Zoopla’s flotation news expected this week

Zoopla is expected to announce its long-awaited stock market flotation this week.

But its advisers could be spooked by a sharp fall in Rightmove’s share prices in recent days.
Last week, Rightmove’s shares plummeted £3, reducing the value of the company to just under £2.1bn from a high in February of over £2.7bn.

The fall did not come on the back of any bad news from the company or negative broker sentiment, but may have been the result of speculation of a house price bubble and a possible rise in interest rates.

Although Bank of England governor Mark Carney appears to have ruled out an immediate rise in interest rates, he did say that the housing market was the biggest threat to the recovering economy, and that the Bank is closely watching rising house prices.

Yesterday in an interview on Sky he went further, saying that the housing market has “deep, deep problems”.

Meanwhile, Zoopla is expected to announce its plans to go public this Thursday when its parent group, Daily Mail and General Trust, releases its annual results.

The stock market is expected to value Zoopla at around £1bn – half the current value of Rightmove – creating a windfall for both the Daily Mail publishers and Zoopla founder Alex Chesterman, who made the Sunday Times Rich List yesterday for the first time, with a fortune estimated at £100m.

The DMGT owns 51% of Zoopla, while Chesterman has a 9% stake. Other winners in a flotation would be the corporate estate agents, including Countrywide and LSL, that also have stakes.

Any flotation of Zoopla would inevitably cause City analysts to focus on Agents’ Mutual, its recruitment of agents so far, and its plans to launch next January with an advertising rule of “only one other portal”.
See the full article HERE

Mortgage lending down 17% in three months, claim

Mortgage lending fell 17% in the three months before the Mortgage Market Review kicked in at the end of April, it was claimed this morning.

E.surv, part of LSL, estimates that house purchase approvals fell 6% in April, when it says there were 13,000 fewer loans than in January.

The firm says that although house purchase approvals in April were up 15.3% on the same month last year, the recent monthly falls are stalling the housing market recovery.

Richard Sexton, director of e.surv, said: “Borrowers must now prove they can withstand potential interest rises of up to 7%, as well as answering a host of detailed questions about future finances.”

However, e.surv’s forecasts – which attempt to anticipate official Bank of England statistics – could be controversial.

Mortgage guru Ray Boulger, of John Charcol, hit out angrily at the “misleading” way that mortgage approvals are reported, thanks to the “nonsense” of seasonal adjustment.

The Bank of England says, as does e.surv, that mortgage lending dropped in both February and March. In fact, Boulger says, they actually rose in both months – by 8.7% in February and 15.4% in March.

Boulger points out: “The seasonally adjusted figures are in fact lower than the actual figures nearly every month except December and January, because the reported figures in these months are massaged upwards by a large margin.

“This winter the seasonally adjusted figure for December was 31% higher than the actual figure and for January it was 29% higher.

“The nonsense of seasonal adjustments is amply demonstrated by reference to the reported figure for January of this year which was 124,844 – whereas the real figure was 96,762.”
See the full article HERE

Commons to vote on ban on letting agents’ fees within days

Labour is to try to force a vote in the Commons next Tuesday on banning fees charged by letting agents to tenants.

The ban could be in place within months. Industry leaders have hit out at the proposals, pointing out that bans on fees are likely to result in raised fees for landlords – who would pass the increases on to tenants in the form of higher rents.

Ian Potter, managing director of ARLA, called the latest move – unveiled today – deeply worrying.

Ed Miliband believes he could get support from both the Tories and Lib Dems, and that legislation to ban fees could be in place before next year’s General Election.

David Cameron has been pointedly silent on the specific matter of letting agents’ fees, although his party has repeatedly said it will not legislate the lettings industry itself.

On Wednesday, during Prime Minister’s Questions, Cameron rejected another Labour idea – that of rent controls – but did suggest he would be prepared to work with Labour on proposals for longer tenancies.

