You will remember that last week I wrote a blog on the fact that the OFT had decided to take a much closer look at the practices of sale and rent back companies.

This was an area that I believe has been cause for concern for quite some time and it appears the OFT agrees. They made three recommendations to the government regarding these companies:

–    Compulsory Regulation.

–    Increased consumer awareness through education.

–    Improved information about housing benefits.

From there the government has launched an extensive consultation period but so worried is the OFT about the actions of some of these companies that they also recommended that something needed to be done in the interim.
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As the effects of the credit crunch are felt people are really looking closely at the state of their businesses and investments and one of the side effects is that an amazing amount of fraud is coming to light.

Jeff Salway wrote an interesting article in the Scotsman last week quoting experts as saying so widespread was the fraud that it is possible it caused the property meltdown. Mr Salway writes

“In December the Professional Negligence Lawyers Association claimed there was “no doubt” that large-scale, organised mortgage fraud at least contributed to or may even had caused the property market meltdown”

Frightening stuff really and perhaps even more scary are the claims that the full extent of the fraud that has been taking place since the credit crunch began will not even yet be known for some time.

Hitesh Patel, fraud investigation partner at KPMG Forensic, said: “As the global economic downturn takes hold and organisations look ever more closely at their operations, it is very likely that more fraud will come to light so that the real impact of the credit crunch on fraud is yet to be fully felt.” Continue reading →

It is good to see that UK landlords are taking an increasingly pragmatic view of things as the recession continues.

ARLA (Association of Residential Letting Agents) reports that most landlords expect to hold on to their investment properties for the next twenty years and they are not being scared out of their position by dropping house prices. If anything the opposite.

Their report shows that the proportion of landlords who do not expect to sell anytime in the next 12 months has risen from 77% to 88%

ARLA credits these residential landlords for maintaining core growth in the private rented sector and also for providing the housing that is so desperately needed in these difficult times.

Ian Potter, Head of Operations for ARLA, said: “Again and again, these independent surveys show that Buy to Let landlords are helping to guarantee the growth of the private rented sector and these are the people who provide the housing solutions for those hit by the current recession and in to the future.
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Further on EPA’s, there is no need to remind you that they are now a legal requirement in this country as I blogged on the topic last week, but it may be timely to mention the government scheme that is designed to help landlords shoulder the cost of having heating upgraded if it is necessary.

Paragon EPA is advising landlords to make sure they are aware of what they are entitled to under the government LESA  (The Landlord Energy Saving Allowance) scheme. This allowance enables landlords to claim the cost of buying and installing energy efficient measures against their income or corporation tax. This is up to the value of 1,500 pounds per property. Which would obviously come in very handy.

John Heron Paragon’s managing director is outspoken on the subject of heating efficiency being of primary concern to a tenant these days. It does make sense if you think about it. The tenant knows that if the property they are renting is certified energy efficient then that is less money they will be paying out in heating bills.

So, not to mention the legal issues, you could actually be losing out on clients if you delay in getting your property up to scratch in this regard.
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The Opinion on HIP’s is Still Very DividedRecently the Independent had an interesting article on HIP’s (Home Information Packs) and how the new legislation involving them has been greeted by the industry.

For those of you who are unaware. HIP’s became compulsory for all homes being sold in England and Wales in December 2007. Reaction to the current legislation appears to be very mixed and the fact that the rules regarding these things are soon set to get even tighter just makes the situation even more interesting.

Essentially these HIP’s were introduced to try to make the sometimes tricky transaction of selling your home a bit simpler. They currently contain key information about the property such as the local authority, utility searches, copies of titles and Energy Performance Certificates. In a short time they will also contain information buyers often enquire about such as risk of flooding.

It is easy to see, at least theoretically, that these things should be useful but a lot of people in the industry have branded them a monumental waste of time. “They are good in theory but the execution has been so bad – frankly, they are a bit of red tape,” says Alan Thompson from conveyance specialist Act Legal. Continue reading →

Most of you probably know that Paragon Mortgages launched its quarterly survey of highly experienced landlords back in 2001. Since then it has become highly respected in the industry so when we read that their recently released fourth quarter report contained a big warning for landlords, we should all take note.

Highly experienced landlords have reported that tenant demand is still strong for their properties. Even better, 40% are of the opinion that this demand will be even higher in twelve months time, very heartening indeed.

Rising rates of return are also reported with the average yield across a landlord’s portfolio standing at 6.1% though nearly a third report even higher figures than that. So the doom and gloom is not total in our sector by any means.

One figure that should provoke a bit of gloom, however, is the really rather large number of landlords who indicate that they still have not obtained Energy Performance Certificates for all their properties.

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It is great to see the London boroughs of Hammersmith and Fulham being really proactive in their approach to improving social housing.

Some people that have previously been contributing and tax paying members of our society will, at least temporarily, fall on hard times. It is important that we have enough decent social housing to cope with this increase comfortably. This is clearly an issue that should bother us all in this economic climate.

Hammersmith and Fulham Homes (H&FH) have joined together with Northgate Public Services, who are well known for their innovations, in what they claim is a unique public-private arrangement. Their goal is to ensure local people benefit from the Government’s Decent Homes programme to provide people with high quality and sustainable social housing.

They are trying to create a scheme linking fees to performance and prioritising the transfer of skill to employees.
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Most of us would probably agree that this is not the ideal time to try to sell off properties from our portfolio, sadly, however, some landlords are being left with little choice.

If they cannot find a tenant in today’s climate of high vacancy rates especially if they are struggling with outstanding debt, then they may be forced into the sales market. Michael O’Flynn of the website FindaProperty.com has some advice for these landlords.

Firstly, he points out that statistics show overwhelmingly that quick sales of properties are very difficult to achieve. Apparently it now takes 45% longer for the average house to sell in Britain.

The only answer to this, according to Mr O’Flynn is competitive pricing of your property. It is a fact that home values are continuing to fall with a further 1.9% decline between December 08 and January 09. So what Mr O’Flynn is trying to say, as nicely as possible is, if you want to get rid of your property it is going to be at a bargain basement price.

Clearly this is best avoided; I would think you would only consider it an option in the most dire of circumstances. If, however, you are unlucky enough for it to be unavoidable then industry advice it that it is better to sell in the winter when competition is less.

Don’t forget, if you really don’t want to sell, then rather than heavily discounting your property sales price, try dropping your rents a little to try and entice tenant.

I, for one, am actually quite pleased to see that the OFT is launching an investigation into some sale-and-rent-back-firms. These firms offer a scheme where the home owner sells their home at a discount in exchange for tenancy rights.

It is not because I think these types of schemes are inherently bad, on the contrary, they may have great potential, but I feel it is very important they are well regulated.

According to James Meikle of the Guardian, the OFT is taking steps to make sure this happens. The watchdog organisation has issued 16 companies with please explain notices regarding their advertising practices.

There is some concern that these companies may have been misleading people who are in desperate financial straits and scared they are going to lose their homes.

The OFT has given the 16 companies, who have not been named at this stage, fourteen days to substantiate the claims they have made in their advertising or face sanctions that may include prosecution.
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