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Research Reveals Britain’s “Reluctant Landlords" April
2009
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ARLA Press Releases on this site ________________________________ ARLA
PRESS RELEASE - 15th April 2009: Frustrated
sellers are turning to the lettings market creating a glut of inexperienced landlords,
according to the Association of Residential Lettings Agents (ARLA). 94
per cent of lettings agent respondents to the ARLA Members’ Survey of the Private
Rented Sector * reported an increase of property coming onto the rental market
because it could not be sold. ARLA’s members believe that these figures confirm
a trend that has been much discussed but thus far unproven other than through
anecdotal evidence. The
trend was reported countrywide with even 92.2 per cent of landlords in “prime”
Central London locations reporting an upsurge in rentals coming onto the market
for January, February and March. Ian
Potter, Operations Manager of ARLA, said: “Sellers have been left with little
option but to resort to renting out their property. These reluctant landlords
need to understand the obligations of a landlord to their tenants, and the need
to choose a regulated and qualified letting agent.” Semi-detached
houses appear to be the most common type of property succumbing to reluctant letting:
UK-wide, 68 per cent of the agents surveyed saw an increase in the supply of these
properties onto the rental market. This was followed by detached houses (67 per
cent), terraced houses (52 per cent), with flats (29 per cent) and studios (11
per cent). Ian
Potter explained: “These figures confirm the trends we have been hearing from
ARLA’s members that sellers looking to downsize are turning to the lettings market
after being unable to sell. “Detached
and semi-detached houses are always traditionally harder to rent, but in this
market there is now a glut of un-sellable properties coming onto the market. It
is another sad indication of the work that the Government must take to free up
the sales market and the need to regulate a lettings market that is becoming increasingly
competitive. “For
those landlords new to renting, it’s crucial that they look for a local lettings
agent who is both regulated and abides by a code of practice. “The agent will
also have received the necessary training and qualifications, and consumers can
be confident that any funds being held by them on your behalf are protected under
client money protection schemes.” According
to ARLA’s members, the increase in new landlords has led to tenants taking extra
measures to gain assurances on the security of the property. According
to Lucy Morton, managing partner and head of lettings at
W
A Ellis (see
section below),
and president-elect of ARLA, there is a growing trend for tenants to be asking
for references on landlords. She explained: "Tenants are increasingly nervous
about the security of landlords, we are also seeing tenants asking for assurances
that the landlord will be able to cover his mortgage payments throughout their
Tenancy."
Source
ARLA
Lucy
Morton, managing partner of W A Ellis (who becomes President of ARLA in May, sits
on the Property Standards Board and is the voice of Lettings in Central London
- often quoted in the media) is being called into more and more meetings now with
developers and corporate landlords to give valuable advice from her experience
of working through previous market downturns. This
month she comments: “Tenants are prepared to move within London, as, in some cases,
they can find more space for less money - this was not the case earlier in the
year, and we are noticing that a lot of tenants are prepared to make this move.
But we are now seeing properties being realistically priced and tenants need to
understand this, because it means that landlords are not accepting the huge reductions
on quoting prices of previous months. It also means that, in some cases, we have
two or three prospective tenants now for a property. “As
a result of properties being put onto the lettings and sales market, a new trend
is creeping into the market. We are noticing that people are renting with an option
to buy. We have just agreed a one year letting for a substantial house in Knightsbridge
and the Tenants have asked for, and been granted, an option to buy the house at
an agreed set price for the duration of the Tenancy, ie. for one year they have
the right to buy the house. We have also just agreed the letting of another house
in Knightsbridge where the tenant has been granted first refusal to buy should
the landlord decide to sell during their tenancy. This may happen more and more
as people wait to see how the economic climate, and in particular the sales market,
pan out. “Also,
due to the serious shortage and increasing demand for sales stock - some un-let
properties are now being placed on the sales market which should create more supply
on the sales market, and decrease the abundance of stock on the lettings market.
“As
President-Elect of ARLA it is interesting to report that the association has delivered
a report to Chancellor Alistair Darling asking him to strengthen his proposals
to protect tenants from repossession, alongside urging the Treasury to implement
measures to increase both supply and quality in the private rented sector. The
submission asks for: Greater
protection for private sector tenants during the economic downturn; Incentivisation
for private sector landlords to improve the quality of housing stock; Reform to
mitigate the adverse impact of Stamp Duty on larger investor landlords. “Like
the sales market, the current downturn is having equally grave consequences on
the lettings market. “ARLA
has also called on the Government to ensure lenders give tenants at least two
months’ notice of an eviction after a repossession order has been granted. In
a case of a mortgage default, the issue of blame would rest with the landlord,
not the tenant if the tenant has kept up to date with their rental payments, and
it will also allow the tenant more time to find alternative accommodation. The
lender may also decide to take rent in receivership in appropriate circumstances.
This is obviously more likely, should the tenant be able to prove the rent has
been kept up to date. “25%
of the accommodation provided in the private rented sector is in need of improvement
and ARLA has urged the Government to incentivise landlords to improve the quality
of our housing stock. It is ARLA’s opinion that the Government should implement
the following initiatives: Remove
VAT on the purchase of materials and labour for capital expenditure to improve
older property brought into the rental market; Introduce capital allowances for
landlords improving housing stock over a certain age; Increase the Landlords Energy
Saving Allowance (LESA) to include the installation of central heating systems.
“ARLA
has also suggested changes to stamp duty as larger investor landlords can be put
off buying blocks of property as the Stamp Duty is based on the total value of
the transaction, rather than value of individual properties within the block,
which is often at the highest rate.” Source
W
A Ellis
________________________________
See also
Housing
Minister Grant Shapps promises 'no more red tape' for private landlords - June
2010 ARLA
launches buy-to-let mortgage comparison site - March 2010
Response
to FSA Paper on Mortgage Lending - October 2009 Response
to statistics from NLA on rental arrear-October 2009 Demand
in rental market returns for the first time since recession began - 28 September
2009 Review
of ARLA Agreement Magazine on Insurance - August 2009 Property
Woman of the Year ARLA sponsors young property woman award at the NLA Property
Women Awards 2009 - May 2009 ARLA
welcomes the Government’s “historic shift in thinking” on the private rented sector
towards improved industry standards - May 2009 ARLA
launches new licensing scheme to protect consumer interests - Consumer interests
safeguarded by letting agent licensing - May 2009 ARLA
- Research Reveals Britain’s Reluctant Landlords - April 2009 ARLA
demands an end to unregulated Letting agents - January 2009 ARLA
Welcomes Rugg Review on the Private Rented Sector - 24 October 2008 ARLA’s
Response to the Law Commission Report - August 2008 and
The
Law CommissionHousing: Encouraging Responsible Letting Professional
Property Organisations Tenancy
Deposit Scheme (TDS) UK mydeposits
will stick by all letting agentt- January 2009 Back
to Property Articles Back
to Property Information ________________________________
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