The Rt Hon Michael Gove MP is trying to do what is right.
His target is second homeowners who abuse the tax system and leave properties empty while declaring they are let as holiday homes. From April 2023 these owners must prove they let their property for 70-days to qualify for business rate status , small business rates relief and exemption from council tax.
Michael Gove said: “The government backs small businesses, including responsible short-term letting, which attracts tourists and brings significant investment to local communities.
However, we will not stand by and allow people in privileged positions to abuse the system by unfairly claiming tax relief and leaving local people counting the cost.”
‘But will some landlords fall foul of the new rules simply because they do not have the knowledge or expertise on how the new regulation will apply?’
We asked Debbie Pennell, Associate Director at Caxtons who heads up their Residential Lettings and Management Department that, and a few other questions.
Debbie: “It is very easy for a residential landlord to miss vital changes to legislation – there are so many rules and regulations applicable to the sector. And there are more in the pipeline. So yes, I think some will be found culpable by accident, rather than design. I see it as my job, and the job of my team here at Caxtons, to keep all our landlords fully informed and compliant. This avoids them inadvertently being in breach of the law when they could incur costly penalties. The recent Levelling Up White Paper – presenting policy preferences before the government introduces legislation – insists that landlords ensure their private rental properties meet the Decent Homes Standard, which was originally designed for social housing. It also plans to end Section 21 repossessions, consult on a national register of landlords and develop plans to tackle rogue landlords more effectively.
‘So, can you reassure new landlords who want property management, that Caxtons is the right firm for them?
“We pride ourselves on the wealth of in-house expertise and knowledge we have. Caxtons is a multi-disciplinary
property firm, so the answer to a difficult question is usually just an internal call away.
“For instance, if you’re looking to enter the buy-to-let market, but have enough deposit to spread the risk and buy two properties rather than one, this would circumvent void periods in the future. If you are a first-time residential
property investor, we can advise you on the best way forward – student or professional; flat or house.
“Or maybe, you’re an existing landlord and self-management is getting too complicated – not surprising with the plethora of existing and new legislation, rules, regulations and responsibilities. We could provide you with a cost benefit proposal for full management to leave you worry free while Caxtons’ experts take the burden from your shoulders. Many existing landlords – whether individual or multi-property portfolio owners – rely on a full management option because who wants to get a call at 5 a.m. to say that their tenant has a flood and they need a plumber. That is what an agent is for!
“Sometimes landlords need help with how to get the best return on their investment, we can help. While being a landlord should always be viewed as a long term investment, rental income and property in general is far outperforming other investment options at the moment. Where rental is concerned, this is predicted to continue to rise for some time to come. Tenants are finding it harder to save for a deposit to buy so trends are veering to longer rental periods and older tenants.
‘Is Caxtons regulated by any particular organisation?’
“In order to keep apace of advice from sector bodies and best practice, Caxtons is a member of the Royal Institution of Chartered Surveyors (RICS), a member of the Association of Residential Letting Agents (ARLA), the Association of Residential Managing Agents (ARMA), the Tenancy Deposit Scheme (TDS), the National Approved Letting Scheme (NALS), the UK Landlord Accreditation Partnership, the London Landlord Accreditation Scheme and is regulated by the Financial Conduct Authority (FCA).
‘Do you have any final advice for landlords?’
“If you don’t have a full property management service with Caxtons, be aware of updates and changes to legislation governing the private rental sector. One major change that will be upon us before we know it is the 2025 government target to make new domestic tenancies illegal if the property does not meet a minimum Energy Performance Certificate ‘C’ rating. We will keep our landlords posted on any information as soon as it is available.
“Our duty of care is to safeguard both the landlord and the tenants; to ensure we protect landlords from unforced errors – because legislation can sometimes be difficult to navigate – while keeping tenants happy and secure.
“I believe one of the greatest benefits of working with Caxtons is that we invest in expertise and continue to educate ourselves. That is one reason that we have sponsored and authored the Kent Property Market Report for the past nine years. 2022 will be the 10th year that we have worked in partnership with Kent County Council and Locate in Kent to bring some of the most interesting property investment and developments of our area into the light and make them available to anyone who is interested. Potential landlords would find the Report useful to uncover which areas are attracting the most inward investment; new commercial expansion; highest rents; where new builds are planned. This is why we command the competitive edge.
“Having said all that, Caxtons is still a people business and, unlike national agents, every one of my residential lettings team has a name and every client knows who their contact is. We are always pleased to hear from clients and it’s in our interest to help each and every one of them.
“It has taken more than 30 years to earn our enviable reputation of being trustworthy and dependable right across the business – and it is not in our interest to change that anytime soon.”
Debbie Pennell, Associate Director & heads of Residential Lettings and Management Department
Good infrastructure, large and small towns, villages, coast, and countryside have all been a magnet for businesses, families and individuals migrating from other larger urban areas resulting in a race for space.
2021 has seen an insatiable demand for residential property across the county with frenetic activity during the first six months, aided by the 0% Stamp Duty Land Tax (SDLT) holiday for residential property up to £500k fuelling transactions and a lack of supply creating a surge in prices.
The national picture was reflected in Kent, a county that fulfils all of the above attributes. The 2021 Kent Property Market Report (KPMR) noted that the county’s residential property prices had, in fact, outperformed the rest of the UK.
Research conducted by Zoopla commissioned for this year’s KPMR revealed that all districts across Kent outperformed both the south east and UK average house price increase over the 12-months, with Dover and Canterbury both achieving a 6.7% increase over that period
Demand outstrips supply and construction thrives
With pre-loved homes in short supply, construction of new build has been active across Kent and residential schemes have been brought forward. In and around the county residential property has been built, planned or is coming on-stream in Ebbsfleet Garden City, Medway, Gravesend, Swale, Thanet, Folkestone, Canterbury, Ashford, Kings Hill, Sittingbourne and Faversham.
The pandemic has reshaped priorities and homeworking has facilitated what many hope will be a better work/life
balance. London is an easy and fast commute away, which makes Kent a desirable destination, both to buy and rent, so the county has seen an influx of families and individuals seeking more space and quality of life. This
Proposal for 45 flats at Station Rd Faversham (credit: George Wilson Holdings)
will no doubt strengthen local communities and local economies, is vital for Kent’s economic development, and a silver lining if ever one was needed.
Rents have risen faster during this year than they have since the early days of the recession in 2008. Some of those who worked in London and other large conurbations pre-pandemic, moved back to parents or sold and moved out of towns and cities to ‘escape to the country’ and work from home. This caused an uplift in rents due to lack of available property and overdemand. More recently, businesses are slowly requesting employees to return to the office – for at least some of the time – and the result has been a rush back to centres of commerce, exacerbating the rise in rents and an ever greater dearth of available property.
Add to that a favourable time for landlords taking on a buy-to-let mortgage. Moneyfacts reports that for the past 12 months, the cost of mortgages rates for the buy-to-let sector (with a 60% loan to value) has fallen every month. So, competition for available and suitable property may be the only thing holding back new entrants to the buy-to-let marketplace.
However, there is potential for a new generation of retirees and freelancers/consultants to become landlords as lenders ease rules that have in the past prevented some from investing in the sector. Some lenders have dropped their ‘minimum income’ threshold, which will enable those previously excluded to participate.
A silver lining
At a time when some long-term landlords are looking to exit the market, there is an opportunity for new investors to get involved. With Kent property remaining more affordable, in relative terms, than the rest of the south east, this may be an ideal time for and those wanting to join the buy-to-let sector, or existing landlords to expand their portfolio.
For more detailed information follow this link to the Residential Performance sector data extract from this year’s Kent Property Market.
Caxtons recently won the EGi Most Active Agent in Kent award for commercial property transactions.
By Debbie Pennell, Regional Head of Residential Lettings & Property Management
London’s rents have been dropping in recent months, no doubt underpinned by Covid-19 restrictions.
The flight from the Capital has been facilitated by a change to the previously accepted ‘norm’ of daily commuting to a centrally located office.
Many employers and employees responded to a ‘work from home’ call in the first lockdown, which resulted in a surprising outcome.
Deloitte research found that 55% of workers believe that their colleagues are just as, if not more, productive now than before lockdown. And after lockdown 61% of desk-based workers would prefer to work from home more often. We don’t have statistics on whether they thought they were more productive though! Undoubtedly there were some problems for working parents who were also home schooling, but once schools went back these eased. Also, networking, collaboration and social interaction were seen as positives of going in to an office and working with colleagues. However, it seems that employees could be relied on to work at home.
When looking to rent a property, ‘within walking distance of a London tube station’ may be lower in the search criteria, and quality of location or more space for a home office higher up the list.
Because of this, Kent is ideally positioned to benefit as both a rental destination for tenants and perfect to invest in a buy-to-let property.
Investors have also been making the most of the Chancellor’s Covid-related Stamp Duty Land Tax (SDLT) holiday for property up to £500,000. Latest data from Hamptons International records that nationally, landlords drove 15% of sales last month (November 2020), the highest share of sales since the run-up to the introduction of 3% SDLT on second homes in 2016.
Overlay that with the London tenant retreat and it is easy to see why Kent is popular for buy-to-let investors and that rental returns are rising due to demand and augmented by a lack of stock.
Of course, and in time, what comes around goes around. However, there is an opportunity to invest in good rental property and landlords – whether new to the sector or those who wish to extend their portfolios – would be advised to look south of the river Thames.
Currently, demand is outstripping supply with properties being let in a matter of days.
Caxtons is always looking for landlords who have available buy-to-let investments, and who are interested both in letting to reliable tenants and protecting their valuable asset – and we have good tenants with proven track records who are seeking rental property.
At the beginning of October, Housing Secretary Robert Jenrick announced that a minimum size for flats/homes converted from offices under permitted development rights (PDR) would be enforced.
This expands on changes to PDR, introduced on 1st August 2020, ensuring that adequate natural light is a pre-requisite when creating new homes from a building that had another use in a previous life.
In 2017, when a study compared floor space across the EU it unveiled that the UK had the smallest dwellings in the EU. (*At the other end of the scale, Canada has the largest floor space in the world, where on average, homes measure 150 m2.)
However, developers of new schemes must now comply with the new rule, ensuring that a one-bed home with shower room, measures at least 37m2. And, if the property has a bathroom the minimum size increases to 39.2m2.
This may not be vast, but is probably larger than the homes Nick Raynsford, ex-Labour MP and Housing Minister in Tony Blair’s Government, was referring to in Architects Journal (Jan 2020), saying the current Government was ‘immorally producing slums through PDR’.
PDR has been branded a major stimulus that’s resulted in cramped living spaces.
This latest amendment to PDR might be more readily explained if read in conjunction with a Government-commissioned report, which revealed between 70% and 80% of flats converted under PDR fail to reach the minimum size conditions. It found that some converted ‘studio’ flats measured 16m2 - less than half the recommended size.
The Housing Secretary says that while most developers “...deliver good homes and do the right thing...”, the new measures would address those who did not follow regulations. He also stressed that Covid-19 had illuminated the importance of having a comfortable place to live. And during lockdown or quarantine, this must have been very apparent to those living in tiny spaces.
In general, these new measures have been welcomed, although some say that consideration must be given to the communities impacted by PDR - especially when used to convert large office blocks. These schemes often result in a sudden increase in demand upon local amenities and services such as schools, surgeries and public transport.
However, PDR is a vital weapon in the Government’s armoury, to achieve its pledge to deliver one million new homes during this parliament. And if proof were needed that permitted development could help, the Government says there have been ‘over 60,000 homes provided over the last 4 years’ under PDR.
That said, a year of Covid restrictions has affected the Government’s housing ambition, and early lockdown adversely impacted the construction sector and delivery of some schemes. But as building sites were some of the first to return to work, it is hoped that time lost can be recouped in due course.
In summary, it is hoped that this new move will ensure the few who have abused PDR in the past are no longer able to, and that new homes created will meet minimum space standards.
*Caveat: the UK has a landmass of 244,100 square kilometres and a population in excess of 67,000,000; Canada’s landmass is almost 10 million square kilometres with a population of 37.600,000.
By Debbie Pennell
Having once extended emergency measures to prevent tenant evictions during the darkest days of Covid-19, the Government has come under pressure from all sides. Originally due to end on 30th June, the eviction ban was extended to 20th September. Now, the ban has been lifted and, where appropriate, landlords are able to take eviction proceedings against tenants.
The opposition party, industry, charities and Baroness Ros Altmann, a former pensions minister under David Cameron, have different and often conflicting agendas, but have all had their say on the matter.
Landlords, their representative bodies and Baroness Altmann were all concerned that if the eviction ban been extended, they, together with other restrictions imposed, would deter new entrants to the private rental sector (PRS), encourage many to leave the sector and impact others who use their buy-to-let investment as a source of income.
Their argument was that although a blanket ban on evictions would benefit those in genuine need, it had the unintended consequences of helping those difficult, anti-social, or persistently non-paying tenants who take unfair advantage of their landlords.
In addition, many landlords are dependent on their buy-to-let income for day to day living, or as part of their pension pot, potentially supporting drawdown funds. An extension of the ban would have impacted them by default, and would have caused knock-on, unplanned hardship.
Although the courts are now opening their doors to eviction cases, the backlog is predicted to be long. So, there is no quick fix.
When criticising a potential further extension to the ban, Baroness Altmann suggested a number of other measures that could help tenants in Covid affected areas who found themselves in need. These include interest-free hardship loans guaranteed by Government and paid
Conversely, charity Shelter say that since the beginning of the pandemic 322,000 tenants are in arrears. They are concerned that resulting evictions will increase homelessness and propel a rise in coronavirus. Also, the end of the furlough scheme in October can only push unemployment figures upwards making matters worse. Government opposition voices have been heard in support of this sentiment.
Meanwhile, some sector experts think that in extreme circumstances, unscrupulous and potentially criminal landlords could be planning to illegally evict some tenants, reminiscent of the Rackman 1950/60s era.
In the main, landlords have welcomed the reinstatement of evictions, although for tenants who have found themselves in arrears due to reduced working hours, job losses, illness or depleted income - all at no fault of their own - are feeling let down. They had been hoping for a further deferral of the inevitable, but it seems the Government has decided the country must learn to live with Covid and that it is essential life resumes some semblance of normality.
In order to introduce fairness into this difficult situation, the National Residential Landlords Association (NRLA) is encouraging landlords to continue working with any tenants experiencing genuine financial hardship, and to arrive at a mutually acceptable payment plan. In short, this will benefit both parties, averting the possibility of homelessness for the tenant and voids for the landlord – not to mention the expense of eviction through court proceedings.
However, in anticipation, courts are preparing for a flood of new cases and there is talk of prioritising cases such as those with 12-months of unpaid rent or, in some cases, where the outstanding funds amount to 25% of the landlord’s income. In addition, cases of illegal occupancy,
Finally, and in an attempt to avoid at least some potential disputes, Landlord Action and Property Redress Scheme together are offering a cost effective mediation service to avoid eviction proceedings. This should enable letting agents and landlords regain possession in a more timely, non-judicial manner, rather than immediately resorting to the courts.
