What should a tenant look for in a letting agent?

The Royal Institute of Chartered Surveyors recently told the Commons Local Government Select Committee that some letting agents are part of “the property industry’s wild west”. To help you to avoid any unscrupulous operators in the market, we have compiled a list of things you should look for in a letting agent using the UK Association of Letting Agents guidelines.  

It's important to us that tenants know the vital role letting agents can play in ensuring that they benefit from a wide choice of quality property and that properly trained, professional letting agents are poised to deliver this service.

With this in mind, here are the top 8 things you should look for:

1. Are they reputable? Look for agents that are members of a registered trade body such as the UK Association of Letting Agents (UKALA). Membership of a professional association confirms that they are professionally approved and must adhere to a Code of Practice. UKALA agents also utilise Client Money Protection Insurance, which protects your money for the duration of the tenancy.
2. Where are they based? Make sure that the agency you’re letting from are in your local area, if they are far away it won’t be particularly convenient when it comes to maintenance or repairs.
3. What does the agency specialise in? Check on their website to see who they are aimed at, if they specialise in the type of property you’re seeking and whether it suites your needs.
4. What are their fee’s? Fee’s will always vary, but if they are a member of a professional association they should always be transparent about their fee’s - if they aren't, this should be an alarm bell!
5. Do they do out-of-hours call outs? If the agency doesn't have an out-of-hours service, then you may want to look further afield.
6. Do they protect deposits in a tenancy deposit protection scheme? An agent must protect your deposit in one of three government-authorised schemes and provide you with relevant prescribed documentation. If they don’t they are breaking the law.
7. Do they do regular maintenance and safety checks? When managing a property on behalf of a landlord, it is essential that the letting agent visits the property at least every six months to check for any maintenance issues. It is also important that they carry out various safety checks regularly.
8. Are the the staff knowledgeable? The more knowledgeable and highly trained the letting agents are the better. Look to see what training each agency undertakes; if the staff are knowledgeable, they will be able to help with the various hurdles you may experience with your rental arrangements.

For the first time there is a new scheme to make CMP accessible for all letting agents

All letting agents will be able to get Client Money Protection for the first time, whether they are a member of a recognised trade body of association or not.

Hence, landlords and tenants will not compulsorily have to look for a member of, for instance, ARLA, NALS or RICS, to make certain that their money will be secure.

This week, a new company named CM Protect was launched. While they have a status of a company, this is simply to be able to offer the insurance at all, individual agents aren’t allowed to take out their own insurance against the possibility that they might go bankrupt, misuse or run off with the clients’ money.

The company has been created by the very same management team behind insurers Total Landlord Insurance and tenancy deposit scheme Mydeposits.

The single reason is to provide Client Money Protection insurance to letting agents who aren’t members of a recognised trade body or association but wish to act responsibly.

Previously, belonging to one of these bodies was the only way for clients of letting agents to gain from such protection.

CMP insurance protects the money of landlords and tenants against theft or embezzlement by the owners of a letting agent whilst it is in their custody or control. This could involve tenants’ deposits and landlords’ rental payments, or funds held for repairs and maintenance to a property.

Reports of lettings agents starting up on the back of a badly functioning sales sector and then folding, taking all of their clients’ money with them, has had a harmful effect on responsible independent and smaller letting agents.

Eddie Hooker, chief executive of CM Protect Ltd, said, “There are many reasons why a letting agent does not feel it should be a member of an industry trade body, such as educational obligations, but they should not be prevented from accessing this valuable protection which demonstrates an upholding of responsibility to clients and provides the reassurance of a well-run professional agency.”

Ian Langley, pictured, director of operations for CM Protect, said, “We do not wish to compete with the industry trade bodies as we recognise the importance and value of these in raising standards and would always encourage larger agents in particular to uphold this.

“However, we feel that there is a void in the market and we want to encourage those smaller agents, who are currently not protected by CMP, to act responsibly without having to take on the commitment of a trade body.”

CMP insurance must be provided by a body or organisation that is independent from the letting agent.

For this reason, CM Protect is setting up itself as a ‘membership’ body, yet without ‘codes of conduct’ or other requirements. The benefit of CMP is only available to letting agents whilst they remain a member.

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It is claimed that one in five people are to be a private tenant in two years

Monthly rents will reach an average of £800 in England and Wales in two years’ time, while one in five people will be living in private rented accommodation.

