2 July 2008

The Lord Richard Best’s chapter entitled: “Time to Regulate”, the Vice-Chairman of The Ombudsman for Estate Agents (OEA) highlighted the work of NALS, the approved and Government recognised accreditation scheme, originally set up by RICS, NAEA and ARLA together with the Empty Homes Agency.

Referring to NALS, Lord Best said “the National Approved Letting Scheme which accredits lettings and management agents and gives reassurance to landlords and tenants that they are in safe hands. Such accreditation provides the basis for a complaints and redress scheme by establishing the criteria against which standards of service can be judges.”

Caroline Pickering, Chair of The National Approved Letting Scheme (NALS) said: “With the number of accredited firms growing and with some 1600 lettings agents in the UK currently signed up voluntarily to the NALS scheme we are delighted to receive this recognition by Lord Best. NALS accreditation is imperative to the many hundreds of firms who use the NALS kite mark to demonstrate to consumers they meet an industry standard for customer service.”

Adding further value and weight to the accreditation, in January this year, consumers using NALS agents benefited from a partnership between the OEA and NALS allowing them easier access to independent redress to settle any disputes and seek early resolution to issues.

About NALS

NALS is backed by the Government and the professional bodies in the lettings sector. NALS offers a reliable benchmark for landlords and tenants to compare the standards of service they receive from residential letting agents. All accredited firms commit to providing clearly defined levels of customer service, have client money protection cover, maintain professional indemnity insurance and operate a customer complaints procedure. For more information visit www.nalscheme.co.uk

Wednesday, 02 July 2008

In an extended ‘Comment’ article in the current issue of Taxation magazine, Lee, who is a Fellow of both of the Institute of Chartered Accountants and of the Chartered Institute of Taxation, explains that his frustrations were a direct consequence of three key developments in the tax system, some of which Lee felt were in danger of bringing tax law into disrepute.

“The ever increasing complexity of our tax system has caused inequalities and inconsistencies and this is not helped by the ‘doublespeak’ of politicians and civil servants with regards to our tax system. Combine this with the prospect of increased powers for HMRC without adequate safeguards for taxpayers and things become very worrying indeed” says Lee.

But despite his reservations about giving tax advice directly, Lee still retains a passion for supporting other accountancy professionals and last year, at the age of 50, he founded the UK’s first independent specialist tax advice community - the Tax Advice Network. In just over six months the Tax Advice Network has grown to over 1,000 accountants and other registered users, who regularly use the network to source quality and up to date tax advice from tax specialists across the country.

Taxation magazine editor Mike Truman commended Lee for his contribution by saying “Mark is probably one of the few people who can write about this from the inside, because he is no longer giving advice, yet is still closely involved with the tax scene.”

The Tax Advice Network is the UK’s first independent network of tax specialists. For more information visit www.TaxAdviceNetwork.co.uk

Notes:

1 - Taxation magazine, published by LexisNexis, was founded in 1927 and is the leading authority on tax law, practice and administration in the UK. The current issue appears on Thursday 3 July. Full copies of the 2,800 word article are available on request (see below).

2 – Mark Lee has been a tax partner at both BDO Stoy Hayward and at Horwath Clark Whitehill. He remains chairman of the Personal tax and finance committee of the ICAEW and vice chairman of the London Society of Chartered
Accountants tax committee. He is a well regarded speaker and a respected commentator on the tax scene.

3 - The Tax Advice Network is a free to use online search facility that helps you find the specialist tax adviser that you need.

It is the UK’s first independent network of tax advisers and was the brainchild of Mark Lee, a former Chairman of the ICAEW Tax Faculty. He has ambitious plans for the network drawing on his many years of experience in the profession and his involvement in both offline and online membership communities.
i
The Network provides accountants and other regulated advisers with the ability to choose who provides them and their clients with specialist tax support.

Our tax specialist members expect to enhance their businesses through the benefits they gain within the network. These include the additional exposure they get to their target audience and from being part of a supportive community of tax advisers.

Membership of the Network is limited to tax specialists who are able to satisfy our membership criteria and are willing to make a commitment to the Network and the members thereof.