Caxtons has advised both landlords and tenants to keep lines of communication open and, wherever possible, arrive at consensus. As a consequence, during the pandemic we have had a couple of cases where the landlord and tenant have agreed to a reduced rent, but only the rare occurrence of rent arrears.
“Following disastrous ‘lockdown’, single property buy-to-let landlord seeks managing agent with expertise in residential property letting regulations.”
No - not a lonely-hearts ad, but the result of Covid-19 and time-limited and radical emergency measures introduced in the private rental sector (PRS) during lockdown, together with the plethora of regulations that landlords face.
In recent weeks this has brought about a reported 20+% increase in landlords seeking managing agents.
Firstly, new and existing landlords are taking advantage of the stamp duty land tax holiday introduced by the Chancellor to boost the housing market, which had ground to a halt because of lockdown. Savings of 2% duty on property priced between £125,000 - £250,000 and 5% on the portion between £250,000 and £500,000 were attractive for many new and existing landlords who bought at a time when most of the nation was holed up not daring to move. These astute investors made savings to a maximum £3,750 in stamp duty.
In addition, the constant stream of new rules and regulation introduced by successive governments and relating directly to the buy-to-let market may have proved overwhelming for some ‘self-manage’ landlords.
On 1st April, in the middle of lockdown, a new mandatory electrical installation inspection came in to effect for all new tenancies (starting on or after 1st July 2020) in England. This compels landlords or their agents to have all electrical installations in rental property inspected and tested by a suitably qualified electrical technician at least once every five-years.
Another emergency measure introduced during lockdown was temporarily abolishing evictions. This may have
made landlords nervous, and motivated them to seek out reputable managing agents who would understand what to do and how to handle such a delicate situation.
Some tenants did, and do face reduced income at best or losing their jobs at worst. Because of this, rent arrears has been a very present issue for landlords and tenants alike.
At Caxtons, the residential lettings and management team advised both tenants and landlords to talk before any major problems arose.
Debbie Pennell, Regional Head of Residential Lettings & Property Management said: “The sooner landlords and their tenants were able to arrive at an arrangement to tide them over until a clearer picture of the future emerged, the better. This gave everyone breathing space to find solutions, rather than make issues worse.
“We have steered our landlord clients through some pretty difficult problems, whilst all the time ensuring that maintenance and regular checks were dealt with efficiently and paying heed to social distancing and Covid-19 health & safety and security measures.
“Whenever we have visited a tenanted property we have adhered to the strict rules pertaining to the virus.
“Ensuring that all our landlords have peace of mind, and that both their valuable asset and their tenants are kept safe has been our priority and – no doubt – the priority of every good managing agent.
“I am not at all surprised that the number of landlords seeking good managing agents has increased over the past 5-months. Letting a property is a heavily responsible and burdensome task for anyone not employed in the business and the penalties for getting it wrong are stringent.
“My advice would be to ensure that any landlord looking to appoint a managing agent – whether they have one or multiple properties – looks long and hard for a reputable and regulated agent to handle the work on their behalf. To protect themselves and be confident that they are in safe hands they should look for agents who are members of, and regulated by:
“There are still too many rogue agents out there”
By Debbie Pennell, Regional Head of Residential Lettings & Property Management
The private rented sector (PRS) is finding its way through chaos and shock-waves resulting from the Covid-19 pandemic. Now that lockdown is lifting, there are winners and losers.
Losers include many tenants and owners who have accrued rental arrears, mortgage holidays and other debts; possible future unemployment; the cessation of furlough and, conceivably, reduced hours and income. All of these threaten stability – especially where housing is concerned.
Some landlords may also find themselves on the losing team and be forced to sell not only because of tenant rent arrears, but also due to new tax laws and regulations pertaining to rented property, which came in to effect mid-lockdown, in April.
On the other hand, some of the winners are landlords who’ve taken advantage of more rental properties coming on to the market. They have been able to snap-up more affordable, ready to let options in high-demand rental areas.
In addition, buy-to-let landlords will now benefit from the stamp duty holiday announced by the Chancellor raising the threshold payable to £500,000 until March 31st 2021. They still have to shoulder an additional 3% surcharge, applied to all second home owners, but depending on purchase price, there can still be some welcome savings. Regional property price difference will obviously apply, with those in more expensive areas benefitting most.
At a time when stocks and shares have been volatile – the FTSE 100 was down -17.86% over the past 6 months (21st Jan to 21st July) – rental property could be viewed as a safer long-term investment. But an eye to the long-term is important where the PRS is concerned.
Since the 2008 recession the PRS market has changed profile with more over 50s joining the traditional younger generation in choosing to rent.
According to the Office of National Statistics: The number of households in the private rented sector in the UK increased from 2.8 million in 2007 to 4.5 million in 2017, an increase of 1.7 million (63%) households.
The Royal Institution of Chartered Surveyors (RICS), of which Caxtons is a member, sees the government intervention on stamp duty as ‘a vital short-term measure’ and while its latest residential property market survey confirms there is recovery in activity, it caveats it by saying that longer-term expectations remain cautious.
In the lettings market, tenant demand returned to growth for the first time in three reports (non-seasonally adjusted monthly series), with a net balance of +24% of contributors seeing an increase. Meanwhile, having fallen significantly in recent months, landlord instructions were broadly steady at the headline level in June. On the back of this, rent expectations turned modestly positive, both in the near term and for the coming twelve months. As such, survey participants are now pencilling in around 1% rental growth nationally over the year ahead. Source: RICS Market Survey Report June 2020 (published 9th July 2020).
At Caxtons we have noticed an increase in enquiries from new landlords transferring their portfolios across to us for management, as well as existing landlord clients who are looking for advice on expanding their portfolio.
We have also seen London landlords buying property in and around the county, possibly following anecdotal evidence of a desire for people to get out of cities and live with more accessible green space around them.
Our Residential Lettings & Property Management team is busy, right across the county, but we are always happy to
Caxtons is a member of the Royal Institution of Chartered Surveyors (RICS), ARLAPropertymark (the Association of Residential Letting Agents); the Association of Residential Managing Agents ( ARLA), the National Approved Letting Scheme (NALS), the Tenancy Deposit Scheme (TDS), the UK Landlord Accreditation Partnership, the London Landlord Accreditation Scheme and is regulated by the Financial Conduct Authority (FCA).
There’s good news for buy-to-let landlords from the latest Rental Index sector analysis – the rental sector is reporting activity in June was up on last year’s figures and there are fewer voids .
Two recent examples of the increase in demand for private rental property are demonstrated by Caxtons’ Sarah Singer, who took on a 2-bed end of terrace property in the village of Borstal, Kent. Within one day the property was let. A 1-bed property in Chatham High Street flew off the shelf in just 2 hours.
Sarah said “We had numerous enquiries for both properties and it really was a case of the tenants being decisive, making up their minds quickly and being able to move without delay. The lifting of Lockdown has seen a resurgence of people wanting to move – maybe this enforced ‘stay at home’ period with families or flat mates has highlighted a desire to move!
“In both our Canterbury and Medway offices we continue to let properties using video tours, which is working well for both us and tenants, with 90% of our properties let via video viewings.”
Some of the activity in East Kent has evolved through working with a London agent with rental properties in the area, and with landlords buying properties to rent in and around Canterbury.
Debbie Pennell, Regional Head of Residential Lettings and Property Management at Caxtons added:
”Canterbury office has seen new enquiries from landlords wanting to move their tenanted properties to us, and from others who are in the process of buying new private sector rentals and want us to act as their agent. This is great news, especially after the protracted inactivity since early-on in the Lockdown. We are seeing voids down and our landlords seeking sensible rents, not exploiting a situation that is for many a very difficult time.”
The easing of Lockdown has seen an increase in buy-to-let purchases, which has come as a welcome surprise to the sector. Increased legislation that came into force in April this year, together with reduced tax allowances, impacted private rental sector (PRS) landlords. These moves saw many single property or accidental landlords withdrawing from PRS at the end of last year.
However, some landlords are now looking to expand their portfolios* – possibly because ready-to-let properties are available and at more achievable prices than they were pre-legislation and pre-Covid-19.
Debbie said “This change in outlook may mean landlords are more open to risk than before. Whatever the reason, we are very happy to advise them on suitable rental properties across Kent and have tenants ready and waiting to occupy.”
*Debbie added "The recent announcement increasing the Stamp Duty Land Tax threshold to £500,000 until 31st March 2021 will be a positive thing for many buy-to-let landlords who are currently considering expanding their property portfolios."
Private Rental Sector: Property Management
Caxtons chartered surveyors, one of the largest independent firms of general practice chartered surveyors and property consultants in Kent, Medway and the south east.
Covid-19 lockdown is impacting everyone in the UK, and Caxtons is no exception. The firm runs busy Residential and Student Lettings departments and their residential landlords clients and tenants continue to face the day-to-day issues associated with owning and renting property.
There has been no let up for Caxtons’ residential property management departments who are still working to achieve compliance rules and regulations relating to letting property.
Debbie Pennell, Regional Head of Residential Lettings & Property Management said “It’s imperative that all tenants in our clients’ properties are kept safe, so issues such as gas inspections must continue.
“When and where this is necessary, our contractors are being as sensitive as possible, maintaining social distancing at all times, and ask residents to remain in one room while they complete the work.”
Emergency work in the private rental sector is also being completed as swiftly as the residential property managers can organise. Caxtons’ contractors all abide by social distancing, and they ask tenants to wait in an area other than where they are working, either outside or in another room.
General maintenance work is still being undertaken but Debbie says this may take longer than usual, depending upon urgency, but that property managers are working flat out to achieve quick and happy outcomes.
“Because of the lockdown, many suppliers and manufacturers are no longer able to supply the spare parts required for repairs, which can sometimes take longer than usual to source and arrive. This is frustrating for everyone – not least the tenant and landlord.”
At Caxtons, tenancies are still reaching their natural conclusion, so their property managers are undertaking check outs – albeit they may take slightly longer. They believe it is important to complete the formalities as soon as possible in order to settle and return deposit monies as appropriate.
Property managers ensure that work continues in empty properties and when complete, the homes are then being marketed and let via video tours. And individuals and families are still moving in to properties when the property is in a suitable condition.
Caxtons’ property managers are, where possible, arranging for tenancy renewals. This is giving both tenants and landlords a bit of peace of mind during this strange time of disruption.
However, for some tenants and landlords the picture is not so rosy. If a landlord is reliant on rental income and a tenant loses their job the situation can very quickly become critical.
Caxtons encourages both tenants and landlords to get in touch as soon as a problem occurs in order for all parties to find a suitable solution. Debbie says “It is no good suffering in silence and many are facing financial struggle and extreme anxiety. The sooner all parties are aware of a problem, the sooner it can be resolved. Tenants must talk to their landlords or agents – who can only help if they know there is a problem.”
The longer the Covid-19 lockdown continues, the likelihood is that more tenants will struggle to pay their rent. Conversely, landlords will struggle to pay their mortgage if tenants do not pay rent.
A new telephone mediation service has been launched for landlords, tenants and agents in order to settle disputes – particularly at this difficult time. Sean Hooker of The Property Redress Scheme said “Mediation is a voluntary, without prejudice and confidential process, which allows disputes to be resolved much quicker and with less cost than court.” The initial instruction comes from the landlord and is in line with government evictions policy.
Student Lettings & Property Management
Duncan Reeves, Associate Director and Head of Student Lettings at Caxtons’ Canterbury office says that their department’s property managers are facing their own unique issues.
“Our 230 student properties currently accommodate in the region of 600 students with just 20 having difficulties paying, although this situation may change.
“Even though students may have returned to their parental ‘homes’, they are still contractually bound by the leases they signed at the beginning of their tenancies. However, where there is genuine hardship, landlords are understanding. Nonetheless, missing payments will reflect on students and guarantors future credit score and a bad reference will be difficult to avoid.”
Government advice at the outset of the lockdown was that ‘students remaining at university in England should stay where they are and not attempt to travel. If they are living in student halls, or private rented accommodation, they should remain there and stay indoors while current restrictions are in force.’
Duncan says at Caxtons the level of debtors is low, but that other agents and landlords may not be as fortunate. In Canterbury, Student Unions - supported by the Vice Chancellors of the Universities - are pushing landlords to let students off their final quarters’ rent, which goes against all government advice. And landlords are very concerned.
This is a thorny issue for property managers who are aware that students have already received student loan instalments and will continue to receive scheduled payments to help meet living costs in 2019/20, so should be able to meet their commitments. If they do not pay, guarantors will be called upon to settle the outstanding rental money.
With that in mind, Duncan contacted Timothy Douglas, Senior Policy and Campaigns Officer at the Association of Residential Letting Agents (ARLA PropertyMark) who replied “David Cox, Chief Executive of ARLA Propertymark has raised the issue directly with the Ministry of Housing, Communities and Local Government.”
The Government is not planning to issue separate guidance for the student sector but the UK guidance for landlords and tenants says that ‘Tenants should continue to pay rent and abide by all other terms of their tenancy agreement to the best of their ability. Tenants who are unable to do so should speak to their landlord at the earliest opportunity.’
Covid-19 has raised more issues than might have been expected at the outset of this pandemic but Caxtons’ property managers will continue to work for clients and their tenants to ensure best outcomes all round.
Caxtons’ property management departments work with multiple clients across both the commercial and residential property sector, from businesses and private tenants to industrial, corporate, student and private landlords. For more information contact Caxtons by email or telephone on 01474 537733.
Caxtons Chartered Surveyors operates a large and thriving Block Property Management department from its Kent base, with clients stretching across London and the south east.
Fortunately, ahead of lockdown the company was well prepared in terms of infrastructure and staff are able to communicate with colleagues and clients completely unhindered.
Tony Martin, Associate Director and Head of Block Management reports that the department’s work is largely unaffected by the resultant Covid-19 lockdown.
“For some time prior to the lockdown, and in order to be more effective at servicing the properties they manage, many of our property managers had been working remotely. We have taken advantage of that model of working so that now our support staff are doing the same with only limited office presence, and the move to remote working for the majority of the department’s staff was seamless.
“Having already established this pattern of work, we are able to provide the same effective level of service to our clients as always, and ensure that the buildings we look after – approximately 7500 properties – are managed with the least amount of disruption. Our managers are still undertaking site visits to ensure that buildings are safe and in good order. They are of course observing social distancing rules and ensuring they take appropriate care to keep themselves and the residents safe.”
Their client and resident meetings continue to be held, but via video conferencing and the success of these will likely pave the way for future meetings to be held in this way.
The majority of Caxtons’ contractor base, some having worked with the firm for almost 30 years, remain willing and able to deal with all essential repairs & maintenance.
Tony said “We believe it is more important than ever that common areas of the buildings we manage are kept clean and safe. In addition, we are able to undertake a deep clean of buildings if, when and where necessary.