The claims came from Lucy Jones, operations director at LSL, speaking yesterday at a Council of Mortgage Lenders conference.

She said the increase would equal a 21% rise since 2010.

She said: “While economic expectations have changed, and even as rents in many areas have risen rapidly, the private rented sector has actually been surprisingly stable.

“Meanwhile, the purchase market has resembled a broken rollercoaster.  

“First-time buyers have seen a boost from new government schemes this year, but the ability to raise any deposit at all has been severely reduced by the recession. As house prices accelerate, this long-term trend towards renting will continue.”

She went on: “Whatever the regulatory outlook, the economic fundamentals will remain the same. Landlords will be critical in providing more homes for million of people who are no longer able to buy. Not just rents will rise.

“Gross yields are set to increase, too, and that should encourage investment from landlords – but they will need finance to continue to keep pace with such demand.

“More finance can allow more homes, and that’s slowly happening. Buy-to-let advances are growing gradually, at what should prove a sustainable rate. And long may that continue. This year, buy-to-let looks set to return to the same proportion of mortgage lending as it was in 2007.

“The private rented sector is set to flourish in the recovery, if anything more vigorously than its performance in the recession.”

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County prices on the rise

Yorkshire’s property market has encountered a clear rise in activity over the last month, according to statistics from the region’s largest independent estate agent Dacre, Son & Hartley and backed by data from Nationwide that reveals that prices are gradually rising as the market gains momentum.

The latest statistics from Nationwide show property sales are roughly 5% higher during the first five months of 2013 in comparison with the average monthly levels in 2012. According to the mortgage lender this has assisted in pushing annual price growth to 1.1% with prices increasing by 0.4% in May alone, which means the average house in the UK now costs £167,912.

Patrick McCutcheon FNAEA, Head of Dacres Residential said: “Economic news is generally more confident, with the UK returning to growth in the first quarter of 2013 and this is having a positive effect on the housing market. Even the weather improving plays a part in boosting sentiment amongst potential homebuyers.

“In Yorkshire the sub £500,000 sector has seen the greatest increase in activity and this is steadily filtering up the market. Mortgage finance remains cheap and the availability of credit is improving with initiatives such as the ‘Funding for Lending Scheme’, which allows banks to borrow money at discounted rates from the Bank of England before lending it to customers, having a positive impact.”

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More retirement homes to be built

A leading housebuilder has thought of an inventive answer to the UK’s housing shortage, by moving older people into retirement homes and allowing younger people to purchase their homes.

McCarthy & Stone, Britain’s leading builder of retirement apartments, has alerted that a city the size of Manchester (approximately 500,000 people) needs to be built every two years for the next 20 years to house the UK’s ageing population.

A super sized building programme to meet this shortage would not noyl release up to 3,750,000 existing and much-needed family-sized homes to stop the Uk’s family housing deficit but would also maintain 250,000 new construction jobs a year to 2033 and provide a substantial boost to the economy.

As underlined in the March 2013 House of Lords’ Ready for Ageing? report to which McCarthy and Stone gave evidence, the UK’s specialist housing provision trails sadly behind other developed countries with just 2% of housing stock built as retirement housing in comparison with 17% in the US and 13% on New Zealand and Australia.

But 17% of people (9.2 million) in the UK at present are over the age of 65 and by 2033 it is predicted that over 13 million people will be over 65.

A 100% rise in those aged over 85 is expected by 2030.

Nevertheless, just 1,600 specialist retirement homes were built for ownership in 2012.

That figure is substantially below demand for this type of housing.

Steve Secker, regional managing director for McCarthy & Stone, said: “Releasing more homes for families will benefit the entire housing chain and lead to more jobs.”

In the last 12 months property prices have risen by 2.7% - similar to levels in mid 2008

In total the average house price in the UK has risen and were up by 2.7% in the last 12 months to the end of March 2013, according to the most recent data published by the Office of National Statistics.

Up from the 1.9% rise recorded in the 12 months to February 2013 and prices are stable across most of the country. The average UK mix-adjusted house price in March 2013 was £235,000.

Price levels are now at a resembling level to that of the middle of 2008 but stayed below the peak of January 2008.

Yet the statistics also revealed that there are large regional differences with prices increasing the most in London and still falling Northern Ireland and Scotland.