Marginal falls in rental returns for houses and flats are reported in the latest quarterly survey of ARLA’s member letting agents published today, June 9. This, ARLA believes, is due to the number of new developments coming on-stream. The Association also points out that this demolishes the myth that rent levels are soaring.

Demand for rental property still outstrips supply in some areas, with the proportion of letting agents reporting this imbalance at its highest in Greater London and the South East, followed by Prime Central London and the rest of the country. Overall, the proportion of agents reporting more tenants than there are properties available to rent remains at a historically high level of 39%. However, average weighted rents for houses are down by 7% and for flats by 9%.

Commented Ian Potter, Head of Operations for ARLA, “We are seeing corrections in individual locations throughout the country. The main cause of these is the developments of new blocks of two-bedroomed flats coming on-stream. In many places this has had a positive effect as it has allowed the rental market to provide stability in housing at a time of volatility in the sales market. It also demolishes the myth of soaring rent levels. As before in volatile times, the rental market is proving to be the white knight for housing as a whole.”

Average rents for a house range from £3,000 a month in London to £931 a month outside the South East. For flats, the rental difference is £2,000 a month in central London, £854 in the South East and £585 a month elsewhere.

The ARLA survey shows that most investment landlords (77%) are marking time and neither selling nor buying.

The average capital asset values of rented houses have fallen by 2.4% in Prime Central London, 1% in the rest of London and the South East and 5.1% in the rest of the UK. For flats, average values rose in the South East by 0.9% while falling 3% in Prime Central London and 8.1% in the rest of the UK.

The average values of rented houses are £800,000 in Prime Central London, £336,900 in the rest of the South East and £223,500 in the rest of the country. Rented flats in Prime Central London have an average price of £486,300, compared to £213,000 in the South East and £149,400 in the rest of the UK.

Void periods have continued to shorten. This quarter they have fallen from 24 to 22 days. Tenants are still staying in properties for longer for an average of 16.3 months against 16.1 months in the previous quarter. They stay the longest in central London at 17.3 months. In the South East they stay for 16.8 months and for 15.4 months in other areas. 17% of all tenants are immigrants

The ARLA Survey of Letting Agents is the largest independent survey of its kind conducted in the Private Rented Sector and is supported by the ARLA Group of Buy to Let Mortgage Lenders: Bank of Ireland, Cheltenham & Gloucester, GMAC Residential Funding, Mortgage Express, NatWest and Paragon Mortgages. The Second Quarter 2008 survey was drawn from 444 responding lettings offices.

Click here to view the full ARLA Members Survey of the Private Rented sector

Law changes often cause problems, so if you are considering selling a commercial property that is subject to an option to tax, make certain you are aware of the new rules. You should be aware of a VAT law change which affects property from 1st June 2008.

If you are selling a commercial property that might be converted into residential use, the buyer can now serve you (the vendor) a form which removes your option to tax, which could cause you to repay input tax that you had reclaimed for up to ten years. This can also affect you as a vendor if there is a chain of buyers, where the ultimate acquirer plans to convert it.

It is inevitable with new law, especially in this area, that someone is going to get a nasty shock. An option to tax that unexpectedly gets disapplied can cause some difficult input tax recovery issues.

If your potential buyer serves you such a notice before you have fixed the price (such as the exchange of contracts), you can seek to adjust the price of your building to take into account the tax that you will now be required to repay to HMRC, or in extreme cases consider seeking a new buyer. Most importantly, you should seek good professional advice before making a decision.

ABOUT KINGSTON SMITH’S PROPERTY TEAM

Kingston Smith is a top 20 firm of Chartered Accountants. We have considerable experience in the property sector through working with clients in property development, construction, investment, management, rental and trading. We help these clients run their businesses more successfully by providing practical advice such as planning ownership structures to minimise their tax exposure, accounting services to help with financial efficiency, and helping source alternative methods of funding.

To find out more about Kingston Smith’s bespoke services to the sector please visit:
www.kingstonsmith.co.uk/Kingston-Smith/Sectors/Property.htm

If you would like to discuss how the VAT changes might affect your business going forward, please feel free to contact Martin Muirhead on 020 7566 3705 or mmuirhead@kingstonsmith.co.uk or Adrian Houstoun (VAT Partner) on 020 7566 3802 or ajh@kingstonsmith.co.uk.