“Whilst cleanliness is imperative, the properties we manage must remain compliant with all rules and regulations pertaining to apartment blocks to ensure they are safe and secure. Therefore, our contractors continue to test and maintain all of our lifts, gates, fire alarms and emergency equipment on site. This is overseen by our Compliance Officer who works closely with our property managers to ensure all of our buildings are fully compliant.”
Caxtons has always considered good communication with clients and residents as vital. Tony believes this is one of the department’s strong points, and that during these worrying and difficult times, it is crucial to keep all channels of dialogue open.
Tony continued “On occasion it has been necessary to write to some residents to remind them not to congregate in communal gardens, parks and open spaces, and to
“We believe that the service we provide to our clients and residents at this challenging time is absolutely vital to protect their safety and wellbeing in their homes.”
Caxtons’ property management departments work with multiple clients across both the commercial and residential property sector, from businesses and private tenants to industrial, corporate, student and private landlords. For more information contact Caxtons Block Management department or telephone 01474 330890
Leaseholders in blocks who buy their freehold should ensure the lease is extended to 999 years prior to purchase thereby avoiding complicated tax problems on sale of individual flats.
This is something that is often neglected by professional advisers.
Depending upon the nature of the freehold ownership, leases extended post purchase may give rise to a second stamp duty land tax (SDLT) liability - even though SDLT will already have been paid on the original freehold purchase - and capital gains tax (CGT) liability.
Usually, several leaseholders form a company where each becomes a shareholder and purchase the freehold interest from the landlord, either by agreement or under a statutory right. Collectively, they then own the building incorporating all of the flats. What is important is whether the freehold asset is held by the company simply as an asset, or held in trust for all lessees.
A Trust can be implied if it was the original intention of the purchaser, or if the company accounts do not show the building as an asset. Or it could simply be declared by deed.
Importantly, under a Trust, leaseholders have individual liability for tax, rather than the company, and this will be significant if they are eligible for principal private residence (PPR) relief.
Also, under a Trust, lessees are collectively responsible for the management of the building and not the company directors.
If there is no Trust there will be an SDLT liability on the notional new lease price, which increases as the original lease shortens. For second home owners this might attract a further 3%.
When 999 year leases are granted and a Trust is in place no SDLT liability is applicable at any time, but for CGT purposes it is essential that the lease extension is granted immediately on the freehold acquisition as no time will have elapsed between the two transactions to give rise to a taxable gain by the freehold company. If there is a CGT liability then this would be borne by the company, which is not eligible for PPR.
So, if you are intending to buy a lease with a share of the freehold and a 999 year lease has not been granted, make sure your solicitor or conveyancer checks whether the freehold is held on trust so that you don’t have an SDLT liability. And find out how long ago the freehold was purchased, because the longer the time frame the greater your potential CGT liability is.
Caxtons is not qualified to give accountancy or legal advice and recommends that you speak to a suitably qualified accountant or solicitor for formal advice before proceeding with such a transaction.
The Association of British Insurers (ABI) says that in 2018 the average amount of a burst pipe insurance claim due to adverse weather conditions exceeded £10,000, and it estimates that in the UK, insurance companies pay out around £2.5m per day in claims relating to escape of water.
Water damage is one of the most common insurance claims, and reflects 31% of all claims during that year according to Zurich.
Whilst water damage can conjure up scenes of extreme weather and floods, in addition to these obvious causes, it can very often be as a result of bad maintenance, DIY (nails through pipes), sewer back-up etc. Escape of water can cause extensive damage to property and the need for temporary alternative accommodation.
Whatever the cause, the result can be disastrous for those affected and can occur anywhere, any time so identifying potential problems and taking steps to reduce the likelihood of incidents occurring will help protect property.
Insurers place great emphasis on ‘first loss notification’ as this can minimise an insured loss, so it is important to deal with the issue as soon as it is identified. The impact that large Escape of Water (EoW) claims can have includes increased premiums and high excesses
With this in mind, Morag Keohane Dip CII, Head of Insurance at Caxtons says “Some of the reasons for an increase in EoW claims cited by insurers and others was the installation of additional or enhanced bathrooms, white goods such as American style freezers, adaptions to heating systems, changes in building practices and of course, gradual wear and tear/maintenance issues. All of these have added to the problems.
Morag also stresses that there are things that can be done in order to reduce the risk and limit the extent of damage or completely avoid the misery of EoW.
Owners of residential apartments in blocks should be doubly vigilant. If a top floor property develops a persistent leak from underfloor heating or a burst pipe between floors or walls, escaped water will make its way into other’s property, sometimes multiple homes. This could manifest itself in a dramatic ceiling collapse or just through water seepage – whatever the route to discovery, the underlying problem will cause more than just the obvious and visible damage.
Often occupants will need to move out of affected properties for lengthy periods, so that the route-cause ofthe problem can be established and remedial works, to rectify the underlying and obvious problems, can be undertaken.
It is vital to undertake regular and rigorous maintenance of obvious areas where water may escape.
In blocks, every owner should know where to find the stop-tap to turn off water to their apartments and, if necessary, the block. This may help to reduce some of the potential damage if a leak occurs.
Details of a reliable emergency plumber kept in an obvious place – a communal area, by lifts, in entrance halls – could make the difference between one or multiple properties being affected.
Using technology to assist with monitoring or detecting the escape of water can be installed, although if retrofitting the cost may prove prohibitive. If detectors / sensors have been installed during construction of the blocks, the system may also have a built in facility to isolate water by shutting down relevant valves. The system may also alert owners (or managers) to the problem.
Solutions such as these are pioneering and relatively new. For details of suppliers, the Water Regulations Advisory Scheme can supply a list.
Once an incident has occurred it is important to contact the broker or insurer and to take photos of any loss or damage. Wherever possible, keep any damaged items or fittings and look out any receipts for items (proof of purchase / price). A loss adjuster may be appointed if the damage is considerable, although the insurer may
request the policyholder to provide estimates for repairs or replacements. If so, it is advisable to do this as soon as possible.
A checklist of key things to do in response to an emergency are:
If you are the leaseholders or tenant in a block where Caxtons provides insurance cover, contact us to log a claim as soon as any damage is noticed to mitigate losses.
If you would like further information about Caxtons’ buildings’ insurance provision, contact us without delay.
MEES – not another ‘buzz word’ used by Generation X Y or Z, but an acronym for Minimum Energy Efficiency Standards, another regulation that is due in to law in April this year.
A regulation, introduced in 2018, ensured that unless exempt, all new tenancies of private rental property should have a minimum energy efficiency rating of E. If a property did not have the relevant energy performance certificate (EPC) to prove it was E or above, it could no longer be legally marketed for private rental.
In April the law changes and will include all existing tenancies, bringing them in line with the minimum energy efficiency standard. This means that a landlord with an EPC rating of F or G will not be able to let their property, and if they fail to comply with this new regulation they are in danger of a £5,000 fine.
If their property is below the requisite rating, landlords are expected to invest up to £3,500 (capped) to make improvements in order to achieve at least the minimum E grade. If this investment is not enough to meet requisite efficiency, landlords are able to apply for an exemption – although it may not be forthcoming. Financial loans and grants are available to help ease the financial burden, but many landlords will not be eligible for this help.
The switching service, Switchcraft examined 18 million EPCs and concluded that more than 250,000 investors / landlords had not yet
In addition, many landlords and investors are being squeezed by new tax regulations that are beginning to bite so are looking for a way out of the sector. However, the rude awakening of Capital Gains Tax (CGT) changes, which come in to force in April, may keep them locked in.
Any profit made on a home that is not the ‘main dwelling’ is liable to CGT. Previously, if a landlord lived in the rental property they were selling they could claim ‘lettings relief’ for the period of time they occupied the premises plus the final 18 months ownership prior to sale (even if not occupying during that period). This loophole will be abolished and may ensnare landlords, leaving them with larger than expected tax bills, and will be liable to pay the total amount owed in 30-days.
Lettings relief will still exist, but the additional 18 month period reduces to nine and landlords must be able to prove that they shared the home with their tenant.
And finally, landlords should be aware that the Tenant Fees Act will change in June to include all existing tenancies.
For advice on maximising your asset contact one of Caxtons’ investment or lettings and property management professionals.
There is gathering evidence that private rental sector (PRS) landlords are looking for a way out of the market, or to reduce their investment in what many see as a changing sector.
Radical changes in tax laws related to buying, owning and letting a second property means it is harder to make a reasonable return on investment unless a landlord understands how to maximise their buy-to-let investment.
And if that wasn’t enough to deter new investors from entering the PRS, developers and institutional investors have jumped on the landlords’ bandwagon with build-to-rent (BTR), professionally managed schemes. Savills, who recently conducted research on behalf of the British Property Federation, say that BTR is on the increase with 150,000 homes in planning, under construction or completed.
Larger conurbations are currently the focus for such developments, with Manchester, Birmingham, Liverpool, Leeds, Glasgow and Sheffield cited as leading the way while London is playing catch-up, and as fast as it can. Overall, Savills says there has been a 15% increase in planning for such schemes over the past year.
In the UK, at least, BTR apartment block homes offer a new approach to the rental market, many with shared and managed facilities such as gardens, a gym, pool, communal lounge and full-time concierge or manager, often provided with on-site living accommodation.
The attraction of BTR is clear, especially to professionals looking for long-term, service led, no-hassle renting of premium properties at a price they are willing to pay.
So how can the PRS landlord survive and prosper? One rule of thumb is that a good deposit will make the figures work and keep mortgage repayments down, so the smaller the loan the better it will be. Also, building a portfolio of properties will maximise returns because professional fees can be rationalised, bulk purchasing of white goods, carpets and other soft furnishings may help when negotiating discounts, and there is always the
option of setting up a buy-to-let company in and through which all properties would be held and managed.
A company structure will attract better tax rates and go some way to negate the loss of relief landlords were previously able to claim against mortgage payments. However, although they are becoming more competitive, buy-to-let mortgage rates for limited companies can be greater than for individual landlords.
Also, with many existing buy-to-let landlords looking to sell their stock there are bargains to be had. Some areas of the country offer substantially better yields, so if landlords can be selective, buying a property in Liverpool, will probably provide higher rental yields than a comparable rental property in the south east.
Since tougher tax rules were introduced and fewer allowances permissible, data from Savills reveals that 103,900 more buy-to-let properties have been sold than bought. Whilst first time buyers have benefitted – recently, numbers of those entering the market indicate a substantial rise – there is a constant demand from good tenants plus a variety of rental homes available to purchase for those intent on becoming landlords.
Landlord insurance provider Simply Business estimates half a million rental properties could be coming to the market this year following on from a survey they conducted with 800 UK landlords. The main reasons given for selling (at least one property) were tax increases, government reform, rising rental costs and economic instability. In addition, the survey revealed 82% of landlords would not be adding to their portfolios in 2020.
In summary, while BTR is probably coming to a conurbation near you in the not too distant future there is still plenty of time and profit to benefit landlords in the private rental sector.
For advice and information on property investment, letting and property management contact us or call 01474 537733 and ask to speak to one of Caxtons’ property experts.
A Grenfell Tower Inquiry Phase I report has been published and focuses heavily on the response and actions of the London Fire Brigade, rather than the cause of the fire.
However, in addition the report does highlight deficiencies in fire safety in blocks of flats.
As part of Caxtons’ ongoing compliance procedures, we are already implementing the recommended changes - due to become Law during this parliament and included in the recent Queens Speech.
In summary, the report highlights:
All of the above contributed to the spread of the Grenfell Tower fire.
Clients of Caxtons Block Management department will be pleased to know that we already undertake inspections of common part fire doors on an annual basis, update
In future the law will demand that more comprehensive and technical details of buildings under management are available, including floor plans. We already ensure that the relevant information is displayed at prominent locations throughout blocks in order to assist fire crews in identifying the location and layout of flats etc.
As well as maintaining Datastation, a bespoke software system to maintain health and safety records, we now have a comprehensive database that highlights when the servicing of plant is due. For example, it will automatically alert us to when fire alarms servicing or statutory inspections are due.
All blocks under management have, for many years, been subject to a comprehensive health /safety and fire risk assessment. These now include an inspection of entrance doors to the flats and where present, an invasive survey of cladding is carried out.
Caxtons hopes that the additional measures we have already instigated will make owners and tenants of the blocks that we manage feel more confident that we are doing everything we can to keep them safe.
With election fever in full flow it is tempting (though maybe irresponsible) to book a long haul flight to the back of beyond and only return when it is all over.
However, Debbie Pennell, Regional Manager of Residential Lettings & Property Management says Caxtons is more pragmatic and has looked at some of the things that any incoming government must, in their view, do to resuscitate the private rental sector.
Rogue landlords and agents1.
Some months ago, the government, under The Housing and Planning Act 2016 ("the Act") 1.introduced a range of measures to help local housing authorities tackle rogue landlords and drive up standards in the private rented sector. These measures include establishing and operating a database of rogue landlords and property agents.
This was such welcome news for all reputable landlords and a simple route for local authorities (in England) to eradicate rogue landlords from their area. Or so we all thought. But sadly no. The register was introduced April 2018 and by mid-August 2019 only 12 landlords had been recorded. Yes – only 12 rogue landlords were on the register after 16-months.
At the beginning of November, the outgoing government announced an additional £4m to help local authorities tackle rogue landlords and agents.
Caxtons is keen to lobby for more effective regulation against rogue landlords, and for local authorities and central government to implement existing legislation – not least the rogue landlord register – and to make it widely available. This, in itself, may stop some rogue landlords and property agents who 1.knowingly flout their legal obligations and rent out accommodation which is substandard, frequently to vulnerable tenants.
Implement mandatory client money protection law2.
In April 2019 legislation was introduced to make it mandatory for all property and letting agents across the private rental sector to join any one of the six government approved client money protection schemes.
The schemes ensure that agents:
However, six months after this compulsory legislation was introduced in April 2019 a joint survey, conducted by the National Trading Standards Estate and Letting Agency Team (NTSELAT) and Client Money Protect, revealed that up to 20% of property agents had not signed up.
Caxtons would like those agents who flaunt the law to be given an ultimatum: join up to a client money protection scheme or face the consequences. Perhaps a 24-month ban from operating as a letting or property agent would make them take responsibility?
Stamp Duty Land Tax3.
Purchasers of second homes face an additional 3% stamp duty land tax (SDLT) levy whatever the property is for - as a buy-to-let, a holiday let or holiday/second home for their exclusive use – it doesn't matter.
Landlords will surely be considering very carefully whether it is worth starting or expanding an existing buy-to-let portfolio when this additional cost applies to each new property they make?
Caxtons would encourage any new government to review SDLT and consider whether it has contributed to stagnation not only in the private rental sector but across the housing market in general. We would consider a reduction in all existing SDLT and abolishing the 3% levy on second homes, as a positive move that should get the market moving once again.
Regulation of Property Agents4.
In July a report from the Regulation of Property Agents (RoPA) working group was released recommending a number of changes to industry regulation including: licensing for all estate, letting and management property agencies; individual property agent licensing; mandatory minimum level of qualifications for customer facing agency staff; a catch-all Code of Practice; a regulator to police compliance within the Code of Practice. These new regulations will apply in England (devolved powers apply in Wales and Scotland).
