| Hello and a warm welcome to our December newsletter.
Amazingly we are celebrating twenty years since Lenwell first started and things have changed considerably since then. 1990 was the year Mandela was set free and Germany was reunified after the Berlin Wall fell, so alongside Lenwell opening in Luton, it was clearly a time of momentous change!
In all seriousness, I would like to thank everyone at Lenwell, our clients and our customers for making the journey to date such an enjoyable and successful one. Here’s to the next twenty!
The last few days have seen temperatures fall and large parts of the UK experiencing snow and icy conditions. Despite a natural desire to want to curl up in front of a warm fire and think of Christmas, there is still much happening in the rental market and our offices remain very busy.
In this issue we look at offering some simple winter maintenance tips for both landlords and tenants as well as looking at the growing practice of sealed bids being used in setting up a tenancy and some of the possible implications from the Government’s announcements on changes to the Housing Benefit system.
Also in this issue Lucinda Newell reflects on the year that was 2010.
Obviously we cannot ignore the fact that Christmas and the New Year are only a few weeks away and we provide details of our office opening hours and Christmas charity donation to Shelter.
Cuts in housing benefits could have serious implications for landlords and tenants
More than half of people renting – 49% in private rented housing and 66% in social housing - would face financial difficulties if their income fell, such as through a cut in housing benefit, according to a YouGov poll commissioned by the TUC and the Fabian Society.
While the government is cutting housing benefit and mortgage support, more than half the population want to see greater support from government for renters and mortgage payers who get into difficulties with housing costs or who face losing their home. The figures show that the government's housing benefit cuts will not easily be absorbed by renters, nor be popular with voters.
TUC General Secretary, Brendan Barber said: “It is no wonder the housing benefit cuts are causing such difficulties for the government, even within their own parties. Ministers want us to believe that housing benefit is going to what they would call work-shy scroungers, yet in reality only one claimant in eight is unemployed. The rest are mainly low-income working households, pensioners or the disabled.
“Then they tell us that people can absorb a cut in their housing benefit. This poll shows that most cannot. One in three renters already says that the stress of keeping up their rent payments has hit their performance at work.
“Thousands of people will have to uproot and move out of homes where they may have lived for years and have settled lives. Children will have to move schools. Lone parents carefully juggling work and child-care will lose support networks and have to give up work.”
YouGov found that 31% of private renters and 44% of social renters said that their income is normally about the same as spending; but if their income was to fall by say, 10%, that it would cause real difficulty. Of those surveyed, 18% of private renters and 22% of social renters said that they were already worried because their income was less than their expenditure.
The survey revealed that 39% of private renters and 31% of social renters reported that the stress of maintaining their rent payments has affected their performance at work. When asked 'Taking into account current pressures on public spending, to what extent do you agree that government should provide a stronger safety-net’, 56% agreed with more support for renters and 60% with more support for homeowners 'who face difficulties with their housing costs or face repossession'.
Rob Wellstead, Managing Director of Lenwell said: “Whilst we feel that the comments of the TUC are, perhaps predictably, alarmist, the proposed cuts in benefits may have some impact on the Private Rented Sector overall, the overwhelming majority of our managed portfolio is let to tenants not dependent upon benefits, as required by our landlord clients. Of course, the implications of the Comprehensive Spending Review and its effects on the general economy will impact on everyone and we recommend that landlords and tenants take advice and consider putting in place some of the insurance based safeguards that can assist in difficult situations.”
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!
I was sitting down at the weekend and thinking just how quickly 2010 had seemed to pass by and wondering whether it was my age or simply that life moves so fast these days? It made me think about what had happened this year in the property market and some of the key things that may influence the months ahead.
My estate agency friends tell me that the year started with shortages of supply in the sales market which continued from the latter part of 2009 and created great urgency amongst purchasers and an upward movement of house prices.
Mortgage availability was an issue, as it has remained throughout the year, and house building is at an all time low which has added to the low supply of property to purchase. The rental market has remained strong, partly because of the situation in the sales market, and the number of transactions in the private rental sector has continued to rise.
Whilst the volumes of activity were well below the peaks of 2006 they were gently increasing and with the economy showing signs of officially coming out of recession, there was a degree of cautious optimism developing.
Of course, there were factors looming that we knew would create uncertainty and impact on the market.
The most major of these, a General Election, took place on May 6th.
