Hello and a warm welcome to our April newsletter.
Spring seems to finally have arrived and the frozen temperatures and seemingly endless snow of earlier in the year is now well behind us.
I am delighted to report that at Lenwell business has been strong and our recent acquisition of Dunstable Property Lets in Dunstable has already become firmly established as part of our network.
In this issue of the Leading Letter there is important information on forthcoming changes to the rental limits for Assured Shorthold Tenancies. The changes will mean that virtually every letting will now require the tenants deposit to be protected.
I also had the pleasure recently of sharing coffee with Lucinda Newell and her account of our meeting is detailed here.
With the budget having taken place on the 24th March and a General Election looking set for early May, we also include an overview of the key factors that will impact on the property market.
Finally we report on recent changes that allow defaulters under the Government’s Local Housing Allowance arrangements to be pursued more speedily.
Happy Reading!
Rob Wellstead
Managing Director
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Assured Shorthold Tenancy (AST) limit to increase to £100,000
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Currently, AST tenancies are those with rents totaling up to £25,000 a year. Any tenancies with a higher value are contractual tenancies, where there is no requirement to protect the tenancy deposit.
However, from 1st October 2010, tenancies worth between £25,000 and £100,000 a year will become ASTs overnight and all these extra tenants’ deposits will have to have been protected.
The change will have its greatest impact in central London and on family rental properties across the south-east, but will also impact on student-shared houses in multiple occupation (HMO) properties just about anywhere.
The requirement will cover all new tenancy agreements in the new price bracket, apart from very short-term ones, made from, and including, 1st April 2010 onwards.
David Salusbury, chairman of the National Landlords Association, said: “The retrospective nature of this change is highly regrettable, and it could have a wide-ranging impact on the letting of private residential property. Landlords in this higher rent bracket will have to protect deposits for the first time. If they fail to do so by 1st October, they could be in breach of the law.
Lettings law specialist David Smith, of Pain Smith solicitors, said: “It looks as though this will apply to tenancies that are already in existence. As it happens, due to the way the Housing Act 1988 was constructed, the Government had very little choice as to how it did this. It could have done it in other ways but it would have taken longer and therefore could not have been rushed through to suit an election timetable. It will create some problems in relation to tenancy deposit protection as the law technically requires that a deposit be protected within 14 days of receipt. However, that cannot happen for a tenancy that has shifted from a non-Housing Act tenancy to an AST by a quirk of the law.”
Rob Wellstead of Lenwell added: “The deposit protection schemes and TDS particularly, will see an increase in deposits being protected and therefore, almost certainly, in disputes, which will be of higher value and more contentious. This could have a significant subsequent effect on the costs of deposit protection.”
Should you have any questions concerning this change, please do not hesitate to contact us and we will happily advise based on your particular circumstances.
The Lucinda Newell Column
To be seen pottering along the highways and byways of Luton in her Mini Clubman, her trusted Scottie Malcolm at her side, our super sleuthing property rental expert Ms Lucinda Newell is on the case on your behalf!
The other day I was visiting Lenwell’s offices in Luton to discuss one of my properties when I bumped into Rob Wellstead, the man who started the business twenty years ago when he was just nineteen.
I have been so pleased with Lenwell’s services that I invited him for a coffee and a chat and was delighted when he accepted my invitation. Over a couple of large lattes (and I must admit I did treat myself to a Danish pastry too) I found out quite a lot about the man at the top. The nice people in the coffee shop found a large bowl of water for Malcolm too.
Rob was charming and spoke passionately about the business and his desire to improve standards and service. Rob told me he had been a member of the National Association of Estate Agents since 1991 and the Association of Residential Lettings Agents (ARLA) since 1993. Apparently he is also a qualified Domestic Energy Assessor and we had an interesting chat about the merits of investing in solar energy. But I digress!
Rob is rightly proud of the Silver award Lenwell’s won in the national Estate Agency of the Year Awards Lettings category in 2009 and that the business achieved the coveted British Standards ISO9000 accreditation (formerly ISO9002) as far back as 1995.
With ambitious and ongoing plans for expansion he is determined that Lenwell can be the leading agent in every town in which they operate and he is also keen to raise standards and see better regulation in the industry.
After ordering another latte our conversation turned to more personal matters and I was impressed to learn that Rob managed to combine his obviously driven and committed approach to business with an equally busy and fulfilling life away from the office.
