February 2015 Market Trend Data

Land Registry’s Market Trend Data for England and Wales.

The February data shows an annual price increase of 6.5 per cent which takes the average property value in England and Wales to £180,252 compared with the peak of £181,083 in November 2007. House prices are up 0.5 per cent since January.

The regional data indicates that:

  • London experienced the greatest increase in its average property value over the last 12 months with a movement of 13.1 per cent
  • North East experienced the greatest monthly rise with a movement of 6.2 per cent
  • North West saw the lowest annual price growth with a movement of 0.7 per cent
  • North West also saw the largest monthly price fall of 1.7 per cent

Sales and repossessions during December 2014, the most up-to-date figures available, show that:

  • the number of completed house sales in England & Wales decreased by 11 per cent to 70,470 compared with 79,569 in December 2013
  • the number of properties sold in England and Wales for over £1 million decreased by 4 per cent to 929 from 967 a year earlier
  • repossessions in England and Wales decreased by 38 per cent to 654 compared with 1,062 in December 2013
  • London was the region with the greatest fall in repossession sales

Access the full February HPI report

General Election on the horizon leaves landlords feeling deflated

Really interesting article from Vanessa Warawick via Property Industry Eye;

The Budget 2015 from a property and landlord perspective
I don’t know where the time flies, but it’s been three weeks since my last column! During that time, the Budget was announced, and landlords were quick to share their views on the Chancellor’s new property announcements, especially the “sub-letting” clause.

Conservatives take an early lead in the Property Tribes poll to signal landlords’ voting intention in the Election

With the Labour party being described as “electoral kryptonite” for landlords with their plans for “rent indexation”, the Conservatives and UKIP seem to be the only viable alternatives with respect to landlords’ interests.

Please vote anonymously on our poll (click the link above) to help us gain an insight into how the property industry is reacting to the various housing policies. We will share the results with Eye readers in due course.

How will deflation affect the UK property market?

With the news this week that inflation has dropped to 0% for the first time on record, putting the UK on the brink of falling prices, landlords are discussing whether this is good or bad for the property market and who the winners and losers will be if deflation does occur.

Positive relations between landlords and tenants highlighted

How refreshing! Endsleigh Insurance launch their “Better Relations” campaign to show the sharing and caring side of the private rented sector. Find out what landlords (and lettings agents) can do to provide a better experience in the PRS by performing a random act of kindness for tenants!

That’s it for this week.

Thank you for reading and keep tuning in to Property Tribes for the landlord latest!

 

Smoke alarms requirement in all rental properties: update

There are new provisions requiring smoke and carbon monoxide detectors in residential properties.

This announcement has had an interesting genesis. The Government announced on March 11 that it would be utilising powers it had taken to itself to require smoke and carbon monoxide alarms to be fitted in residential property.

However, they did not make clear in that announcement what powers they were proposing to utilise.

On the same day the Energy Act 2013 (Commencement No. 2) Order 2015 was made and it brought into effect s150 of the Energy Act 2013 from 11 March 2015, the following day.

The small problem with this was that s150 requires that landlords fit an alarm of a standard to be specified in regulations and that there is a penalty for not doing so which is to be specified in regulations.

However, the Order did not specify the type of alarm or penalty.

Therefore on March 11, landlords were left with a legal obligation to fit an alarm of an unspecified type in an unspecified place with an uncertain penalty for not doing so.

This is about to change as the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 are now available, albeit only on draft form at this stage. These regulations set the alarm requirement, the penalty process, and the level of penalty.

The obligation applies to all residential landlords in the private rented sector. Longer leases of over seven years and accommodation shared with the landlord is excluded.

There are some other exclusions which I will not bother you with here.

The obligation is to fit a smoke alarm on each storey of the property that is adapted or used as residential accommodation and also to fit a carbon monoxide alarm in any room which contains a solid fuel appliance.

Comment
This has all been pretty badly done, to be honest. There is no definition of what constitutes a smoke or carbon monoxide alarm, by reference to a British Standard or to anything else.

So it seems that any old piece of junk will do.

In reference to carbon monoxide alarms, the requirement is the same as the one that already exists under the Building Regulations. So it is hardly an improvement and certainly not the one we thought we were getting.

Enforcement
Where a local authority believes a landlord is not in compliance, then it is obligated within 21 days to serve a remedial notice on him. If such a notice is served, then the landlord has 28 days to make representations to the local authority.

Irrespective of those representations, the landlord is required to comply with the notice within the same 28-day period. If the landlord does not comply then the local authority is obligated within 28 days of becoming satisfied that the notice has not been complied with to arrange its own action.

Perversely, there is no power for the local authority to recover the costs of that work.
The local authority is also empowered to serve a penalty notice on the landlord, within six weeks of becoming aware that he has not complied with a remedial notice, requiring him to pay a penalty of up to £5,000.

