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Tenants Charter Proposals For Longer Tenancies Breach Mortgage Lenders Current Buy-To-Let Mortgage Terms

Tenants Charter Proposals For Longer Tenancies Breach Mortgage Lenders Current Buy-To-Let Mortgage Terms

Industry welcome to weak tenants’ charter that could see UK PRS landlords at odds with

Buy-To-Let Mortgage Lenders

The new tenants’ charter was announced by the Secretary of State for Communities and Local Government (CLG), Eric Pickles, last Wednesday, allowing tenants to ask for longer tenancies and better transparency of letting agents’ fees.

The new tenants’ charter will also aim to force all lettings and property managing agents controlling PRS rental properties to join a compulsory redress scheme.

The Tenants’ Charter, published for consultation, outlines what tenants should be looking out for at every stage when renting a property in the UK’s private rented sector, including lettings agents having to inform customers what all their fees are upfront, before they have committed to anything, including visiting a property.

However, the introduction of these terms under the banner of the tenants’ charter could threaten the business future of large numbers of landlords who would technically be in breach of the strict buy-to-let mortgage terms imposed by many mortgage lenders, which generally stipulate that tenancy agreements are to be for a period of no more than one year.

Secretary Of State For Communities & Local Government, Eric Pickles

Secretary Of State For Communities & Local Government, Eric Pickles

Mr Pickles stated that the Government intend to publish a code of practice setting standards for the management of property in the private rental sector (PRS) along with guidance setting out the role of public bodies in protecting tenants from illegal eviction.

Mr Pickles said: “This government is on the side of hardworking people and the last thing we want to do is hurt tenants and kill (property) investment by increasing costs and strangling the sector with red tape. But tenants deserve better value for money, and dodgy landlords should be under no illusion they can provide a shoddy service with impunity. These proposals will raise the quality and choice of rental accommodation, root out the cowboys and rogue operators in the sector, and give tenants the confidence to request longer fixed-term, family-friendly tenancies that meet their needs”

Mr Pickles also said that the Government will develop a model tenancy agreement which will clearly set out the rights and responsibilities of tenants and landlords, and ensure families can benefit from longer tenancies, without changing the existing legal framework for the rental market. He said “Longer tenancies will give families greater certainty and security, especially for those with children at school, and reduce costs for both tenants and landlords who will not have to pay letting agents to arrange frequent contract renewals.”

Clive Betts MP, Chair of the Communities and Local Government Committee said: “I am pleased that the Government has embraced many of the recommendations in our private rented sector report. The proposals for a tenants’ charter and model tenancy agreements reflect our calls for greater awareness of rights and responsibilities. Far too often the security needed by families is not being provided by the private rented sector. I am pleased, therefore, that the Government has listened to what the Committee said about the need for more family friendly tenancies. It is also welcome that the Government is taking forward our proposal to allow rent and housing benefit to be clawed back when landlords have been convicted of letting out dangerous property. The Committee will be watching closely to ensure that they are translated into action. We will also press to ensure that the Government’s gathering of information on selective licensing leads to action to raise standards. Much remains to be done if renting is to become an attractive alternative to owner occupation. It is disappointing; therefore, that the Government does not see fit to crack down on cowboy letting agents and their rip off fees and charges. It is also regrettable that the Government has declined to give local authorities the powers and freedom they need to improve housing in their areas.”

Tenants Charter Proposals For Longer Tenancies Breach Mortgage Lenders Current
Buy-To-Let Mortgage Terms

Property professionals generally agree with the introduction of the new tenants’ charter but many think that the Government have sidestepped the opportunity to enforce much tighter regulation of landlords in the private rental sector and lettings and property managing agents in particular and many feel that the new measures fall short of what is really needed.

It will be interesting to see if the Government put pressure on the banks and mainstream mortgage lenders to abolish or ignore such limiting clauses, allowing them to deliver on the real aim of the tenants’ charter.

Caroline Kenny, an executive of the UK Association of Letting Agents (UKALA) wants the Government to build on the experience and expertise of those industry bodies which already require higher standards of their members. Commenting “Responsible agents who choose to belong to professional bodies which require client money protection insurance, impartial redress and an adherence to a strict Code of Practice are forced to compete with those who show little regard to professional standards or the needs of their clients. UKLA believe that this package of proposals represents a missed opportunity for the Government to make mandatory the kind of comprehensive protection offered by the UK Association of Letting Agents and other industry regulatory bodies, which are called UKALA & NLAfor by those working in the property industry and needed by hardworking consumers who are unable to differentiate between good and bad letting agents.”

