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UK landlords get confused over betterment principle, study finds
Some 60% of landlords in the UK admit they don’t understand the betterment principle, whilst 90% say they fully understand fair wear and tear, according to a new report. The betterment principle means that if an item, such as a carpet was old at check-in, the landlord can’t replace it with a new carpet, but some compensation is allowable towards the item. The research from My Property Inventories also shows that over 80% of landlords said inventory evidence helped them to win a tenant deposit dispute. Furthermore, 60% of landlords admit to never visiting their properties to check the condition, while just 6% say they regularly make spot checks on their property. ‘We do find that landlords and agents push for new for old at the end of tenancies, and have unrealistic expectations of what they can claim against tenant deposits,’ said Danny Zane, director of My Property Inventories. He explained that the tenant has a duty of care to return the property in the same condition at the end of the tenancy, as at the start and listed on the inventory report, with an allowance for wear and tear. The law does not allow landlords to claim ‘new for old’ from the tenant deposit. ‘The key problem is that agents, landlords and tenants have different expectations when it comes to fair wear and tear issues. There is a distinct difference between fair wear and tear and actual damage. For example, carpet tread will flatten over time where there has been foot traffic, but cigarette burns, stains or soiling will incur a charge,’ said Zane. He pointed out that the betterment principle applies to cleaning issues too. ‘If a carpet was stained and marked at the time of check-in, a landlord can’t expect the tenant to pay for carpet cleaning at the check-out, no matter how long the tenancy has been,’ Zane explained. ‘However, if the carpet was recorded in the unbiased inventory report at the start of the tenancy as clean, with accompanying photos and is found to be stained or marked at check-out, the cleaning costs can be deducted from the deposit,’ he added. The firm believes that it is important to note that normal wear and tear is a fact of life within tenancies. ‘The best way for landlords and agents to ensure that the property’s condition is fully recorded at the start of the tenancy, is by having a thorough and professional un-bias inventory, along with a detailed check-in and check-out report,’ Zane concluded. Continue reading
Dubai to get mandatory affordable housing quotas
A proposal by Dubai Municipality to introduce mandatory affordable housing quotas for all new residential developments is expected to bring a wide range of benefits to the emirate, it is claimed. The move will create further maturity in the market and is long overdue, according to a new report from international real estate consultants, Cluttons. With the residential market in Dubai now meandering through the second half of the current property cycle and with values stabilising following the tremendous growth recorded in 2013 and the first half of 2014, the timing for the introduction of such legislation is ideal, the firm says. According to Steven Morgan, chief executive officer of Cluttons Middle East, the issue of affordability has been one that has been quietly bubbling away in the background for some time. ‘With the introduction of the Federal Mortgage caps and the doubling of property registration fees, we saw genuine end users in the market forced into a holding pattern as they attempted to make the transition from rented accommodation to owner occupation,’ he said. ‘The surging rents, driven by the exceptionally strong underlying demand, which was linked to the robust economic growth, meant that household finances were coming under tremendous pressure on several fronts,’ he pointed out. ‘Now of course, with rents starting to show greater stability, households have a window of opportunity to consolidate their finances and make that leap to owner occupation. The prospect of those on monthly incomes of between AED4,000 and AED12,000 being able to control their rental outgoings will no doubt go some way to aiding the speed at which deposits can be amassed,’ he added. He also pointed out that it is important to remember that there is a huge pent up demand for affordable housing in the UAE and with rental affordability thresholds being breached in many cities, we welcome the news on this key issue. According to Cluttons, the idea of affordable housing is not a new concept and it has served cities such as London well, where developers are liable to provide affordable housing for developments starting with as little as ten units. In particular it has aided in the creation of diverse communities, while allowing people from all financial backgrounds to live alongside one another. ‘There have of course been exceptions to the rule, where developers have been permitted to build off-site affordable housing, with land costs being cited as the primary driver for this. Dubai stands to learn a valuable lesson from this as the authorities in London have often been criticised for effectively creating lower income neighbourhoods through this method,’ said Cluttons' international research and business development manager, Faisal Durrani. He explained that Dubai is clearly not short of affordable neighbourhoods. Karama and Satwa are two key stand out areas that evolved organically at the edges of the Deira-Bur Dubai and Jumeirah districts, respectively. ‘During the course of expansion of any city, affordable districts often tend to spring up on the fringes… Continue reading
UK house prices up 2.6% in first quarter of 2015, latest index shows
UK house prices were 2.6% higher in the three months of 2015 than in the previous quarter but the annual rate of growth is still falling. The latest index from the Halifax shows that annual price growth fell slightly from 8.3% in February to 8.1% in March, taking the average price of a home to £192,970. The quarterly rate of change increased for the third consecutive month. It is now at a similar rate to September 2014 when it was 2.7%, prior to a marked slowdown in the last three months of 2014. The data also shows that house prices increased by 0.4% between February and March, offsetting February’s 0.4% fall. According to Halifax’s housing economist Martin Ellis the recent return to real earnings growth for the first time in several years, very low mortgage rates and last December’s stamp duty changes are supporting housing demand. ‘The rising level of house prices in relation to earnings should, however, curb house price growth and activity,’ he added. He also predicts that the annual rate of house price growth, which has continued to ease in the first quarter of 2015, is forecast to end the year at 3% to 5%. The index report also points out that housing supply remains tight. According to figures from the Royal Institution of Chartered Surveyors new instructions fell again in February suggesting that the trend remains down following January’s modest rise, which was the first increase in six months. However, house price optimism rebounded in February as inflation continued to fall and the expectation of an interest rate rise receded further, according to the Halifax Housing Market Confidence Tracker. Ellis said that this optimism is reflected in the outlook for both buyers and sellers, with buying sentiment up to its highest level since the Confidence Tracker launched in 2011 at net +35. At the same time, selling sentiment reached an all-time high and now stands at +27. The report also mentions the regional differences in stamp duty. Some 81% of residential stamp duty revenue raised in the UK in 2013/2014 was in the four regions of southern England; Greater London, South East, South West and East of England, according to the HMRC. This was significantly higher than their 71% share in 2007/2008 when total stamp duty revenues were at a similar level at £6.68 billion in 2007/2008 against £6.45 billion in 2013/2014. London alone contributed 42% of all UK stamp duty revenues in 2013/2014 compared with 28% in 2007/2008. Indeed, London was the only region to see an increase in revenues between 2007/2008 and 2013/2014. Continue reading
