Currently viewing the tag: "consumer"

How Estate Agents Are Regulated And Who Regulates Them

Currently estate agency as a profession is self-regulated. The Office of Fair Trading has previously stated that it believes self-regulation within the industry serves to relieve unnecessary regulatory burdens. However, research carried out by the Guardian newspaper regarding the consumers view on estate agency shows that;

  • Just one in ten people asked thought that estate agents were trustworthy.
  • 70% of people interviewed were of the opinion that estate agents were prone to giving misleading advice.
  • 41% were under the false impression that estate agents need certain qualifications to enable them to practise.

Despite consumer bodies campaigning against self regulation, estate agents are not currently legally obliged to belong to an industry regulatory scheme. Just one third of estate agents in the United Kingdom currently belong to an industry regulatory scheme, according to the Guardian. This can be disconcerting for consumers as taking action against an agency which is guilty of miscode of conduct  that does not belong to such a scheme is not as straightforward; the complaint must be logged directly to the Office of Fair Trading. Even though estate agents are not legally obliged to belong to a scheme, legally they must abide by the rules set down by the Estate Agency Act 1979, amended for undesirable practices.

Within the confines of this Act a complaint may be registered by a consumer if they believe that the estate agent they have instructed has breached their duty of care; this could mean providing misleading information such as presenting a developer as a first time buyer with no chain or not displaying their terms and conditions clearly. If the estate agent concerned is a member of an approved scheme the complaint may be taken to the Property Ombudsman. They will subsequently  look at the case individually and compensation may be awarded to the affected consumer, compensation can be up to a maximum of £25,000. If the agency is not listed with an approved scheme however, the complaint may only be registered with the Office of Fair Trading; in this case the investigation will not look at the individual complaint, but at the agency as a whole, no compensation will be offered despite the conclusion of the investigation.

The most well-known scheme within the estate agency industry is the National Association of Estate Agents; this was founded in 1962 by estate agent Raymond Andrews. The scheme is only available to agents who pass the necessary exams and must abide by the NAEA code of practice. This practice includes protecting clients from fraud, misrepresentation and malpractice; Noncompliance of these rules can result in a fine of up to £5000 per branch and membership will be revoked. Another approved scheme is the Royal Institute of Chartered Surveyors, founded in 1968. It is an independent scheme which regulates property professionals and surveyors; it is suited mainly to agents working with commercial property transactions.

From October 1st 2008, estate agents were legally required to register with an Estate Agents Redress Scheme. This was an Order made under the Estate Agents Act 1979 by the Secretary of State for Business Enterprise and Regulatory Reform. Each of these redress schemes must be approved by the Office of Fair Trading for the registration to be legally binding, one of the approved schemes includes the Property Ombudsman. This was created on May 1st 2009 and was formerly the Ombudsman for Estate Agents created in 1998. The title was changed to reflect the broadening of authority in relation to complaints including commercial and overseas property. The scheme is only available to companies whose director or partner is a member of the National Association of Estate Agents or the Royal Institution of Chartered Surveyors.

The Property Ombudsman provides impartial assistance to any customer who feels they have been treated unfairly. For the complaint to be considered by the Property Ombudsman the agent must have either infringed the legal rights of the consumer, breached the terms of any practice that they are working under or be guilty of maladministration. Although this scheme is voluntary, it is recommended to instruct an agent who is registered with The Property Ombudsman, any complaint about an agency which does not belong to the scheme should be submitted to the Office of Fair Trading.

When selling a property, it is recommended that research is carried out before instructing an estate agent. By choosing an agent who is a member of the National Association of Estate Agents the property vendor can be assured that the necessary qualifications will have been obtained.

If in doubt consumers may verify an agency’s NAEA membership by calling 0844 387 0555.

Written by Urban Sales and Lettings Nationwide Online Estate Agents

Bank of England's Funding For Lending Scheme Beginning To Have Effect

Bank of England’s Funding For Lending Scheme Beginning To Have Effect

The £80 Billion (GBP) Funding for Lending Scheme (FLS), launched in August by the Bank of England (BoE) and HM Treasury, is starting to show signs of having a positive effect.

The multi Billion pound scheme designed to unclog the flow of credit to the UK’s residential homebuyers is having the desired impact as official figures show an upturn in mortgage approvals.

The Funding for Lending Scheme (FLS) makes money available to banks on the condition they pass it on to businesses and households in the form of cheaper loans and mortgages.

The Bank of England have stated that the number of loans approved for residential property purchases rose by 2,103 to 50,024 in September 2012 and the number of loans approved for re-mortgaging increased by 1,860 to 28,343.

Meanwhile, unsecured consumer credit has also increased by £1.2 Billion (GBP) in September 2012, the sharpest rise since February 2008, including an increase of £307 Million (GBP) in credit card borrowing while the remaining £900 Million (GBP) came from overdrafts and unsecured personal loans.

Borrowers have faced even tougher times trying to take out a mortgage in recent months as lenders tightened their lending criteria even further, causing a drop in the proportion of mortgages approved.

