Regulation & Law
News articles looking at national legislation and local regulation and the application of law to the residential property industry.
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Westminster to stop ‘proliferation’ of estate agent branches after 27% increase
Westminster City Council in London is to restrict the number of new estate agent branches being set up after opting out of a key piece of planning legislation. The council says the number of new agent branches increased from 179 to 228 during the 12 months ending February 2016, an increase of 27.4%. “This represents the largest percentage increase of all London boroughs,” says Julia Corkey, the council’s Executive Director Policy, Performance and Communications (pictured). The council also says research among shoppers within Westminster showed consumers were “aware of the proliferation of estate agents in some shopping centres” and that some specifically requested ‘fewer estate agents’ as well as more and better retail. To enable the council to control the number new estate agent branches it has told the Secretary of State that from January 1st estate agents wishing to change retail usage from shops into branches will have to apply for planning permission. This means the council has opted out of Article 4 of the Town and Country Planning Order 2015 which enables retail premises to be switched via ‘permitted development’ from shops to financial and professional services without planning permission. Robert David, deputy leader of the council, told…
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FCA to investigate mortgage lending via estate agents
Estate agents who introduce customers to in-house or third party mortgage brokers are to be investigated by the Financial Conduct Authority (FCA) as part of a new wide-ranging look at competition in the home loans market. The aim of the review is to see if customers are being offered the best deals, advice and whether links between industry players limit choice, all part of a wider government drive to reduce the cost of buying a home. There are currently 11.1 million home loans held in the UK worth £1.3 trillion, according to the Council of Mortgage Lenders. “As a mortgage is likely to be the biggest financial commitment most people make in their lifetime, we’re keen to ensure that competition in the mortgage sector is healthy and working to the benefit of consumers,” said Christopher Woolard, the FCA’s executive director of strategy and competition (pictured). This will include a close look at how estate agents, conveyancers, surveyors and developers all introduce customers to mortgage lenders or brokers. But when launching the full review the FCA singled out estate agents for criticism, saying that some customers could be coming under pressure from estate agents to use certain brokers if they want…
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Beehive, tenants – it doesn’t belong to you
Direct Line for Business has published a new report which reveals that 30 per cent of people who have rented a property in the last five years think it is acceptable to take items that don’t belong to them when they move out.
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Tenant fees ban will have an unintended consequence, Mr Hammond
Two senior figures within the lettings industry have said that the tenant fees ban announced by Philip Hammond in his Autumn statement is likely to make life more difficult for tenants, not easier. Martin Totty, CEO of HomeLet (pictured, left) and David Cox, MD of ARLA (pictured below), both told The Negotiator that they expect tenants to be asked for – and pay the costs of – providing their own references if a full ban is implemented. Totty, who heads up the UK’s largest referencing agency, says that while there is now uncertainty about what might happen to referencing after agents and landlords are prevented from passing on their cost to tenants, if this does happen renters should not “assume referencing is no longer their liability” if they want to secure a property. “This would be an unfortunate [and] unintended consequence of the announcement contained in the Autumn Statement,” he says. David Cox agrees, saying that if referencing agencies such as HomeLet are forced to find alternative business models, these companies will turn to tenants to pay the cost of checking their financial and rental track records. Cox says that if a full ban is introduced he believes agents will ask tenants for…
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Tenant fees ban could cover just ‘upfront’ charges, says ARLA
The Association of Residential Letting Agents (ARLA) says it believes the government may be considering banning only ‘upfront’ fees rather than implementing a total tenant fees ban. ARLA managing director David Cox (pictured) says he has had several meetings with Department of Communities and Local Government officials and says that so far, they are talking only about upfront fees. This, he says, would enable letting agents to spread the fees for services such as referencing, contract negotiation and paperwork preparation over the first months of a tenancy instead of before or at the point that the tenant moves in. “It’s what we’ve been advocating within the Private Rented Affordability and Security (PRAS) working group since June,” says Cox. The PRAS was set up in June by Housing Minister Gavin Barwell to ‘explore options to reduce costs for tenants who access and move within the sector’. If ARLA gets its way then agents will be able to continue charging some elements of their current fees, although Cox says that even if it doesn’t and the government goes for a total ban, he believes ARLA can argue successfully for referencing fees to be excluded. “I’ve had several meetings with Shelter and they…
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RICS says tenant passports are solution to rental woes
Letting agents and landlords could soon be able to review tenants’ rent payment histories if proposals from the Royal Institute of Chartered Surveyors (RICS) for a national system of tenant passports becomes a reality, a direction of travel that industry leaders say the government has already embarked on. The RICS Rented Sector Policy Paper published today outlines a national passport system using a database of all the UK’s ten million social and private sector tenants, along with a similar database of landlords. RICS says this would help more vulnerable tenants because, by offering more details on a person’s payment track record, landlords and agents would have a greater understanding of them than currently offered by referencing checks. The idea is a more ambitious version of several local tenant passport systems already being trailed including in Kettering, Northamptonshire where the local borough council offers a voluntary tenant passport scheme for those moving from social to private rented sector housing. RICS says this enables potential landlords to see that they have been good tenants, even though they may have a bad credit history. “An ever-increasing proportion of the population is looking to rent. By 2025, we know that there will be a 1.8 million shortfall…
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Don’t let landlords rely on old EPCs
Residential landlords would be well advised to take the 10-year anniversary of the introduction of the Energy Performance Certificate (EPC)...
