Posts tagged: letting
The issue of an unregulated private letting industry has hit the headlines on a number of occasions in recent weeks and one of the problems faced by tenants has been highlighted this week by Labour’s Opposition Government.
Hilary Benn, the shadow secretary of state for communities and local government has spoken out over the high charges placed by letting agents and has claimed that some are genuinely ‘ripping off’ landlords and tenants. The numbers in question don’t just relate to commission charges as Labour are also concerned about fees for add-ons such as reference checking and sending renewal letters.
The Labour Party underlined their concerns amidst claims that in 2013, the numbers of homes rented out privately is set to exceed social housing for the first time and their findings suggest that agents’ charges vary to a huge extent.
The charges for reference checking range from a mere £10.00 all the way up to an unnecessarily excessive £275.00 while the charge for renewing a tenancy - a process which involves sending an e-mail or a letter and asking for it to be signed and returned – varied from £12.00 right up to £220.00.
“What is actually £220 of cost in terms of administration if you had just to send an email, open an envelope, stick it on file?” Asked Mr Benn.
“That seems to me a rip-off. It’s a problem not just for tenants but also for landlords.”
Hilary Benn and his party have promised that they will look into ways in which caps can be introduced in the private sector and this is a move that has been widely welcomed by Landlords and Tenants Groups right across the country.
“Anyone can set themselves up as a letting agent, and then potentially abscond with hundreds of thousands of pounds of people’s cash,” said Ian Fletcher, Director of Policy at the British Property Federation.
“It is therefore counterintuitive that estate agents who handle relatively little cash are regulated, but letting agents who handle lots of cash are not.”
Labour has conceded that part of the problem lies in the fact that the levels of social housing weren’t increased when they were in power. As a result, more and more home seekers are turning to the private rental sector as they are unable to get on to the property ladder and into home ownership.
In the present day, the Labour Party recognise that the private sector is therefore meeting an urgent need and it seems set to press on with finding a solution to any excessive agents’ charges.
In previous weeks, studies and surveys have told us that many families are currently caught up in a rental trap. With the lack of available mortgages and the struggles for first time buyers to raise a deposit for a new property, a significant proportion of potential buyers are having to be patient in the current climate.
However, there are increasing suggestions that this pattern is set to become a permanent way of life for this and possibly future generations. A study by Cambridge University which has been published by The Observer suggests that much of the UK buying public face being locked out of the market for the long term.
In the present day, the survey claims that 35% of the population are homeowners although that figure has dropped from 43% in 1993. It goes on to claim that further decline is set to follow and that as few as 27% of us will own our own homes by the year 2025.
The report indicates that those with families are in the greatest danger of renting for life as they continue to spend over half their income on monthly rental charges. As a result, there is simply no money left to save for a deposit and they remain locked in to the prospect of renting on a permanent basis.
“The worse the economy, the more the likelihood of this group’s housing being in the private rented sector,” the report continues. “In London, if current trends continue, tenants will soon outnumber owners, with important political, social and economic implications.”
The news has been met with resignation in some areas and the housing organisation Shelter says that the government has to recognise that renting has now become a ‘way of life’ for many families. It has gone on to call for major investment in the private rental sector in order to improve standards in all areas.
“This report shows what is fast becoming the new reality of our housing market in the current economic climate: home ownership continuing to fall while renting becomes a way of life for British families,” said Shelter’s Chief Executive Campbell Robb.
“Yet despite the growing pressure on the rental market, the government’s recent housing strategy virtually ignored the sector and did little to address the issues of affordability, stability and quality that so many renters face. It’s time government woke up to the fact that ‘rental Britain’ is here to stay.”
Many of those families would naturally want to retain a hope that they can still move into home ownership and as such, will be hoping that the future isn’t as bleak as the report suggests. As far as Shelter are concerned however, maybe a proportion should really be considering that rental has now become permanent.
Renting is back in the spotlight this week with the news that more and more homes are being put on the private rental market by owners who simply can’t sell their properties. However, it seems that despite this increase in available homes, demand in the rental sector is still outstripping supply by some considerable margin.
The findings have come from the Association of Residential Letting Agents (Arla) who have noted a significant increase in rental properties that have come on to the market as a result of this scenario.
However, in many cases, the homes remain on the market and this could prove a problem for anyone renting and looking for a long term arrangement.
“Renting is often seen as a low-hassle, lower risk option when compared to purchasing a home, yet many people find the prospect of renting a home daunting, whatever their age or experience,” said Ian Potter, Operations Manager at Arla.
“First time tenants – young or old – should remember to keep the process as focussed and simple as possible. Keeping to some simple guidelines can help tenants navigate the process from property hunting to signing a tenancy agreement.”
The organisation has gone on to provide a series of tips for anyone renting for the very first time and these can be found in full at the website – www.arla.co.uk.
Included in the advice is a tip to research your postcode, which has a great bearing on the price you can expect to pay. Sometimes, even moving a mile away from a certain location will have a favourable effect on your monthly charge so remember to ask a letting agent for advice.
