight sections to mirror the lettings process and sets out the standards expected of letting agents operating in Scotland in how they manage their business and provide their services. It covers key areas such as standards of practice, engaging landlords, lettings, management, maintenance, ending tenancies, communications, complaints, deposits and insurance. Under the code Scottish ministers will establish and maintain a register of letting agents. The regulations will also allow them to remove a letting agent from the register if they are no longer ‘fit and proper’. The Association of Residential Lettings Agents (ARLA) welcomed the introduction of a statutory code of practice for letting agents and said that it will help to further professionalism in the industry and drive up standards. ‘We contributed to the Scottish Government’s consultation on the code last year and we are pleased that they have taken on board a number of our recommendations over procedure and wording,’ said ARLA managing director David Cox. ‘It is also very pleasing that the code has a requirement for agents to have professional indemnity insurance and client money protection. These are two requirements of ARLA membership and mandatory CMP is something we are campaigning for in England to provide greater protection for landlords and tenants if things go wrong,’ he explained. But ARLA believes that there should be more detail about what agents should do if disputes occur around tenancy deposits. This is because an agent may be required to co-operate with any investigation by an independent body if a dispute is raised between either the landlord or tenants and this is not always clear in the relevant scheme’s rules for disputes. ‘On the issue of training and qualification ARLA has long campaigned for greater regulation for letting agents and believe that mandatory qualifications will promote professionalism and basic standards within lettings that will benefit businesses and consumers. We look forward to seeing more detail from the Scottish Government in this area,’ added Cox. Kaira Massie, solicitor in the Law Society of Scotland’s professional practice team, said that there has been very little scrutiny of letting agents until now and having a new, statutory code of conduct will improve the situation for both landlords and tenants. ‘Solicitors in Scotland are already subject to stringent rules of admission and detailed practice rules covering professional ethics and conduct and many other aspects of practice. While solicitors will still be subject to the new letting agency scheme, there will be less duplication than was in the original proposals,’’ she pointed out. We’re pleased that the Scottish Government has considered many of the points we raised. The regulations now take into account that solicitors are required to have indemnity to… Continue reading
Location is still the top consideration when buying a home in the UK
The old cliché location, location, location when it comes to buying a home is still relevant with new research showing it is the top reason for buyers making up their mind. More than half, 56% of British people make an offer on a home because they fall in love with it with location, price and garden the top three reasons for doing so. Being close to friends is the least important factor when choosing the location of a property with only 9% of buyers saying so, according to the research from conveyancing services firm My Home Move. Some 58% cited location as the top characteristic that made them fall in love with their home, 37% said it was price and 29% said it was the garden. When it comes to that all important location some 40% said transport links were important, 35% said a green area nearby and 32% said being near to shops, cafes and restaurants. Women are more likely to base their decision on being close to family at 32% compared to 26% of men yet both genders list being close to friends as the least important factor, shared by only 9%. For those in their 20s, having a nearby school and being in an up and coming area ranked in joint second place, with 34% saying these factors were important. This suggests that the younger age group are planning ahead, as well as looking to settle in an area that has investment potential as it shifts from being on the cusp of gentrification, to a sought after location. Location is also the most important factor in putting people off a property with 43% said a bad location would mean not buying a property. Some 40% would be put off a home that as too expensive and 34% by the appearance of the property. Younger home owners aged between 21 and 30 were less put off by the location, with only 37% citing this. However this age group tends to be more limited on choice due to job location and affordability issues than older Brits. ‘For most people, location is the secret ingredient that makes them fall in or out of love with their home. People also love a bargain, which explains why cost was the second most important factor in making someone fall in love with their home,’ said Doug Crawford, chief executive officer of My Home Move. ‘As house prices continue to climb and many first time buyers struggle to take their first step onto the property ladder, younger buyers are more willing to scout out up and coming areas to try and find a bargain to fall in love with,’ he explained. ‘Unfortunately, not all of those buying a home have the flexibility to pick and choose their ideal location or perfect interiors, especially as demand continues to outstrip supply. Compromise may have to become… Continue reading