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RICS calls for ‘balance’ in letting agent fees ban
The Royal Institute of Chartered Surveyors has made an impassioned plea to the government to allow agents to recoup the ‘reasonable costs’ of putting prospective tenants through referencing and credit checks when the letting agent fees ban comes in during 2018. The comments have been made by Jeremy Blackburn, RICS’s Head of UK Policy who yesterday published a blog warning the government that there may be unintended consequences of the ban. He says these include rising rents as landlords pass on the extra costs to tenants and reduced rental stock as smaller and more vulnerable landlords decide to exit the market. Blackburn also says that Build to Rent’s capacity to take up the slack of a shrinking private rented sector is doubtful, but says agents will have at least a year to prepare for the changes. He says the Department of Communities and Local Government has told RICS that they re planning to take the longer route to legislation rather than rushing a ban through, and that this will give the industry until 2018 to prepare. But Blackburn also says he is surprised that agents were caught off-guard by the Chancellor’s announcement last week. “For the industry, early warning signals of…
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From today Agents face prison for Right to Rent breaches
A letting agent who knowingly rents a property to an illegal migrant will from today be committing a criminal offence and may face jail. The new offences under the Immigrant Act 2016 were announced in November and were created to help prosecute rogue agents ‘intent’ on flouting the law. Agents who face the lesser charge of omitting or forgetting to carry out Right to Rent checks already face civil penalties since the scheme went national in February. These penalties covers both new tenancies and those being renewed. The new penalties are in addition to several other criminal laws that apply to agents such as measures for those who flout Consumer Protection regulations, and under the 1979 Estate Agents’ Act against agents who do not stop trading after a prohibition order. The new criminal penalties will pile the pressure on agents to complete their Right to Rent checks and paperwork meticulously in what is a fast-moving market, particularly in the UK’s larger cities. And the penalties under either legal regime are severe. Under the civil laws the fines are £3,000 per tenant although agents can object to the penalty in writing up to 28 days of the date of the licence. The…
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Barwell’s Tweet shows consistency on fees ban
This week Housing Minister Gavin Barwell was caught off-message on Twitter when a reply he gave to magazine Inside Housing about the rumoured fees ban was unearthed. Barwell said (see right) ‘Bad idea – landlords would pass costs ton to tenants via rent. We’re looking at other ways to cut upfront costs & raise standards’. It is no doubt this sort of mood music from the Tory government that persuaded NALS that a Fair Fees Forum was a good idea. But they, like Barwell, were caught by surprise when Hammond announced that he would bring forward a total ban on fees charged to tenants. At least Barwell is consistent, though. He is one of the few people Tory MPs who who haven’t undergone an astonishing conversion to banning tenant fees since 2014. Those with longer memories will recall that both the 2014 Labour amendment to the Consumer Rights Bill and a 2013 Private Members Bill both failed to gain support from the Tory benches. Chancellor Philip Hammond and Prime Minister Theresa May both voted against the Labour amendment, which was defeated by 291 to 228 votes. But while Barwell has stuck to his guns – his Tweet reflected his ‘no’…
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