Miliband will table the proposed ban as an amendment to the Consumer Rights Bill in the Commons.
Miliband said: “If the Conservatives and Liberal Democrats support us on Tuesday we can make this happen now. That could be implemented straight away.

“David Cameron seemed to be warming to Labour’s policy on rents. Now he has a chance to actually vote for it.”

Shadow housing minister Emma Reynolds said: “If the Tories and Liberal Demcrats refuse to back Labour’s proposals, they’ll have to explain why they won’t stand up for the nine million people who rent.”

Potter said: “Pledging to transfer fees to landlords or calling for outright bans will increase rents as landlords and agents seek to achieve returns. Fees are not arbitrary or unnecessary; they represent a business cost that Labour has failed to recognise.”

Under the likely proposed amendment, letting agents could only require tenants to pay a month’s rent upfront and a deposit. They would not be able to charge for services such as administration, referencing or check-in inventories.

Following next Tuesday’s vote, the Consumer Rights Bill would then have a third reading in the Commons, before going to the Lords for consideration.
See full article HERE

Merger to create Scotland's largest rental body

LetScotland, the Association of Professional Letting Agents in Scotland, and Lettingweb, a marketplace for lettings in Scotland, have announced that they have merged.

With more than 420 members, the merger creates the largest representative body for letting agents in Scotland. It is the only Scottish organisation representing only letting agents which will act as the voice of agents in the media and in parliament and government. Previously, LetScotland spoke on behalf of just over 40 members.

The representative body will retain the name LetScotland, but will be branded as part of the Lettingweb group to reflect its role as one of Lettingweb's divisions.

The merger is part of a significant increase in the scope and activity of Lettingweb, which is 15-years-old this year having been formed in 1999 as a letting agent-led advertising portal. Since its inception, it has been a popular advertising platform for letting agents.

Lettingweb is now set to become the single leading voice of the private rented sector. Over the coming weeks and months it will announce:

new plans for activity in the area of housing investment;
new plans for a charitable foundation;
new tools to help letting agents operate at the cutting edge of their industry;
a huge boost to Lettingstats, Lettingweb's statistical division;

Alex Watts, chief executive of Lettingweb, said: "LetScotland's ethos matches Lettingweb's perfectly – we are both formed by Scottish letting agents, for letting agents, with only the interests of letting agents at heart. This arrangement is a perfect fit.

"The private rented sector plays a crucial and expanding role in providing homes for people in Scotland. The new, enhanced Lettingweb group will encourage more investment in homes to increase the supply of rented accommodation, which will help tenants who are currently unable to find a property and help our member letting agents run successful businesses. We are looking forward to getting started."

Malcolm Warrack, chairman of LetScotland who will continue in his leadership role for Letscotland as part of Lettingweb, said:

"LetScotland was formed because the letting agent sector had been ill-served by its representatives. There was no body dedicated to Scottish letting agents, so we created one from the bottom-up.

"Our grass-roots movement can now take the next step as we go from being a relatively small voice to by far the largest representative body for letting agents in Scotland.

"The industry needs a single unified voice to speak for it in the media and in parliament. This deal creates that voice."
See the full article HERE

Guide to EC: Clerkenwell, Liverpool Street and Barbican

Barbican first, because Barbican, with over 2,000 homes spread across 35 acres, is by far the biggest residential area in the City of London. And also the most traditional: until the take-off of Clerkenwell, Whitechapel and surrounds, Barbican, controlled by the City Corporation, was pretty much the only area that aspiring City dwellers could move to. Its conception was certainly a bold one: never before had plans been made to undertake, so centrally, such a vast residential project.

Aesthetically, however, Barbican isn’t that pleasing. On face value alone, it’s a colossal, and ultimately quite drab structure with three huge tower blocks protruding from its complex maze of a belly. Estate agents have been known to take a ball of string on viewings. But you shouldn’t judge this Grade II-listed book by its cover. For starters, it has its own theatre, lake and well-kept lawned area, while the impressive flats within come in all different shapes and sizes (and I mean all different shapes and sizes): there are just under 150 different types of accommodation in Barbican. If there’s one thing this place has got, it’s choice.


