Concerns over unintended consequences of fees ban in Commons debate

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The House of Commons debate held this morning was organised by Kevin Hollinrake, MP for Thirsk and Malton, and co-founder of Hunters Estate Agency was to look at the proposed lettings fees ban.

The proposed bill also includes capping security deposits at one month’s rent and holding deposits at one week’s rent.

The majority of MPs that took part in the debate did at least acknowledge concerns over the unintended consequences of a total fees ban for small businesses and low income or non UK tenants along with potential for rising rents and job losses.

However, Housing Minister, Alok Sharma, confirmed that holding deposits will be excluded from the legislation.

Mr Sharma said that the problem with fees is that the agent is chosen by the landlord giving the tenant little opportunity to negotiate or opt out of these fees. “A landlord is better placed to pay reference and credit check fees and anyway it is they who ask for the checks to be completed, not the tenant.”

Henry Bellingham, MP for North West Norfolk said he had received no complaints from tenants about letting agent fees with the average application fee being £325 and the average renewal fee £75.

Mr Sharma confirmed the government’s response to the fees ban consultation would be published very shortly and acknowledged that the ‘broken’ housing market remains one of the greatest barriers to progress in Britain and he felt capping fees would be largely ineffective as it would be harder to understand and enforce.

David Cox, chief executive of ARLA Propertymark, commented on the debate saying: “We welcome this morning’s comments from Kevin Hollinrake MP around the unintended consequences of a total ban on letting agent fees.”

“It’s important that the government understands the value of the services agents carry out for both landlords and tenants when shaping its final legislation.”

“We are therefore disappointed in Alok Sharma’s comments today declaring that the government’s position remains that all fees will form part of the ban.”

“As Kevin acknowledges, the ban on fees for referencing checks will cause problems. Agents are required to carry out these checks by law, and they invest both time and resources to ensure this work is carried out properly.”

“The government must now consider exempting referencing checks from the ban as well.”

National Approved Letting Scheme (NALS) CEO, Isobel Thomson, replied: “NALS welcomed the cross party debate on the fee ban and confirmation that the Minister has adopted a common sense approach on holding deposits with his announcement that they will be exempt from the ban, but he gave no clear indication of when legislation might come forward.

“We were encouraged that MPs quite rightly expressed concern about the implications of rent increases as a result of the ban and the impact on those least likely to afford them. Of real interest was the Minister’s commitment to consider the ban on tenant fees in the context of wider work in the private rented sector, something NALS called for earlier this year. This is positive news and an indication that he has listened to the call for an end to piecemeal legislation. His clear reference to regulation was welcome as well as his willingness to explore options for what a regulatory framework might look like.”

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Ocean View Sandown – Luxury retreat investment on the Isle of Wight

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Ocean View is a luxury retreat for the over 50s situated on Sandown Bay on the Isle of Wight. Due to the Isle of Wight being such a popular destination for older holidaymakers, a 10% net rental income for 10 years is guaranteed.

Residents can fully relax and enjoy fine dining experiences, a heated swimming pool, hair and beauty salons, a gym, spa and beautiful landscaped gardens. The existing building will be transformed into 60 studios and apartments and provides a mix of supported breaks, short stays and longer stays for those in later life.

Suites at Ocean View Sandown start from £89,950 with a net return of 10% per annum over a 10 ten years lease. The attractive returns are complemented by two guaranteed buy-back options in years 5 and 10 at 110% and 125% respectively. Units can be reserved for as little as £2,000.

Why Invest in Retirement Property in the Isle of Wight?

A quarter of the Isle of Wight’s population is aged 65 or over. As young people are leaving the island to chase jobs on mainland Britain, elderly people are settling on the island to take their place. Enquire today using the contact form below to find out how such a high percentage of over 65s can result in a lucrative opportunity for investment.

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Fire safety and landlords legal obligations

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This is the 10th post in my 2017 Legal Update series.

On the morning of Wednesday 14th June, I was due to travel down to London for a meeting. I got up early to do some admin, and then turned to the online version of the Guardian website.

I was transfixed by the horrific picture of a burning tower block. It haunted me for the rest of that day and it is still often in my thoughts. I am sure you will also remember it – and remember too where you were when you first saw it.