Richard Lambert, Chief Executive of the National Landlords Association (NLA), said: “The NLA has long argued that private renting can be far more flexible than commonly perceived, and we need to tap into this potential to meet the changing needs and expectations of those who rent. We look forward to working with government to make a success of these proposals. However, we believe that the Government has missed an opportunity to require greater professionalism of letting agents. While the requirement to belong to an approved redress scheme is a step in the right direction, it does little to protect the financial interest of landlords and tenants working with unregulated agents.”

Residential Landlords Association

Join The Residential Landlords Association

Alan Ward, Chairman of the Residential Landlords Association (RLA) welcomed the Government action to improve tenants’ understanding of their rights and responsibilities saying: “Tenants take more trouble buying a second-hand car than renting a house” Ensuring that tenants and landlords each understand clearly their rights and obligations to one another ensures a balanced relationship and enables them to hold each other to account based on the large number of laws already in existence. It will also play a vital role in rooting out those willfully criminal landlords who reap misery on tenants. We look forward to working with Ministers on the Charter as well as on how to best get this information to tenants.”

RICSPeter Bolton King, RICS global residential director, said “The long overdue announcement was definitely a step in the right direction. The lettings sector has for far too long been the Wild West of the property industry, with many tenants having absolutely nowhere to go should they wish to complain about shoddy service. The introduction of a code of practice specifically covering those managing rented property should certainly improve standards.”

Chief Executive of the Housing & Homelessness charity Shelter, Campbell Robb said “This announcement is recognition that current private renting arrangements are not fit for families with children, who need greater long-term stability. This is a welcome step in the right direction, and ministers now need to consider how to make longer tenancies a real choice for the families desperate for a more stable place to live.”

The announcement of the new Tenants’ Charter was good news for consumer champions, Which? Who have been campaigning since 2007 when they first called for an amendment to the Consumers, Estate Agents and Redress Act 2007 requiring letting agents to join an approved complaints scheme, just as property sales agents are. The consumer groups investigations also discovered earlier this year that major letting agents are acting unlawfully by not being upfront about the fees charged to clients.

The Enterprise and Regulatory Reform Act 2013, looks set to be implemented in Spring 2014, giving all landlords and tenants access to a complaints scheme. This will mean that 40% of agents who currently aren’t signed up to a redress scheme will have to become members

Which? Executive Director, Richard Lloyd, said: “Renting is now the only housing option for millions so we’re pleased to see the Government taking steps to address problems in the lettings market. Making charges clear upfront will enable people to shop around more easily, and longer tenancies could mark the end of unnecessary renewal fees. The new legislation giving landlords and tenants access to a complaints scheme now needs to be brought in as soon as possible and there must be strong action taken against any agent in breach of the scheme.”

  • Do you think the proposals go far enough?

Take our Poll on the Tenants Charter or leave a comment below!

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RICS Warns Of Another Property Bubble If Property Prices Increase By More Than 5%

RICS Warns Of Another Property Bubble If Property Prices Increase By More Than 5%

RICS Want To Cap Property Price Increases 

RICS want the Bank of England’s Financial Policy Committee (FPC) to consider limiting annual house price inflation to just 5% in order to prevent another housing bubble.

According to research by the Royal Institute of Chartered Surveyors (RICS), excessive property price growth and high mortgage lending have left the banking sector vulnerable and specific policy on limiting property price growth is required to prevent another property price bubble.

RICS have suggested caps on elements such as:

  • Loan-To-Value (LTV) ratios
  • Loan-To-Income ratios
  • Mortgage durations
  • Ceiling limits on the amount banks are permitted to lend (should prices exceed a given limit)

RICS reckon that by sending such a clear and simple statement to the public, indicating that the Bank of England (BoE) will not tolerate property price rises over 5%, would help restrict excessive price expectations across the country, preventing property prices from over-inflation.

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Help-To-Buy Heralded As UK Property Market Saviour

Help-To-Buy Heralded As UK Property Market Saviour

RICS Claim Help-To-Buy Is Reason
For UK Property Market Recovery

The Royal Institute of Chartered Surveyors (RICS) have stated that the Government’s Help-To-Buy scheme and other financial initiatives have seen the UK property market turn the corner after the post recession slump.

In its monthly report RICS said property prices are up for a fourth consecutive month as the largest number of property buyers in 4 years return to the market.

The RICS report particularly picked out the West Midlands and the North East, as two areas which had suffered more than most in the UK property market crash, but these areas experienced the biggest increase in property buyer activity during July.

The widespread pick-up in the UK property market has seen residential property prices rise at their fastest rate since the peak of the property market in November 2006.

There is a growing chorus that the Government’s Help-To-Buy scheme, which was introduced in April to provide equity loans for first time buyers of up to 20% towards the cost of a new build property worth up to £600,000 (GBP) is creating a new property bubble.