Of course, Gordon Brown and Labour lost the General Election and after a few days of negotiations in “smoke filled rooms” a new coalition Government between the Tories and Liberal Democrats emerged. Housing issues were not to the fore in manifesto terms but both the Tories and Liberal Democrats had pledged to remove Home Information Packs and on the 21st May they were duly suspended pending legislative abolition.
The property market, perhaps rashly, celebrated the suspension of HIPs and the numbers of homes coming to the market increased. This had the almost immediate effect of altering the supply and demand balance and subsequently slowed the sales market.
June saw the new Government hold an emergency budget and announce a Comprehensive Spending Review that would look to take action to reduce the UK’s huge budget deficit and reduce the £43bn being spent in interest on the UK’s current debt levels.
The Government announced that it would be looking to save £11bn from the welfare budget and an announcement was made that VAT would increase from 1st January 2011 from 17.5% to 20%.
Whilst virtually everyone in the UK understood the dire financial situation, opinion as to how and how fast to tackle it was divided and created further uncertainty.
England’s dismal showing in the World Cup Finals in South Africa did little to lift the general mood this summer. I must admit I am not a football fan and was quite glad when it was over. I certainly hope that those tuneless and noisy vuvuzales don’t find their way over here!
The outcome of the Comprehensive Spending Review was announced in October with the plans announced designed to cut Government spending and reduce debt. The actions announced were initially projected to result in some 490,000 job losses in the public sector although a recent report has suggested that the number may be lower at around 330,000. No consolation for those who lose their jobs but a little light at the end of a long tunnel.
By the Autumn the sales market had slowed and house prices were starting to reduce again. The many and varied market indices provided conflicting views but the overall picture was of a sales market that was slowing and “fizzling out” towards Christmas. The lettings market however, has remained strong, buoyed by tenant enquiries from those unable to buy due to mortgage restrictions and the re-emergence of “reluctant” landlords who chose to let rather than sell at a price they were unhappy with.
The Autumn also saw the start of new series’ of X Factor and Strictly Come Dancing. Now X Factor has never appealed to me but I have always liked the occasional twirl round the dance floor. Imagine my horror to see frumpy old Anne Widdicombe making a complete fool of herself and letting the side of us more mature ladies down dreadfully.
In November the Government announced the introduction of a new Energy Bill and the “Green Deal”. This is a scheme to enable consumers to better insulate their homes and reduce both energy costs and carbon emissions. It is also hoped that it will create over 100,000 jobs in the energy industry by 2015. Having just seen my gas and electricity charges increase, I certainly hope to be able to find some economic way to save costs.
Overall 2010 has been a year in which the levels of overall sales has not be significantly different from 2009. House prices will likely end the year up a few percentage points but down from their highest levels in the middle of the year.
New home starts have remained at very low levels with combinations of confidence and planning delays not assisting developers to make positive steps forward. It is likely however that 2011 will see a small improvement in the number of new homes coming to the market.
The lack of mortgage availability is the major factor holding the sales market back with lenders requiring higher levels of deposit and applying tougher income multiples to prospective borrowers. This may be helping improve the balance sheets of the banks but it is doing little to encourage greater liquidity in the sales market.
The private rental sector remains strong and this looks set to continue. If house prices continue to slip then landlord yields will look likely to improve and this may encourage more buy to let investors into the market. Tenant demand outstrips supply and with many “would be” purchasers unable to actually finance a purchase in the short term, this looks set to continue.
2011 looks set to see volumes continue at similar levels to 2009 and 2010. There is nothing to indicate that house prices are likely to rise and most observers are predicting further falls in the short term.
With the impact of the Government Spending Review likely to begin bite in 2011, I anticipate that the amount of “discretionary” movers in the market will remain at low levels with activity being concentrated on those that have compelling reasons to move. This may include people who look to reduce outgoings by downsizing.
In short I believe that 2011 will be an OK market and one where transactions will continue to take place where motivated sellers and buyers are prepared to be pragmatic and realistic about price. For those capable of, and looking to move upmarket, I actually believe the market will offer some good opportunities.
For us landlords, I believe the private rental sector will remain strong but avoiding void periods and tenant defaults will be particularly key. I think it is better to be realistic on rental levels and terms and retain a tenant than try and squeeze the last drop from a deal and pay the price of disruption and a lack of continuity.