The average interest rate on new mortgages also fell slightly, from 3.84% to 3.77%, offering some hope that the recent rise in borrowing costs may also be starting to ease.

Governor of the Bank of England, Sir Mervyn King, said that “More than 20 banking groups, including the five largest lenders in the UK, have signed up to the Funding for Lending Scheme, while funding costs have fallen by around one percentage point”.

However, Sir Mervyn warned the initiative was temporary and lenders would have to accept further losses if normal banking services are ever to make a return.

The reductions in borrowing rates have primarily been aimed at households taking out mortgages with low Loan-To-Value (LTV) mortgages. So they may not help first-time buyers (FTBs) much.

As mentioned last week, borrowers are still faced with some degree of uncertainty when looking for mortgages or credit as despite all the positive noises made by the BoE and the Government, banks are still fairly reluctant to lend.
Read last week’s top story here.

The simplest solution may be to become your own bank!

Private rented sector property rents in the UK are only expected to rise moderately in 2012, remaining almost in line with inflation and salary increases, according to the Belvoir rental index, which records monthly and annual rents across the popular letting agents 140+ UK offices.

Their data shows that in the UK, property rental fluctuation is very regional and this is likely to continue throughout 2012, with areas such as the South East likely to see a higher increase as residential property rental prices force people out of London into the Home Counties.

Dorian Gonsalves, Managing Director of Belvoir Lettings said “With regard to other areas of the UK I think rents will be relatively stable and increases are likely to be very modest. Landlords should be realistic and it is worth noting that, according to the Belvoir rental index, many areas have still not recovered to the level of rents that were being achieved in 2008. I predict that increased rents and stable or decreasing house prices will result in increased rental yields in 2012. However, this is clearly very dependent on the outcome of the Eurozone crisis and its impact on credit and borrowing. The current crisis is making consumers nervous, which will affect both the buy to let and mortgage market”.

A recent phenomenon noted by letting and property managing agents across the country is the occurrence of “double renting”, (homeowners who are struggling to sell are letting out their existing home to provide an on-going income stream and then moving to another lower cost rental property).

Double renting helps avoid the stamp duty and legal costs that are associated with buying and selling, enabling savvy homeowners to remain invested in the property market until the situation improves and sell at a profit.

“I believe that for reasons of flexibility, mobility and budget, 2012 will see a shift towards more people viewing renting as a preferred lifestyle choice rather than a necessity. By renting a property people are able to plan their spending much more accurately and have the flexibility to follow job offers etc. These factors are becoming increasingly important, particularly in the current financial climate. Because of the regional variations in rental yields it is very important for landlords to talk to specialists who understand the local market, as buying in the wrong area could be very costly. We are able to report on regional markets rather than providing a broad brush approach, which is not particularly helpful from a property investment perspective”, explained Mr Gonsalves.

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Private residential renting on the decline?

UK PRS faces mounting rent arrears

The demand for Private Rental Sector (PRS) residential property and the rise in the number of tenants struggling to meet their rental payments on a regular monthly basis is expected to see the decline of the UK residential property rental market.

According to the latest lettings survey from the Association of Residential Letting Agents, (ARLA) 55% of its members reported more tenants than available properties in the last quarter of 2011, down on 74% reported in the previous quarter.

39.2% of ARLA members reported an increase in tenants struggling to pay their rent, over the same period, a figure up from 36.7% the previous quarter.

President of ARLA, Tim Hyatt, said: “With household income decreasing and job uncertainty prevailing, it could be that increasing rental arrears is a sign that the wider economic malaise is having a tangible impact on personal finance – some consumers may have reached the limit of their access to finance, while others may be cutting back as many commentators have predicted. We are reassured by the fact that the number of new tenancies is stable, but we will be watching the market closely in the coming months to determine how significant these latest figures will prove to be”.

The number of First‐Time Buyers (FTB) able to secure finance isn’t expected to significantly increase during 2012 so the demand for the limited supply of private sector rental accommodation will only continue to rise. It won’t be long before rents will resume an upward trend.

With the mortgage market still facing more financial fallout from the Eurozone crisis and the wider economy remaining sluggish, UK credit conditions are unlikely to ease significantly in 2012. As household income become even more stretched during the course of the year, it is expected that the current rental boom will begin to decrease outside of prime areas in the latter half of this year.

With the numbers of tenants having trouble paying their rent being on the rise, UK Landlords are encouraged to use Rent Guarantee products from reputable suppliers such as Legal 4 Landlords as a means to keep their rental income flowing in.
If you are a Landlord who lets a property then you run the risk of rent default by your tenant. Even the best checks and references cannot predict a tenant falling on hard times and not being able to pay their rent. Could you cover your expenditure if this happened?

In the current economic climate, many landlords are finding their default rates soar as tenants struggle with rising unemployment and increased bills. Recovering arrears can be difficult and costly for landlords, without any guarantee of success.
At Legal 4 Landlords, our Rent Guarantee Insurance will cover you against your tenant defaulting or failing to pay the rent

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