The notice can specify a lower penalty if it is paid within 14 days.
The landlord has up to 28 days to request the authority to review any penalty notice. After that, appeal lies to the First Tier Tribunal.

The regulations do not make clear which emanation of the FTT should be appealed to but the explanatory note makes mention of the rules of the General Regulatory Chamber, so I assume that this is the one intended.

HMOs
There is also a change to the Housing Act 2004 to specify a compulsory condition to be applied to all HMO or selective licences covering these same requirements.

However, as the HMO Management Regulations require all properties to be fire safe and those are generally read as requiring a mains powered, battery backed, interlinked set of smoke detectors, it seems as though this new condition adds very little to the mix.

Duty issues
This new duty may be a source of some concern to local authorities as it potentially means that where there has been a fire and the local authority can be shown to have been aware of the lack of smoke detectors, then injuries may be laid at its door if it can be demonstrated that a working smoke detector would have led to a different outcome in relation to the fire.

These new obligations apply solely to England.

Definitely going to be watching this one!

Already I feel sorry for these agents as I know exactly how it feels when your trying to be as professional as possible whilst the client isn’t really that interested! Hat off to them!

http://www.digitalspy.co.uk/showbiz/news/a637536/watch-cheryl-prank-estate-agents-for-ant–decs-saturday-night-takeaway.html#~p82cC7hA7IcFho

 

WARNING!

This is a warning to all Landlords out there. As an agent we are not responsible for reporting a landlords income until we get the appropriate notice served by the HMRC. Im confident that all our clients account to them correctly but please ensure this is true. Interesting article below from Property Industry Eye;

With the help of letting agents, the taxman has recovered over £20m in unpaid tax from private landlords.

Last year, hundreds of letting agents were sent statutory notices to provide details of rents collected on behalf of all landlords.

Figures released this week by HMRC show over £20m recovered as at the end of January – massively up from the figure of £7.9m announced in October.

HMRC’s Let Property Campaign is an ongoing crackdown on private landlords with undisclosed rental income.

The campaign provides buy-to-let and other private landlords with an opportunity to make a full and voluntary disclosure on more favourable terms than if they were caught.

It is understood that over 9,500 landlords have so far taken up the opportunity to bring their tax affairs up to date.

Ian Leigh, tax partner at accountancy firm Jefferys Henry LLP, said: “These figures should come as a warning to anyone with undisclosed rental income.

“With increased data-gathering activities, it is less likely a case of if and more likely when HMRC catches up with you.”

HMRC now gathers information from much wider sources beyond local authorities, the Land Registry and electoral roll, and now includes agents.

Leigh said: “Landlords with undisclosed rental income should take this opportunity to come forward and regularise their tax affairs as soon as possible.

“Penalties as low as 20% and affordable payment plans can often be negotiated for those who make a voluntary declaration as part of the Let Property Campaign.”

Landlords who ignore this opportunity face penalties of up to 100% and in certain cases criminal prosecutions.

Earlier this year, two men from London and Essex were arrested as part of an investigation into an alleged Capital Gains Tax and Income Tax fraud.

HMRC claims the pair had failed to declare CGT on a number of properties that they had bought and sold.

 

Most expensive place in the world to buy a property

Sandbanks Beach in Dorset, England – Known as Britain’s Palm Beach, the strip has numerous beachfront properties with prices running into tens of millions of dollars.Tom Doyle, the managing director of Lloyd Property Service points out that till late only buyers from London showed interest in buying property at this location, but overseas buyers, especially Russians are flocking to the place to buy some property.
The rush for possessing some of the valued properties in the region is so high that the Dorset based real agency had to open a branch office in Moscow. They have hired a Russian employee to cater to the inquiries from Moscow in their UK office, too.
The monetary value of the properties in the region can be gauged from the fact that Maxim Demin, the Russian multimillionaire petrochemicals trader has invested $8 million USD in a Sandbanks mansion. This came after he bought 50 percent of the shares in Bournemouth’s soccer club.
An interesting assumption that a real estate agent Keith Fensom points out is that Russians are known to follow each other and this has happened in case of Sandbanks, too. Rich Russians vied with each other in possessing properties here resulting in majority of these to be bought by Russians.
Doyle points out the reason for this, too. He says that foreigners are attracted by the region’s beaches which are considered to be best in the U.K. Its proximity to London is another reason for Russians heading to Sandbanks for buying one.

Numerous properties including a six-bedroom home on harbor front is up for sale in Sandbanks. The property has been listed for a base price of 11972150.00 USD.
Real estate prices in Sandbanks are on the rise though. This is evident from the fact that the base price for a single bedroom apartment has been listed at 1607000.00 USD in the region. Real estate agents point out that the popularity of the region has grown in the past few years and it has become globally well known.
Perhaps this only fuels the property prices which have been surging to a new high in the entire region. The agents though expect that Arabs and other wealthy people from the world will follow the Russians and invest in properties in the region soon.
A waterfront property in Sandbanks, Dorset is considered to be a status symbol and rich and the famous from world over are vying with each other when it comes to buying one of these.