"...Anyone thinking of buying or renting here, of course, should expect to pay a premium. This is very definitely one of the hippest areas in London and prices reflect this. However, it’s not all about converted and designer flats. Clerkenwell also has a good spattering of Georgian and Victorian properties"
Giles Atkinson, Director
The vast majority of properties here are one and two bedroom flats (£250,000–£450,000), although you can also pick up the odd town house (expect to pay £750,000) and there are also a good number of studios (circa £200,000). The Barbican attracts all age groups, although is increasingly favoured by older people, attracted by the excellent security, overall community feel – the people who live here tend to live here for years – and ‘onsite’ cleaning facilities.

Directly north of Barbican is another estate, Golden Lane, which contains just under 600 privately owned flats, which tend to be 20%–30% cheaper than their Barbican counterparts, and are not dissimilar in design and quality. To the east of Barbican, meanwhile, little more than a quarter of a mile, is Liverpool Street, although it’s on the Barbican side of the station that many of the area’s best properties are to be found. In Finsbury Square, and on Tabernacle Street, both off the City Road, it’s possible to pick up some of the City’s most stylishly converted flats, lofts and penthouses, often chiselled out of old warehouses and factories.

And on to Clerkenwell. Much like its neighbour, Shoreditch, Clerkenwell, in the eighties and very early nineties, was a hive of light industrial activity, particularly printing companies. Then, as if commanded by the God of residential development, they all departed, leaving behind swathes of grim but at least cheap and centrally-located, space, that was either snatched up by media companies fed up with paying sky high West End rents, or by developers who promptly set about converting the soulless ex-commercial buildings into super-cool living space (particularly lofts apartments, mimicking the trends of Manhattan). Or simply bought them, knocked them down, and started anew. Enter, left, a wave of big hitting restaurants and ultra-fashionable bars keen to cash in on the advertising, design and dotcom types and you have Clerkenwell as it is today.

Anyone thinking of buying or renting here, of course, should expect to pay a premium. This is very definitely one of the hippest areas in London and prices reflect this. However, it’s not all about converted and designer flats. Clerkenwell also has a good spattering of Georgian and Victorian properties, such as in the ‘triangle’ between Clerkenwell Road and Rosebery Avenue, and no shortage of very quaint pockets, such as Exmouth Market, a pedestrianized zone replete with bars, cafes, restaurants and the usual designer outlets.
See the full article HERE

One Hyde Park penthouse sells for record £140m in booming London property market

An East European buyer is believed to have paid £140 million for the 16,000 sq ft apartment — more than 10 times the size of a typical London three-bedroom home — at the One Hyde Park scheme near Harrods.

Developer Christian Candy’s CPC Group said it had used “global professional valuation companies” to give the flat a potential price tag of £160 million to £175 million when it is fully furnished.

That would value the apartment at more than £10,000 per square foot, setting a new benchmark for London. The sale comes after some commentators suggested the long boom in trophy homes in London could be coming to and end amid growing worries over swingeing new property taxes after next year.

Earlier this week one of London’s biggest landlords, the Duke of Westminster’s Grosvenor Estates, which owns swathes of Mayfair and Belgravia, said it had sold £240 million of super-prime London property because of concerns about overheating.

But more evidence of the insatiable demand for London property emerged today as property firm Capital & Counties said it had already sold £200 million worth of flats at its Lillie Square development at Earl’s Court just five weeks after its March launch.

The firm has sold 204 of 237 flats — which range in price from £600,000 to £1.4 million and will not be finished for another two years — to a mix of overseas and domestic buyers.

Chief executive Ian Hawksworth said: “Demand was overwhelming. It was so strong that we scaled up original plans for the launch.

“Overall I think it is a very sound marketplace at the moment ... London over the next five to 10 years is looking as good as anywhere in the world.”

