MAXINE LESTER TAKES TO THE STAGE
To discuss 2 main topics
- Legal Update for Landlords
- Market Update for Private Rental Section
Maxine was clear to point out that there are 179 pieces of legislation which currently cover the PRS and can result in hefty fines, or imprisonment if they are not adhered to, and it is very likely that this figure will be increasing to 182 laws in the coming year.
It is incredibly important to keep your tenant happy, and that is one of the main functions of the Maxine Lester lettings team. By keeping your tenant happy, they take better care of your investment and stay longer in the property. In order to keep your tenants happy, the Maxine Lester team will cover a number of roles such as ‘teacher’ (how to change a lightbulb or fuse, how to bleed a radiator or pressurise a boiler, how to de-fluff the tumble dryer etc – all jobs which the tenant should be doing); diplomatic service (when your tenants do not get on or have a disagreement); and social service (if your tenant falls on difficult times or their circumstances change).
Last, but not least, the Maxine Lester team ensure that your asset is well taken care of. They will visit the property on a quarterly basis and ensure that the property is in great condition or will organise any updates or refreshments required on your behalf.
So let’s get onto the main points covered:
The Act came into force on 20 March 2019. It is designed to ensure that all rented accommodation is fit for human habitation and to strengthen tenants’ means of redress against the minority of landlords who do not fulfil their legal obligations to keep their properties safe.
Redress Scheme for Private Landlords
Since 1st April 2019 all letting agents have been legally obliged to belong to a Redress Scheme, but for those landlords who do not use a letting agency, there has been no legislation in place to protect their tenants if things go wrong. This is now being rectified and new legislation will be coming in soon with a fine up to £5,000 for non-compliance.
3 or 4 year Tenancies
A variety of think-tanks and consultations are taking place to bring the standard tenancy to a minimum of 3 or 4 years. At Maxine Lester the average tenancy is currently at 22 months with 87% of tenancies being ended by the tenants, so we are unsure there is a real need for this type of tenancy, but time will tell. It does appear to be a major policy for the Labour Party, so we shall have to wait and see what happens. At Maxine Lester we are now offering a selection of legal protection policies to cover Landlords who will be forced to enter into longer-term tenancies, should the tenant’s circumstances change and they find themselves in financial difficulty. The policies can cover loss of rent and eviction expenses and give landlords peace of mind that they will not be left with tenants in residence who are unable to pay the rent.
This January 2019 the Ministry of Housing, Communities and Local Government (MHCLG) announced that mandatory five-year electrical installation checks on private rented housing in England will be introduced in a phased approach. Whilst it has always been ‘Best Practice’ at Maxine Lester we now urge anyone with an old fuse board or any old wiring in a rental property to get it sorted now before the legislation comes in and the cost of electricians doing this type of work increases significantly due to high demand.
The Regulation of Letting & Managing Agents
Of the estimated 8,000 managing and letting agents in England, only about half belong to any of these organisations. When you consider that at Maxine Lester we handle around £8.5 million in rent and £1.5 million in deposits, it is frightening to think what a ‘non-regulated’ agent could get away with. Clearly, at Maxine Lester, we ensure that all of our staff are regulated, so that you do not just have one regulated company owner, but a complete set of fully qualified people who adhere to a strict code of membership with ARLA PROPERTYMARK.
As mentioned earlier, there are 179 pieces of lettings legislation covering the private rental sector, so imagine leaving that amount of legal knowledge to someone untrained, unqualified and without any governing body to turn to if things go wrong?! Maxine Lester send almost £9,000pa training their staff and it will be a welcome relief when letting agents HAVE to be regulated, because we already are! Let’s bring the standard of the rest up to scratch.
The Tenant Fees Act comes into force on 1st June and bans the payment of fees by tenants for any administration, references, contracts or inventory costs at the start, during or end of the tenancy. The only exception is that some default fees can still be charged (a reasonable amount – yet to be announced) for such things as changes to tenancy terms or change of tenants, loss of keys etc.
In addition, the maximum security deposit which can be held against a tenancy will be 5 weeks worth of rent. A holding deposit of around £200 can be taken to secure a property but this must then form part of the tenancy once it begins (as part of the 5-week amount). If a tenant is unsuitable or pulls out of the deal for inadequate reasons (ie references fail) then the agent or landlord can only withhold the exact amount they have paid out (ie. for 3rd party references or right to rent checks).
At Maxine Lester amendments to processes have been taking place over the past 2 years in order to minimise the effect of this ban to our landlords. There is a lot of work to be covered, which has been paid by the tenant previously, so we assess an average rent increase of £25pcm should cover the additional cost of the work, which will now be paid by the landlord (from 1st June onwards). If you have any questions about your individual property, please contact Maxine on [email protected].
LETTING MARKET TRENDS
The type of properties required in the Private Rental Sector have changed over the past couple of years and are a much broader spectrum now.
- GEN V: FIRST TIME RENTERS
- MILLENNIALS: MORE DISPOSABLE INCOME
- GEN X & BABY BOOMERS: FAMILIES, COMMUNITIES, PET OWNERS
The PRS is growing substantially and 50% of tenants at Maxine Lester are now over 46 years old. Whilst the Gen V or First Time Renters are still after quite cheap, plain properties at the lower end of the spectrum, there is an increase in the Millenial rental type, which must have fast broadband, be ECO friendly and have additional features like car parking, gym, concierge, en-suite bathroom and high-performance white goods. The largest growing factor is the older category, who will be looking for schools, community, shops, transport links and, would you believe, 87% of these will own a pet. It is hugely important to try and accommodate animals into your rental property. If you have qualms, please speak to the Maxine Lester team about how to minimise any risks attached to pet-tenancies via insurances & additional clauses.
Tenant demand is strong, at Maxine Lester we have seen an 11% growth in applicant registrations this year and we anticipate a 7.5% increase in rental prices over the next 3 years.