By Paul Robinson, CEO Ezylet.com - 25 June 2008

Energy Performance Certificates (EPC) are being introduced to help improve the energy efficiency of buildings as part of a series of measures being introduced across Europe to reflect legislation which will help cut buildings’ carbon emissions and tackle climate change.
By October 2008 all buildings rented out will require one. The EPC gives home owners, tenants and buyers information on the energy efficiency of their property by providing ‘A’ to ‘G’ ratings for the building, with ‘A’ being the most energy efficient and ‘G’ being the least, with the average to date being ‘D/E’.

EPCs only apply to England and Wales (Northern Ireland and Scotland are producing their own regulations) and will be required by law.

Landlords will need to provide an EPC which will be valid for ten years, to prospective tenants, the first time they let or re-let a property after 1 October 2008 while letting agents will need to get EPCs for properties they are marketing to new tenants.

There is no need to obtain a certificate for existing tenants.

There have been some reports saying there will be flexibility regarding the October deadline but the Department for Communities and Local Government (DCLG) has refuted these reports. The DCLG also rebuffed any claims of a shortage of assessors needed to provide the EPCs, adding: ‘We have more than 50 assessors, which we estimated as enough to meet demand’.

The requirement for the issue of an EPC is set out in regulation 5 of The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 SI 2007/991, which demands that a prospective tenant be provided with an EPC at the earliest opportunity and certainly prior to entering into any contract to rent out the property.

EPCs are measured using the same calculations for all homes, so you can compare the energy efficiency of different properties, and can only be produced by accredited energy assessors, which may be employed by a company (such as an estate agent of energy company) or be independent traders. Always check they operate as part of an accreditation scheme, as this ensures the energy assessor is operating to professional standards.

EPCs are produced alongside an associated report which lists improvements to make a building more energy efficient. This report will suggest the potential rating that your property could achieve if you made the recommended changes, approximate costs and possible cost savings per year.
You do not have to act on the recommendations contained in the recommendation report. However, if you do decide to do so, then it could make your property more attractive (you can issue a new EPC) for sale or rent by making it more energy efficient. You will also contribute to cutting carbon emissions.

The price of an EPC is set by the accredited organisations which issue them. An EPC on its own should cost approximately £100 for an average house.

Obtaining an EPC for an average sized home is likely to take the same time as that for a house valuation report which has to be prepared when a property is put up for sale. The exact time will vary from property to property.

Below is a list of approved accredited schemes for EPCs for existing dwellings or new builds:

NES - www.nher.co.uk
BRE - www.bre.co.uk/accreditation
Elmhurst – www.elmhurstenergy.co.uk
Northgate - www.northgate-ispublicservices.com
Stroma - www.stroma.com
RICS - www.rics.org/hips
ECMK Ltd - www.ecmk.co.uk
Quidos - www.quidos.co.uk
HVCA - www.hicertification.co.uk
CIBSE - www.cibse.org
Knauf - www.knauf.co.uk
CIAT - www.ciat.org.uk
NAPIT - www.napit.org.uk

Sources:
Archiects Journal:
http://www.architectsjournal.co.uk/news/dailynews/2008/03/epc_deadline_flexible_not_delayed_says_government.html
Energy Saving Trust:
http://www.energysavingtrust.org.uk/
Friends of the Earth:
http://www.foe.co.uk/resource/press_releases/new_years_resolutions_go_g_21122007.html
WWF:
http://www.wwf.org.uk/news/n_0000003247.asp
DCLG:
http://www.communities.gov.uk/speeches/corporate/climate-changeDirectGov:
http://www.direct.gov.uk/en/HomeAndCommunity/BuyingAndSellingYourHome/SellingYourHome/DG_076370
Landlordzone:
http://www.landlordzone.co.uk/pdf/paimsmith_epcs.pdf
OPSI:
http://www.opsi.gov.uk/si/si2007/uksi_20070991_en_1

[All above websites accessible: 25 June 2008]

In a recent study, the Government discovered that domestic energy accounts for 27% of the UK’s ENTIRE carbon dioxide emissions and with the requirement set down by Article 7 of the Energy Performance for Buildings Directive (2002/91/EC) Energy Performance Certificates will be a mandatory requirement.