Caxtons is fully behind RoPA and would urge an incoming government to press forward with the proposals contained in the report.
We hope this will, in time, help stamp out rogue agents and give customers more confidence in the information provided by property agency staff. The property sector is governed by rules and regulations that, amongst other things: protect the health and safety of tenants; safeguard deposits held on account; ensure that landlords and their agents fulfil their obligations to tenants etc.
We would hope that once some of these rules and regulations are brought under one concise Code they will ensure more transparency and result in fewer dishonest agents and landlords.
In addition to the issues highlighted a raft of others are stacking up behind, such as changes to taxation for buy-to-let landlords or impending changes to Section 21, but these are either a fait accompli or the battle is yet to come.
1. Statutory Guidance https://www.gov.uk/government/publications/database-of-rogue-landlords-and-property-agents-under-the-housing-and-planning-act-2016
In September, buy-to-let lender Landbay released research findings that showed of 2,000 private rental sector (PRS) tenants surveyed, 42% were happy to remain renting, and older tenants were the least interested in climbing the property ladder.
At that time, the research revealed that not only were women keener than men to buy, but there was an age differentiation between those considering purchasing, now or in the future – whether near or far:
Pro-buying – extremes highlighted by age gap:
And the top three reasons for renting (multi choice):
Whilst women placed more value on an investment and ownership, men were focused on where – the place – that they were considering buying. Both genders were equal in their desire to buy somewhere that had more space than their rental property.
There are demographic differences too with those in London the most eager and hankering after their own home more than elsewhere in the country.
The majority of those surveyed agreed that the flexibility of renting was a bonus they would have to relinquish if they bought, when they would not be able to move location or property as quickly or easily.
Debbie Pennell, Caxtons' Regional Head of Residential Lettings & Property Management said: "Since the Thatcher government introduced their 'right to buy' policy, some have assumed that tenants are just renting until they can afford to buy their own home. Of late, this sentiment seems to be moving for a variety of complex reasons, including a desire for flexibility and reluctance to be tied-down. So maybe the invisible stigma of renting may be disappearing?"
If this research proves to be 'sector accurate' there are two obvious and separate problems:
For more articles relating to the rental sector see (Caxtons' residential news) or:
i. The Stamp Duty lottery
ii. If client money protection is now mandatory why don't all agents comply?
iii. The fee ban is here, what are the consequences?
iv. Landlords leaving the buy-to-let market
Much has been written and discussed around letting agents and tenancy deposit schemes, which ensure the safety of any money held against loss of rent or damage to property will be held securely. Regulations direct that deposits, capped at a maximum of five-weeks' rent, must be held in one of three secure government recommended schemes.
However, little is documented or debated around client money protection (CMP) in general across the private rented sector, and that it has been mandatory for property and letting agents to join a CMP scheme since the legislation that came in to force on 1st April 2019.
The government has agreed and approved six schemes and, since the law was introduced in the new tax year, tells property agents they can join any one of the schemes and must:
• hold clients' money in an account with a bank or building society authorised by the Financial Conduct Authority
• get a certificate confirming membership of the scheme you join, and provide it to anyone who asks, free of charge
Display the certificate:
• in any office where you deal with the public
• on your website
You may be fined up to £5,000 if you do not display a certificate of membership or provide it when asked
But six months after this compulsory regulation was introduced, according to a joint survey by one of the six approved organisations and National Trading Standards, up to 20% of property agents have not signed up.
In order to establish the level of non-compliance, Client Money Protect worked in tandem with the National Trading Standards Estate and Letting Agency Team (NTSELAT). One of the objectives of NTSELAT is to oversee the operation of relevant estate and lettings agency legislation, such as monitoring complaints, carrying out surveys and working with trade and consumer organisations.
These figures of non-compliance are the result of one such survey.
Even the threat of being fined up to £30,000 if they are not members of a client money protection scheme doesn't seem to worry some of the more unscrupulous agents. They seem to think they are above the law.
Enforcement Agency, the London Trading Standard carried out their own research between March '18 and June '19. Following their findings - that letting agents across the capital had been fined £1.2m for breaking the law during 2018/19 – they caution tenants to beware of rogue agents saying that of almost two thousand agents inspected, many failed due to non-compliance with CMP law.
This picture is reflected across the country.
Client money protection schemes were designed to insure and reimburse a landlord or tenant losing money - such as rent, deposit or similar - because they have inadvertently used a rogue agent, or their agent goes out of business. But this relies on the premise that all agents will sign up to one of the schemes, and some do not. The Property Redress Scheme (PRS) notes that 'It's a simple fact that letting agents who do not belong to a CMP scheme present a greater risk to landlords and tenants.'
In conclusion Debbie Pennell Regional Head of Residential Lettings & Property Management at Caxtons agrees and echoes the PRS warning. "If you cannot immediately see a property management or letting agent's certificate for CMP displayed in their office or on their website then you are well within your rights to ask to see it. If they cannot comply with your request, warning bells should start ringing.
"Our advice is always to engage an agent who is a member of one of the approved schemes and don't be fobbed off with excuses. Better to be over vigilant than lose your hard earned money."
Could more Regulation of Property Agents (RoPA) help to weed out the rogue agents from the property sector?
'Yes', says Debbie Pennell, Regional Head of Residential Lettings & Property Management at Caxtons. "ROPA would introduce a Code of Practice for agents, which will require minimum qualifications for anyone entering the sector, and we all hope will help to reduce bad practice. It can only be good news for professional agents, landlords and tenants alike."
A government-backed report released by the Regulation of Property Agents working group, advises that a mandatory Code of Practice and licensing for all property agents is the right way to tackle existing problems in the sector and create a better industry.
Chair of the working group, Lord Best, acknowledges that this could lead to some (we believe less than professional) agencies closing. He seems to view it as a positive move overall that will "... improve the stability of the sector."
As well as examining qualifications, the group recommended the introduction of an independent body to regulate the industry and reviewed fees and charges – both of which were subjected to change under the recently introduced Tenant Fees Ban.
Debbie continued: 'For years we have been battling with agents who offer cheap deals but are not qualified and do not comply with the rules and regulations of the industry – you wouldn't regard them as an example of best practice. Generally, they are not members of industry bodies such as RICS and ARLA Propertymark and operate without scrutiny - basically a law unto themselves.
"However, they promise the world to landlords and tenants without the knowledge or experience of legislation surrounding the rental market. And when the chips are
down they deliver little other than misery, which taints all other agents."
One set of figures revealed by London Trading Standards shows currently 46% of letting agents (in their jurisdiction) are not complying with current property law. At best, this leaves landlords open to poor or incorrect advice and tenants to being duped – and at worst, accidents and prosecutions.
While the relatively recent introductions of Client Money Protection Schemes and the Tenant Fees Ban have addressed some of the problems, Scotland already employs greater regulation. The recommendations to bring the entire UK in line is seen as a good and unifying move.
Debbie is keen to point out that "Staff career development and customer service are very high on our agenda across all departments. We ensure that staff training is available and qualifications are achieved to encourage recognisable progression through the professional levels endorsed by industry bodies. This way, clients can be assured that our staff are able to provide expert and best advice whenever it is needed."
Agents can currently enrol on industry e-learning courses to NVQ level-3 (A-level equivalent), the standard which they would be required to reach before receiving their license.
Whilst being welcomed by the industry, this could take some time to achieve according to David Cox, CEO of ARLA Propertymark who predicts the earliest minimum qualifications for agents – and presumably a licensing scheme along with it - could be introduced would be 2023.
So, while there is hope on the horizon that better training will oust rogue agents, they may be around for some time yet.
Regional Head of Residential Lettings & Property Management
With Knight Frank predicting that almost 25% of all family units will be in private rental property by the year 2023 is the deposit replacement scheme an inevitability?
The Tenant Fee Ban has now been in place since 1st June and deposit replacement schemes are proliferating. These schemes are designed to supersede the compulsory deposit – now capped at 5-weeks' rent - taken at commencement of a tenancy to cover missed payments and damage found at the end of a tenancy.
Can such schemes provide tenants, with a lack of resources, a means to rent properties that are otherwise out of their grasp? And will they offer landlords peace of mind knowing they will be financially protected? Are there hidden pitfalls?
Caxtons examines the pros and cons from the landlords' and tenants' perspectives.
New rules in the Tenant Fee Ban cap deposits to just five-weeks rent, which means landlords no longer have the safety net of considerably larger deposits to cover default on rent or damage at the end of tenancy. Depending on the policy, a tenant who buys in to these schemes ensures that the landlord will be compensated for any potential losses. However, outstanding monies will be recovered retrospectively from the tenant.
Landlords or their letting agents cannot compel new tenants to use a deposit replacement scheme, but it is permissible under the Tenant Fee Ban and may be a good option for tenants concerned about meeting their financial obligations.
It is also true that some tenant activists view these schemes as a way for letting agents, who lost fees with the introduction of the Tenant Fee Ban, to recoup some income through commission paid on sale of each policy. Georgie Laming of Generation Rent says "They are targeting people who can't afford deposits upfront....."
The Property Ombudsman also has concerns. It has received complaints relating to tenants who assume they are buying an insurance policy that covers any (and all) damage, not realising that while the landlord is reimbursed, the insurers will recover costs from them, the tenant.
To maintain hard fought for and well-established reputations letting agents must ensure they are well informed about the deposit replacement product or products they intend to offer. Communicating the terms and conditions to both landlords and tenants is essential. Both must understand what the tenant is buying in to, and that there are no unexpected surprises at the end of a tenancy covered by such a scheme.
For instance, if tenants no longer have to worry about losing a large deposit because they've signed up to a scheme, will cleaning a wine-spill from a carpet no longer be a priority because it will be covered under the scheme – won't it? Will these schemes make tenants less concerned about the condition in which they leave a rental property at check-out?
Agents must fully understand and educate their new tenants on the ins and outs before they sell / buy a deposit replacement scheme.
Agents who opt out of such alternative deposit options should be aware that other, possibly less scrupulous, agencies may be more attractive to new tenants because they are providing such schemes. Would this present an unfair advantage?
And landlords must be fully cognisant of the cover. Will wilful damage be included in the scheme? If the 'provider' cannot recover funds from the perpetrator, is the landlord protected against all financial loss?
Peter Savage, ex-president of ARLA Propertymark and recently appointed spokesman and 'champion' for leading replacement scheme provider Zero Deposit, considers a regulated marketplace a necessary evolution. Going forward, is Financial Conduct Authority (FCA) regulation necessary for all schemes?
Provider Zero Deposit already has regulated status with the FCA and has recently signed-up to an exclusive supplier deal with the National Landlords Association, having already secured a similar agreement with the Residential Landlords Association (RLA).
While this article may have presented more questions than answers it is intended to inform and be thought provoking. We hope it has achieved its aim.
Last month, Homelet reported that ahead of the Tenant Fee Ban introduction rents were rising. Now that it's here, how are things panning out?
Their monthly Rental Index analysis revealed rents were, on average, up by 2% year-on-year for new tenancies across the UK, but the South East registered the greatest upward movement of 3.2% between March 2018 and 2019.
Since 1st June, letting agents can no longer charge tenant fees so time spent on administration and referencing – plus the associated charges - must either be absorbed by agents, or passed to their clients – the landlords.
So there is a general concern that rents will continue to rise to compensate for the additional cost to landlords. Alternatively, landlords will shut up shop and sell their buy-to-let property as and when they no longer provide a reasonable return on investment.
Relinquishing an investment property may seem drastic, but landlords have faced an onslaught of measures that have reduced their investment potential. In an attempt to encourage owner-occupiers and suppress the buy-to-let market, the government introduced a 3% stamp duty surcharge on rental property back in April 2016. Thus began the exodus from the sector. More recently, subsequent cuts in mortgage interest relief and expensive to implement energy efficiency legislation was the final straw for some of the 120,000 landlords who have departed the arena in just three years1.
On the positive side, landlords who sold realised an average profit (across the UK) of £80,000 per property.
With the Tenant Fee Ban now in force there is a financial cost that must be met, in many instances by increased fees charged by agents to landlords. Landlords will then face the difficult dilemma of either increasing rent – if feasible – or selling up. And both of those options have the same consequence... more expense for the tenant. If lessons of the past are anything to go by, less rental stock equals less choice and spiralling rents.
The Association of Residential Letting Agents (ARLA Propertymark) warns that the impending ban on Section 21 'no excuse' evictions will just compound the problem.
David Cox, CEO of ARLA said "In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn."
The National Landlords Association (NLA) raises concerns that letting agents will try to cut costs wherever they can and may no longer provide client references for past tenants. One result of this could be that landlords breach some local licensing schemes that require tenant referencing prior to them moving in.
At one minute to midnight on 31st May the government published it's updated How to Rent Guide, which contains details of the tenant fees ban and Section 21 evictions procedure. It is important that tenants are given a copy of the updated guide to avoid problems going forward.
A knock on effect may be that letting agencies whether large – with larger overheads – or small with smaller portfolios, will lose revenue directly because of the ban, and will be driven to cut costs elsewhere by way of staffing levels. In an ideal world agencies may not want to pass on the costs to their landlord clients, but if their bottom line is impacted they may have to be more creative and recoup their costs as best they can.
However, agencies that have always striven to provide landlords with a first-rate management service at a realistic fee will be well placed to pitch for new business from those who are unhappy with agents passing on lost tenant fees.
Latest government estimates reveal the introduction of the Tenants Fee Ban could cost landlords up to £83m and letting agents £157m a year.
1 Earlier research conducted by Hamptons.
Caxtons is delighted to announce that Head of Block Management, Tony Martin, has been made an Associate Director of the South East based independent firm of chartered surveyors.
Born in London and raised in Kent, Tony is a graduate of Greenwich University in Management and Maintenance and qualified in 2000 whilst working for the Royal Borough of Greenwich.
Tony joined Caxtons as a Property Manager in 2006 and was promoted to Senior Property Manager four years later. This was followed in 2016 by his appointment as Head of Block Management, where he has continued his work in developing best practice in the sector and guiding and expanding the department.
In addition to his daily duties Tony always adopts a laudable attitude to insurmountable problems. This he ably demonstrated when in 2014 he and two colleagues from Caxtons raised funds for 'Meningitis Now' when they undertook the Three Peaks Challenge, scaling the three highest mountains in the UK in under 36-hours.
Last year he completed a quarter of a vertical mile while raising funds on behalf of ellenor Hospice by running up 2,631 stairs in the City of London's Broadgate Tower. On that occasion Tony was accompanied by a Caxtons' team of nine others, and they finished the task in 8 hours and 56 minutes.
Recent reports that buy-to-let landlords are leaving the market in droves have been reinforced with the news of specialist of buy-to-let lender, Magellan, closing its doors to new business.