Married to Jo and with two young boys, Rob is a very keen sportsman and says he cycles nearly everywhere, including to the office. As someone whose last experience of riding a bike was when collecting groceries as a small child, I was impressed to learn that Rob manages to cycle over 100 miles a week and last year cycled up Mont Ventoux in Provence whilst on holiday. Rob also mentioned the cyclist Lance Armstrong as a person he admired due to his ability to succeed through hard work, determination and single mindedness. By now I was thinking that Rob could probably win the Tour de France himself if he put his mind to t!
Rob is also a keen skier and sailor. He regularly sails dinghies locally and yachts whilst on holiday in the Mediterranean or Caribbean. In fact Rob’s favourite place in the world is a bar called Sydney’s Peace and Love bar in the British Virgin Islands which he described as an honesty bar. When I asked what an honesty bar was he said it was where you just helped yourself to a drink and then put the money in a jar behind the bar and then watched the sun going down from either their deck or back on your own boat. Rob made it sound completely idyllic but I’m not sure it’ll catch on with the landlord at the Rose and Crown in my home village.
Rob did however admit to enjoying lazy Sundays at home with his family and to laughing at, what he described as, juvenile comedy.
Anyway, all our talk of cold drinks on Caribbean beaches had made me realise that our coffees had also now gone cold and that I had kept Rob too long from his work.
Having refused to let me pay, he settled the bill and kindly escorted me from the coffee shop before heading back to his office. I was left feeling that I now knew a lot more about the man himself and was also confident that, with Lenwell, my properties were definitely in the right hands.
Come on Malcolm - Walkies!
I love to hear from my readers so let me know your thoughts - email me at editor@lenwell.com
March 2010 Budget Delivers No More Than Expected!
The last budget to be delivered by the present Government was largely bereft of major initiatives and contained little or no detail of how the UK’s huge debts were to be repaid and where the inevitable spending cuts in public services would be instigated. With a General Election widely anticipated for May 6th, this budget was always going to “hold back” on delivering any real further pain to voters. After all, whether you consider the current Government to be a bunch of turkeys or not, they were unlikely to find themselves voting for Christmas!
Alistair Darling clearly therefore had little room to maneuver and the majority of planned tax increases such as National Insurance and Fuel Duty had been detailed in the pre budget report.
The traditional targets of cigarettes and alcohol were hit with duty increases and there were some relatively minor concessions on business rates, university funding, money for pot holes and work or training guarantees for the under 24’s.
The only real “headline grabber” was one that directly impacts on the housing market.
Stamp duty for first time buyers was removed completely on purchases up to £250,000. The definition of a first time buyer perhaps needs further clarification but is said to mean anyone who has not previously owned a property anywhere in the world. This change came into effect immediately and has been set for a two year period until March 25th 2012.
Also announced was an increase in stamp duty on property transactions above £1 million where the rate will increase to 5% of the total amount. This change however does not come into effect until March 25th 2011.
These changes in stamp duty by the Chancellor are also a clinical lesson in “stealing” policy from the two other main parties as the Tories had widely promoted changes to the first time buyer levels of stamp duty and the Liberal Democrats had talked of a “Mansion Tax” on the highest property values.
Clearly for first time buyers it is good news although the real issue for the market is the availability and affordability of mortgage funding. Having signaled a year’s grace before the 5% level of stamp duty comes in to force, it will be interesting to see whether this promotes an increase in high end transactions in the coming months with buyers eager to avoid paying the additional £10,000 plus tax.
Stamp Duty on a property purchase now looks more complex and is as follows:
Up to £125,000 = 0%
£125,001 - £250,000 = 1% (unless a first time buyer in which case up to £250,000 = 0%)
£250,001 - £500,000 = 3%
£500,001 plus = 4%
From 25th March 2011
Up to £125,000 = 0%
£125,001 - £250,000 = 1% (unless a first time buyer in which case up to £250,000 = 0%)
£250,001 - £500,000 = 3%
£500,001 - £1 million = 4%
£1,000,001 plus = 5%
..... and finally
Local Housing Allowances (LHA) have been in place since April 2008 when they were introduced as a new way of calculating Housing benefit for those renting property from private landlords.
Until now, LHA has only been paid directly to the landlord if there are exceptional reasons - e.g. if the tenant is unable to handle their financial affairs, has a bad history of paying landlords or was more than 8 weeks in arrears. If the tenant was in arrears by more than 8 weeks, benefit would be paid directly to the landlord.
Now, following new guidance issued to local authorities, the “eight week rule” has effectively been halved and can be applied at the beginning of a second month of arrears rather than at the end of the second month.
As with all issues, the quicker one can get on the case of resolving them, the higher the likelihood of success and the lower the financial risk.
As always, your local Lenwell team will be happy to talk, in confidence about any individual situations.
Sincerely,
The Editor
editor@lenwell.com