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Will Landlords Be Safe Under New Rental Rules?

Will Landlords Be Safe Under New Rental Rules?

Tenants Charter could put tenants in a

stronger position over PRS landlords

Regulations which hand private rented sector tenants more power and rights to request longer leases have been greeted with cautious optimism, although the new code of practice, intended for launch by the Government, would bring in much-needed protection for many tenants from rogue and inexperienced landlords.

The proposed Tenants’ Charter, could mean honest and hard working landlords are at a disadvantage and could be put off from renting out properties.

The results of the introduction, could lead to another shortage of available rental stock for the UK property market leading to rent increases and landlords becoming trapped by more stringent legal binding agreements.

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Rightmove Think London Property Prices Are Unsustainable

Rightmove Think London Property Prices Are Unsustainable

London Property Prices Increase
More Than 10% In October

Average UK property prices increased by 2.8% across the country in October, however property price rises in London are going through the roof and are unsustainable, according to property portal Rightmove

London property prices increased by £50,484 (GBP) equivalent to a 10.2% increase in October, after two consecutive monthly falls in the price of properties marketed.

Property prices in the Capital had fallen by -2.8% and -1.5% in August and September respectively, and the double digit price increases reported in October has analysts worried about the volatility and sustainability of the London property market.

The huge rise in London property prices has been attributed to corresponding factors;

  • Lack of supply of residential properties coming to market
  • Overseas investment in new build properties by foreign property investors

October’s strong recovery means London property prices are now 5.6% or £28,852(GBP) up on July’s all-time high of £515,379 (GBP), pushing the year-on-year increase in London to +13.8% or £66,161(GBP).

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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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Property Valuations In UK on the Increase

UK Residential Property Values Increase Across the UK

According to Nationwide 9 out of 13 regions in the UK recorded residential property price rises in 2011, with London the best-performing region (+5.4%) and Northern Ireland the worst-performing region (-8.9%).

Property prices in Scotland are down 0.8% on the year, having remained steady in the final quarter of 2011, in Wales prices ended 2011 up 1.5% despite having lost 0.9% in the final three months.

For the UK as a whole, the typical value of home stood at £164,785 in December, following a 0.3% increase during Q4 which helped produce an annual price rise of 1.1%.

However, at 5.2, the average house price to earnings ratio remains above the long-term average of around four, although down from a peak of 6.4 in 2007.

Due to continued property price falls, Northern Ireland is now the cheapest UK region in terms of average prices, and also the most affordable relative to average earnings.

The North remains the most affordable English region, while annual price growth of 5.4% has consolidated London’s position as the least affordable region, with a house price to earnings ratio of 7.4.

In 2012 the market is likely to be dominated by fears over rising unemployment, the squeeze on household incomes and the Eurozone finance crisis.

Forecasts for 2012 are for property values to remain stagnant at best.

Shortage of suitable property supply should continue to underpin the market, although Halifax recently reported that there were only 187,000 First-Time Buyers (FTB’s) in 2011 – the lowest annual total since the lenders’ records began in 1974.

Homes built before 1919 have risen in value more than any other type of property over the past 25 years.

The report by the Halifax says pre-1919 homes are popular because there are fewer of them, and they tend to be in the best locations.

Over the past quarter of a century, the report reveals, homes falling into this category have risen in price by more than 450%.

This is equivalent to an average increase of more than £500 every month for 25 years, a price rise which has not been matched by any other type of property.

In 1986, pre-1919 homes had an average value of £33,619, making the category the cheapest of the four ‘ages’ of property.

By 2001, the average had increased to £117,990 and today it is £188,473, an increase of 461%, or £516 every month.

The other three ‘ages’ of property are 1919 to 1945, 1946 to 1960 and 1960 onwards.

Martin Ellis, housing economist at the Halifax, said it was easy to see why pre-1919 properties were now more expensive than any other. “The age of a property often determines its size, its style and location. Properties from the Victorian or Edwardian era tend to be in higher demand. This is because there are fewer of them. They are often larger, situated in desirable locations, and have a popular style”.