Impending pressure from the government to tackle landlords and letting agents who, in their words, 'potentially discriminate' against some tenants, including those in receipt of benefits, has taken its toll. That, together with the squeeze on any return on investment in rental property, has made many reconsider their venture into the sector.
The general disarray caused by Universal Credit, where housing benefit is no longer paid direct to landlords but to the client, is just one named culprit. It has provoked reluctance on the part of some residential buy-to-let owners and their agents to rent to those in receipt of such payments. Denying potential housing benefit tenants the right to rent is justifiably seen as flouting equality laws - even though many landlords have resorted to these draconian measures only after finding themselves out of pocket due to DSS tenants not paying their rent.
Add to this, the government's Right to Rent scheme that
The property market in general and the buy-to-let market in particular is confused, and no wonder. Conflicting reports abound and scare stories do not stimulate confidence in the sector.
We believe, and always have, that property is a long term, slow burn investment that will reap rewards in due course – it is not for short-term quick return investors.
Our advice is to engage a good letting agent to guide you on how to maximise the potential rental income your asset might attract, and then to capitalise on that by introducing reliable tenants who will look after your investment.
Maurice O'Connor, Head of Compliance in Caxtons' Block Management department has been reviewing new regulations that will affect landlords.
In late summer 2018, Housing Secretary James Brokenshire announced a comprehensive review of fire safety guidelines, which began in the autumn. As part of the review, it was proposed that all privately let homes should undergo an electrical installation check.
This month, the government confirmed it will introduce mandatory five-year electrical safety checks for all private rental homes in England.
In future, and in order to comply with ever increasing rules and regulations, landlords will have to instruct qualified electrical inspectors to undertake checks. Already compulsory for houses in multiple occupation (HMOs), the first properties to qualify for this latest safety measure will be new tenancies, and will be closely followed by existing lettings.
So far, no date has been set for the checks to be brought into law – this will take time to pass through Parliament.
The group Electrical Safety First has been campaigning for many years to tighten the law relating to landlord obligations. On their website* they offer sound advice to landlords saying "Electrical Safety First has found that landlords are exposing themselves to significant financial risks, from fines and invalidated insurance, through not acting on their electrical safety obligations.
"Landlords are also putting millions of UK private tenants at risk of serious accident or fire."
Minister for Housing and Homelessness Heather Wheeler MP said: "These new measures will reduce the risk of faulty electrical equipment, giving people peace of mind and helping to keep them safe in their homes."
Caxtons will, of course, provide advice and guidance in relation to this impending change in the law.
There was a great turnout to Caxtons' Residential Block Management Update 2018 at The Princes Suite, Dartford Football Club on 21st November, with many directors of Residential Management Companies, fellow agents, solicitors and other professionals in attendance.
David Gurton, director of Block Management at Caxtons welcomed the assembled audience and outlined an extensive programme for the half-day seminar, then introduced the first speaker, Philip Jones.
Phil, who is a Chartered Member of the Institution of Occupational Safety and Health and a partner of Quantum Compliance, updated the delegates on current fire safety requirements and also provided an insightful review of the recent Dame Judith Hackitt fire safety report into the Grenfell Tower disaster.
Bukola Obadun-Craigs, a Senior Associate at Brethertons Solicitors who specialises in litigation and management in the residential leasehold sector, was second on to the platform and gave an interesting presentation on the exacting responsibilities and legal obligations of directors of residents' management companies as well as covering both service charge demands and 'Section 20' consultation.
There was a short break for coffee, which was followed by a compelling briefing from Chartered Insurance Broker,
The last speaker was Tony Martin, Caxtons' Head of Block Management who covered what clients should look for and expect from a good block managing agent. Tony explained the importance of budgeting, including for major works; the effect of service charge arrears on cash flow; client money protection; day-to-day management and site visits; compliance obligations; the company secretary role and much more besides.
There was a final, busy Q&A session with David facilitating and all the speakers taking questions from the floor. A buffet lunch rounded off the morning when delegates were then able to talk to the experts on a one-to-one basis. And what did the audience think of the event:
o ..an interesting, diverse range of speakers ..
o ..very useful information ..
o ..very knowledgeable and assured ..
o ..good level of detail, not too technical ..
o ..excellent! ..
Caxtons was delighted to welcome a full house of speakers, landlords and property professionals to its recent Landlords' Residential Lettings' Update at the Holiday Inn, Chatham.
After welcoming the delegates to what he hoped would be a 'lively and informative seminar' Chris Coleman, Head of Residential Lettings and Property Management in Caxtons' Canterbury office introduced solicitor Rex Cowell, a property litigation specialist.
Rex's presentation centred on the thorny issues surrounding obtaining possession when circumstances necessitated such extreme action, and this was followed by a comprehensive update on the latest changes to legislation – of which there are many! He said that keeping abreast of such changes in the law was imperative if landlords wanted to avoid financial or other draconian penalties.
Jason Oldham, a Chartered Insurance Broker from Morrison Insurance Solutions followed Rex to the lectern and gave the audience compelling reasons to insure their valuable property assets. Many were unaware of the pitfalls of underinsurance; tenants illegally cultivating drugs in rented premises; and the need to keep up-to-date with requirements arising from the threat of terrorism.
After a break for coffee, Eamonn Evans, a Health & Safety expert and a specialist EPC provider took the audience through the relevance of Energy Performance Certificates (EPC) in the rental market and how recent legislation would have a bearing on landlords and their property. He then gave an update on HSE legionella risk assessing in domestic properties – some of which was new to the delegates.
The final speaker was Amelia Pavey, Caxtons' Residential Lettings Manager for Medway and North Kent spoke about what landlords and property professionals should expect when looking for or engaging a good letting agent. Amelia explained how market rent appraisals should be arrived at and then navigated her way through important and necessary matters such as tenancy agreements, inventories, finding the right tenants, undertaking credit checks and secure deposits, checking tenants in and out as well as a myriad of other check-list essentials.
Before the sandwich lunch and to round up the half-day event, there was a Q&A session with speakers answering questions from the floor under the guidance of Chris, who returned to the podium. And what did the audience think of the event:
Jason Oldham and an attentive audience
Speakers Jason Oldham, Chris Coleman, Amelia Pavey, Rex Cowell and Eamonn Evans
Contemporary living has seen a massive rise in the popularity of residential apartment blocks for all ages.
However, with 'block' living comes rules, regulations and responsibilities. Living in a block, residents are under one or more communal roofs; have common areas and gardens and this means there is collective responsibility and adherence to ever-changing legislation.
In order to address some of the thorny issues surrounding block living and management, Caxtons Block Management – a division of Caxtons Chartered Surveyors – is hosting a free half-day Residential Block Management Update 2018 seminar on Wednesday 21st November at The Princes Suite, Dartford Football Club, Grassbanks, Dartford DA1 1RT.
Responsibility and decision making relating to joint interest is more often than not delegated to a residents' association or residents' management company, who in turn may engage managing agents to handle the day-to-day running, maintenance and general up-keep of the entire property.
Topics covered at the Residential Block Management Update will include:
Speakers include Philip Jones, Partner at Quantum Compliance and a Chartered Member of the Institution of Occupational Safety and Health; Bukola Obadun-Craigs, Senior Associate at Brethertons Solicitors specialising in litigation and management in the residential leasehold sector and Jason Oldham, a Chartered Insurance Broker from Morrisons Insurance Solutions.
The day starts with bacon rolls and coffee from 0900 and the seminar kicks off with a welcome and introduction at 0930 and ends with a final panel session made up of all the speakers. This will give the audience an ideal opportunity to ask questions that are important to them or to delve further into some of the topics already covered. The day will end at 1230 with a buffet lunch where delegates and speakers will be able to chat on a 'one-to-one' basis.
Places are limited and will be allocated on a 'first come, first served' basis, so call now to reserve yours.
Forthcoming changes and their implications in law will be one of the topics addressed at a free half-day seminar for residential property landlords in Kent.
The Landlords' Residential Lettings' Update 2018 is being hosted by Caxtons Residential – a division of Caxtons Chartered Surveyors - on Tuesday 6th November at The Holiday Inn, Maidstone Road, Chatham ME5 9SF.
In recent months landlords who own and let residential property in Kent have been preparing for, or dealing with new and impending regulations and legislation that they must comply with, or risk being on the wrong side of the Law or HMRC.
This, and the ever-present issues of balancing the books and being a landlord make it even more important to keep up to date with changes in the sector.
In order to address these issues and help landlords keep abreast of variations to their legal, Health & Safety and insurance obligations, Caxtons want to engage with
Speakers include Rex Cowell, a property litigation specialist solicitor, Jason Oldham ACCI from Morrison Insurance Solutions and Eamonn Evans DipNDEA, DipDEA, GDA, an EPC and Health & Safety expert who works across the South East.
The final panel session, made up of all the speakers, gives the audience an opportunity to ask the questions that are important to them and will be followed at 1230 by a sandwich lunch where delegates and speakers will be able to chat on a 'one-to-one' basis.
Places are restricted and will be allocated on a 'first come, first served' basis, so call now to reserve yours.
Tamsyn Muller was full of excitement and expectation having been offered an unconditional place to study for a postgraduate degree at the University of Kent at Canterbury.
Being well organised, she found and secured accommodation in Tyler Court, university accommodation that was being marketed by Caxtons Student Lettings department in Canterbury. She paid an administration fee, completed her tenancy agreement form and was just waiting for the day she would move in.....
However, soon afterwards, the University of Kent contacted Tamsyn to say that, due to an administrative error, she had been accepted without being interviewed – which was against protocol. An interview was organised for the third week of August and unfortunately Tamsyn was told that the university had decided not to offer her a position on the course.
This was an obvious blow and not only did it throw her plans for 2018/19, but meant that she would no longer be relocating to Kent and didn't need the accommodation she had organised.
She immediately contacted Caxtons Student Lettings in Canterbury to let them know of the situation and offered to send documentation as evidence her tale of woe. She requested they withdraw her tenancy form and put the
This is when Samantha Collins, who works in Caxtons Student Lettings, took the problem to Duncan Reeves, the head of the department, and questioned just what they could do for Tamsyn, who had experienced enough misery already.
The outcome was that Tamsyn's admin fee was refunded in full and the property was put back on the market without further ado. She was so delighted that she wrote:
That is truly amazing news, I'm so grateful for all the help and understanding I've received from you and the Canterbury office
And the moral of this tale – some Letting Agents have big hearts.
The Ministry of Housing, Communities and Local Government (DHCLG) has announced new measures for the lettings and property management sectors.
Caxtons Chartered Surveyors is a full service property company based in Kent providing property expertise across the South East - including residential lettings and management.
Alan Stewart, director and a Fellow of the Association of Residential Lettings Agents has heard it all before.
"Banning orders against rogue landlords and letting agents who commit offences came in to force as part of the 'Housing and Planning Act 2016' and local authorities will be able to share that information. However, there are so many rules and regulations designed to catch these offenders that just aren't being enforced.
"At Caxtons we hope that if and when the latest proposals become law they are rigorously policed and applied. As an accredited letting and managing agent we already have codes, laws and regulations that are being flouted by some 'fly-by-night' agents who set up with no qualifications or knowledge of the sector. We know that letting agents are already in breach of the existing code that requires us to display charges prominently in offices and online. But nothing is being done to challenge them or let potential tenants and landlords know."
The new proposals are, in general, welcomed by the sector and comprise a compulsory Code of Practice covering all letting and managing agents to ensure that:
Sadly, bringing the proposals on to the statute book will require Parliamentary time, which is in short supply particularly with Brexit looming. And the finer detail of the Code is yet to be finessed by working parties made up of user and regulatory groups.
Housing Minister Heather Wheeler said "Most property agents take a thorough and professional approach when carrying out their business, but sadly some do not.
"By introducing new standards for the sector, we will clamp down on the small minority of agents who abuse the system so we can better protect tenants and leaseholders who find themselves at the end of a raw deal."
It is hoped that the proposals, and the promise that penalties in the form of criminal charges, will be enforced where mal-practice is uncovered.
"This move will reinforce our message about using reputable agents and I believe the non-compliance figure for displaying fees was over 90% with little or no repercussions. The provisions are already contained in the Consumer Rights Act 2015 and it appears that these will be amended and strengthened in the Draft Tenant Fees Bill, which is now working its way through the Parliamentary process." says Alan.
Having completed their examination of the draft Tenant Fees Bill, members of the DHCLG Committee are supporting change to apply stricter regulation to tenancy deposits including smaller deposits, what fees will be permissible, and diligent enforcement of the regulations.
Recommendations include capping tenancy deposits at five weeks' rent, rather than six and returning holding deposits if tenant referencing fails the required criteria.
Industry experts are concerned that the latter will lead to additional problems for tenants and agents. If agents are unable to retain holding deposits and the potential tenant fails referencing checks it may lead to agent bias in selecting only the best tenants to avoid expense associated with failed referencing.
The HCLG Committee Report says the Bill will
...increase letting agents' incentives to compete for landlords' business resulting in a more transparent market with lower overall fee levels and a higher quality of service
and that a fee ban will
....reduce the risk of unfair practices in the form of double charging ... thus making the sector more competitive, more affordable and of a higher standard.
Where leaseholders are concerned, they will be able to challenge unfair fees and service charges and there will be support for leaseholders who want to sack management companies who charge a lot for doing very little.
When interviewed, Sebastian O'Kelly, a prominent campaigner for a fairer deal for leaseholders, recently said he would hope the new regulator is "Somebody who is completely outside the leasehold system, so none of that terracotta army of lawyers and surveyors who depend on the leasehold system and its inefficiencies for their livelihood. It needs a very robust independent regulator who will kick this murky corner of property into line."
Confirmation that Kent has some of the most competitively priced areas to live for property renting commuters has been underpinned by a number of recent stories appearing in the national media.
The BBC looked at 18 'commutable' areas and concluded that rental property in Chatham would benefit tenants with the most economical living/travel costs within a reasonable commute of London. They took into consideration the cost of an annual season ticket – currently £4,124 for Chatham to Victoria – plus the rent on an average two or three bedroom property in the town, which they determined to be £866 a month. A slightly better deal might be to consider a property that Caxtons is currently marketing. It is a three-bedroom terrace house on First Avenue, a no-through road in Chatham, at just £750 per month. This beats the BBC's baseline average cost of annual commute plus rent at £22,604 within Greater London by more than £8,000 – a massive saving.
Other comparable Kent areas within a reasonable London commute would include towns such as Maidstone with a substantial £4,496 for a season ticket but the average rent for a two/three bedroom property would be £10,788, so still well under the £22K marker.
Another property in an area that could provide an excellent alternative to a Greater London address includes a mid-terraced spacious 3-bedroom house within walking distance of Gravesend train station. The rent of £950 a month and a commute to London terminals of £3,646 would make an annual travel and rental total of £15,046, £7K below the baseline.
