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New Data Reveals UK Private Rental Sector Hotspots

New Data Reveals UK Private Rental Sector Hotspots

Private Rental Sector Rents Continue To Rise
In 10 Out Of 12 UK Regions

New data published by HomeLet has revealed some UK private rental sector hotspots for property investors and portfolio landlords to consider.

In some areas of the UK PRS rents have continued to increase, despite all the doom mongering that is going on in the media, with rents increasing by the most in:

  • Leicester – PRS rents up 45% on 2013
  • Southall – PRS rents up 38% on 2013
  • Cambridge – PRS rents up 24% on 2013

Meanwhile other parts of the UK witnessed the biggest falls in rental prices in 2014 on new rental agreements with the biggest rental price falls recorded in:

  • Colchester PRS rents Down 24% on 2013 prices
  • Croydon – PRS rents down 23% on 2013
  • Brighton – PRS fall 18% lower than 2013 prices.

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UK PRS Rents Rise Faster Than Tenant Income

UK PRS Rents Rise Faster Than Tenant Income

Working tenants renting property in the UK private rented sector have diminishing amounts of disposable income after new research revealed that average PRS rents rose four times faster than average UK salaries increased.

The March 2013 HomeLet Rental Index shows the average cost of renting property in the UK private rented sector increased by 3.3% during the first quarter of 2013 to average £776 (GBP) per month.

In contrast, the average amount working tenants earn in a year only increased by a minimal 0.8% over the same period to £27,300 (GBP).

Although the 3.3% rise is much higher than that of tenant income, the increase in PRS rents has apparently slowed.

Data from March’s report also shows the average cost of renting a property in the UK PRS in the first quarter of 2012 increased by 3.4% and a significant 6.9% in 2011.

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Two Executives have been suspended at the UK’s largest tenant referencing firm, HomeLet, while an investigation into the selling of tenants’ insurance policies is under way.

The investigation follows a crackdown by the Financial Services Authority on the selling of contents insurance policies by HomeLet, which is one of the brands owned by insurance giant Barbon, (the company formed from the former insurance wing of the collapsed property services firm Erinaceous).

The probe revolves around a clause in lettings agents contracts, making it a mandatory requirement for tenants to take out tenants’ content insurance.

It is understood that the clause – which was apparently a long-standing one and not objected to by the FSA during earlier inspections – was originally inserted by agents on the advice of HomeLet.

HomeLet sells its policies to landlords and tenants through letting agents, and claims to sell one in five of all tenants’ references. It has a network of 3,000 lettings agents, all of whom have apparently been contacted and told to remove the clause.

It is understood that the FSA, which requires HomeLet to make sure the agents do not breach the regulator’s rules, has been concerned on two fronts: first, the possibility that making purchase of insurance a condition of tenancy could be an unfair term; and secondly, because the clause breached FSA and OFT guidelines which state that a tenant cannot be asked to buy their own contents insurance – although, confusingly, a tenant can be asked to buy insurance that covers their landlord’s possessions.

The HomeLet spokesperson said: “HomeLet is involved in a review process which may lead to policyholders with tenants contents policies being contacted about how such contracts were purchased. This is a thorough process to ensure it meets the company’s required standards. HomeLet continues to provide insurance products and services to existing and new customers. HomeLet is committed to best practice in the service it offers to landlords and tenants via agents.”

The next step in the investigation will be for HomeLet to contact tenants who were sold the HomeLet contents insurance. HomeLet says the tenants will be contacted ‘shortly’.

It is thought the FSA could have other lettings insurance firms in its sights.

Source: Estate Agent Today

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