See the full article HERE

Housing costs pricing first-time buyers out of the market

House buying is becoming increasingly more expensive for many Brits, new research has shown. Figures published by the Land Registry revealed that property prices rose at an annual rate of 5.6 per cent in March, the fastest rate in nearly four years.

 

Its findings showed that prices in London are particularly high. Housing costs in the sector rose by 12.4 per cent over the last year.

 

On average, a person can expect to pay up to £414,490 to live in the capital. Land Registry figures now show that across the country, property values now stand at £169,124. But house price growth has not just been seen across London.

 

All regions across England have seen prices rise year-on-year, but in Wales they fell by 1.6 per cent annually to £113,275 on average.

 

The greatest monthly rise was seen in both the east and north-east regions with rises of 1.1 per cent. But it is not just ordinary homes that have been subjected to these increases. Premium properties have also gone up in prices.

 

There was a 61 per cent rise in homes over £1 million that were sold in January 2014, according to the report. Commenting on the findings, a property economist at Capital Economics, said however, that although the Land Registry figures pointed to a slight recovery in the market, this is unlikely to translate into a "runaway boom" just yet.

 

He added: "That is not to say that the housing market is grinding to a halt. With the economy growing by a healthy 0.8 per cent in the first quarter, and earnings finally rising faster than prices, demand for housing is not set to collapse." These figures have also been supported by findings from Estate Agents across the country who are reporting that a rising number of people are renting for longer, as purchasing a home is becoming increasingly unaffordable.

 

Estate Agent Marsh & Parsons for example revealed that the average price of a three-bedroom home in prime London has increased by £729 a day over the past year. It said that property prices rose by 19 per cent since April 2013.

For full article click HERE

New rules to make short term letting easier in London

 

The Evening Standard reports on the Government’s latest idea for cutting red tape and making the property market more flexible.

In an outdated, and usually unenforced, rule any Londoner wanting to rent out their property for less than three months has to seek planning permission, as this is considered a change of use under the 1973 Greater London Powers Act.

Housing Minister Kris Hopkins says:“London is a holiday hotspot, with thousands of people visiting every year looking for somewhere comfortable and convenient to stay. Yet the capital’s homeowners get tangled in red tape each time they look to offer their homes. This, and the wide range of property websites offering opportunities to advertise homes for rent, makes this law increasingly outdated and unworkable.”

The consultation paper says:Greater London, is subject to different rules and people are prevented from letting their property in Greater London on a short term basis. This means that if a person were to rent a property in London for less than 90 consecutive nights it would amount to a material change of use that would require a planning application to be submitted.

Local authorities in Greater London currently have discretion to take enforcement action against short-term letting whenever they consider it expedient to do so.

These London provisions from the 1970s have attracted controversy more recently, such as during the recent London Olympics. The internet has also seen changing patterns in short-term lets, as new technologies are helping facilitate householders rent out their homes for short periods of time without recourse to traditional letting agencies.

This is a very sensible change. Certainly many councils will have decided their priorities for enforcement action apply elsewhere. But it hardly enhances respect for the rule of law to rely on living in a borough where the planning officers are not complete jobsworths. The reform will help Londoners to gain some extra income and also make the capital an easier place for tourists and international investors to visit.

It’s just a pity that the rules hadn’t been liberalised in time for the 2012 Olympics.

See the full article HERE

Wapping, Whitechapel and Shoreditch

Cobbled streets, historical old wharves, Victorian warehouses, luxury apartment blocks overhanging the river, splendid restaurants and a plethora of history-packed, olde worlde pubs, Wapping has something for everyone. The only surprising thing is that, for so many years, the secret that is Wapping has been so well-kept.

Wapping starts in the shadow of Tower Bridge with the nautical playground of St Katharine Docks. It stretches all the way to Shadwell Basin and is cordoned off, to the North, by one of London’s busier arteries, The Highway. The properties in this now exceptionally popular and gentrified area vary from million pound plus penthouses in St Katharine Docks, and, dotted along the riverside off Wapping High Street, stunning new build apartment blocks such as the glass-roofed pyramids of President’s Quay, converted warehouses in the mould of Oliver’s Wharf, and the really quite picturesque Georgiana of Wapping Pierhead. Again, not cheap. Away from the river can be found cheaper new build flats and two to three bedroom houses – some council – while near the attractive Shadwell Basin some five bedroom property are up for grabs.