Environmental concern and the implementation of energy saving measures are fast-growing in importance, especially in the property sector. There are, however, a few simple, yet effective ways, Landlords can ensure their properties are energy efficient ahead of arranging an EPC. These range from correctly insulating properties; using cavity wall insulation and loft insulation, which is efficient and is a cost effective way of storing energy. Double glazing will also reduce noise pollution and lower overall heating costs, as will replacing a boiler of 15 years or older.

Caroline Pickering, Chair of NALS advises that certification will actually help landlords attract tenants:

“An EPC provides the tenant with a clear indication of the energy efficiency of their accommodation which can only be a selling point for prospective tenants. It is a “win-win” situation for tenants, landlords and lettings agents.”

“Leaving your assessment until the last minute could cause unnecessary lengthy hold-ups, especially if everyone else does the same” warns Pickering, “but by contacting a local Domestic Energy Assessor (DEA) ahead of the deadline in October will ensure that your property is fully compliant and will reduce the risk of having to join a waiting list and most importantly will put you ahead of the competition!”

An accredited DEA will carry out an inspection of the property and produce a certificate which is valid for 10 years, costs vary, however for further advice speak to your local NALS agent who may be able to carry out the service for you.

For more information, or to request a FREE advisory leaflet for landlords please contact your local NALS agent.

Or

visit www.energysavingtrust.org.uk or call the Energy Performance Certificate Helpline on 0845 365 2468.

About NALS

NALS is backed by the Government and the professional bodies in the lettings sector. NALS offers a reliable benchmark for landlords and tenants to compare the standards of service they receive from residential letting agents. All accredited firms commit to providing clearly defined levels of customer service, have client money protection cover, maintain professional indemnity insurance and operate a customer complaints procedure. For more information visit www.nalscheme.co.uk

The National Letting Scheme Board comprises:

Caroline Pickering (Chair), representatives from Communities and Local Government (CLG), British Property Federation, Sanctuary Shaftesbury Housing, the National Landlords Association, the National Union of Students, the Guild of Letting and Management, ARLA, NAEA and RICS

• Real Lettings is Broadway’s pioneering social enterprise. Set up in partnership with the Empty Homes Agency in 2006, it has received funding from The London Housing Foundation and the Transitional Spaces Project. Current supporters include: Hammersmith and Fulham, Lewisham, Southwark and Westminster Councils.

Why…?
• Aware of the growing demands made on social housing in the capital, Broadway saw that the Private Rented Sector (PRS) was the only viable option to re-house the people it helped.

• London councils no longer provide leasing services for landlords with one-bed and studio properties. This is due to pressures to achieve social housing targets. Their priority is to house families in larger 2-3 bed properties.

• Broadway has worked with homeless people across London since 1977 and has more than 25 years experience managing properties in the rental sector as well as a waiting list of ready tenants.

• Real Lettings is an innovative social enterprise, which uses Broadway’s existing skills to plug this gap in the market. Landlords with one-bed and studio properties can access Broadway’s property management experience through competitive management and leasing services. Their properties are then used to re-house single people that have experienced homelessness.

How…?
• Real Lettings works collaboratively with London councils and Registered Social Landlords (RSLs) to provide leasing and management options for their landlords with one-bed flats and studios. It also works directly with landlords interested in these services.

• Rent payments are paid using the tenant’s Housing Benefit or Local Housing Allowance (LHA).

• Its leasing service offers landlords a risk-free service comprising minimal voids, guaranteed rent and no admin fees for up to five years. All maintenance is covered and at the end of the contract, the property is returned in its original state.

• Management services provide the above but rental payments start only as soon as the tenant is placed. Also, maintenance costs are not covered.

• All tenants are fully assessed before being housed. Resettlement training is provided, as is ongoing support throughout the tenancy.

• As a social enterprise, all of the profits are put back into improving the service for both landlords and tenants.

Successes To Date
• Since its inception, the scheme has re-housed and supported over 77 people. It also received a nomination for the 2007 Andy Ludlow Awards.

