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UK seeing a crisis in private rented sector due to tumble in landlord confidence
Landlords’ confidence in the buy to let sector in the UK has collapsed to an all-time low and is now worse than levels witnessed during the financial crash, according to the country’s biggest landlord association. Richard Lambert, chief executive officer of the National Landlords Association (NLA), told delegates at the Building Societies Association’s (BSA) annual meeting for mortgage professionals that the situation is worrying. He explained that confidence in landlords’ business expectations has tumbled by more than a third over the past year, down from 67% to an all-time low of 43% and the current level of confidence in the sector is now 5% lower than levels witnessed after the financial crash in 2007. He pointed out that the actions taken by the Chancellor in last year’s Summer Budget and Autumn Statements has led the NLA to reverse its previous prediction of the continued growth of the private rented sector (PRS) by another million more households over the next five years. It now forecasts that, if landlords follow through on their intentions, there will be a dramatic sell-off of 500,000 properties in the next 12 months, followed by another 100,000 sold each year to 2021. The net effect will be that the PRS be smaller by up to 136,000 properties. The data, from the latest NLA quarterly landlord panel survey, also shows that the proportion of landlords looking to sell in next 12 months has more than doubled since July 2015, up from 7% to 19%. Over the next few years some 28% of landlords don’t plan purchase any more properties, 10% plan to reduce their portfolio and 5% plan to sell up completely. ‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few buy to le products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success. But there is no guarantee that these will be the one or two bedroom flats or small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas,’ he explained. ‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small scale part time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty, and who appear most likely to leave the sector,’ Lambert told the meeting. ‘What happens to the people these landlords house if they still can’t buy and there are fewer and fewer properties available to rent?’ he added. Continue reading
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
UK housing supply halves in 10 years and first time buyers still struggle
The supply of available housing to buy in the UK has almost halved in 10 years and first time buyers are still struggling to get on the housing ladder, according to estate agents. The average number of properties available per branch in December 2015 fell to 37 properties, the latest housing market report from the National Association of Estate Agents (NAEA) shows. It is the joint lowest figure for 2015 with September, and almost half the number available in December 2005 when there were an average 72 houses per branch. There were 45 houses available in December 2014. While the number of house hunters registered per branch fell to 374 in December from 403 last month, an expected seasonal trend, the number of house hunters per branch has gradually increased year on year. In December 2014, there were 360 potential buyers registered at each branch, up from 302 in December 2005. Low supply affected the number of sales in December, as NAEA members reported an average of seven sales per member branch, an expected seasonal dip, and the lowest recorded in 2015. ‘Whilst we expect figures for supply and demand to be seasonally low in December, 2015 overall does not paint a positive picture for the housing market. Supply of housing is half of what it was 10 years ago,’ said Mark Hayward, NAEA managing director. ‘Yet the number of home buyers on the books has been gradually increasing. When there is such a huge and widening gap between supply and demand, a level playing field seems further out of reach for many would be house buyers,’ he added. The report also suggests that the Government’s recent efforts to help first time buyers enter the property market such as Help to Buy and plans to build new starter homes are yet to take effect. The number of sales to first time buyers stands 24%, a 2% drop from December 2014. It also reveals that the recent 3% increase to stamp duty on buyers’ second properties has created movement in the market. Some 44% of NAEA agents have seen an increase in house buyers trying to beat these reforms, and snap up their properties before they come into force in April. ‘The issue of lack of supply needs to be solved, but it isn’t going to be done anytime soon. We are still waiting to see new homes being built and whilst we wait, house prices continue to rise,’ said Hayward. ‘There is some potential light for first time buyers however, once the new tax rate increase in April is in place we may see less investment from buy to let or second home investors, which may mean less competition for first time buyers,’ he added. Continue reading
