First Fees, now deposits!

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Here we go again!

The Queen has spoken – briefly on her way to Ascot – and the news is not good.

As expected the Government has re-affirmed its commitment to ban letting agents fees to tenants in the form of the Draft Tenants’ Fees Bill. Less expected was the inclusion of two new ‘caps’:

  1. Security deposits will no longer be able to exceed the value of one month’s rent. Compared to the restriction which already applied of one sixth the annual rent (aka two months’).
  2. Holding deposits will no longer be able to exceed one week’s rent.

All in all more unnecessary regulation from a government intent on disrupting a market which works for the majority.

Is there any good news?

Perhaps not good, but neutral. As a draft bill the timetable for implementing these proposals has been stretched.

Draft bills have to undergo consultation and scrutiny in both houses of parliament, before a ‘proper’ bill is produced.

Once a bill is drafted it is then introduced into parliament and has to work its way through the various stages of the passage of a bill before finally receiving royal assent – only after which can implementation begin.

So it may be a while before we see the ban(s) come into force.

Is there anything else?

Most of the focus is understandably on delivering the UK’s exit from the EU, but agents should take note of the following (non-legislative) commitment made today to:

“look at ways we can streamline the home buying process so it is cheaper, faster and less stressful for people when they make the biggest purchase of their life”.

 

Anyone for HIPs?

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Calling all lettings experts!

Rugg ReviewAnyone who has been involved in the lettings industry for a while, and has taken any interest in how we are regarded by the powers-that-be will have heard of the ‘Rugg Review’.

The review, conducted by Dr Julie Rugg and David Rhodes of the University of York was published back in 2008 and helped inform the then Government, and each subsequent incarnation about the PRS.

Unusually for a review of PRS behaviour and regulation it was actually pretty positive about the private sector and helped keep (most) policy initiatives sensible –  for a little while at least.

OK, but that’s nearly a decade old!

Exactly. That is why the Nationwide Foundation has allocated funding to repeat the review in 2017, and they need your help.

Returning research fellows Rugg and Rhodes have issued the following call for evidence:

“It is nearly ten years since the publication of The Private Rented Sector: Its Contribution and Potential, which aimed to create a more nuanced understanding of a highly complex market and consider appropriate policy responses.

The Nationwide Foundation has funded us to repeat the exercise with a particular focus on:

  • how the current PRS is operating in terms of demand and supply and variation in local rental markets;
  • aspects of the PRS deemed to be problematic, and obstacles to finding solutions;
  • demonstrably effective policies dealing with those issues.

As part of the Review, we would be grateful if you could forward information relating to your local private rental market.”

We at UKALA are very keen to make sure that the new review is as informed as possible and think that letting agents are well placed to provide a wealth of insight.

If you agree, and would like to contribute please email your thoughts and observation in relation to the points above (including whereabouts you are based) to: policy@ukala.org.uk by 1 September 2017.

 

 

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What does #PropTech mean to letting agents?

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Could this be the hi-tech letting agent of the future?

I wouldn’t describe myself as especially ‘tech-savvy’, but I do like to learn about new ways of doing things – especially if it involves some kind of shiny new gadget.

Of course the important thing is to find efficiencies in everyday life and business, and dare I say it I appreciate the ingenuity of those market disrupters who aim to disturb the apple cart from time to time in search of roads less travelled.

So what’s new?

Despite out principle assets often being decades, if not centuries old (the properties I mean, not their owners) and the home buying process remaining largely untouched for most of recent history, change is not new to the property industry;  especially in the lettings arena.

One of the biggest changes seems to be the degree to which this latest technological revolution is self-aware and providing its own running commentary. Just look up #PropTech and you will be inundated with blogs, articles and (above all) start-ups vying for primacy explaining new approaches to everything from the mundanity of diary organisation to ways to apply the principles of blockchain to the property market.

Some of this PropTech is genuinely revolutionary, think back for instance to the market before Rightmove and Zoopla.

