‘The Modern UK Housing Market – Origins and Prospects: Private Rented Housing’

Part 1: Private Rented Housing’

At over GBP500 billion, the value of the Private Rented Sector now outstrips the total of all privately-owned commercial property, including offices, shops, hotels, factories, warehouses and leisure facilities.

In a report for the Association of Residential Letting Agents, ARLA, published today, Monday 14 July, the Private Rented Sector is forecast to continue outstripping other types of investment property and rents will rise significantly in the short term. House prices will almost certainly increase faster than commercial real estate over the longer term, as housing supply is less responsive to demand than commercial property but consumers demand more housing as living standards rise.

The report, Part I of “The Modern UK Housing Market - Origins and Prospects” by Professor Michael Ball, Professor of Urban and Property Economics at Reading University, forms part of a wider study into residential housing commissioned by the National Federation of Property Professionals, to be published in the Autumn. This will cover the market sectors of both its residential housing divisions, ARLA and the NAEA.

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Energy Efficiency is a Major Factor when Renting Property

Nearly nine out of ten (85%) private tenants are concerned over increases in domestic energy costs, while 42% claim to be very concerned, according to new research on current attitudes to energy efficiency, conducted by the Energy Efficiency Partnership for Homes (EEPH).

Clearly feeling the squeeze, caused by rising energy costs, 9% of respondents have already taken action into their own hands and decided to go as far as to change properties to find somewhere more energy efficient to rent.

When tenants were asked about the perceived value of Energy Performance Certificates (EPC), nearly nine out of ten (88%) said that the EPC would be useful when looking for somewhere to rent and nearly a third (32%) said it would be very useful. Nine out of every ten private tenants said the EPC could have an impact on their choice of property. A quarter would actually use it in the first instance to narrow down properties whilst a further quarter would narrow down properties on other factors but then use the EPC to help make their final decision, (the remaining 40% would use it to decide between two properties that had equal appeal to them based on other attributes).

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CML urges Treasury to adopt innovative funding solution

The Council of Mortgage Lenders has drawn up a blueprint to address the funding problems in the mortgage market. The idea, which has already been submitted to the Crosby review team and to the Treasury, is an innovative approach which helps the financial system to help itself. It could help to significantly reduce the severity of the downturn in the housing market.

CML Press Release - 15 July 2008

But speed is of the essence. The CML was disappointed by speculation this week that the Crosby review of housing finance was unlikely to offer policy recommendations in its interim report. The CML firmly believes that with quick and decisive implementation of the mortgage market funding proposal, the Government could mitigate the difficulties that households and the housing market will otherwise face, as well as helping to restore greater confidence to the financial system as a whole.

The suggested action plan is outlined in detail in section 5 of the attached document and is represented visually in the attached diagram. It is essentially a way of kick-starting the markets for UK residential mortgage-backed securities (RMBS) and covered bonds (CBs) back into life. These are parts of the market that have been dysfunctional since investor appetite disappeared in the wake of the credit crunch.

Their loss has been the main cause of the contraction in the size of the mortgage market, and hence the lack of mortgage availability for many borrowers and higher mortgage costs. Mortgage lending is set to halve this year, with many borrowers who could afford new mortgages nevertheless being unable to access funds.

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House of Commons Invitation Accepted With Style

The opportunity to join a select group of business leaders, parliamentarians, entrepreneurs and respected commentators on commerce in the UK was afforded to Jane Pickup, Managing Director of Style Counsel Interiors and Congleton Business Woman of the year following an invitation to an exclusive reception at the House of Commons.

Attendance to the prestigious event was by personal invitation from Andy Love MP, Chair for All-party Parliamentary Group for Small Business and Member of the heavyweight Treasury Select Committee.

The reception marked the publication of findings from the National Business Awards White Paper entitled “Innovation – Evolution or Revolution” with the debate led by an influential panel including the author of the research paper, The National Business Awards’ Philip Forrest, and Senior Executives from Orange, Cobra Beers and Tenon.

