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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
High supply level keeping rents on prime property in London down
Residential rents across the prime property market in London rose by just 1.3% on average in 2015, while those in the commuter zone increased marginally by 0.6%, new data shows. In London this reflects relatively high levels of supply coming into the market, not just from investment buyers of an increasing volume of new build stock but also from the re-emergence of accidental landlords, who reflect a more heavily taxed and generally less active sales market, says a new report from international real estate firm Savills. Behind the headline figures, however, there are a number of submarket trends seen in previous years, the report points out. In the prime housing markets of the commuter zone, rental values of prime properties in urban locations performed much more strongly than those in other locations, showing annual rental growth of 3.1%. In London smaller properties were by far the best performers. For example, while rents for one bedroom homes rose by 3% in the year, those for four bedroom houses barely increased at all rising by just 0.1% on average. ‘From an investment perspective, this meant smaller, less expensive properties clearly delivered the best returns. In addition to stronger rental growth, they offered better income yields and capital values proved more robust given less exposure to higher rates of stamp duty,’ said Lucian Cook, director of Savills residential research. He also pointed out that the impact of tax policy on the rental market has undoubtedly become a very hot topic. There is the progressive restriction of tax relief on mortgage interest payments meaning that by the 2020/2021 tax year, only basic rate tax relief will be given to private individuals, and more recently the imposition of a 3% stamp duty surcharge on the acquisition of so called additional homes, the purchase of which completes after 01 April 2016. Cook gave examples of how these changes will have an impact. He examined the economics behind the purchase of three different prime London properties in 2015; a one bedroom flat in the east of City market, a three bedroom house in south west London and a four bedroom house in central London. In each case it was assumed that 60% of the total purchase cost, including stamp duty and miscellaneous additional costs of purchase, is funded by cash and 40% by debt. At current interest rates, with full tax relief on the corresponding interest payments each makes a reasonable cash surplus for a private investor. That surplus varies between 21% of gross rent for the most expensive property in central London that has the highest stamp duty liability and delivers the lowest income return and 28% of gross rent for the smallest, highest yielding property in the east of City market that carries the lowest stamp duty liability. ‘In 2020, we expect the cost of mortgage debt to have risen, we have assumed a 4.5% mortgage interest rate, and income yields to have fallen because we expect price growth… Continue reading