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OFT Investigating Property Quick Sale Companies

OFT Investigating Property Quick Sale Companies

Property Quick Sale Companies Face
Investigation By Office Of fair Trading

The Office of Fair Trading (OFT) have announced that they are investigating 3 property quick sale companies for unfair practices after it was alleged that some customers had lost out on many thousands of pounds.

Property quick sale companies offer to buy property from distressed vendors within a short time frame, however some companies have brought the practice into disrepute.

The announcement comes as the Office of Fair Trading publishes a report on the sector, which found that property quick sale firms can be beneficial to consumers who need a fast, hassle-free property sale.

In fact the OFT found that many other property quick sale companies in the sector were operating in an “open and fair” manner.

Quick sale property providers offer to purchase properties from struggling consumers within as little as seven days, but at a discount – typically between 10% and 25% – of the property’s full market value.

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Property Prices Increase As New Houses Built

Property Prices Increase As New Houses Built

Property Prices Increase As New Houses Built

On Tuesday, it was revealed that the Royal Institute of Chartered Surveyors (RICS), said 21% of its members had reported an increased workload during the second quarter of the year.

The poll, the most upbeat since the start of 2007, indicated that the reported recovery of the UK property market was widespread, with surveyors in almost all of the UK’s regions and industry sub-sectors becoming busier.

The best-performing regions were London and the South West, often referred to as the driving force behind the UK property market, while the worst region was Northern Ireland, the only part of the UK where RICS surveyors continue to see their workload shrink.

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Royal Institute of Chartered Surveyors Slams Government

Royal Institute of Chartered Surveyors Slams Government

Government Not Doing Enough
To End Housing Shortage

A recent study by the Royal Institute of Chartered Surveyors (RICS) has shown that the Government still are not doing enough to alleviate the chronic shortage of residential housing in the UK.

The Royal Institute of Chartered Surveyors have again stated that successive governments have failed to produce a coherent long-term strategy for UK housing.

The RICS housing commission may concede that some of the coalition government’s policies are producing short-term help for the UK house building industry but they are prepared to argue that successive ministers’ lack of consistency in policy over the past 50 years has exacerbated the failures of the UK property market.

The Royal Institute of Chartered Surveyors think that current Government housing policies are merely clearing up the problems left by their Labour party predecessors, and current government ministers are struggling to find a viable alternative solution to the current housing shortage.

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For the first time in UK history the Government have decided to regulate the UK lettings and property management industry

UK Lettings & Property Management Agents are to be regulated for the first time

UK Lettings & Property Management Agents are to be regulated for the first time

Lettings and property management agents in the UK are set to face government regulation, after decisions were made in the House of Commons to take action to clamp down on unscrupulous behaviour, according to reports.

The new rules will see amendments to the Enterprise and Regulatory Reform Bill, will mean that all lettings and management agents will be required to sign up to a redress scheme allowing consumers to report unresolved disputes to an ombudsman, who will have the authority to ensure that agents repay any tenants and landlords they may have deceived.

The changes have come as welcome news to many property professionals, after calls from many corners for letting agents to be monitored and checked.

The Royal Institute of Chartered Surveyors (RICS) extremely happy with the regulation changes, because they were at the forefront of the campaign for regulation.

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Residential Property Sales Hit Three-Year High

Residential Property Sales Hit Three-Year High

Residential property transactions in the UK reached their highest level in three years, as would be buyers begin to take advantage of the continuing record low interest rates and the increased availability of residential mortgage loans, according to a survey of estate agents.

The monthly market survey from the Royal Institute of Chartered Surveyors (RICS) found that the increased availability of cheaper residential property mortgages and home loans has been boosted by the Bank of England’s (BoE) Funding for Lending Scheme (FLS) and this in turn has led to a pickup in residential property transactions.

Surveyors reported that many agents have sold an average of 17.4 residential properties to new first time buyers in February – up from the previous average of just 16.8 in February 2013, but property transactions remain significantly below the unprecedented levels reached in the early-mid 2000s, at the height of the last UK property boom.

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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

What’s in store for the UK residential property market in 2013?

What's In Store For The UK Property Market In 2013?

What’s In Store For The UK Property Market In 2013?

Many of the predictions made by property analysts have so far been reasonably positive in that the state of the UK property market can’t really get much worse.

2012 was a rollercoaster kind of year with the Queen’s Diamond Jubilee and the Olympic and Paralympic Games having an effect on the market.

But overall UK residential property prices and property sales have been fairly stable, probably ending the year just higher than where they started, although by how much depends on whose figures you look at.

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