Landlord Quote:
“The property management service provided by Real Lettings has been very friendly and helpful. Even though it’s still early in the process, from the original meetings pre-contract through until after the rental service has started, communication has always been good and any issues that have occurred have been dealt with promptly and efficiently. I would certainly recommend Real Lettings to prospective landlords”

Tenant Quote:
“I got a nice flat shortly after being referred to Real Lettings. It’s given me a great start, living in my own place after 8 months in a hostel and a long time before sleeping rough.

I get on well with my landlord and he’s been really helpful. Now I’m busy buying furniture that will last.”

www.reallettings.com

For further information, interviews, case studies or comment, please contact Sally Hems at Oakleaf Communications on sally@oakleafcomms.co.uk, 020 7193-9283 or 07970 919-941.

RentPro was developed by K-Point Internet Solutions, located in Warrenpoint, County Down, to streamline the many administrative tasks associated with the day-to-day running of a letting agency, and the application has evolved to reflect the changing needs of the market place. It is currently used by letting agents across the British Isles, cutting their management and reporting administration time from days to minutes.

K-Point recently hosted a seminar at the Canal Court Hotel Newry, County Down where they invited local estate and letting agents to a lunch time event to launch version 2 of RentPro, whose main focus has been making the application even easier to use. The seminar focused on the benefits and features of RentPro and members of the team were on hand to discuss individual needs. The event proved a success and a second seminar has been confirmed to be held at the Mercer Hotel, Dublin on the 2nd July, with further events planned throughout the British Isles.

The RentPro product development involved working closely with new and existing customers to determine where competing products have failed to deliver, as project leader Brian Murphy explains. “Our current RentPro users include local one-person ventures and multi-branch agencies in the Irish Republic and England, and we have gone to great lengths to ensure that the product caters for all their varying needs. Having continuous feedback from these clients during the development leaves us confident that our product is ahead of similar property management products in the UK and Irish markets.” Although primarily aimed at letting agents, a ‘lite’ version of RentPro is available for property investors who manage their own portfolios.

One of a suite of web-based applications from K-Point aimed at improving management of customer data and streamlining associated business processes, RentPro encompasses key areas such as recording rental payments, generation of rent and landlord statements, and ongoing management of property repairs. The package enables both agents and landlords to simultaneously access data, greatly reducing the admin overhead involved in traditional management methods such as spreadsheets and paper-based rent books.

K-Point (www.kpoint.co.uk) was founded in 1999 by software developers Diarmid Sloan and Brian Murphy who recognised that small to medium sized businesses were struggling to stay in control of their ever-increasing volumes of customer and project data. Over the past decade the company has established a reputation for delivering quality web-based software solutions in the form of custom web application development and website design, using both established and emerging web technologies to stimulate and support business growth. With existing clients in all regions of the British Isles, director Diarmid Sloan is confident that this latest software product will continue to spread their reputation as a premium software house.

“We are committed to working in partnership with all of our clients to deliver quality solutions that result in increased efficiency, ultimately reducing costs and increasing profits. Whatever the sector, each client’s business is individually assessed and the solution is designed around their specific needs. “

Approved and funded by Government, NALS was set up by RICS, NAEA and ARLA together with the Empty Homes Agency as an entry level standard for all lettings and management agents operating in the private rented sector. It offers peace of mind to landlords and tenants who know that a firm bearing the NALS kite-mark is committed to providing clearly defined standards of customer service.

With the number of accredited firms growing and with some 1600 lettings agents in the UK currently signed up voluntarily, NALS provides the consumer with the security Sir Bryan is calling for.

As an open access scheme it is there to cover all letting agents and enabling those without RICS/NAEA/ARLA qualifications to meet an industry standard for customer service. It has a clearly defined code of standards and processes. And, with the protection of tenants and landlords very much at the heart of its agenda, these standards are underpinned by independent redress in the form of adjudication on complaints against NALS members by The Ombudsman for Estate Agents, whose remit also covers lettings and whose residential Code has OFT approval. In addition all NALS firms are required to belong to a Client Money Protection Scheme ensuring that all client monies are protected.