The cheapest properties are homes built between the end of the Second World War, which triggered a building boom, and 1960.

They cost an average of £144,988, and have risen in value by only 249% over the past 25 years.

As the study highlights the popularity of older properties, it raises concerns about the Government’s moves to encourage people to buy new-build homes.

The Prime Minister has said he wanted ‘everyone in this country’ to experience the ‘magic moment’ of getting the keys to their first flat. But the Government scheme, which allows people to buy with only a 5% deposit, is available only to those who want a newly-built home.

And it is this type of property which has plunged in value over recent years amid fears of further falls. Since the credit crunch began, the Halifax figures show, homes built after 1960 have dropped by nearly £40,000 in value.

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A Channel 4 TV programme is set to reveal the scandal of over 1 Million empty residential properties in the UK

There are 2 Million people on housing waiting lists – and yet 1 Million properties are still remain empty or uninhabitable.

Along with landlords from hell, the empty property debacle is one of the issues being aired in Channel 4’s new ‘Great British Property Scandal’ season which starts on TV tonight.

Tackling the 1 Million empty residential properties across the UK is one of the top priorities of the Government’s new housing strategy and a key feature in the drive to increase the provision of affordable housing.

Channel 4’s decision to address the nation’s housing shortage in a season of four programmes this week seems prescient, coming hard on the heels of divisive Government housing initiatives – in particular, the drive to restart council house sell-offs

As yet there has been no mention of agents or individuals in any of the publicity material released by the television company, but the series does promise to be uncomfortable viewing for many UK landlords.

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With the UK suffering a housing shortage drastic measures are to be considered by the Government.

According to the homeless charity Shelter, about 1.8 Million households are on waiting lists for re-housing. The building projects that were moth balled following the 2007 financial meltdown and subsequent recession could also cause further problems in the future.

Estimates for the number of long-term empty homes are in the hundreds of thousands, according to the Empty Homes Agency, the figures could add up to 920,000 properties lying empty across the UK.

The issue of empty properties is a very hot topic at the moment. In recent weeks, councils and MPs have been talking about ways to bring them back into use, and in December Channel 4 will be launching a campaign to fill some of those properties.

But one local authority has already offered a solution – Cornwall council have suggested that they offer owners of empty homes the option of either interest-free loans to bring properties that have been left empty for six months or more back to use, or a compulsory purchase order

Cornwall council says 3,597 flats and houses in the county have been empty for at least six months. Some have even been empty for many years, and has allocated £2 Million (GBP) to spend on persuading owners to bring the them back into use. This does not include the holiday homes that make up 10% of the county’s housing stock.

Interest-free loans of up to £15,000 can be claimed from the council by owners of two-bed properties that have been empty for six months or more and need substantial work to make them habitable. Owners of one-bed homes can claim up to £7,500.

In return, the refurbished homes must be made available for some of the 18,931 households on the council’s waiting list.

The council is also offering interest-free loans of up to £20,000 to local first-time buyers who purchase long-term unoccupied homes. It cannot be put towards a deposit, but is made available after completion of the purchase for buyers to undertake renovation work.

However, the council admits this is a scheme that may have minimal impact because few mortgage companies are willing to lend to buyers of homes that have been left empty for six months or more – even with the promise of an additional loan to improve them.

Cornwall council is also looking at offering loans directly to tenants to carry out improvements in return for a contract with the landlord giving them long-term security of tenure for five years or more.

The idea is still being discussed amid concern that it may be difficult to draw up a watertight contract binding landlords to such an agreement.

Cornwall council is not the only local authority to use its powers to oblige owners to bring empty properties back into use.

In 2007 Kent introduced a similar “No Use Empty” programme of interest-free loans; since then, 1,729 long-term empty properties have been returned to use. £5 Million (GBP) has been given in loans with £1 Million (GBP) returned to date.

Although Kent has not used compulsory purchase orders, it undertakes other initiatives to encourage take-up, such as holding surgeries for owners of long-term empty properties.

Bristol city council also run a similar loan scheme, operated through a housing association, and some Scottish local authorities are also believed to be investigating the idea.

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