Amelia Pavey, Head of Residential Lettings across the Medway and North Kent towns said: "We have some great, reasonably priced rental properties at Caxtons and are always looking for more. We understand that while it may be exciting to live and work in the centre of London, there comes a time when for many people, the life work balance changes – that may happen when you meet a long term partner, start a family, or just want to live out of town – and that's where we can help. We have let properties across Kent, from the coastal towns to the banks of the Thames, and understand not only the financial, but also the emotional value of property and how important each one is for both landlords and tenants alike."
At a time of uncertainty, resulting from a concoction of issues including confrontational Brexit negotiations (both at home and abroad), a government with no working majority* and interest rates rising for the first time in a decade, the lettings' market is finely balanced with affordability being a key component for both landlords and tenants.
Landlord returns are being steadily eroded, but if they try to redress the balance by increasing rents the level of demand from tenants will fall.
However, on the positive side the government has announced that letting agents are to be regulated and new proposals will require that they join a professional organisation and meet 'certain minimum standards'. The Association of Residential Letting Agents (ARLA) and various other bodies have been lobbying for many years for this to happen.
In addition, while letting agents already have to be part of a redress scheme, this will now be extended to all landlords to enable tenants to complain about poorly managed properties and rogue landlords.
Alan Stewart, Director & head of Residential Lettings & Property Management says: "The buy-to-let sector is still very challenging for landlords who have had to contend with changes in regulations and legislation with investment having been curtailed - particularly amongst the more short term speculative landlords - by the restriction of income tax relief on mortgage interest payments and the introduction of more stringent mortgage affordability tests.
"Pressures on the residential investment market and achievable yields will certainly continue next year with many local authorities introducing selective licensing controls on some properties plus the effect of new Energy Performance regulations, which will increase the financial burden for landlords."
Legislation will be introduced next year to prevent tenants being charged any fees in connection with the letting of a property. This will impact significantly on letting agents
According to latest figures from the British Property Federation the build-to-rent sector is continuing to grow and play an important part in increasing the supply of homes. Combined with this, the Prime Minister has just unveiled a major council house-building programme that will see the release of government owned land and the goal of providing homes at affordable rents.
In the student housing sector investment demand is buoyant. In a recent survey it is estimated that there has been a 24% increase in transactions in the first half of 2017 compared to the same period in 2016. Purpose built student accommodation continues to offer attractive returns, particularly for overseas investors.
Alan continues: "Our region has seen a period of rental stability with tenants now very focussed on achieving value for money when selecting properties. If the accommodation is not well presented we are finding that prospective tenants are looking elsewhere or seeking a reduction in the asking rent.
"I believe that during the course of 2018 we may find that some accidental landlords look to sell their properties and larger investors take the opportunity to restructure their portfolios, but overall demand could be sustained by first time buyers who still cannot afford to purchase a property and there will be more choice in the rented sector with the completion of a variety of build-to-rent schemes.
"At Caxtons we are keen to promote the benefits of engaging a good letting/managing agent who can steer a landlord through all the complexities of letting residential property."
* The Conservative Party has formed a minority government and has signed a "confidence and supply" agreement with the Democratic Unionist Party.
A recent story in the Daily Telegraph raised the question of whether the 'student housing bubble' was about to burst. Duncan Reeves, Associate Director and head of Student Lettings in the Caxtons' Canterbury office responded to some of the messages promoted.
The journalist's position was that the student sector had seen an upsurge in the availability of expensive, luxurious alternatives to traditional accommodation. It is true that developers large and small have invested in purpose built student accommodation (PBSA), whether converting existing buildings or building off plan. It is also true that students are now spoilt for choice and the oversupply is affecting all areas of the student accommodation market.
Duncan agreed that a key point raised, relating to a drop in demand from students, does resonate.
"With the big PBSA providers now firmly established in Canterbury, it will be interesting to see what effect this will have long term on the existing student accommodation."
The first wave of PBSA in Canterbury, which began over 10 years ago, are located on the outskirts of the city – not as convenient for study or socialising. These properties may begin to suffer as students gravitate to the newer blocks in the city centre. There is also a murmur amongst agents that communal house living is still in demand as hard-up students look to save money, so some of the studio apartments that are favoured by developers may not be such a hit with the students.
Duncan continues "I don't believe that student property in Kent is very different from other university towns and with less than a week until terms starts, we have half-a-dozen studios on our books and landlords are accepting discounted rents to attract tenants.
"A large proportion of tenants who have rented purpose built studios are overseas students and money is less of an issue than for UK students. Even so, with the increased competition it has put pressure on some of the developments on the outskirts of the city."
So - have we reached saturation point with the number of student studios in Canterbury?
Duncan's opinion was "Where there are still sites available within walking distance of the University of Kent, or in the city centre, it may make out-lying student properties more challenging to let - as evidenced with the new CRM block at the moment."
An alternative view is that the continued development of PBSA may free up much needed housing stock as landlords of traditional HMO's are forced to sell up. This does not appear to be the case so far this year and Caxtons increased their stock of traditional HMOs, which have let well.
Whilst there has been a desire – even a necessity - for PBSA in recent years, for the majority of UK based students, the pressure of increased tuition fees has meant they are looking for better value over outright exclusivity and facilities. Whilst it is possible that HMOs, just like PBSA, located on the outskirts of town or cities or in poor locations will struggle and may be sold on, there is still strong demand for this traditional student property in Kent. The argument that first time buyers or families would be interested in buying this high turnover letting stock is definitely not guaranteed.
In its latest report, the London School of Economics (LSE) highlights problems for leaseholders who are being asked to pay excessive amounts when they extend the lease on their properties.
According to the LSE 'The researchers estimated how a property's sale price varies with the remaining term on the lease by analysing data from 8000 sales of leasehold properties that took place between 1987 and 1992 in Belgravia, Chelsea and Mayfair.'
(The London areas used in the research have some of the highest concentration of short leases in the UK and have historical property data available.)
It suggests that when extending a lease, current practises may underestimate the value of leasehold properties.
Charles Oliver, an expert on leasehold residential property at Caxtons says "Typically leases begin with 99 or 125-year terms. However, the value of a lease will go down as the time on it diminishes and it could prove difficult to sell a flat, particularly when the lease has fewer than 60 years left to run because most potential purchasers will have difficulty getting a mortgage on the property."
As long as the owner and the flat qualify, leaseholders are entitled to extend the lease by an extra 90 years at no rent, but must have owned the flat for 2 years (although that does not apply when collectively buying the freehold*).
The fee to extend a lease will depend on how much ground rent is due, and how long the lease has left to run; the shorter the lease, the more it will cost. The price takes account of the loss of the ground rent income to the landlord and the fact that he will have to wait a further 90 years before receiving full market rent. If the lease has less than 80 years to run, then the price will increase as the calculation also takes account of the value of a flat now and after the lease has been extended because the landlord is entitled to half of the increase between the value of 'his' and 'your' interests added together, before and after purchase, called 'marriage value'. The leaseholder will also have to pay all legal and surveyors costs.
In order to extend a lease there is a procedure with strict deadlines that must be followed. The leaseholder is entitled to ask for information about the landlord, who in turn is entitled to visit the property to value it. The landlord may ask for 10% deposit (of the price offered by the
An alternative option would be to *purchase the residential property freehold from the landlord. As long as the building qualifies, the landlord is not protected, and the required number of qualifying tenants wish to participate, they can join together and require the freeholder to sell to a nominee purchaser or Right to Buy company that will be set up to buy the freehold. Having followed a strict procedure, tenants will then own a share in the company and, with the other tenants, jointly become their own landlord. This procedure is known as enfranchisement.
The fee to 'buy out' is almost the same as for extending the lease, except the landlord will lose the rental income completely, and it will take into account the value of all of the leases.
With both freehold purchase and lease extension, if a price cannot be agreed, then the matter must be referred to the independent First-tier Tribunal within a six-month deadline to decide the terms.
If the landlord plans to sell the freehold to someone else, he must give the tenants first refusal, as long as there are at least 2 flats, at least 50% of the building is residential, and a majority of the tenants qualify. If he plans to sell by auction, the leaseholders must be given four months' notice so they can reserve their right to match the winning bid.
There are many long-term advantages to extending a lease or jointly buying the freehold – not least the value of a flat upon sale - but it can be a complicated procedure so advice from a professional who knows about enfranchisement is essential.
by Charles Oliver BSc MSc FRICS FAAV MEWI FCIArb, Associate Director, Associate Director
Concerns continue over new build houses being sold as leasehold.
The problem stems from onerous lease clauses that double the ground rent as often as every ten years. Consequently, this could make future selling or mortgaging impossible.
In many cases, buyers say they were also encouraged to use developers' recommendations for their conveyancing and mortgage broker.
Until recently, new houses have been sold freehold and some commentators have described this new departure as a profit boosting exercise that should be outlawed.
One developer, Taylor Wimpey, has already set aside £130m to compensate those affected by 'toxic' leases – often sold on to anonymous third or fourth parties whilst the ink is still wet on the contract.
The government has now been galvanised into action and proposes to outlaw 'unjust leases' on new houses.
Sajid Javid the Communities and Local Government Minister said "Enough is enough. These practices are unjust, unnecessary and need to stop. Our proposed changes will help make sure leasehold works in the best interests of homebuyers now and in the future."
The government will consult with the aim to make leases fairer by reducing ground rents to zero in order for them to "relate to real costs incurred". Plans include closing legal loopholes to protect leaseholders left vulnerable to possession orders.
Sarah Singer, a senior negotiator at Caxtons Chartered Surveyors, has been awarded the Best Letting Agent in Gillingham by allAgents in their 2017 People's Award for Customer Experience.
allAgents.co.uk is the UK's largest customer review website for the property industry where clients rate their letting agent depending upon the level of service they receive. Reviews comprise an overall ranking for the agency; responder's comments; agent's fees and the name of the negotiator that handled the transaction. allAgents then use the information when judging their annual awards.
Caxtons is delighted that Sarah has been rewarded in this way. Alan Stewart, Director & Head of Residential Lettings
& Property Management said that he is not at all surprised Sarah has received this accolade as she always goes out of her way to ensure that clients are provided with the best possible service.
Of 94 residential lettings and management property agents in the Canterbury, Kent area Caxtons is officially *number 1, having secured the most 'new instructions' in the 10-week period between 7th November 2016 and 17th January 2017.
According to latest statistics from Rightmove, with 294 instructions, Caxton beat its nearest registered rival into second place by a massive 120 more instructions. The total number of new instructions during the period was 611, meaning that Caxtons managed to capture almost 50% of the available 'new instruction' market.
In addition, and across the same time-period, Caxtons came top of the 'let agreed' table. Of the 66 registered residential lettings and management agents' offices in the area, Caxtons secured 89 of the 164 total residential properties let during that time – well in excess of 50% during what is traditionally a quiet season for moving home.
Duncan Reeves, Associate Director at Caxtons, said "We are delighted that both our Canterbury Student Lettings and Residential Lettings teams are reaping the rewards of all their hard work.
The past six months have been tough for the property sector, not only in Kent but country-wide. There has been much uncertainty following the referendum vote and new legislation has, and will, affect landlords and buy-to-let property. This means we, as residential lettings and management agents, have to be extremely diligent, professional, efficient and cost effective at what we do. And we not only have to please our landlord clients, but their tenants too.
"Kent is a lovely county to work and live in and Canterbury is a busy and desirable residential and university destination. At Caxtons we will continue to ensure we look after both landlords and tenants to the very best of our ability. And even if their time in Canterbury and the surrounding villages and towns in Kent is short, we will help them find - and hopefully enjoy - their new homes."
*Rightmove Intel Report statistics
Caxtons is pleased to announce it has recently agreed a three year sponsorship with The Marlowe Theatre in Canterbury
Caxtons already supports The Marlowe through its corporate membership and has now partnered with the award winning theatre by sponsoring its Discovery Scheme, which provides reduced price tickets for 16-26 year olds.
David Gurton, Marketing and Business Development director at Caxtons said "We are delighted to join forces with The Marlowe Theatre in this very worthwhile scheme. Our Canterbury office has a specialist student lettings division, dedicated to providing accommodation for those attending the University of Kent, Canterbury Christchurch University and UCA so this collaboration is a perfect fit with our core market."
Mark Everett, Theatre Director at The Marlowe added "We are delighted to welcome Caxtons as the sponsor of our Discovery Tickets scheme. Discovery Tickets help young people between the ages of 16 and 26 see a wide range of performances for just £10. Together with Caxtons, we can help more young people develop a love of theatre and live performance."
The Marlowe Discovery Scheme provides heavily discounted tickets for top-ticket shows. The scheme emulates an initiative that was successfully introduced by the National Theatre and Royal Shakespeare Company some years ago.
Whether a novice or already a devotee, the scheme is designed to attract and enthral a younger audience and to inspire a fresh generation to become regular followers of the wonderful world of theatre.
Discovery Tickets can be purchased for seats in price band A, and with shows spanning theatre, comedy and music, there is always something to please every taste.
Caxtons is keen to support the scheme whenever and wherever it can and has recently commissioned a single decker bus back to promote the benefits of Discovery Tickets. The bus (21a) runs from Hales Place in Canterbury to The University of Kent, a route that is well used by students living in and around the city.
Three of the student lettings team from Caxtons recently joined Samantha Scott, Development Manager at The Marlowe, to cement the relationship and launch the scheme.
(l to r) Kevin Tubb, Brittany Holland, Daniel Eley all from Caxtons' Student Lettings division with Samantha Scott, Development Manager at The Marlowe
The Government and Bank of England seem to have used every weapon in their armoury to quell the appetite of buy-to-let landlords snapping up residential properties. They are determined to stop what they see as a root cause of inflated house prices and lack of available residential property for first time buyers.
Both the Residential Landlords Association (RLA) and the Association of Residential Letting Agents (ARLA) have voiced their dismay at what they regard as a series of measures that will further damage the residential rentals market.
There are fears that the additional stamp duty land tax (SDLT) premium of 3% on top of normal stamp duty rates for second homes will deter private buy-to-let landlords from investing. In addition, there are concerns that the phasing out of mortgage interest relief, which begins in 2017, will push rents to unaffordable levels.
One proposal, put forward by the Bank of England, is to tighten up the rules for new landlords hoping to obtain a buy-to-let mortgage. This would require residential rental income to cover mortgage outgoings, thus applying the brakes on the number of buy-to-let mortgages approved.
In an effort to beat the system there was a rush to purchase property in advance of the new stamp duty land tax being implemented.
Alan Stewart, director; Head of Residential Lettings; Management at Kent chartered surveyors Caxtons said: "The Government and the Bank of England are introducing new initiatives in an effort to slow the buy-to-let market and realign the residential property market. But it seems there is little anyone can do to quell the enthusiasm of buyers in this sector.
"Following an earlier change to restrictions on the use of pension funds, many new landlords are liberating funds to purchase what they consider to be a reliable long-term investment and interim income stream for their retirement."
Alan continued: "Saving for a reasonable deposit makes it difficult for first-time buyers to get on to the property ladder. The Government's attempts to cool the market suggests they believe buy-to-let landlords and first time buyers are chasing the same properties – and that generally, landlords win. Ergo there is a supply and demand issue that is proving difficult to resolve.
