Millions will never own their own home

Active landlords may sit tight in 2012

2012 - what the future holds for landlords

What can we look forward to in 2012?  The global economic situation is all we hear about on the news so we’ve reviewed the different messages to consider what might be waiting for landlords in the year ahead………..

Interest rates are at an historical low and the pundits don’t foresee any increases soon.  The Eurozone problems may prove crucial and if the Euro currency fails or is disaggregated we may see higher rates in some parts of Europe – a contagion that might spread.

New property building remains depressed, particularly as mortgages for first time buyers are at an historical low and show little signs of becoming more freely available. It may take central intervention for the banks to make the capital needed to kick start the housing market available.

Capital values have fallen nationally, although some areas other than central London have bucked the trend. In Sussex quality family homes haven’t been as badly affected as the more plentiful flats.

Rental values have continued to see modest increases but we’ve seen more people staying put or downsizing rather than taking on more expensive rents. Reports suggest that more than one in three private tenants are struggling to pay their rent.
The “British Social Attitudes” study on housing says 35% of private tenants are having problems meeting their rent payments, compared with 29% of tenants in social housing.  The report also suggested that 32% of people think rents in the private sector are too high, regardless of their own tenure.  However, what tenants think of rental values is irrelevant unless there is a viable alternative and with huge waiting lists for social housing, little access to mortgage capital without an enormous deposit and negligible new building the Private Rented Sector is the only option for many.

We foresee rental values continuing to enjoy modest increases for the lower and middle end of the market, although probably static at the top end and luxury properties.  For people with some capital there are incredible deals for purchasing that yield much better returns than bank interest rates, and buy-to-let mortgages are becoming more available, but you need to be looking for medium to long term capital growth for the real windfalls.  The property market has always recovered (doubling in value every 11.2 years over the last 150 year average) but this one may take a while!
 

LANDLORDS ‘RIPPED OFF’ BY LETTING AGENTS - SAYS CITIZENS ADVICE

Letting agents are routinely ripping off landlords and tenants, and making up administrative charges as they go along, on top of their normal fees.

The accusation comes from Citizens Advice whose spokesperson Moira Haynes said that charges by agents often bear little or no relation to the cost of the work involved.

She said: “Many letting agents routinely rip off tenants by imposing unjustified and excessive charges and providing a poor or non-existent service. In some cases letting agents appear to make them up as they go along.”

“These charges can be a huge barrier for people on low and even average incomes who have no housing options other than the private rented sector. They should be banned.”

 At Medics on the Move in Sussex we pride ourselves on an ethical, open and honest approach. In a largely unregulated market we want to stand out!

A generation of renters

Children are leaving home later

Only private rented sector will grow

House prices continue to fall

Property prices slumped 4.2 per cent in the last year. The average home saw £6,688 shaved off its value – £18.32 a day – according to the latest Halifax House Price Index.

The annual fall in prices is the fastest for 19 months, leaving the average home worth £160,519. However, over the quarter to the end of May prices have fallen just 1.2 per cent and have actually risen by a minuscule 0.1 per cent – £126 – over the month.

Martin Ellis, the housing economist at the Halifax, said the property market was continuing to drift modestly downwards. "Low earnings growth, higher taxes and relatively high inflation are all putting pressure on household finances," he said. "Confidence is also weak as a result of uncertainty about the economic and employment outlook. These factors are constraining housing demand and applying some downward pressure on prices."

The figures are considerable bleaker than those from the Nationwide, published last week, which showed an annual decline of 1.2 per cent. But Mr Ellis predicted the property market would stabilise later in the year.

"An improvement in the economy during the remainder of 2011, combined with continuing low interest rates, is likely to support housing demand. This should prevent a further fall in prices and help to stabilise property values."

Property Ombudsman warnings

Growing concern has been expressed about the activities of ‘fly by night’ letting agents who run off with landlords’ and tenants’ money. 



The Property Ombudsman, Christopher Hamer, said of one case, where his investigation had revealed systematic misappropriation of client funds affecting at least 64 landlords, that Trading Standards and police had to be put under pressure to take action.



Hamer has made a fresh call for more control over the actions of residential lettings agents, saying there is appetite in the industry for formal regulation.



“Many agents conduct their business by following the TPO Code of Practice, but there are still too many who are operating without that commitment to standards and without any external controls over what they do with client money,” Hamer said.



He also revealed that the Code of Practice for letting agents has still not been approved by the Office of Fair Trading despite his submitting it three years ago.



It means that, unlike estate agents, letting agents cannot display the OFT logo.



From this summer, the Code of Practice will include a requirement for lettings agencies to hold a separately designated client account to protect money the agencies receive.



Hamer said: “There can be no excuse for client money not being held in separate and properly audited client accounts, so that it is less easy for unscrupulous agents to misappropriate it. Furthermore, there needs to be an obligation that such monies are protected by suitable client money insurance.



“An appropriate regulatory regime could ensure that the necessary separation of client and business money is enforced.



“An agent who uses client money because they are operating on the edge of viability and needs to bolster the business, or more worrying still is using the money for personal enjoyment, is entirely unacceptable and against the law.”



Last year, Hamer investigated 1,338 new referrals – 646 sales and 672 lettings, with the remainder related to HIPs and residential leasehold management.



It was a record number of complaints – the highest ever recorded in the 20 years of the scheme’s existence and 28% above the previous peak in 2008 of 1,043. They arose from a total of 11,794 enquiries, compared with 11,165 during 2009 and 11,201 during 2008.



The largest single cause of complaint was communication failure between the agent and consumer (214) followed by complaints handling by agents (163) and sales details / advertising / marketing (138).



South-East England was the source of most complaints (26%), followed by South-West England (13%) and the eastern region (12%). Wales generated only 3% of the total, a figure matched by Northern Ireland and Scotland combined.

Uncertain times – but landlords are well placed

New planning rules for Houses of Multiple Occupation

Buy to let confidence returns

Rental prices set to rise in 2010

Beds bug infestations on the increase

Brighton & Hove House Prices