When I first started working in letting agency, having a properly designed website was the big tech innovation and odd as it may seem today it was not universally welcomed. We didn’t get many leads from the web and I can remember quite clearly the annoyance of some negotiators at having to take the new-fangled digital camera with them to listings – as well as the trusty old SLR so we could still get ‘good’ pictures developed for the window cards.

It wasn’t until we started to embrace aggregators, which look our new online listings and spread them across the myriad of sites which eventually matured into the portals we now know today.

In 2017 I can’t imagine any agency surviving long without an online offer of some sort, let alone without the option to advertise further afield.

It’s amazing how quickly the extra-ordinary can become humdrum in a fast moving sector.

Other innovations are more subtle, like the adoption of cloud-based property software, producing cost-effective floorplans, e-signatures (one of my personal favourites) and even mobile optimised listings to ease the process for applicants.

One of the biggest threats to traditional agency, or potential opportunities, is the growth in ‘full-service’ renting apps. Increasingly tech companies seem to be taking aim at the landlord/tenant relationship with offerings which encompass marketing, documentation, vetting and even matching issues with maintenance solutions. They may not be able to rival the expertise of an experienced agent, but they certainly seem keenly priced.

What’s next?

Virtual reality viewings seem ready to take off, but are perhaps more of a gimmick than a game-changer.

Eye-tracking during viewing s will supposedly help identify the differences between applicants priorities and assist in targeted marketing, but again this hardly seems likely to revolutionise lettings throughout the land.

The truth is property companies need to be ready to adapt, in the way that they always have. However, the human touch is unlikely to disappear any time soon.

The question is how ready are letting agents to embrace change?

 

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Meet the latest Housing Minister

Since the Conservatives came to power, albeit initially with some help, in 2010 we have had the pleasure of working with a number of housing ministers.

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Grant Shapps MP

First there was Grant Shapps, he sounded very good on homelessness and generated impeccable soundbites. Less good on talking with the sector once elected, but he did make good on his pre-election pledge to amend permitted development rights for small HMOs.

 

 

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Mark Prisk MP

 

Mr Shapps gave way to Mark Prisk in 2012. Mr Prisk’s tenure was fairly uneventful, but at least with a surveyor’s background he seems genuinely interested in housing.

 

 

 

Spin the wheel again…

Kris Hopkins came next. Mr Hopkins seems to divide opinion with Conservative Party colleague Nadine Dorries calling his promotion “a really awful decision”, describing him on Twitter as “one of parliament’s slimiest, nastiest MP’s”. Whilst Therese Coffey defended Hopkins, describing him as “authentic and brave”.

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Kris Hopkins MP

 

The only policy making of significance to letting agents I can recall from this period is the start of the conversation about fee transparency, and look where that got us.

Moving swiftly on….

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Brandon Lewis MP

Brandon Lewis took up the post in 2014.

 

Mr Lewis oversaw the restriction of borough-wide selective licensing; his appointment also saw the planning and housing portfolios brought together for the first time since Margaret Beckett held the position in 2009.

Mr Lewis managed to keep hold of the job through the 2015 election, before finally winning promotion to the Home Office in July 2016.

Next!

 

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Gavin Barwell MP

Next up was Gavin Barwell, who before losing his seat in the June 2017 election was generally seen as a positive addition to the department. Unusually there was also general agreement that Mr Barwell had a decent grasp of housing and the importance of the PRS – having opposed borough-wide licensing in his constituency of Croydon.

 

However, his time was cut short by virtue of losing his marginal seat on 8 June – creating a vacancy.

 

Enter Alok Sharma MP….

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Alok Sharma MP

The new Minister of State for Housing and Planning is Alok Sharma, MP for Reading West and previously Parliamentary Under-Secretary of State in the Foreign and Commonwealth Office.

 

Mr Sharma is a qualified chartered accountant, who trained with Deloitte Haskins & Sells in Manchester before moving into a corporate finance advisory role with Nikko Securities.

Subsequently he went on to work as Director of Corporate Finance at Swedish bank Skandinaviska Enskilda Banken.

So he should understand business….

As a chartered accountant you would hope so, and perhaps this will mean that we finally have a decent advocate in respect of s24, but the notable absence in Mr Sharma’s CV seems to be any reference to housing.

