Every week I pick out the top 5 stories which I think could affect your property project, here are this week's stories and my thoughts!
1. Letting agents legally required to join an Ombudsman Scheme before 1st October
Letting agents have until 1 October 2014 to register with one of three redress schemes, so that dissatisfied tenants and leaseholders have somewhere to go, free of charge, to complain and potentially receive compensation.
The schemes are run by The Property Ombudsman, Ombudsman Services Property and the Property Redress Scheme. Agents failing to sign up face a fine of up to £5,000. For more information, see Redress Schemes
My thoughts: Unfortunately although a move in the right direction, this isn’t the best protection you can get as a landlord or tenant as there is no obligation to have Client Money Protection insurance so if your rent goes missing it can be replaced. Nor do agents have to prove they know letting legals and have had any training.
As such, advice to only use ARLA, NALs and RICs agents remains.
Read - How to choose a letting agent
2. Government produces new model assured tenancy written agreement
The government has published a checklist-style model agreement which can be used by landlords and tenants for assured short hold tenancies. It’s free of charge and gives clear guidance by means of checklists and key dates, plus further help on ending agreements legally under differing conditions.
Specifically targeted at tenancies of two years or more, the model can also be adapted to fit shorter periods of tenancy, and helps both landlords and tenants ensure that they comply with their respective obligations during the tenancy. Find out more from the governmernt site on assured tenancy
My thoughts: Sadly, although the ‘intention’ is good, the problem is this is considered ‘free’ so tenants and landlords will use this to avoid using a quality agent and a legal company. When the law changes, there is nothing in place to update the landlord using the agreement.
Worth using once, but it doesn’t mean you can save on agent or legal fees!
Thinking of choosing a letting agent, read: Choosing a letting agent checklist
3. RIC’s property price report suggests price rises outside London
UK house price rises slowed to last year’s levels and new buyer enquiries also fell for the second consecutive month, according to the latest RICS UK Residential Market Survey. House sales also decreased slightly, but 9% of surveyors say they now expect prices to rise.
While a general lack of supply persists overall, London showed signs of recovery, but new buyer interest still declined. Scotland and Northern Ireland showed improvement, at 43% and 52% respectively, and prices are likely to rise faster outside London where sales are only modestly growing relative to demand, resulting in slower price gains.
For further details, see RICS - Hosuing market plateaus
Read our free checklist on Choosing a surveyor
4. TUC Conference advises of ‘gradual and limited’ interest rates
Mark Carney, governor of the Bank of England, warned that next spring’s anticipated higher interest rates, from a record low of 0.5%, will arrive ahead of wage rises, which are unlikely to come before the summer of 2015. The current inflation environment, at 1.6%, will not remain ‘benign’ unless interest rates increase with economic expansion, but this will be gradual and peak well below their previous average of 4-5%. Wages should be up by an average of 4% by 2017, and rates are not expected to return to pre-recession levels. For more information, visit TUC - Mark Carney
This is good news for homeowners to some extent as there was talk of interest rates rising before the end of the year or early 2015 and now it appears it won’t be until next Spring, giving everyone sometime to make sure they are on the mortgage.
Read - Analysing your property market checklist
5. Clampdown imminent on BTL mortgages, says the CML
As a result of the European Mortgage Directive, buy-to-let investors face a further wave of regulatory change. According to Paul Smee, director general of the CML, the government is putting forward a new proposal to regulate part of the buy-to-let mortgage market by March 2016, when the EU directive needs to be fully in place.
A consultation from the FCA will be published shortly and will cover in detail the changes that will most affect the mortgage market, but the CML hopes that their impact will be ‘modest’. For further information, go to www.cml.org.uk
This could on the one hand be good news as at the moment I think mainstream lenders are allowing more Buy To Landlords than they should to invest in property, without enough due diligence. However, it could also mean less landlords are able to start their portfolio or expand it, so with prices on the up now, it may well be considering working out if buy to let is right for you or not.
Read - Buy to let quick guide checklist