Best buys in the last 7 days

Nice little safe bet on this one here. Would help if the agent had put internals up so we could assess it slightly better.

1

Its on the market at £155,000 and I would market at £700pcm. Haggle hard at £150,000 and that’s a nice safe 5.6% share

http://www.rightmove.co.uk/property-for-sale/property-48953635.html

We really like these quality apartments for a return and if you bargained at £145,000 and a rent of £750pcm this would return 6.2% minus lease costs

1

http://www.rightmove.co.uk/property-for-sale/property-33996513.html

not sure if there is a restriction on the renting out of this, also assuming that there is works needed but at £110,000 and a possible rental return of £650pcm+ this is a cracking little earner at 7.1%+

Think this is worth investigating, nothing ventured, nothing gained!

1

http://www.rightmove.co.uk/property-for-sale/property-49016341.html

Hope there is something there for you and will keep you posted of any other possible BTL’s!!

Worries subside over estate agents’ fees and negative equity

People are less concerned about estate agents’ fees, negative equity and Stamp Duty than they were a year ago, while general confidence in home buying has bounced up.

The new 2015 Annual Homeowner Survey, conducted by YouGov, shows that people’s concerns about housing have receded right across the board last year.

The survey, conducted for the HomeOwners Alliance, conveyancing firm myhome move and BLP Insurance, shows that the top concerns are the ability for aspiring first-time buyers to get on the housing ladder and saving for a deposit – 83% cite these as serious problems.

However, even these are less worrying than this time last year, when 87% were worried about first-time buyers’ prospects and 86% concerned about saving for a deposit.

While they remain the top concerns, they are followed by worries about house prices (76%), the ability to get a mortgage (72%) and availability of housing (70%).

However, concern about negative equity has dropped from 64% to 49%. Fewer people are worried about Stamp Duty (64% were concerned last year, but down to 51% this year following December’s wholesale reforms).

Worries about being able to pay off the mortgage have also lessened, down from 70% last year to 65%.

Aspiration to own a home has also edged up slightly, from 68% to 69%.

Estate agent fees were seen as a problem by 64% of people surveyed last year, but down to 57% now.

The survey shows up some interesting contrasts, with aspiring home owners being much more worried about house prices than home owners, and Londoners being easily the most worried about house prices.

The sample size was 2,214 adults, of whom 1,390 were home owners.

 

Taken from Property Industry Eye

Risks from not declaring referral fees – money ‘belongs’ to the client

Now, we are extremely proud to announce that we do not receive any kind of fee from any source. As far as we are concerned, that is part and parcel of our management service. Read on and be warned!

Are agents right to focus on the possibility of letting agency fees being scrapped if Labour wins the election – or is there something more important they are ignoring?

Yesterday, Twitter spread the word about a case we suspect most agents have never heard of – largely because it concerned the purchase of a hotel in Monaco.

Eye hadn’t heard of it either so we looked it up.

And it is clear that the apparently obscure case has important implications for agents’ fiduciary duty to their clients – and specifically income from referral fees and the risks of not revealing them.

Essentially, if you do not reveal the money to your client, it belongs to them.

In FHR European Ventures LLP and others vs Cedar Capital Partners LLC, the Supreme Court last summer ruled that any secret commission that an agent receives is money held on trust for their principal.

In other words, the client has a “proprietary” claim to that money.

A proprietary remedy means that the client, in the event of the agent’s insolvency, has a claim that has priority above the agent’s unsecured creditors. A proprietary claim also gives the principal the right to trace the undisclosed commission and keep tabs on it.

The case applied to the Grand Hotel in Monte Carlo where the agent, Cedar, acted for purchasers FHR.

Unknown to FHR, Cedar also had a brokerage agreement with the seller.

When FHR found out, it took steps to recover the €10m Cedar had received, and the case eventually ended up in the Supreme Court.

Interestingly, in looking at ownership of the undisclosed commission, the court said it had no sympathy with the argument that providing a proprietary remedy would reduce the agent’s estate and therefore be prejudicial to the agent’s unsecured creditors.

The court very firmly said that any secret commission should not have been considered part of the agent’s estate in the first place.

The ruling is regarded as a landmark by lawyers in the UK.

It makes it clear that agents who want to keep their commission fees – for example, those paid by sales agents to conveyancers or by letting agents to contractors – must declare the money that is earned as part of their engagement by the client.

Alistair Spencer, a solicitor in the litigation team at Brethertons, said: “This judgment is an important clarification and expansion of the existing rule that an agent must account to his principal for any secret commission received in the course of his acting as agent for the principal.

“Obtaining the informed consent of the principal to such fees is absolutely key in these situations as without such agreement any commission or benefit would belong to the principal who would be entitled to take action to recover the same.”

There is a good blog on the case here

And another here