His education is in Applied Physics and Electronics (BSc Salford University). He supports medical charities. He is a fellow of the Royal Society for the Advancement of the Arts, Manufacturing and Commerce – but seems to have little interest in bricks and mortar.

Going out on a limb, I’m going to suggest that the Sharma family probably live in a house….but there is no record of any other link between the new Housing Minister and our sector.

I suppose only time will tell.

Here’s hoping!

Posted in Blog, Politics, Regulation | 1 Comment

Strong & Stable Chaos?

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If you thought 2010 was bad, ‘hung parliament’ 2017 looks to set new records for uncertainty

The polls have closed, most of the votes have been counted, all but a few seats have declared, and what have we got?

Like everyone else, I’m not entirely sure. So let’s look at the situation objectively and try to tease out some answers.

Questions to ask yourself on the morning of Friday 9th June:

  • Who is Prime Minister?

Well, the PM is still Theresa May for the time being and all of the rumours coming out of Number Ten suggest that the status quo will persevere for a little while longer.

  • What’s their majority?

Nil. The Tories have sacrificed a 17 strong overall majority for status as the largest single party, but insufficiently large to command an absolute lead.

  • Is it strong and stable?

Ha! In no way, shape or form could this outcome be considered strong or stable.

No-one has a clear mandate, both main parties increased their vote share while neither managed to convince enough of the electorate to put their faith in them for the next five years (if it lasts that long).

At present the Conservatives are forecast 319 seats, Labour 261, SNP 35, Lib Dems 12, Plaid 4, Greens 1, and ‘other’ candidates are set to take the other 18 seats available.

UKIP took no seats, and haemorrhaged vote share to both Conservative and Labour rivals enabling both parties to increase their popular vote by 5.5 and 9.6 per cent respectively.

This means that Theresa May’s party commanded 42.4 per cent, 13,568,716 votes compared to Jeremy Corbyn’s Labour which secured 40.1 per cent and 12,824,737 individual votes.

Turnout was at its highest since 1997 with 68.7 per cent of the potential electorate casting a vote.

  • What now?

Here’s the interesting bit.

The Conservatives are still the largest party in Parliament, and although the immediate future looks like it will be very uncomfortable for its leader there is a very good likelihood that they will be able to form a Government on a similar basis to the one which is coming to an end.

How?

On the face of the headline numbers any party seeking an overall majority needs half of all seats plus one, therefore 326 seats. However this ignores the never dull nature of Northern Irish politics.

Assuming that Sinn Fein members, of whom there are 7 this time around, continue to refuse to take up their seats the magic number for overall control drops to 322.

But the Tories have only got 319?

Yes, but there’s more to Northern Ireland than Sinn Fein. The Democratic Unionists (DUP) have taken 10 seats appointing them virtual ‘kingmakers’.

It looks fairly unlikely that we’ll see another formal coalition, or that Theresa May and Nigel Dodds will take to the Downing Street’s Rose Garden akin to Cameron and Clegg at the start of their historic ‘bromance’.

What is quite likely is that the DUP will agree to support a Conservative Queen’s Speech and subsequent agenda on a supply and confidence basis.

Adding the DUP’s 10 to the Tories’ 319 gives the pact a (very) slim, and not at all stable overall majority – but a majority none-the-less.

  1. Tories are back, but what does this mean for letting agents?

Well, we know what May’s Government wanted to do in terms of fees. We’ve also witnessed a number of Conservative-led attacks on the wider private-rented sector over recent years.

As housing is a devolved issue, the DUP are unlikely to have too many demands on Westminster policy in this area so concessions are unlikely. The uncertainty will come in terms of how much leeway the new Government has to enact any legislation, and to what extent the opposition choses to make life difficult.

Logically regulating agents is a politically popular option, so may not be blocked for the sake of party political gain but this is far from clear.

We may be about to experience a ‘legislation-light‘ parliament – the first defining moment will probably be the Queen’s Speech on the 19th June, when we learn just how ambitious the 2017 Government wants to be.