The national year on year rise showed a rise of 3% in England and 1.2% in Wales, yet this was offset by declines of 1.7% in Scotland and 2% in Northern Ireland and Scotland.

Annual house price rises in England were driven by a 7.6% increase in London and there was a 3.3% rise in the South East and 2.8% increase in the East of England. Average house prices declined by 1.3% in Yorkshire and the Humber and remained unchanged in the North West.

Excluding London and the South East, house prices in the UK rose by 0.6% in the 12 months leading up to March 2013. On a seasonally adjusted basis, UK house prices rose by 0.4% between February and March 2013.

The study also revealed that average mix adjusted house prices in March stood at £244,000 in England, £157,000 in Wales, £130,000 in Northern Ireland and £178,000 in Scotland. London continues to be the English region with the highest average house price at £398,000. The North East had the lowest average house price at £144,000.

London, the South East and the East of England all has prices higher than the UK average price of £235,000. Excluding London and the South East, the average UK mix-adjusted house price was £187,000.

The average price for properties bought by first time buyers rose by 1.3% over the year to March 2013, down from a rise of 1.6% in February 2013. During March 2013 the average price paid for a house by a first time buyer was £175,000.

The average price for properties bought by former owner occupiers (existing owners) rose by 3.2% in the year to March 2013, up from a rise of 2% in February 2013. In March 2013, the average price paid for a house by a former owner occupier was £270,000.

During the 12 months up to March 2013 prices paid for new properties rose by 1% on average, in comparison with a decline of 0.3% in the year to February 2013. The average UK house price for a new property in March 2013 was £230,000.

In the 12 months up to March 2013 prices paid for pre-owned properties rose by 2.8% on average, in comparison with a rise of 2% in the year to February 2013. The average UK house price for pre-owned properties in March 2013 was £235,000.

Regardless of the regional differences the industry considers the figures as being positive. David Newnes, director of LSL Property Services, owners of Your Move and Reeds Rains, said, ‘The UK’s housing market is showing signs of growing stronger, boosted by greater consumer confidence in the market and wider economic recovery in Britain.’

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UK buy to let lending is on the rise, latest figures show

According to the Council of Mortgage lenders, in the UK the buy to let mortgage sector is springing back to life due to strong demand and is growing as an overall proportion of the property lending market.

The most recent CML statistics show that gross mortgage lending of £4.2 billion across 33,500 mortgages were given to buy to let landlords in the first three months of 2013. This continues from £4.6 billion the previous quarter and £3.7 billion in the first quarter of 2012.

Almost half of this lending was to remortgage, rather than house purchase. Even so, the buy to let market continued to grow, and loan performance improved, said CML director general Paul Smee.

By the end of March buy to let lending had amounted to 13.4% of the total outstanding mortgage lending in the UK, up from 13% the previous quarter and 12.9% at the end of the first quarter of 2012.

The CML said that there are now approximately 1.46 million buy to let mortgages in the UK, equaling about 13% of the estimated stock of 11.26 million mortgages.

‘The buy to let mortgage market is performing well, against a backdrop of robust landlord and tenant demand for good quality rental property. Loan performance compares favourably with the owner-occupier sector, and buy to let continues to grow as a proportion of the overall mortgage market,’ said Smee.

‘As the private rented sector looks likely to be the longer term tenure in which more households may live in the future, lenders are actively looking at how they can best evolve their future lending for those landlords who may wish to offer longer term tenancies to their tenants, although concrete landlord demand for such borrowing is not yet clear,’ he added.

‘The economy may be firing blanks but the buy to let market is going great guns. High yields, stagnant property prices and improved financing options are encouraging investors to add to their portfolios,’ said David Whittaker, managing director of Mortgages for Business, a specialist buy to let mortgage broker.

‘Life might have become marginally easier for first time buyers in the last six months, but only marginally. Their life was already about as miserable as it could get. The flow of first time buyers is still barely a trickle, which is sending the excess demand directly into in the rental sector and keeping yields high for buy to let investors. Landlords are understandably trying to take full advantage of the returns on offer, which is why we've seen an increase in the number of buy to let investors trying to refinance in the first quarter as they look to expand their portfolios,’ he pointed out.

‘This activity has been helped by increased competition between the buy to let lenders. Rates and fees are down and there are increasing options for landlords looking to finance more complex deals. The Funding for Lending Scheme too has helped by loosening the supply of credit to lenders, and they are passing the savings on to investors,’ he added.

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