"...historical old wharves, Victorian warehouses, luxury apartment blocks overhanging the river, splendid restaurants and a plethora of history-packed, olde worlde pubs, Wapping has something for everyone"

Giles Atkinson, Director 

North of The Highway, and to the East of Leman Street, lies Whitechapel, one time haunt of Jack the Ripper but which, in many areas, is now being ripped down itself and reconstructed stylishly by the major property developers. Like many areas on the City’s fringes, it’s becoming increasingly popular with young professionals, attracted by the short commute and the growing scene, symbolized, in particular, by the colourful street markets and superlative art venue, The Whitechapel Gallery. The area has a substantial Bengali Muslim population, particularly around the currytastic Brick Lane, and the East London Hospital (home of the London air ambulance) on Whitechapel Road.

It’s near the hospital that some of the best properties are found: 3- and 4-storey Victorian terraced houses sell for around £500,000 in Sidney and Ford Squares, just south east of the hospital and you’re never too far away from a gorgeous run of Georgiana. Interspersed among such period properties are many new developments of luxury flats along with myriad (loft) conversions, more dramatically of churches, breweries and schools. Predictably, properties tend to get pricier the closer you get to the City.

Slightly north west of Whitechapel lies Shoreditch, now one of THE areas in London. In the late eighties, it was pretty faceless and a little shabby, a place of light industrial firms with no real identity, and which, by the early nineties, had moved on anyway. Then, in the mid to late nineties, arrived a new wave of aspiring new media and dotcom companies, attracted by the cheap rents relative to Soho and other areas of the West End. Now, on the back of this influx of media types, it’s overflowing with art galleries, very designer bars, and no end of very well-reviewed restaurants. Such was and is the buzz surrounding the area that many now live there too. There’s certainly a wide range of properties to choose from, ranging from 1830s terraces on Shepherdess Walk and tidy period homes on Charlotte Road through to the new and converted flats of the extremely fashionable Hoxton Square. Also worth a mention is the Kingsland Road, regarded by many locals as East London’s answer to the King’s Road.

See full article HERE

The performance of east of City markets

Across the prime housing markets of Canary Wharf and Wapping, average values increased by 4.4% over the first quarter of 2014, bringing the total growth in the past year to 17.2%. This is higher than the 13.1% annual growth recorded across the wider prime London markets.

However, since the credit crunch, price growth in the east of City has not been as strong as other areas of prime London, tending to track the wider London average. Average values are 28.5% above their 2007 peak, compared to 36.2% across all prime London.

Yet these figures mask a significant divergence between the housing markets in Canary Wharf and Wapping. In Canary Wharf, high levels of new supply in the years following the credit crunch kept price growth low until 2013 when the supply of completed stock dried up. Now average values remain just 11.6% above their 2007 peak, although there is significant variation between the developments. Conversely, in Wapping the converted warehouses are in limited supply and strong demand has meant that prices are now 41.4% above their 2007 peak.

In the prime rental market, the east of City saw the strongest rental growth across all prime London over the past year due to uncharacteristically low levels of stock. In contrast to the sales market, Canary Wharf, where student and sharer demand is more dominant, has seen stronger prime rental growth since the peak of the market than Wapping.

Increased demand

During the downturn, the east of City markets were heavily dependent on a relatively small pool of domestic buyers who were buying properties as their main residence. This occurred at a time when employment and earnings in the financial centre were under pressure.

While buyers purchasing their main residence remain the dominant buyer group, since 2010 investors have been returning to the area both from overseas and the UK. However, they tend to focus on Canary Wharf, accounting for 27% of buyers in 2013/14 compared to 21% in Wapping due to the nature of stock and familiarity of the area.
 

