Some good news to kick things off for a change! Ratings agency Moody’s has noticed an improvement in the UK’s buy-to-let mortgage market. Having looked at the three months up to May, they said that repossessions remained stable and that it looks as though performance in the buy-to-let sector will remain steady.
Moody’s said, “Performance in this sector has been stable for the past year mainly because of a low interest rate environment, which has helped borrower affordability, and relatively low job losses, which have helped tenants continue to pay their rent.
“Interest rates will remain low in 2012 and unemployment will rise only slightly to 8.7% in 2012 from an average of 8.0% in 2011.
“Also, house prices will remain within a plus-or-minus 3% band, which will help contain losses on foreclosed properties.”
Sadly, what goes up must come down, and it is the latest research from Mydeposits which is set to deflate the early positivity. They have found that nearly one-fifth (19%) of landlords say that rent arrears among their student tenants increased over the last academic year, which doesn’t bode well considering the student fees are set to treble from this coming September to the maximum £9,000 per year in many universities across the country, including the University of Leeds, Leeds College of Music, and near maximal fees from Leeds Met and Leeds College of Art.
However, the landlords don’t seem to be too concerned, as 70% of those surveyed say that they are optimistic about the future investment prospects for student lets. Approximately one-quarter of landlords have property let to students.
According to the data, the average time taken for students to pay outstanding rent was 18 days. The main reason for falling into arrears in the first place was because of the mismanagement of funds (69%), while student fees was the reason in just one in five cases (19%).
Eddie Hooker, CEO of Mydeposits, said, “It’s encouraging to see that landlords remain positive about the future investment prospects for the student lettings market.
“However, with planned increases to tuition fees just around the corner and tough times ahead for many students, it’s a concern for all that rent arrears seem to be on the rise.”
The start of the new academic year is now just a little over a month away, and with this in mind the National Landlords Association (NLA) has issued a reminder to landlords to focus on getting tenancies in shape for the next wave of student lets.
Carolyn Uphill, NLA director and university landlord, said, “How landlords manage the start of a tenancy can have a real impact on their tenants’ customer experience and their business as a whole, so the check-in meeting is a vital part of this process.
“It is important that all members of the group attend the check-in meeting if possible and that landlords are contactable for any early questions or problems, as this will save a lot of hassle in the long term and help to avoid a dispute occurring at the end of the tenancy.”
Not too long ago we reported the news of the decision by Newham Council to license all private landlords, which will cover 35,000 private tenancies in the borough, meaning all local landlords have to sign up or face a fine of £20,000. Robert Nichols, director of Edmund Cude, the oldest lettings agency in London, has spoken out against the scheme and the wider implications and potential damage that could result if other local authorities choose to adopt similar initiatives.
He said, “Let’s be clear – there are bad landlords across the capital, but they are a tiny proportion. Attempting to inspect 35,000 properties is a huge financial undertaking and Newham Council has bitten off more than it can chew.
“At this stage, our concern is that other councils – both in London and further afield – will look to embark on similar initiatives before the negative fallout of Newham’s licensing regulation becomes apparent.
“The initiative itself is deeply flawed. By imposing this ill-conceived regulation, Newham could lead to some landlords leaving the borough altogether, thus reducing available housing stock.
“All this comes at a time when the private rental sector plays an invaluable role in reducing the national housing deficit, and this extra level of bureaucracy will simply put off potential landlords.”
The scheme is meant to be a way of dealing with rogue landlords. But the problem with rogue landlords is that, unlike regular landlords, they don’t comply with things like laws and regulations, and make a habit of getting away with it. There is the possibility that rogue landlords may not be too greatly affected, while the good landlords who were never doing anything wrong in the first place end up having an unnecessary bureaucratic obstacle placed before them. The results of this scheme should make for interesting reading in any case.
Mr Nichols will no doubt be somewhat displeased to learn that Kitty Ussher, the former treasury minister, has had an essay published by the democratic socialist organisation the Fabian Society, in which she wrote, “All landlords should be licensed and required to raise the quality of their homes to the Decent Homes standard required by the Department for Communities and Local Government.
“If they are unable to do so, they should hand over long-term management of their property to a social letting agency in return for a fixed, lower rate of return.”
Ussher is also known to have backed Ken Livingstone’s call for rent caps in his effort to become Mayor of London. She was formerly the Burnley MP, but did not stand for re-election in 2011 after being shamed by the expenses scandal.
New research from the Association of Residential Letting Agents (ARLA) has shown that tenants are staying longer in their properties than ever before.
The average tenancy in the UK has risen to a record high of 20 months, mainly attributed to the fierce competition for new properties. 58% of ARLA member offices state that there are more tenants than there are available properties, which is 2% higher than in the previous quarter.
Ian Potter, ARLA Managing Director, said, “The PRS is clearly picking the slack resulting from a flat housing market and the ongoing lack of mortgage finance. As tenants stay in properties for longer, the importance of regulation in the sector becomes even more pressing.”
Letting agents are also witnessing a new trend with regard to the type of tenant they are encountering; 55% of new tenants are couples or young families who are finding it difficult to purchase their first home. ‘Frustrated first-time buyers’ are the most common group of renter ARLA members are encountering. There are more of them than there are tenants who rent because they want to, those who have sold their property to rent, and those whose homes were repossessed.
Mr Potter added, “Renting offers significant flexibility, which can be vital for working professionals who need to move in order to find employment. However, with an increasing number of families with younger children also looking to rent, having a secure and stable home environment has never been more important.
“For this reason, I would urge tenants to use a licensed ARLA member. The lettings industry is unregulated and renters must be confident that they are receiving the best possible service. All ARLA licensed agents must adhere to a strict code of conduct, as well as offering client money protection and redress schemes, which protect all parties if things go wrong.”