April’s Round Up of the Private Rented Sector
This month seen more announcements of high profile entrepreneurs venturing into the online property market, leading to speculation that 2014 is the year the sector is transformed with the future of the industry not on the high street but online. Whilst there are arguments for the online model, I don’t think it will obliterate the high street market, after all buying a house is one of the biggest purchases a person will ever make and the reassurance of dealing with an agent face to face for this will be hard to replicate online. The businesses that maintains a high street presence as well as embracing the benefits of the online model will be the ones to watch.
The news within the sector in general this month was less optimistic than previous months this year. The British Property Federation reported that, due to the uncertainty surrounding Universal Credit and how it will tackle rent arrears, nearly four in ten (39%) of larger landlords are planning to reduce the number of properties they let to welfare recipients. As a result the BPF have urged DWP to implement alongside Universal Credit, a system to inform private landlords when a tenant has a change of circumstances that affects their housing benefit. This basic step will provide reassurance to a landlord and reduce any confusion regarding delayed payments or applications for alternative payment arrangements.
Buy-to-let investors have also been coming under increasing scrutiny from the HM Revenue & Customs (HMRC) which suspects some buy to let investors are underpaying their tax bills. As a result they are now running a Let Property Campaign to encourage landlords to come clean, or risk higher penalties.
Rental returns have also dropped in nine out of ten areas as property prices rise. According to research from Estate agent Chesterton Humberts, the areas with the biggest decline in rental returns was York, Sheffield, Manchester and London. However, they do not believe that this drop in rental returns will cool the buy-to-let demand.
With a 23% rise in the number of complaints to the Property Ombudsman last year, Ombudsman Christopher Hamer repeated his call for regulation of the lettings sector, saying it should become a priority after the General Election. One noticeable trend was that while complaints relating to TPO lettings agents rose by 21% last year, inquiries about non-TPO letting agents rose by 34.2%. This, says the report, underlines the importance of forthcoming mandatory redress requirements for the lettings industry.