Oh, and what ever happens we can look forward to yet another Housing Minister as the incumbent lost his Croydon Central seat to Labour in the early hours of this morning. Roll on the reshuffle!

 

 

 

 

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UKALA’s response to the ‘letting fees ban’ consultation

Untitled-1UKALA has responded to the Government’s consultation on its proposal to ban fees to tenants.

The Association does not support the proposed ban and has called on the government, post election, to return to the drawing board – working with the industry rather than against us.

Full details of UKALA’s response is available to download below:

UKALA’s RESPONSE IN FULL

What happens next?

Post-election the new Government will be able to take the consultation into account, or dismiss it as it sees fit.

However, it is clear that no party seems to disagree with regulating letting agents. In practical terms, who ever is in No. 10 will have to be seen to consult with industry but it would be a ‘brave’ step to rely on a consultation exercise interrupted by an election campaign and purdah.

As we outlined in an earlier blog, in order to go ahead with such a policy, any government has to be satisfied that it has met Cabinet Office guidelines on proper consultation of interested parties.

Normally, this is fairly simple as they just need to demonstrate that they listened to the right people for the right period of time. This time around, the delays associated with the election could open government up to a judicial review of any future decision.

Given this state of affairs it is likely that they will return to square one – at least in terms of re-running the consultation. At which point there is another opportunity to convince the government of the say to re-think once and for all.

 

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Could letting agents be extinct by 2063?

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Could agents go the way of the Dodo?

Letting agents’ survival depends on their ability to attract and retain customers, just like any other business, although in this case those customers happen to be landlords.

The way that landlords use letting agency services exists along a spectrum. At one end about 45 per cent of landlords don’t use a letting agent at all. At the other, about 14 per cent are completely hands-off electing to use agents to let and manage their entire portfolio all of the time.

This is according to private landlord surveys conducted by the National Landlords Association (NLA), who have been conducting similar research concerning landlords’ behaviour and habits for more than a decade.

So what?

The interesting point about this variation in practice is that there appear to be certain trends emerging.

For instance, over the course of the last seven years or so the proportion of landlords telling the NLA that they do not use letting agents at all has increased from around 39 per cent at the end of 2011 to 45 per cent in the last quarter of 2016.

ukala chart june 6 17*Yes, that should read 2013

Using current estimates of the number of landlords active in the UK market, this equates to about 141,000 more landlords choosing to do without the assistance of a letting agent today – compared with a few years ago.

That sounds bad…..

It could be; extending this trend in a purely linear sense would forecast the end of letting agencies within 46 years or by the end of 2063!

Obviously that’s nonsense, but so is most forecasting based on indicative surveys. In reality the increase in those landlords going it alone is only one part of the picture.

The proportion of landlords handing over their entire portfolio to an agent, either for tenant find or full management purposes, has actually increased from 14 to 17 per cent and 9 to 14 per cent respectively.

At the same time the proportion of ‘casual users’ of letting agents has shown the most substantial change. Occasional use of an agent for let only services has declined from 18 per cent of landlords to only one in ten, while the proportion of those who use a combination of let only and full management for some but not all properties has dropped from 11 to 9 per cent.

What does all this mean?

It suggests that landlords, and the way that they are approaching the management of their portfolios, are changing. One possible interpretation is that letting and portfolio management is becoming less causal and more structured.

In this sense landlords seem to be opting either to bite the DIY bullet, or hand over responsibility to the professionals.

What about the future?

Here’s where it gets a little contradictory. The NLA’s long term trend statistics compare like for like quarters, in this case Q4 each year, which works out just fine most of the time. The problem is that Q1 2017 showed a considerable spike of landlords using agents – an increase of around 6 per cent compared to the end of 2016 – bucking the trend.

This could be an anomaly, or it could be an extension of the polarisation the trends seem to be suggesting, since the increase appears to be coming from the single property landlord segment. Of this group of landlords, those with only one property to let, Q1 illustrated an increase in agent use from 31 per cent to 46 per cent, suggesting that agents are becoming more important to those with the smallest portfolios, who occupy the largest tranche of the market.

Perhaps in this case, less really is more.

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