July 6, 2018
This week, we’re looking at mandatory 3-month tenancy agreements, how Londoners are saving money on their property by helping to build them, HMLR under scrutiny, Exeter’s booming property market and how estate agents could gain inspiration from Amazon and Uber.
Government plans may give renters 3-year tenancy agreements
This week, the government launched a consultation into minimum 3-year tenancies to provide more securities for renters, which will run until the end of August.
They proposed that tenants would have the option to leave earlier under the plans and that landlords would have more financial security. Exemptions could apply to those living in student accommodation, for example.
It’s said that around 80% of tenants currently have 6-month or 1-year contracts, while figures show that on average, renters stay in their property for 4 years.
“I am a landlord with one house used as a pension top-up after my wife’s state pension age was hiked up at short notice,” says St Albans landlord, who disagrees with the plan. “We feel this proposal will force small landlords like us, with just one property, out of the market [and] it will make it so much harder to manage difficulties with problem tenants.”
Communities Secretary, James Brokenshire, disagrees: “It is deeply unfair when renters are forced to uproot their lives or find new schools for their children at short notice due to the terms of their rental contract. Being able to call your rental property your home is vital to putting down roots and building stronger communities.”
Study reveals that homeowners would like progress tracking and real-time updates from estate agents
A recent study has found that homeowners would like the estate agency market to adopt services offered by the likes of Amazon and Uber.
The study was conducted by technology and property specialist ‘One Dome’. They asked over 1,000 current and prospective homeowners aged between 25 –64 a series of questions in an attempt to gain a better insight into consumer opinion of digital experience, specifically amongst the property market.
Participants were asked to choose from a selection of brands and were then given 4 areas of functionality. They had to answer which areas they’d like to see being used by estate agents.
The most popular area was Amazon’s progress tracking tool, with 84% of respondents saying they’d like to be offered this. Many people suggested enforcing ‘recommendations’ and a ‘marketplace’ style format. Uber’s real-time update tool was also fairly popular, with almost 50% of homeowners saying they’d find this useful.
South Londoners save money on their new homes by helping to build them
Young families and first-time buyers in Ladywell have been given the chance to join a ‘self-build scheme’ which offers a cut-price new home, on the condition that they’ll help build it.
The scheme, organised by the community land trust and charity ‘Rural Urban Synthesis Society (RUSS)’, will see 33 new homes built and are expected to sell for a starting share of under £80,000.
Lewisham Council, who own the 1-acre site, have granted planning permission and a 250-year lease, and they hope to start work at the beginning of next year, with the first residents moving in in 2021.
The buyers each have a household income of less than £90,000 and will be required to take plumbing and plastering courses beforehand. They must also sign a contract committing to 20 hours of work per week. Failure to do so could result in expulsion from the scheme.
RUSS estimates that a 25% share of a 1-bedroom flat (including fit-out costs) will come in at £77,000 – far less than the average first-time buyer will spend getting on the property ladder in London.
Report shows a quarter of estate agents ‘in financial distress’
Accountancy firm, Moore Stephens, have released figures from a recent study which shows that over 7,000 UK high street estate agents are showing signs of financial distress, risen significantly from the under 5,000 that were in trouble last year.
The study found that 27% of high street estate agents are struggling to survive. One of the main reasons is said to be the long-term decline in property sales. Transactions in London fell by 20% between 2014 and 2017, and sales in the UK have dropped by 1% in the past year.
The accountancy firm also partially blame the growth of online estate agents such as Purplebricks and Emoov. Chris Marsden, the restructuring partner at Moore Stephens, predicts further damage to profits next year, as there are alleged plans to ban letting fees to tenants in early 2019.
The UK’s largest chain of estate agents, Countrywide, witnessed more than 60% decline in their share profits since May, after issuing 2 profit warning in the past year. Its rival, Foxtons, has experienced a 15% decline in revenues during this year’s first quarter, and its share price has fallen by nearly 25% since the start of May.
Purplebricks’ shares, in contrast, have fallen by 8.2%, and they have plans of expansion in North America. They charge a flat fee for agreeing to sell a property as opposed to a commission.
HMLR scrutinised for misleading conveyancers
Trade body CoPSO (the Council of Property Search Organisations) has criticised HMLR (HM Land Registry) for ‘misleading conveyancers’ following the marketing of its Local Land Charges Service, which is set to roll out over the next 3 years.
CoPSO claims that whilst it supports digitising property information, there were some issues with the project’s initial publicity materials. The publications claimed that conveyancing lawyers could just source an ‘official’ search direct from the Registry for a fee of £15.
The trade body said there were various factors that made this information misleading: within the market, the terms ‘official’ and ‘personal’ are generally used when referring to a full search. However, HMLR used these terms only to refer to the LLC1. It also said that while the Registry can supply the LLC1 for this price, the ‘official’ search is also available from search agents.
CoPSO has requested that the marketing materials should be withdrawn, asking the Chief Executive and Chief Land Registrar at the Registry to consult with the industry before issuing any further publications to do with this project.
Thousands of Londoners are moving to Exeter where the property market is booming
Exeter’s house price growth has grown by 5.9% in the year to March while many other areas of the UK are slumped, according to figures by Knight Frank. The property growth in this city has outpaced the wider South West and is currently one of Britain’s 5 fastest-growing cities. However, figures from the Land Registry suggest an impending lull, after the annual rate of growth sunk to 2.7% in April.
Many are attracted to the city because of its access to open space and fresh air, as well as being within proximity to the city centre, beaches, moors and countryside. Property investor Noel Brandson was just one of the 3,000 Londoners who moved to Exeter last year. He and his wife swapped a flat in Central London for a rambling cottage in Exeter and were surprised by the lively social scene and array of restaurants.
There has also been an increase of 3,000 private sector jobs in Exeter, up by 5.1% last year, as well as an increasing number of digital tech jobs and start-ups like CrowdCube – Britain’s most successful crowdfunding platform. The Met Office, the University of Exeter and the Royal Devon and Exeter Hospital are the city’s major employers.
New development in the city is also booming: even members of the Exeter Chiefs rugby team are launching their own property company called Tomahawk Homes. They have already started building 2 developments outside the city.