Arla also advise that the lettings industry is unregulated and at present, agents do not have to subscribe to an Ombudsman scheme. However, looking for an agent that is Arla affiliated will help to give you peace of mind.
You should also make sure that your deposit is safeguarded. This is a significant outlay for tenants and by securing it in a scheme such as TDS (the Tenancy Deposit Scheme) you can help to safeguard your money.
Arla also advises to get a proper inventory drawn up and agreed when you move in. This will identify any damage to the home – and its contents if you are renting furnished and will prevent any problems when the time comes to move out again.
Full details of this advice can be found on the Arla website and if you are renting for the first time, it makes sense to follow them and be sure of what you are entering into.
Property lettings are put under the microscope this week as a survey released by one prominent agent suggests that the costs of renting your home may be dropping. Meanwhile, the survey goes on to suggest that Christmas spending is one of the factors currently having an impact on a rise in late rental payments.
LSL Property Services claim that the average monthly rental payment across the UK in December fell by 0.8% from the previous month. However, LSL go on to state that this still represents an increase of 4% on comparative prices from December 2010.
The fall comes after ten straight months of rental increases, although this does represent a fairly familiar ‘seasonal decrease’.
“The rental market was sheltered from the full impact of the seasonal lull by the strength of underlying tenant demand as many prospective renters took the opportunity to move in the run-up to Christmas at a time when the market is traditionally less competitive,” said David Newnes, director at LSL.
The survey also revealed an increase in late rental payments which it blames squarely on the impact from Christmas spending. The findings suggest that 10.7% of all rental payments were late or unpaid in December, as opposed to a figure of 9.3% from the previous month.
Those figures have prompted the Association of Residential Letting Agents to highlight the difficulties faced by tenants and landlords alike and has reiterated the need for watertight contracts, preferably from a recognised agent.
“It is more critical than ever to take references and conduct thorough research before signing a tenancy agreement,” said Arla’s President Tim Hyatt.
“Seeking advice from a professional, licensed letting agent is the best way to ensure tenants and landlords’ rights are protected.”
The fall in monthly rental prices may be seen by those looking to rent as a positive sign however, industry experts are warning against too much excitement, while affirming their belief that this is no more than a seasonal anomaly.
“It may be premature to say the UK rental market has peaked and that we are about to see rents fall away,” said Matt Hutchinson, director at Spareroom.co.uk.
“What we are probably seeing is a temporary blip, a natural cooling off period for the rental market.”
Overall, rental prices are expected to shortly begin climbing once again while continuing to increase throughout 2012 but the next survey run along similar lines may give us a more telling picture.
A landlord has been left picking up the pieces after a tenant wrecked his property and then walked away from court without paying a penny. £20,000 of damage was caused in total rendering the property inhabitable until the damage is put right.
Teenage tenant, Lee Davis destroyed the flat he was renting in Darlington following a request to vacate the property due to non-payment of rent. Most tenants would simply accept this as a fair request, but Mr Davis was intent on going on a rampage instead.
The Judge, whilst admitting that he would like nothing better than to make Mr Davis repay the costs of repairing the property, was only able to give the defendant 300 hours of unpaid community service as punishment. He said his hands were tied as there was no way that Mr Davis could find the funds to pay for the damage. The defendant walked away whilst the landlord was left open-mouthed and out of pocket.
These problems are actually fairly common in the rental world. Often, when discrepancies arise between tenants and landlords they are settled amicably, but occasionally a tenant will take umbrage over a request or issue and set about destroying their surroundings in anger. Many of these issues can of course be avoided by carrying out thorough checks of tenants before agreeing to let the property. The good news is that the majority of tenants are law-abiding, respectful and honest and will give no cause for concern.
We don’t believe thorough checks were made in the case of Mr Davis and that if checks were made there was probably fraudulent information supplied or shortcuts taken. A thorough tenant check requires credit checks, personal character references, financial checks, and employment checks to ensure the tenant is who they say they are and that they can afford to pay the rent each month. £20,000 is not a figure that any landlord wants to think about coughing up and we think this landlord probably cut their losses and sold the property in the end. A big price to pay for not checking up on a tenant.
Any landlord who has suffered losses because of malicious damage will understand how important it is to conduct proper checks of their tenants. Of course, even a tenant that looks great on paper can suddenly turn into whirling dervish when tempers fray and there is little you can do in these cases.
In addition to carrying out the right level of checks you should also add malicious damage to your landlord insurance. Many low price insurance policies won’t usually include this as standard so it’s worth covering your back and your property.
People have been investing in buy-to-let property for years, nothing new there. For centuries tenants have been renting from landlords, but it’s only been recently that the average ‘man on the street’ has had unprecedented access to finance products to use for investment purposes. Until the credit crunch bit, lenders were practically falling over themselves to provide buy-to-let finance.
