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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Leeds experiences an increase in first time buyers

In February the number of first time buyers rose by 3% in February, making the best start to the year since 2008, according to new research released by the Council of Mortgage Lenders.

Activity from first time buyers was 17% stronger in February 2013 than in February of last year, and merged with January reached the largest number of first time buyers in the first two months of this year since 2008.

Lending to home movers dropped, contributing to an overall decline in house buying lending, while remortgage lending also calmed.

A sum of 16,400 loans were given to first-time buyers in February, up on 15,900 in January and 14,000 at the same time last year. By value, loans to first time buyers came to £2 billion, the same total as the previous month, yet 18% higher than February 2012 (£1.7 billion).

First-time buyers made up 43% of all house purchase loans in February. This was the sixth successive month that this indicator has been at or above 40%, indicating that market conditions are continuing to get better for first time buyers.

Signs of loan affordability also demonstrates that the market was somewhat more favourable for first time buyers generally borrowed a smaller amount in February than in January, both in absolute terms and relative to their income. First time buyers generally borrowed 3.19 times their income in February, down from 3.2 times in January, while the average loan to value ratio remained at 80%.

This is likely to be connected with a shift towards the purchase of less expensive properties by first time buyers, with a small rise in the amount of properties bought for less than £125,000.

In February lending to home movers fell for the third successive month. A total of 21,500 loans were given to borrowers who moved in February, down by 4% in comparison with January and a decline of 3% on February last year.

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Minister says, substantial changes ahead for letting industry

Huge growth and a gradual transformation in its structure lie ahead for the private rental sector, said housing minister Mark Prisk in an important speech.

He spoke at the Law Society, in London, highlighting just how alteration the new build-to-rent industry will be for the whole housing market.

He said, “For too long, our housing markets have been dysfunctional. For much of the past two decades, we have been consistently building half of what we needed, year on year.

“The result has been a serious imbalance between supply and demand, and while this has led to potential opportunities for investors, there are significant social consequences too.

“So as a government, we’ve had to step back and adopt a new, comprehensive approach to the problem. An approach which reaches across all tenures – owner-occupied, affordable, and private rented – understands the relationship between the three, and seeks to address the deep dysfunctionality in supply and demand.”

Prisk went on: “Over the last decade, the rented sector has become increasingly important in addressing people’s housing needs. The sector now houses 3.8 million households. Mobile patterns of work and reduced mortgage availability have made renting a more realistic choice for many more people, and the effect has been a strong rise in demand over the last decade.

“So far, this rising demand has been met principally by individual landlords, who have been responsible for adding approximately 1.5 million new homes to the sector over the past decade. But there is real potential to go further, and particularly to bring new players into the market.

“Put simply, we want a bigger and better private rented sector, a sector in which large scale and experienced institutional investors can help the market not simply grow, but also to mature.

“Small-scale individual landlords operate around the world, but in many countries, such as the US, Germany and Switzerland, institutional investment in the private rented sector is much stronger and more established than it is here. Evidence from those markets shows that where institutional investment is stronger, costs are driven down and the sector becomes more professional, with a longer-term perspective.

“That’s what we want to encourage here. It’s a change which has the potential to underpin sustained growth of the entire private rented sector, and offer beneficial changes to the market as a whole.”

In Prisk’ speech he also announced a new private rented sector taskforce. This will be commanded by Andrew Stanford, former head of Cluttons Residential. Other members include Julian D’Arcy, a former chairman of Knight Frank, chartered surveyor Joanna Embley, Tracey Hartley of Grainger, and Dominic Martin of EC Harris.

Prisk said, “The role of the taskforce will be to connect investors with opportunities for long-term investment in the sector and help to break down actual and perceived barriers to entry. They will work with the sector to kickstart the delivery of innovative, high-quality and large-scale rented projects.

“And they will bring developers, management bodies and institutional investors together to help you get the most from both the private rented sector Housing Guarantees and the Build to Rent Fund.”

Prisk concluded, “We believe that the private rented sector is a vital part of a functioning housing market, and we want it to get bigger and better.

“A sector in which supply keeps pace with demand, large investors play an increasing role, and government policy is set for the long term.

“Only in this way will private rented housing fully realise its potential alongside other tenures. It’s why we’ve introduced Build to Rent and our Housing Guarantees.

“Our interventions are radical and significant. And that’s because this is a long-term commitment, not a short-term fix.

“Success will not be easy or quick. There will be further obstacles along the way. After all, this is an untested market.

“But working together, I believe we can rebalance our housing markets, and so provide the right type and quality of homes for the next generation.”

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UK’s biggest agent says, now is the best time to buy-to-let

Countrywide has reported, that in the first quarter of this year rents increased and rent arrears declined and lettings times became quicker.

The biggest property chain says they supply the ideal recipe for buy-to-let investors. It places average UK rental yields at 6.2%.

The Countrywide results, based on over 50,000 properties, is believed to be the biggest index of its kind, covering the whole of the UK.

The data shows that rent increased the most in Wales and the East of England, to £616 and £814 per month. The average rents in Outer London went up by 5.4% year on year to £1,107 per month. Inner London had the highest rents at £2,387 per month in the first three months of this year, up 1,9% from the previous year.

Nevertheless, rents decreased in the South East, down 1.1% to £1,054 per month.

Average rents also fell in Scotland, down 2.6% to £580 per month. Scotland was also the only place in the UK with a rise in arrears, up 2.6% from the previous year to 6.6% of the rent roll.

The highest arrears of rents due was in Central London at 7.3%, regardless of the fall of 0.1% over the year.

The study indicated that increasing rents and stabilising house prices are making rental yields very attractive to investors, with the average yield 6.2%. The largest rental yield was in Wales at 6.7% closely followed by both the North and Midlands at 6.5%. The lowest rental yield was in Central London at 4.6%.

Based on the average yield and the QI 2013 average monthly rent of £835, the average investor could anticipate to make a total annual profit of roughly £10,000 over the next 12 months per property.

Countrywide uncovered that the average time it took to rent out a property in the first three months of 2013 was 14.5 days, down on last year when it was 15.1 days.

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Demand for cheaper room shares for tenants is on the rise

Welcome to The Anthony & Co. Blog! Here we will be providing you with the latest and most up-to-date news about the property industry.

The amount of people looking to rent rooms in house shares and flats seems to be increasing as more people are trying to save money on their living costs.

Research has shown, that numbers of applicants are rising and easily outweighs supply.

Last year, it was recorded that an average of 36,886 people searching for a room at a single time. Currently, it has been recorded that there are 37,468, but only 7,000 rooms, indicating a huge shortage. The majority of landlords are looking for a non-smoking professional female as a flatmate.

The greatest demand for flat shares is of that in London, 15,162 prospective flat-sharers are registered, with the second highest, Manchester with 1,578.

Before having to pay tax, live-in-landlords can earn up to £4,250 a year, under the Government’s Rent a Room scheme.

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