Investor behaviour in the east of City markets is different to that in the core areas of prime central London (PCL). Buyers have been concentrating on lower value stock predominantly for income yield as much as a store of wealth. In the east of City, gross yields currently average 4.5% compared to PCL where they average 3.0% and rarely exceed 4.0%.

Canary Wharf attracts more international buyers than Wapping, accounting for 41% of all sales in 2013. However, this is much less than in 2012 when overseas buyers accounted for 74%. This is not due to a significant fall in international interest but an increase in domestic activity which has been rising steadily with the economy.

Over the first quarter of 2014, the number of international buyers has increased from 2013 levels, and is broadly on par with levels seen in 2012. This changing trend between the dominance of international or domestic buyers continues to highlight the attraction of the area to many different nationalities.
 

International tenants in the east of City consistently account for over half the rental market. The majority of tenants renting here have been relocated for employment reasons. Given Canary Wharf is a key financial hub, it is no surprise that the 62% of tenants are employed in the financial and insurance sector.
See the full article HERE

Lord Lawson wants end to Help to Buy scheme in London property market

Former chancellor Lord Lawson has called for an end to Help to Buy in London's property market, arguing that this could be done by bringing the threshold for eligible properties down to £300,000. Lawson is the second former Tory chancellor to warn about the potential effects of George Osborne's policy, after Lord Lamont said there was a danger it could encourage people to take on too much debt.

Speaking to Total Politics magazine, Lawson said he did not want to see the whole scheme stopped, but that he believed it should be ended in the capital, where housing does not need a boost. "What I would like to see is not so much it being turned off, but I would like to see the threshold brought down from £600,000 to, say, £300,000, so that, in effect, it would cease to operate in London, which is an overheated market," he said.

"There is practically nothing in London which is under £300,000, but it would still be a benefit in the north, where there is no overheated housing market. I would like to see that. It doesn't mean it will happen. You don't need to boost the housing market in London, certainly."

A number of senior political figures have now urged caution over Help to Buy, with business secretary Vince Cable warning of the risk of a new housing bubble. More than 20,000 people have bought homes in first year of the government's Help to Buy scheme, while house prices in England and Wales have risen 5.6%.

Although nationwide there was a slight dip in March, there is a different picture in London, where prices rose by 0.6% during the month and were up by 12.4% on the previous March at an average of £414,490. In the London boroughs of Southwark, Lambeth, Islington and Waltham Forest prices have risen by more than 20% over the past 12 months. In some other parts of the country, prices are down on the previous year.

For full article click HERE

Property industry calls plans for rent cap in the UK unworkable

 