However, since the economic downturn, the cost of buy-to-let finance for lenders has increased dramatically. Lenders are now reviewing their lending criteria so that only those cream of the crop investors get the best deals.
If you are serious in investing in property and you have the finances to do so, the market is still viable, but you should review our golden rules of property investment before you start.
Research is King
You wouldn’t buy a car without knowing the make, model or mileage and the same principles apply to property. Even more so! Research your market thoroughly including the area you are thinking of buying in, any regeneration plans, the local transport links, and also other amenities such as schools and shops. Any property 10 minutes away from transport and local amenities is a safe bet!
Location, Location, Location
Consider who your ideal tenants would be. You need high quality locations to attract quality tenants.
How to Buy Well
When purchasing a property, consider content and price. This could save you money in the long run if white goods and furnishing could be included in the price too.
Make the Numbers Work
Buy a property that supports capital appreciation. Make sure you include all the costs involved in the property purchase including legal fees, service charges, stamp duty, contingency and ground rent so that you can afford any void periods that occur between tenancies. Many people ignore these costs and it can be a catastrophic mistake.
Use the Right Advisors
It’s essential that you use good mortgage and letting advisors. A regulated advisor will ensure you have access to the best deals that are free from any fees and which operate in alignment with your investment plans. A good letting agent will work to keep void periods to a minimum.
Don’t Expect to Get Rich Quick
Property investment needs to be approached with care and patience. This is a long-term investment opportunity.
Supply and Demand
Speak to local agents to see what is particularly needed in your chosen area. This will help you to meet the need and to attract tenants easily.
Head Not Heart
Don’t be ruled by your heart when making decisions. If you are not going to be living in your investment property you should only furnish and decorate it to a clean and basic standard unless you want to attract high end professionals. Speak to local agents to understand the quality that is expected.
Avoid the Gimmicks
Be wary of any deals offering incentives, such as no money down for example. Also, so-called get rich quick schemes should be avoided like the plague. A few years ago these might have been worth a punt, but not right now.
Keep Pricing Real
Never pay over the odds when purchasing an investment property. You should never pay up-front fees, finder’s fees or commissions prior to completion.
In summary, your aim should be to find a property that generates long-term wealth. There are many solid investment opportunities out there for those with the finance available.
If you’re looking for a little extra income and you don’t mind sharing your home, letting out a room could be a great solution. You could potentially make up to £4,250 from letting out a spare room and what’s more, it’s tax free!
The Government’s Rent-a-Room scheme offers some really great tax advantages and makes it easier to take on tenants. Our guide tells you how to find the right tenant and the type of agreement you should make to ensure everything goes to plan.
Who can let a room out?
Anybody owning a property in the UK who uses it as their primary residence can rent to a tenant under the Rent-a-Room initiative. If you rent your property you may also be eligible depending on the terms of your lease. If you have a mortgage you should check with your lender and home insurance company to ensure you are not contravening any terms or conditions.
What are the advantages and disadvantages of letting out a room?
Of course, the main advantage to letting out a room in your home is money! When you let out a room you do not have to declare the income so long as the total doesn’t exceed £4,250 a year. This means you don’t have to worry about offsetting things such as accountancy services, bills, expenses, or cleaning services against your income.
However, the disadvantages of the Rent-a-Room scheme are also financial. For example, you cannot claim any expenses against the income you receive through the letting. Also, if you receive more than £4,250 per year on total (you may also be charging for meals and laundry services) you will have to declare the additional amount and pay the relevant amount of tax.
Would the scheme work for you?
Before you start advertising a room for rent it’s a good idea to sit down with a piece of paper and work out if the scheme is right for you. Think about how much you are likely to get in rent. You can look around local listings to find out how much the local rent rates are. Also, think about the additional expenses you may incur such as additional charges on your buildings and contents insurance, accountancy fees, and letting agents’ fees if you use one. You utility bills will also increase and you may have to pay for advertising the room. All of these expenses will be deducted from your total income so it is worth working out how much profit you could potentially make before you start.
If your likely income from renting out your room is likely to be in the region of £4,250 with little in the way of expenses then the scheme is a safe bet. If however, your expenses are more likely to be thousands of pounds then you would probably be best to declare the income and pay tax normally.
Finding the Right Tenant
Another VERY important consideration is the tenant. You are going to be sharing your house with a stranger. How does that sit with you? If you are happy to share your kitchen, bathroom and living space with a stranger then you’re ready to proceed. If not, then perhaps it may not be for you unless you can find a friend who needs a room to rent.
Finding a tenant should be pretty easy as there is a big call for rented rooms right now. Advertise in your local paper or on free local listings online. You could also use a letting agent although this will incur a fee. A tenancy agreement should be drawn up also and you can find templates online or ask your letting agent for assistance with this.
If you have a room in your home that you simply don’t use and that is suitable for letting then this is a great way of making a little extra income. More and more people in the UK are looking to rent so you should be able to find a suitable tenant very quickly.