"Then there is a lack of affordable housing stock right across the country but more specifically in overcrowded conurbations, particularly in London and the South East. Would-be first-time buyers thus have little alternative than to rent. This, in turn, feeds the demand for rental property, which results in higher rents."
The Bank of England is concerned that if there were another financial downturn, second homeowners would offload properties en masse in order to realise their assets, thereby causing a housing crash similar to that experienced in the last recession.
The expectation is that the combination of a stamp duty increase, withdrawal of mortgage interest relief and a tightening up of mortgage approvals will all contribute to a slow down in the buy-to-let market, resulting in more affordable first-time property prices.
But while there is such disparity between house prices and income there is little or no hope of a change in the need for landlords and more rental properties. Only a balance in supply and demand will level the playing field.
Flood Re, the insurance fund developed to provide cost effective home insurance for residential properties in high flood risk areas, came in to effect at the beginning of the month.
It is anticipated that the scheme, funded through a levy (approximately £10.50 per policy) on all home insurance policy holders, will provide cheaper insurance and lower excess limits, and a solution for properties vulnerable to flooding.
Up to 500,000 households will benefit from the introduction of the scheme, which applies to private home owners but excludes certain properties such as blocks of flats and buy-to-let.
Insurers had to carry the burden of flood-related damage claims in the extreme floods of 2007 and 2015, which pushed up the cost of premiums. It is anticipated that this fund will underwrite some of the most at-risk properties that home-owners have found difficult to afford to insure, if not impossible.
Owners of high flood-risk properties will still obtain their property insurance through their usual insurer or broker and it is expected that they will now have access to a greater choice of companies and therefore more competitive prices.
There will be a fixed price for flood cover, based on the Council Tax Band that the property attracts. However, only properties built before 1st January 2009 are eligible to participate in the scheme.
Disquiet amongst commercial and buy-to-let owners rumbles on, as their properties are exempt from the scheme. This unrest is likely to continue until a solution is found that does not exclude SMEs and landlords from prohibitively expensive property insurance policies.
Flood Re was devised in consultation with the government and will be accountable to government henceforth, but is owned and operated by the insurance industry.
While some insurers are absent from the scheme - possibly due to systems glitches or finalising outstanding issues - many companies are now 'signed-up' and affordable choice is plentiful for those who are at risk of flooding.
According to recent information from Rightmove, Caxtons outperformed other Canterbury agents by letting the most student accommodation making them number one student lettings agent in the city during the period 24 Jan to 14 Feb.
Caxtons let 42 properties in that time, beating its closest rival into second place.
Over the past week (8th – 14th) Caxtons also achieved equal first out of 49 Canterbury agents for attracting new student property instructions, and was placed second for 'available stock' out of 90 agents letting similar properties in the city.
Caxtons' Duncan Reeves, associate director and head of Residential & Student Lettings in Canterbury said, "Since we began student property viewings in November last year we have let more than 130 houses and have taken on more than 40 new instructions. This has been a very busy time and we are delighted to have recorded such positive results.
"During the year our Student Lettings department has busy and frantically busy periods – there never seems to be a time when students aren't interested in researching, viewing and agreeing tenancies for their future accommodation."
The doom and gloom merchants who predicted that students would no longer be able to afford to leave home for their university education weren't right in the case of Canterbury.
The city now accommodates approximately 40,000 students every year – double the number of ten years ago. The result is that tens of thousands of undergraduates and graduates studying at the University of Kent, Canterbury Christ Church University and the University for the Creative Arts actively seek student accommodation, so the competition for houses and flats in the city is buoyant. And that means that the student property sector is flourishing.
Duncan Reeves Associate director and head of residential & student lettings, Canterbury
The Student Lettings department of chartered surveyors Caxtons, in Canterbury, decided to give some of the students studying at the city's three universities and taking out tenancies for accommodation through the firm, the opportunity to participate in a simple competition.
Joining forces with the Marlowe Theatre, where the company is a corporate sponsor, Caxtons was delighted to receive a pair of tickets for each of the winners to attend a major performance of the winners' choice at the award-winning* venue.
Lucky prize-winners Lauren Seward, Michael Summers and Sam Jackson collected their tickets on Tuesday 16th February from Caxtons' office in Castle Street, Canterbury. Duncan Reeves, head of student lettings and Sam Scott, development manager at the Marlowe Theatre presented Lauren, Michael and Sam with their prizes.
Lauren was thrilled to get the tickets she wanted to see the Russian State Ballet of Siberia, one of Russia's leading ballet companies which has built an international reputation for delivering performances of outstanding quality and unusual depth, performing Sleeping Beauty at the end of February. Michael chose tickets to Alan Bennett's classic comedy Single Spies with a stellar cast
Lauren said she had been pleased to locate a suitable property through Caxtons and had liked the website, which was easy to navigate and had a good variety of suitable and well located properties that were clearly displayed with details that were simple to understand. Sam, Michael and Lauren will be moving in to their respective student accommodation in good time for the start of the 2016/17 academic year.
*Since it reopened in 2011, the Marlowe Theatre has won a number of national theatre industry awards, including UK Theatre's award for Achievement In Marketing (2012) and Most Welcoming Theatre In The South East (2015).
l to r: Michael Summers, Sam Scott from The Marlowe, Sam Jackson, Lauren Seward and Duncan Reeves from Caxtons.
Through December '15/January '16, and in conjunction with The Marlowe Theatre, Canterbury, we organised a competition for students who had chosen to rent a Caxtons' student property in Canterbury for the 2016/17 academic year. On offer were three prizes of a pair of tickets to a production at the amazing Marlowe Theatre, which re-opened in October 2011, after an extensive rebuild and has since become one of the country's leading regional theatres.
Competition entries closed on 31st January and, after careful deliberation, three lucky winners were selected.
The winners are:
Each winner will be able to select two tickets from a variety of productions due to be staged at The Marlowe in the near future. Performances range from the Russian
Duncan Reeves, associate director and head of Student Lettings said, "We were keen to show our appreciation to student tenants who chose Caxtons to provide their accommodation, so decided to give them the opportunity to get something in return.
"We are involved with The Marlowe Theatre as corporate members, so thought that they would be the perfect partner for this initiative, and we were right. We were really pleased with the response to the competition and delighted that those who came to the office to deliver their competition entry forms by hand seemed really keen on the collaboration between Caxtons and The Marlowe.
"We hope that the winners enjoy whichever performance they select, and will consider running something similar again later this year."
Following the aftermath of the 2007 flooding, the government called for the insurance industry to step up with regard to future flooding cover. Since then the UK has witnessed many more major incidents, most recently in December 2015 and into 2016, which the tabloids estimate will cost the UK around £5-6billion.
Flood Re is a not-for-profit fund that was established in 2011 as a collaboration between the government and the Insurance industry, to provide affordable cover for the worst 1-2% of those living in areas at high flood risk. It has been confirmed that the scheme will go live in April 2016.
Brendan McCafferty, CEO of Flood Re said: "The impact of Storms Desmond, Eva and Frank have been devastating and I express my sympathy for those who've had their homes flooded.
I want to reassure homeowners that Flood Re is on track to start accepting policies from insurers in April. This will give people access to more affordable flood insurance ensuring that the insurance safety net continues to be in place for the future, even if your property is at a high risk of flooding."
This new scheme is a replacement for the Flood Insurance Statement of Principles, introduced in 2000, which was only ever intended to be a temporary measure and has now become unsustainable.
Flood Re will be in place for 25 years and is designed to promote the availability and affordability of flood insurance. It will be funded by a levy on all home insurers (an average of £10.50 a year), regardless of whether they live in flood-prone areas. To those who query having to pay the levy, the ABI (Association of British Insurers) has pointed out that there has always been
To be eligible for the scheme, the property must be covered under private household insurance. Also, the property must have been built before 1st January 2009, which is hoped will be a disincentive to the building of more houses in areas of high flood risk. Flood Re will not include businesses so will not resolve any issues involving commercial property. This means that the whole commercial sector, including residential letting properties, falls outside the Flood Re remit.
It has been said that Flood Re should cover every flooding situation up to what is described as 'a one in 200-year event'. This would be the equivalent of a flood six times greater than the ones that hit the UK in 2007, which has been described by the Association of British Insurers (ABI ) as "very unlikely".
It remains to be seen whether the release of capital that would normally be reserved for catastrophic flood events, will translate into a more flexible underwriting approach in the commercial property sector.
Chartered surveyors Caxtons is delighted that they have again beaten the clock and let a flat within 24-hours of it going onto the market.
Amelia Singer Caxtons' Residential Lettings Manager took on a two-bedroom apartment in Rotherhithe with excellent transport links and good views over the River Thames to Canary Wharf.
Amelia viewed the property then went back to her office and prepared the property details, ensuring they were uploaded to the Caxtons' website and property portal Rightmove. As soon as the details went 'live' she received an enquiry about the property and responded immediately. She arranged a viewing, convenient to the current tenant, for later that day.
She met the professional couple who had sent the email enquiry and showed them around the property. They loved the flat and agreed on the spot that, subject to successful referencing, they wanted to rent the property. With the paperwork done, a date has now been set for them to move in in the New Year.
The rent achieved on this ideally positioned property was £1675 per calendar month. However, the speed of let was
due in no small measure to Amelia's willingness to go that extra mile and to make herself available at a time that was convenient to both the landlord and applicants.
While this Lawrence Wharf, Rotherhithe apartment had everything going for it - including ideal location, excellent transport links, stunning views, modern and clean with a high specification throughout - it was never going to be on the market for a protracted period. However, it was still a delight for the landlord to discover how quickly it had been let and that there would be no expensive void period to worry about.
Caxtons has introduced a 'delayed payment' scheme for their student tenants in relation to accommodation deposits on tenancies commencing on 1st July 2016.
Duncan Reeves, Associate Director and Head of Residential & Student Lettings, Canterbury said "As demands on students' finances grow, we realise that when making advance payments for their coming year's accommodation with administration fees and deposits is a real stretch for many.
"With that in mind we decided to introduce a delayed deposit payment scheme for students whose tenancies commence on 1st July 2016.
Terms and conditions do apply and are shown on the pdf below.
For further information contact Caxtons Student Lettings on 01227 788088 and speak to one of the team.
The following is a direct quote from the website of The Property Shop Ltd, estate agents based in Windmill Street Gravesend.
'Our company has built up a strong reputation for Letting and Selling property quickly, efficiently and at the best price. We pride ourselves on offering consummate levels of service to all sellers, buyers, landlords and tenants. You can trust that you won't find a better service anywhere else.'
The website is still live – even though the company has 'gone into liquidation because of poor company practice' – according to a report in the Daily Mail on Saturday 12 September.
Landlady Claire Deane had left on a 5-year sojourn in South America entrusting the letting and management of
Alan Stewart, director & head of Residential Lettings & Management at Caxtons Chartered Surveyors is frustrated that there is still a lack of statutory regulation. Earlier in the year another unregulated Kent based agent, Sweet Property Services, went to the wall, allegedly owing landlords thousands of pounds after rents were withheld, and leaving tenants concerned that their deposits were unprotected and irrecoverable.
Caxtons has residential lettings offices across Kent. Amelia Singer is Residential Lettings Manager of our Medway offices and says that she has a list of 'top tips' as long as her arm. However, top of her 'top tips for getting property let really fast' list are:
Photographs – make sure you check what you are including in the photo : Take care to present your property in the best possible light.
For some months now correspondents have been reporting increases in private rents across the country and forecasting more of the same to come.
In April, Reeds Rains Buy to Let Index* revealed a 4.6% increase on the same month in 2014 with an average rent across England and Wales of £774 – the most expensive rental prices on record. Adrian Gill, director of estate agents Reeds Rains put this down to "...a fundamental shortage of housing ...".
Anna Brosnan of the National Housing Federation warned that with rents accelerating upwards, tenants would be hard pressed to ever save enough "...to achieve their aspirations of owning a home.".
When broken down regionally and over that same period, the average East of England rental income grew by 12.5% 2014-2015 (up on the 12% recorded in the
2013-2014 Index) achieving an average rent of £810. London followed with an annual increase of 7.8% and Yorkshire & the Humber was third with a 2.2% rent rise across the equivalent time.
However, there were some negatives. Wales recorded rents falling by 2.8% between April 2014 and April 2015 as did the North East and East Midlands with reductions of 0.8% and 0.2% respectively.
More recently, figures released by the Association of Residential Letting Agents (ARLA) record a higher number of letting agents reporting rent increases between May and June.
Their numbers reveal 36% of ARLA letting agents returning month-on-month rent rises – the highest since this data collection began.
Again, supply and demand was blamed.
Not long ago, if you wanted to let, rent, buy or sell a property you visited your local town centre and researched letting and estate agents until you found one you wanted to work with, or had the levels of expertise and properties available to suit your requirements.
The rise of estate agents advertising online has been meteoric, as has the rise of online-only agents. These virtual agents' sites target users and potential clients in a variety of ways. For those selling property, they still offer valuations, accompanied visits and attractive commission rates - especially when compared to high street agents
with an online presence, where the business has to factor in much greater overheads.
Buyers need little encouragement to view such sites as virtual agents provide an additional and free resource for property that may not be advertised elsewhere. When it comes to landlords and tenants, the virtual approach differs only from the traditional letting and management service in that there are no high street premises and no face-to-face, long-term relationships to develop.
Following a report last year, criminals have continued to shift away from cultivating large cannabis farms in commercial buildings to small-scale factories across multiple sites in rented residential properties or residential portions of commercial properties.
This allows the criminal to spread the risk of detection and minimise loss of profit, meaning if one farm is discovered there will be others left in operation.
With cannabis rising in value over recent years, a growing number of criminal gangs are moving into this area and view the crop as low risk and high return.
This allows the criminal to spread the risk of detection and minimise loss of profit, meaning if one farm is discovered there will be others left in operation.
With cannabis rising in value over recent years, a growing number of criminal gangs are moving into this area and view the crop as low risk and high return.
More worryingly, new varieties of the crop are being introduced that only take around nine weeks to mature, rather than the usual 12 weeks. This means scheduled quarterly checks by landlords or agents may miss the cultivation process and be left with a property in a state of disrepair.
'.... probably the best independent Estate Agency and Lettings and property management covering the Medway Towns, Rochester, Chatham in Kent.' This is the opening paragraph on the UK Letting Agents' directory website for Sweet Property Services.
However, it is alleged that this is not the case.
It is reported that Sweet Property Services recently went into liquidation (precise details are "unclear") and has closed, with a Notice of Forfeiture on the door of its leased office in Rochester.
Allegedly, landlords have lost thousands of pounds after rents were withheld, and tenants are concerned that their deposits are unprotected and irrecoverable. The Property
Prompted by this story and the fall out, Alan Stewart, director & head of Residential Lettings & Management at Caxtons Chartered Surveyors is frustrated by the lack of statutory regulation. Alan explains:
"In October, TPO issued a press release highlighting a sharp increase in the number of consumer complaints in the residential lettings sector. This was at the same time as the requirement for every agent to register with an approved redress scheme came into effect. It is clear that the voluntary code of conduct amongst letting agencies is still not working and that landlords and tenants are left at risk.