According to Chair, Caroline Pickering, it would be an unnecessary waste of public funds for the Government to put in place another scheme when one already exists that has the infra-structure, processes and credibility to protect the consumer with the form of light touch regulation advocated by Sir Bryan.

“Why reinvent the wheel..?” she asks. “We already have the solution in place for letting agents. NALS is a low cost regulatory option, it can and should be a fundamental (and aspirational) badge required of all lettings agents and we would urge Sir Bryan to recognize and commend the NALS scheme in his Review.

‘What is needed now is Government and industry promotion of the NALS kite-mark to raise public awareness so that consumers will seek to use only NALS accredited lettings firms”.

“I would also like to remind Sir Bryan of the Government’s words in the Housing Green Paper in 2000* on the PRS (Private Rented Sector) in the 21st century when it said: “Small landlords often need help with the letting of their property but do not know how to get hold of a good agent that guarantees professional standards of operation or where to go if they get their fingers burnt when they employ an unsound one. We have therefore supported the development by the relevant trade bodies of NALS which aims to establish a single “kite-mark” for professional reliable agents, recognized by industry and public alike”.

This comment was echoed recently by Iain Wright MP, Parliamentary Under-Secretary of State for Communities and Local Government in an address to industry figures at the launch of the NALS/OEA partnership in the House of Lords when he highlighted the benefits of accreditation to the sector.

The DNA of NALS is aimed to establish a single kite-mark for professional, reliable agents – a badge which will be recognized by industry and public alike. I would urge Sir Bryan to consider the Scheme’s role and value in more depth”.

*Reference: Quality and Choice A Decent Home for All - The Housing Green Paper 2000

About NALS

NALS is backed by the Government and the professional bodies in the lettings sector. NALS offers a reliable benchmark for landlords and tenants to compare the standards of service they receive from residential letting agents. All accredited firms commit to providing clearly defined levels of customer service, have client money protection cover, maintain professional indemnity insurance and operate a customer complaints procedure. For more information visit www.nalscheme.co.uk

The National Letting Scheme Board comprises:

Caroline Pickering (Chair), representatives from Communities and Local Government (CLG), British Property Federation, RICS, ARLA, NAEA, the Guild of Letting and Management, Sanctuary Shaftesbury Housing, and the National Landlords Association.

Council of Mortgage Leanders - Press Release - 12 June 08

There are clear signs of lenders tightening lending criteria in the face of ongoing funding constraints and a softer house price outlook. The average first-time buyer put down a deposit of 13% in April, which is the highest level in over 3 years. First-time buyers typically took out loans for 3.3 times their income, down from 3.35 in March. The average home mover loan was 2.96 times their income, down from 3 in March.

There was a monthly increase in lending volumes in April, although activity remains weaker than a year ago. Gross lending increased by 8% in April to £26.1 billion, from £24.1 billion in March, after two consecutive months of decline. This was 5% down from April 2007, but this annual rate of decline was lower than in recent months; gross lending in March 2008 was 24% lower than March 2007.

There were 50,700 loans for house purchase worth £7.7 billion in April, up 9% in volume and 10% in value from March. There were 18,500 loans to first-time buyers, up 4% from March but 36% lower than April last year. There were 32,300 loans to home movers, up 13% from March and 38% lower than April last year.

Remortgaging accounted for 42% of gross lending in April and has continued to perform better than house purchase as large numbers of borrowers exit fixed-rate mortgages. There were 83,000 loans for remortgage worth £11 billion, up 14% in volume and 11% in value from March.

CML director general, Michael Coogan commented:

“Monthly house purchase lending volumes continue to be lower than last year’s levels and there will be a further weakening in coming months as recent approvals data has shown.

“The squeeze on mortgage funding has led many lenders to tighten their lending criteria. While tighter criteria make it more difficult for some borrowers to obtain a mortgage, they also reduce risk in a slower housing market.

“There has been a resurgence of fixed-rate lending as borrowers are seeking certainty. This trend is likely to continue as the anticipation of future Bank base rate cuts has diminished.”

The Council of Mortgage Lenders’ members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.8 million mortgages in the UK, with loans worth over £1.2 trillion.