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NALS welcomes the NLA and NFRL merger

The National Approved Lettings Scheme (NALS) has welcomed the merger between the National Landlords Association (NLA) and the National Federation of Residential Landlords (NFRL), which as of Tuesday 8th July has now become the largest representative body for landlords with over 20,000 members in the UK.

Pooling both sets of resources will benefit landlords by providing a wider network of support, products and services in conjunction with strengthening local landlord networks.

Caroline Pickering, Chair of NALS, explains why NALS supports the merger between these associations:

“Following the recent hive of activity in the private rented sector with the Carsberg and Rugg Reviews, this merger signifies another positive development for the consumer.

Both NALS and its board member the NLA, share a common goal in wanting to raise the standards of the private rented sector.

This merger will generate a unified body of landlords, and it is clear that the support an organisation such as the NLA can provide in terms of training and advice, can only be in the best interests of landlords and ultimately tenants who deal with NLA members.

It will further raise agents’ standards and provide even more confidence for consumers. We look forward to continuing to work with the newly constituted NLA.”

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

Agreement on flood insurance is good news for customers

The ABI (Association of British Insurers) and the Government have reached agreement that ensures flood insurance remains widely available now and in the long term.

Defra - 11 July 2008

The agreement outlines the actions that both Government and the industry will take over the long term. These include:

* Improving understanding of flood risk.
* Government putting in place a long-term investment strategy, which will set out strategic flood prevention aims and assess future policy options and funding needs
* Ensuring that the planning system prevents inappropriate development in flood- risk areas.
* Raising awareness in areas where flood risks are significant, encouraging property owners to take sensible precautions, and providing more information about how to obtain flood insurance.
* Promoting access to home insurance for low-income households.

Implementing these steps should lead to a competitive flood insurance market, without the need for the Statement of Principles, which will therefore end in 2013. Until then, insurers will continue to:

* Make flood insurance for homes and small businesses available under household and commercial insurance, where the flood risk is no worse than a 1 in 75 [1.3%] annual risk.

* Offer flood cover to existing domestic and small business customers at significant flood risk, providing there are plans to reduce the risk to an acceptable level within five years.

Floods Minister, Phil Woolas, said:

“The devastation caused by last year’s unprecedented rainfall has shown just how vital it is for people to be able to insure their homes and livelihoods against the risk of flooding.

“Working together we have succeeded in ensuring that flood cover is available in both the short and long term. I’m delighted that the industry has agreed to work with us to raise awareness and encourage homeowners to take steps to protect their homes where appropriate.”

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NFRL merges with NLA to create UK’s largest landlord association

The National Landlords Association (NLA) and the National Federation of Residential Landlords (NFRL), who together represent nearly 20,000 landlords, have announced they are to merge creating the largest representative body for landlords in the United Kingdom.

NLA - 8 July 2008

Research among the membership of both organisations has indicated the need for a national unified voice for private-residential landlords. Following several months of negotiations between the governing bodies of the NFRL and NLA, this merger rightly reflects landlords’ desires that their views are represented with one voice to policy-makers.

The larger NLA, combining the strengths of both organisations, will better represent the needs of all landlords at a time when the private-rented sector faces major challenges. The merger will mean a wider range of products and services being made available to members as well as a significant development of local landlord networks.

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Centre for Cities report highlights NALS Scheme to Regulate Agents

With the prediction of the continuation of high demand for rented homes and as many as 3.6 million tenants by 2021, National Approved Letting Scheme (NALS) has fully welcomed the findings of think-tank, Centre for Cities which recently launched its comprehensive report on “The Future of the Private Rented Sector” which highlighted the NALS accreditation scheme to regulate agents.

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

Top tax man reveals frustrations with the tax system as main reason he no longer gives tax advice

Mark Lee, a past Chairman of the ICAEW Tax Faculty has revealed that his frustrations with the tax system led him to move away from giving tax advice two years ago, despite having reached the top of his profession.

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.”

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Rents Steady as Supply & Demand come into Balance

ARLA Members’ Survey Q2 2008

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.

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