Come on Malcolm - Walkies!
I love to hear from my readers so let me know your thoughts - email me at firstname.lastname@example.org
People looking for houses to rent in many parts of the UK are encountering a new hurdle in their hunt for a home.
Landlords, or more often their letting agents, are increasingly asking would-be tenants to compete by making "sealed bid" offers for the home they want.
The practice is relatively commonplace in the market to buy homes, but is seen as a new development in the rental sector.
The demand for rented property is rising, in part due to a lack of availability of mortgage finance and recent reports indicate that the private rental sector will grow to around 14% of UK households by the end of 2011.
With many more families and individuals finding they cannot afford or obtain mortgages, they are having to compete against each other in order to secure a tenancy.
Agents say sealed bids are usually only asked for where there is intense competition for a limited supply of properties.
This is most likely to be in areas where first-time buyers or others cannot get mortgages and have to keep renting. It is also a market response to higher rental prices.
London has experienced the biggest rise in rents, but other regions are not immune. More than a third of landlords surveyed by the National Landlords Association said they were seeing higher rents in Wales, Scotland and the North West of England.
Recent research published by the property website Rightmove showed that 55% of renters were "trapped" - wanting to leave rented accommodation, but finding themselves unable to do so.
Landlords insist sealed bids are not a device to get tenants to gazump each other and pay more.
Chris Norris, of the National Landlords Association (NLA), said they were mainly employed by managing or letting agents and used to ensure that once an offer is accepted it is final.
"The sealed bid has been seen as a fairer option, compared to a situation when a landlord may agree a tenancy in good faith, only for another would be renter to come along and say that they are prepared to pay 20% more," he said.
"Many landlords might be tempted to take such an offer, but that is not fair on someone who thought they had found somewhere to live."
It seems that with the current state of the housing market, sealed bids will be here to stay - as long as many would-be renters are chasing a dwindling supply of good rental homes. Landlords and tenants are however advised that the highest rent is not itself the only factor to be taken into account when agreeing a tenancy.
Good quality references and security of income are important factors that need to be taken into consideration alongside the level of the rent when considering the setting up of any tenancy.
Christmas and New Year at Lenwell
Our team will be taking a few days break over Christmas and the New Year in order to recharge batteries with families and friends. Our office hours will be as follows:
|Monday 20th December
||Open Normal Hours
|Tuesday 21st December
||Open Normal Hours
|Wednesday 22nd December
||Open Normal Hours
|Thursday 23rd December
||Open Normal Hours
|Christmas Eve 24th December
|Christmas Day 25th December
|Boxing Day 26th December
|Monday 27th December
|Tuesday 28th December
|Wednesday 29th December
|Thursday 30th December
|Friday 31st December
|Saturday 1st January 2011
|Sunday 2nd January 2011
|Monday 3rd January 2011
|Tuesday 4th January 2011 Onwards
||Open Normal Hours
Seasons Greetings from Lenwell
At this time of year, with the hustle and bustle of the festive season, it is very easy to forget that every 2 minutes, somebody in this country faces losing their home.
Lenwell will not be issuing Christmas cards this year but instead will be sending an ECard and making a donation to our chosen charity, Shelter, who work tirelessly to help the homeless throughout the year…..
Click here to view our e-card.
As Autumn turns to Winter there are a few simple actions that homeowners and tenants should undertake in order to avoid potential problems.
With temperatures falling it is advisable to ensure that properties are kept warm, even if vacant, in order to avoid issues such as frozen pipes. Water in frozen pipes expands and can cause flooding when a thaw takes place. Thermostats on heating systems should be set low but at a level to avoid freezing. Insulation of pipes will also help avoid problems.
If a property is set to be empty for some time over the Winter period, consider draining down water and heating systems completely in order to avoid freezing.
Condensation can be a problem during the colder months as people tend to close windows and therefore reduce the amount of ventilation available within a property. Proper insulation coupled with ventilation and heating are the best cures for condensation.
Externally, the end of Autumn sees large volumes of leaves falling and these can easily clog up gutters, downpipes and drains if they are not regularly cleared. Blocked gutters, downpipes and drains can cause flooding and other water related problems.
Leaves can also be a personal hazard as they become very slippery when either wet or frozen.
A few minutes of preventative action can save a lot of time, inconvenience and cost later on.