The leader of the opposition in the UK has been criticised by the lettings industry after announcing that his Party would introduce a national cap on rental increases if it comes to power at next year’s general election. Ed Miliband unveiled the idea as part of a wider Labour Party plan that would also see restrictions on lettings agent fees and the introduction of three year tenancies. Under the plans, landlords and tenants would agree initial rents based on ‘market value’. Following this, rents would be reviewed once a year. While landlords would still be able to increase what they are charging following changes in market conditions, Labour plans to introduce an upper ceiling to prevent rent hikes which are significantly higher than changes in the overall market. Landlords would continue to pay charges just as people selling houses pay fees to estate agents. But estate agents would no longer be able to charge a letting fee to tenants for renting out properties. Rules on tenancy agreements would also be changed. All tenancies would be three years long by default, with a six month probation period. During this time landlords would be able to evict a tenant if they are in breach of their contract. This would be followed by a two and a half year term in which tenants would be able to terminate contracts with one month’s notice. Landlords would only be able to terminate contracts with two months’ notice if a tenant fell into arrears or was guilty of anti social behaviour; or if the landlord wanted to sell the property or needed it for their family. Labour says this is designed to prevent landlords from terminating tenancy agreements to put up rent. However, there would be a provision that allowed landlords to enter into shorter contracts where they are contractually obliged to do so as part of a buy to let mortgage entered into before the start of this new legislation. There would also be provision for new tenants like students or business people on temporary contracts to request shorter term tenancies subject to the landlord’s agreement. The Royal Institution of Chartered Survyors (RICS) said it is always important to consider all options which could potentially expand the supply of private rented homes, and to explore any that might make a positive impact on the sector and drive up property standards. 'However, RICS is not developing proposals on rent benchmarks for the private rented sector, and we do not recommend that a government introduce a ceiling on rent increases. Labour is right to talk about generation rent, but arbitrary caps are not a solution,' a spokesman said. Richard Lambert, chief executive officer of the National Landlords Association, described the proposal for a three year default tenancy as ‘unnecessary, poorly thought through and likely to be completely unworkable’. The NLA believes that fundamentally changing the structure of tenancies will create uncertainty amongst landlords and the lenders which provide the finances underpinning housing in the UK. ‘Were these proposals to become government policy it would strike a devastating blow to investment in housing of all tenures and further constrain supply at a time of real housing crisis,’ he said. ‘We are concerned that the proposals will actually increase the insecurity of tenure for renters. The experience of Ireland, where a similar system of six month introductory tenancies has been running for some years, is that landlords, concerned about the danger of being unable to end a problem tenancy, look to move tenants on after six months rather than find themselves forced into inflexible restrictive tenancies,’ he pointed out. ‘This does nothing to create a fair and balanced rented sector that works for landlords, tenants and agents. Frankly, I’m surprised that, after the effort Labour front benchers put into consulting on how to make the private rented sector work better, Ed Milliband announces a change which risks putting landlords in a position of conflict with their tenants and leaves future housing provision on a knife edge,’ he added. The British Property Federation (BPF) has also voiced concern. ‘There are many institutions investing in UK housing, or on the cusp of it, that will be feeling extremely nervous. Those who are investing already are very receptive to offering longer tenancies and many are doing so and the Labour Party’s aspiration on that in itself is not objectionable, but the rent control aspect of this announcement makes no sense,’ said Ian Fletcher, director of policy at the British Property Federation. ‘Good landlords will be getting a perverse message that if you are providing a premium product the most you can expect is the average, whilst bad landlords with substandard accommodation can find another justification for charging over the odds. There are already mechanisms to deal with dodgy rents on longer tenancies via Rent Tribunals and Unfair Contract Terms,’ he explained. ‘If Labour doesn’t want to alienate the one million plus landlords in the UK it must also be more forthcoming on not only allowing eviction for reasons of sale, or rent arrears, or anti social behaviour, but how that will work in practice and whether our courts will be resourced appropriately, plus the spending commitment that entails. Keeping as many possession proceedings out of court, and providing a guaranteed timescale when cases go to court would be a good start,’ he pointed out. ‘The private rented sector has attracted phenomenal investment into housing over the past two decades and with institutional money now entering the sector there is great opportunity for it to contribute towards Labour’s aspiration of 200,000 additional homes per annum, which is the bare minimum the country needs. We welcome that housing is high up the Party’s agenda, but it won’t achieve its objectives if it has investors in new housing delivery doing a rethink and won’t get away without filling in the blanks in its policymaking for too long,’ he added. Liam Bailey, head of global research, Knight Frank, does not believe the plan would result in lower rents. ‘There is no doubt that affordability and access