One of George Osborne's 'property surprises' was to be discovered carefully buried on page 51 of the 2015 Budget Red Book, which provided for an amendment to the rules on sub-letting.
According to the record it says.... 'the intention is to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies.'
Alan Stewart, director and Head of Residential Lettings and Management at Caxtons, says "If this does comes into law it will open a can of worms for landlords and poses so many questions that require full consultation with the industry. Alan Ward, the Residential Lettings
Landlord Action founder Paul Shamplina has concerns, citing their experience of some tenants who take out fixed-term agreements then don't move into the property, but partition it and sub-let to as many people as possible. When landlords eventually discover what has happened, damage to properties from over-crowding can be very expensive to rectify, and the signatory to the fixed-term agreement is long-gone.
Falling unemployment, and wages predicted to rise will be welcome news to landlords in the private rental sector. Historically, improving prospects supports high demand from new or existing tenants, who may wish to move to better properties.
As tenancies end and property is re-let, high demand and limited housing stock can result in improved yields for landlords, and an uplift in local rental values.
Allowing for regional variations and property differential, figures released by LS Property Services Group report private rents rose by three per cent during 2014, far outstripping inflation.
Some areas have increased more than others with London leading the way. During 2014, eight out of 10 regions in England and Wales recorded rent rises with only the North East and South West of England bucking the trend.
The continuing news that property is a sound investment and has proved its worth in spite of the recession has resulted in a plethora of advice for would-be landlord entrepreneurs. And the evidence is clear - with the right property, yields have far outstripped even the best saving rates available. Add to that the fact that the value of the property will, generally, increase, buying a property to let would appear to be a a sensible move*.
Private sector rents across England and Wales increased on average by 2% in the 12 months to July, edging slightly higher than the 1.9% rate of Consumer Price Index (CPI) inflation.Rents first dipped below inflation in June 2013 and continued to remain below inflation increases until last month. Average monthly rents now stand at £753.
At a regional level, the fastest annual increase in rents was seen in the South East, where rents stand at £775, a 3.8% rise on this time last year.This is followed by a 3% annual increase in the North West, where average rents are £594, and a 2.3% year-on-year rise in London, where the typical monthly rent is £1,143.
The North East is the only region where rents have fallen, down by 3.8%.
Following a study into residential property management in blocks of multiple leasehold flats in England and Wales, the Competition and Markets Authority (CMA) has recently published its findings and recommendations.
Extensive consultation was conducted with stakeholders,and findings reveal that while themarket is working well for many leaseholders, some have experienced a number of difficulties, such as lack of transparency and communication, poor quality service, high, unnecessary charges and difficulties in obtaining redress.
New regulations introduced by the Association of Residential Managing Agents - ARMA-Q - necessitate a client agreement that sets out the full terms of management, to be included within the client agreement. ARMA-Q is only awarded to companies that meet the best industry standards and levels of customer care, as well as offering the greatest quality assurance to clients.
David Gurton, director and head of block management said "Caxtons is a member of ARMA and our application for full accreditation for ARMA-Q was granted in December 2014.
From 2015 flat owners who use ARMA-Q accredited agents to manage their property will be guaranteed a number of safeguards including:
To achieve accreditation, managing agents must demonstrate that they comply with over 160 rigorous industry standards. It's the first time such measures have been introduced for agents in England and Wales, where there are an estimated five million leasehold properties.
Despite collecting over a billion pounds in service charges from leaseholders each year, managing agents are not regulated by government. Unless they are members of a professional body, agents are unaccountable, which leaves the system open to abuse and inconsistent service levels.
Private sector rents have reached a record average high of £761 a month, according to the latest figures from LSL Property Services.
Across England and Wales, rents increased by 2.4% in the 12 months to August, £3 higher than a previous record set in October 2013 of an average £758 a month.
The average monthly rent in London stands at £1,160, after increasing 3% year-on-year.
However, around 8% of rents were paid late or not at all in August, which is the highest level of people seen struggling with their budgets since last Christmas.
Average rents in seven out of 10 regions of England and Wales were higher than this time last year.
The South West recorded the strongest year-on-year rise, with an increase of 3.5%, taking the average monthly rent to £651. While the South East recorded the next highest uplift, with rents increasing by 3.4% to £788.
Rents in Wales, the West Midlands and the North East were lower than they were a year ago.
Alan Stewart, director and head of residential lettings and management at Caxtons, said: "This is the peak season for people taking up new tenancies as students return to university.
Prime rents in the Home Counties rose for the second consecutive quarter in 2014, according to the latest figures from Knight Frank.
The report shows that Home Counties residential rents increased by 2.6% between April and June, with 'tenancies agreed' up by 50% when compared to this time last year.
The rise in this region is being driven by a strong demand from corporate tenants. In the first half of 2014, nearly 40% of all tenancies agreed were with international tenants.
Meanwhile, the latest UK Student Housing Market View from CBRE reports that prime student accommodation in the regions is continuing to outperform other property asset classes, with yields reaching 6.15%.
The findings also highlight a growing interest in this sector from institutional investors.
"Recent reports confirm demand for rented accommodation is strong, which currently makes the private rental market a particularly attractive investment opportunity." commented Alan Stewart, director and head of residential lettings and management at Caxtons.
Chairman of the Residential Landlord's Association, Alan Ward, has suggested the government should be doing more to encourage landlords to buy - and build - more properties to ease the housing shortage.
In a recent article in The Telegraph, he said rather than knocking buy-to-let landlords, we should be helping them to flourish and not introducing more complex regulation to the sector.
Currently, the private rented sector is booming, with almost a quarter of Britons now renting their home. Over the past 20 years it has doubled in size, and is predicted to more than double again over the next two decades.
Investors who bought property 10 or 15 years ago have seen very good returns, with decent yields even for those that invested after the crash five years ago.
With the price of buying a home out of reach for many, a squeeze on public investment in social housing and strict planning rules adding to Britain's property shortage, the private rented sector has become the only option for millions of people.
The government has already recognised the importance of expanding the rented sector through plans to encourage more institutional investment with its £1bn build-to-rent and £10bn debt guarantee funds.
However, Mr Ward believes landlords could help provide the new homes the UK desperately needs. By supporting the 89 per cent of individual private landlords, who control almost three-quarters of the private rented stock, landlords could be encouraged to invest in another property or two, providing thousands more homes for tenants.
A recent article in the Daily Telegraph revealed that property agents are taking a huge cut for arranging work through contractors and are not telling their landlord clients.
"It doesn't make comfortable reading to hear that peers within your industry are hitting landlords with hidden fees and commissions," says David Gurton, a director at Caxtons since the company was founded in 1990.
"I'm surprised at how common this practice of mark-up is and, as a reputable and professional managing agent, it is not a practice that Caxtons condones or follows."
The article reported that many agents are inflating costs and taking a cut of contractors' work for property maintenance and servicing work to boost their profits.
Typically, landlords using an agent to manage their property may pay a monthly fee of around 15 per cent of their rental income.
But industry insiders have claimed that on top of this charge, agents are adding mark-ups of up to 20 per cent to contractors' bills and demanding a cut of up to 60 per cent from contractors for the work they do. These charges are not clearly disclosed to the landlord.
The number of families renting has more than doubled in six years from 386,000 in 2006 to 874,000 in 2012, according to figures released by the English Housing Survey.
Increasing house prices and strict mortgage lending criteria has meant more and more people have turned to rental properties to find a home.
As a result, the private rental sector has witnessed significant growth in the UK's major cities and across the south east, where the acute shortage in housing stock is endemic.
Consequently, this has put pressure on the rental market and pushed rents to an unprecedented average high of £759 per month - the highest level ever recorded according the website LSL Property Services.
Meanwhile figures released from estate agents Savills estimate that another million households will start renting over the next five years.
"The surge in demand for private rented property, rising yields and attractive lending rates has created a boom in the buy-to-let market," says Alan Stewart, director and head of Residential Lettings, at Caxtons.
Landlords' responsibilities were highlighted in a Court of Appeal case when a tenant successfully sued after sustaining an injury.
In Alexander v Fresh Water Properties, the landlord and their contractor were held personally liable when the claimant got her hand caught in a door and had one of her fingers partially amputated.
The front door to the block of flats had a self-closing device, which was not working. A handle had been used to allow tenants to pull it shut, but the building contractor had removed the handle and failed to install a temporary substitute. The claimant caught her fingers in the door when closing it.
Morag Keohane, insurance manager at Caxtons, said: "This case is a serious reminder that it is the landlord's duty to take reasonable care for the safety of their tenants, and this can't be passed on to the contractor.
"With demand for rental properties soaring, injury incidents could start to rise. Landlords therefore need to take particular care that they continue to keep on top of their regulatory and legal responsibilities.
"The case also highlights the importance of having adequate liability insurance as court cases, particularly those that end in the Court of Appeal, are extremely expensive.
Rental income from residential property, such as a buy-to-let where a tenant lives in the house as his main residence, is not subject to VAT.
On the other hand, rental income from holiday letting is subject to VAT, if the income exceeds the UK registration limit, currently £79,000 per annum.
But landlords living outside the UK, who let holiday homes within the UK, may be classed as non-established taxable persons (NETPs) and under regulations which came into effect on 1 December 2012, might be required to register for VAT in the UK whatever the level of income.
Since 1 December 2012, a business or person established outside the UK has to register for VAT in the UK if they generate any income from taxable sales in the UK. Consequently, income from UK holiday lets owned by NETP landlords is subject to VAT as NETP landlords no longer have the opportunity to make annual taxable sales of up to £79,000 before needing to register for VAT.
However, if the landlord has a fixed UK business establishment, such as a UK letting agent managing the property on their behalf, then they gain the benefit of the £79,000 VAT threshold.
Insurers are growing increasingly concerned about the rise in illegal cannabis farming across the UK and the threat it presents to residential rental properties.
The latest figures suggest around 20 new cannabis farms are discovered every day by police, and most of them have been found in unassuming residential premises.
Criminals are shifting away from large farms in commercial buildings to small-scale factories across multiple sites in rented residential properties. This allows the criminal to spread the risk of detection and minimise loss of profit, meaning if one farm is discovered there will be others left in operation.
With cannabis rising in value over recent years, a growing number of criminal gangs are moving into this area and seeing the crop as low risk and high return.
More worryingly, new varieties of the crop are being introduced, which only take around nine weeks to mature, rather than the common 12 weeks. This means scheduled quarterly checks by landlords or agents may miss the cultivation process and be left with a property in a state of disrepair.
Converting premises into a cannabis farm can cause substantial damage to a property and landlords need to know what to look out for and the type of tenant to avoid. Insurer Aviva, for example, saw a 30 per cent year-on-year increase in cannabis damage claims last year.
Industry Adopts Independent Regulation. A rise in buy-to-let and build-to-rent developments over the next few years will see more people becoming leaseholders, and has lead to the industry adopting its own independent regulation scheme.
There are already around two million leasehold flats in England and Wales, and leaseholders collectively pay around £2.5bn a year in service charges for the upkeep of the communal areas of their buildings.
Yet, currently, managing leasehold properties is not subject to any form of regulation or accreditation scheme, meaning many leaseholders experience poor levels of service and extortionate fees with no redress.
While some managing agents do belong to an industry body, there are thousands that don't, and that leaves leaseholders who have a problem with the conduct of their agent with nowhere to go.
The Association of Residential Managing Agents (ARMA), and a number of its members, have long campaigned for government regulation in a bid to drive up standards. However, the government has so far resisted industry regulation.
Now ARMA and its members, which includes Caxtons, are implementing independent regulation and producing a consumer charter, known as ARMA-Q, which will be launched in the next few months. This will be the first time the industry has codified standards for managing agents.
The new charter is designed to ensure ARMA members provide quality customer service, promoting honesty, fairness, transparency and timeliness as well as stringent standards in property management.
One of the most important developments in protecting the interests of leaseholders will be independent regulation of ARMA members. The regulatory panel, which will not be connected with ARMA or its members, will monitor issues involving corporate conduct, service charges and commissions, vet the member accreditation process and enforce compliance.
More Regulation Needed as Complaints about Rogue Lettings Agents Soar
Complaints about lettings agents have more than doubled over the past five years according to figures released by a property watchdog.
The Property Ombudsman (TPO) received 8,334 complaints in 2012, up from 3,739 in 2008 - a 123 per cent increase. In comparison, complaints against estate agents have fallen from 6,067 in 2008 to 4,261.
Complaints about lettings agents now represent TPO's largest workload, around 53 per cent of all enquiries. Alan Stewart director and head of Residential Lettings & Management at Caxtons said: "These figures are very disappointing and it saddens me that landlords and tenants are being ripped off by unscrupulous lettings agents.
"The huge rise in complaints reported to TPO is yet more proof that the lettings industry should be regulated. What is more concerning is that unless some form of regulation is introduced soon, the situation could become worse as the ongoing economic conditions force more people into private renting."
Caxtons is urging students looking for last-minute rental accommodation to use a regulated lettings agency to avoid being exploited or living in a neglected property.
With thousands of students looking to return, or start, university in the next few weeks, the rush is now on to find accommodation before term begins. According to the government's Higher Education Statistics Agency, around half a million students in the UK rented privately last year, which equates to 29 per cent of all students.
However due to time and financial constraints, and lack of local area knowledge, many students can fall victim to unscrupulous private landlords who charge too much for poor accommodation.
A significant proportion of students will also register with unregulated lettings agencies, which means they won't be fully protected throughout the letting process and tenancy.
Caxtons' student lettings manager, commented: "Currently there is no compulsory regulation of lettings agencies, which means anybody can set up as an agent without any relevant qualifications, training or accreditations.
"In towns and cities with high student populations we regularly see a large number of unlicensed agents who view students as an easy target.
Life is tough, very tough. Most of us have had some first hand experience of the economic squeeze during the past four years
– and belt tightening has become an art form as well as a way of life. But what if you run out of cunning plans to keep the wolf from the front door? What if you can no longer meet your monthly financial commitments? What if you can't pay the mortgage?
Alan Stewart BSc FRICS MCIArb, Director & head of Residential Lettings & Management at Caxtons says think carefully before selling up. It may be better to consider letting your home – undoubtedly a very valuable asset – while you rent a smaller property for considerably less. This way you will retain your home and ease the pressure on what is probably a desperate situation.
If you think that becoming a 'reluctant landlord' is for you to allow time for the property market to recover and economic-hard times to abate, then there are a number of issues to explore.
If you have a mortgage, it is sometimes possible to let your property without the complication of changing your mortgage and becoming a Buy-to-Let landlord. As long as you obtain permission from your lender by way of a 'Consent to Let', then you will not breach your mortgage agreement. What is more, you will usually remain on your existing mortgage arrangement and pay your current interest rate. Every lender is different though and some may impose additional charges so be sure you understand exactly what you are signing up to.