Grenfell and its aftermath has shaken us all and raised many questions

• What was the duty of care of Council officials to ensure that the building was fire safe?
• Why weren’t the fire regulations tightened up after similar fires in 2013?
• What does this incident tell us about our society and the differing standards applied to housing for ‘rich people’ and ‘poor people’.

Coming a bit closer to home – how does this affect YOU? We have all become much more sensitive to fire safety, but what are the actual obligations upon landlords in the private sector?

Test your cladding

The first thing to say is that if you have external cladding on your properties, particularly if it is a high-rise building, you should consider getting it tested (or ask for it to be tested if you do not own the block). There may be government help for this which you can read about here (NB you will find all the announcements relating to Grenfell here.

But what are private landlord’s legal obligations?

The Law

The main legislation is the Regulatory Reform (Fire Safety) Order 2005. This requires landlords (or the person who has control of the property – which could be the letting agent) to carry out fire risk assessments for properties.

There is no prescribed way to do this and it depends on the circumstances. If the property is a bungalow and all doors and windows open out onto the ground floor, then provided you have the proper smoke alarms fitted, you will probably be alright. However, if the property is a high-rise building, it would be best to get a proper professional fire risk assessment report done by a specialist company.

If you are managing an HMO there may be extra requirements – you will need to speak to your Local Authority about this.

The other important thing to bear in mind is the Local Authority powers under the Housing Health and Safety Rating System which come under the Housing Act 2004. Fire is one of the 29 hazards which EHOs have to test for. If your property fails the test you could be facing an improvement notice.

Smoke alarms

You should now have fitted smoke alarms on all floors of rented property and CO alarms in all rooms with solid fuel burners.

These regulations came into force on 1 October 2015 and I did a post on the blog at that time here. If you have not got these alarms fitted, make sure that you do this asap.

Further information:

There is quite a lot of information online in particular on Local Authority websites.

So far as our 2017 Conference Course is concerned, I have included fire safety expert Warren Spencer’s talk to our 2015 Conference as a bonus item – the law has not changed significantly since 2015.

You will find more information about the Conference Course here.  There is a discount voucher for Property118 readers which is pp118cc30 – apply this on the checkout page and it will reduce the payment by 30%.  Note however that the coupon will expire after 16th September.

We also had a webinar on Fire Safety for our Landlord Law members recently as part of our members training, and the recording of this is available for Landlord Law members on the site.

You can find out more about Landlord Law here

Tomorrow I will be discussing leaseholder landlords

Tessa Shepperson is a specialist landlord & tenant lawyer and runs the popular Landlord Law online information service.

To see all the articles in my series please Click Here

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London commercial property sees strongest trading in 10 years

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Record Commercial Sales:

London commercial property has hit an £llbn record so far this year, with the City of London seeing it’s strongest trading in a decade.

Savills, the property agency and consultancy, has produced data which shows July turnover was £2.1bn across 11 deals, equating to an average lot size of £190.92m. The sale of The Walkie-Talkie, 20 Fenchurch Street, EC3 accounted for 61% of July’s turnover. Total turnover for the year has now reached £7.4bn across 77 deals (£96.10m average lot size), which is 51% up on this point last year. The rolling 12-month total turnover is currently £10.6bn, 41% up on the long-term average.

In the City market, Savills say they are currently monitoring 57 investment opportunities totalling circa £4.1bn. Of which, 22 are currently under-offer totalling circa £0.8bn, leaving an estimated £3.3bn worth of available opportunities. The 10 largest available assets account for 75% of total availability.

In London’s West End market, £262m was transacted in the same month, with the largest deal the sale of a building on the Strand, for £68.25m.

Asian investors continue to dominate the market, accounting for 63pc of total City turnover year-to-date, followed by European investors, at 17pc and UK investors at ll%. In the West End market, Asian investors accounted for approximately 50pc of turnover to end July, with UK institutions accounting for just 2pc of acquisitions by value.

Savills prime City yield remains at 4.00%. The spread between the City and the West End is still just 75bps with the West End prime yield currently at 3.25%

Stephen Down, head of the Savills central London investment team, told the Daily Telegraph that the value of deals for 2017 as a whole could surpass last year’s total of around £17bn:

“Although the restrictions announced earlier in August by the Chinese government will reduce £2.35bn. However, we have noticed their buying criteria has become increasingly selective.”

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