to accommodation have become real and growing issues for increasing numbers of households. However there is a risk of worsening this situation by misdiagnosing the problem,’ he said. ‘The fundamental issue facing the housing market, especially in London and the South-East, is supply and demand. Household numbers have been rising rapidly and supply hasn’t. This has meant that rents and prices have risen as the market works to ration available supply,’ he explained. ‘Landlords may be charging higher rents than tenants would ideally like to pay, but these rents are nonetheless market rents. The only sustainable way to reduce rents over the long term is to increase housing supply, and thereby increase competition between landlords, and give more choices to tenants and would be first time buyers,’ he added. His colleague, Gráinne Gilmore, head of UK residential research, Knight Frank, pointed out that committed long term landlords already look at ways to retain tenants rather than trying to move them on as keeping tenants in place for longer not only creates a positive environment but is also good for business as it minimises void periods and helps guarantee long term income for landlords. ‘Rental caps must be carefully debated. The rental market is as localised as the housing market, and forcing a nationwide cap on rent rises could have large scale and unintended consequences. If the cap encourages smaller buy to let landlords to sell up, then while there will be more housing on the market for sale, the demand for rental accommodation will grow as the pool of accommodation shrinks, which will, in itself, push up rents,’ she explained. She also suggested that if a landlord wants to improve a property, by say, upgrading the kitchen, or adding an extra bathroom, there needs to be an allowance for rent to increase beyond the cap to take this into account. ‘There is also the question of the data these caps will be based on. At present, policymakers are still struggling to capture rental data on a national basis. This will need to be resolved, as the figures used to calculate a market cap will need to be cast iron,’ she added. Jennet Siebrits, head of residential research at CBRE, also reckons such a policy could affect the number of new institutions entering the private rental market in the UK. ‘These latest measures if introduced could stem investment into the sector. While many of today’s renters and landlords might prefer longer tenancy arrangements, we feel it should be down to the individual providers to decide how long the tenancy should be rather than have it forced upon them through legislation,’ she said. ‘The implementation of rental caps may also discourage a continued appetite from institutional landlords looking to invest in this market. Coupled with the risk of creating uncertainty through calling for more regulation, the current evidence demonstrates that the introduction of these rental caps could lead to a poor quality of rental stock as owners may not have funds to maintain properties to a high standard,’ she added. Landlord Assist, the nationwide tenant eviction and referencing firm, the plans will undermine any attempts to create a more professional rental market and not make renting more affordable of give greater protection against rogue landlords. ‘In our view the proposals are simply unworkable. Most buy to let investors are primarily attracted to the sector by the lack of restrictions surrounding rent levels, so capping rent levels will do little to help the sector grow,’ said Graham Kinnear, managing director at Landlord Assist. ‘Capping rent increases will only prove to disincentivise people from investing in buy to let property and renovating tired properties. This will ultimately lead to a reduction of available quality accommodation at a time when the market is already experiencing a substantial shortage and will simply undermine any attempts that have been made to create a more professional sector as tenants will be paying more for poor standards of accommodation,’ he explained. ‘Labour’s suggestions, if implemented, will undo all of that work and lead to a reduction in mobility and a reduction in the availability of accommodation,’ he added. Stephen Parry, commercial director at Landlord Assist, reckons that mortgage lenders would be extremely nervous about granting three years tenancies which can only be terminated in the event that the tenant is in substantive breach. ‘With longer tenancies in place it will make it extremely difficult for landlords and lenders to act and gain repossession of the property in cases of rent arrears,’ he said. Whilst some agents charge excessive fees, the firm believes that market forces should prevail in this regard without government intervention. ‘To ban administration fees entirely is wholly unfair on agents especially given the amount of administrative work they must undertake. For every tenancy letting agents are required to prepare a tenancy agreement, inventory report, schedule of condition report, arrange a gas safety inspection, energy performance certificate and orchestrate the move in. If Ed Miliband believes that all of this can be provided without cost then he is clearly out of touch with business practice,’ explained Parry. According to UKALA executive director, Richard Price, while there is a need for greater transparency about charges, who is responsible and for what they are paying, a blanket ban will not achieve this. ‘Rather, it will make it less clear by forcing agents and landlords to incorporate their numerous costs into rental demands. Far from reducing the ultimate cost to tenants, the likely outcome will be a long term levy on the cost of rented housing,’ he said. ‘Although there are many disadvantages within these proposals, introducing an annual indexation of rents during longer tenancies will make agents’ lives easier and potentially more profitable. This near guarantee of rent increases and security of income is welcome news for UKALA members, as currently the majority of rent rises are only levied between tenancies on new agreements,’ he added. See the full article HERE