The number of reluctant landlords has dropped for the third consecutive quarter, according to the Association of Residential Lettings Agents (ARLA).

ARLA’s research shows that 60 per cent of its members’ offices reported property being rented out rather than sold during Q3 2009. This number has dropped from 80 per cent in Q2 and 95 per cent in Q1.

These figures suggest that fewer homeowners are struggling to sell their property and being forced to rent it out – supporting industry-wide speculation that the housing market downturn is coming to an end.

Ian Potter, Operations Manager of ARLA, said: “The fact that the number of reluctant landlords has dropped once again, and supported by the rise in demand for buy-to-let, suggests that movement is beginning to occur across the market.

“What remains key is that all landlords – reluctant or otherwise – are fully aware of their obligations to their tenants, and of the importance of choosing a regulated and qualified letting agent.”

In particular, 48 per cent of members in Prime Central London reported rental property coming onto the market because it cannot be sold, compared with 73 per cent last quarter.

Data is taken from the ARLA Members’ Survey of the Private Rented Sector (covering the third quarter 2009, July – September). Together with the ARLA Survey of Residential Investment Landlords, this forms part of the quarterly ARLA Review and Index. All surveys and statistics can be downloaded from www.arla.co.uk.

Rob Wellstead, Managing Director of Lenwell Property Services commented "I wholeheartedly agree with ARLA's findings.  From our market experience it really does appear that the down turn is finally coming to an end - which is fantastic news!"

Source: ARLA

editor@lenwell.com

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!

Q & A

Well, it's a good job that the youth of today are techno friendly!!  Even with the postmen on strike I still managed to have an overflowing virtual mailbag!  This subject has certainly got your interest, so I have chosen four of the best questions for you - Enjoy!

Q. In a previous article on Students you mentioned Joint and Several - What Does This Mean?

A. Mostly, where there is to be more than one (adult) person living in the property, the tenancy will say they are "jointly and severally" responsible. This expression means that, jointly, the tenants are liable for the payment of all rents and all liabilities falling upon the tenants during the tenancy, as well as any breach of the Agreement. Individually each tenant is responsible for payment of all rent and all liabilities falling upon the tenant, as well as any breach of the Agreement until all payments have been made in full.

Q. What Happens If Either Party (Landlord Or Tenant) Unexpectedly Want To End An Existing Tenancy Early?

A. There are only limited ways in which this can happen; the landlord cannot make the tenants move out, nor can the tenants lawfully walk away from their obligations to fulfill the contract. Either party might request of the other that a formal "surrender" of the tenancy be allowed. It would then be up to the parties to agree the terms and conditions of such a surrender. This might include some financial compensation for inconvenience or costs incurred.

Q. What About Rights Of Access To The Property, What Are The Rules?

A. A landlord, or his agent, or someone authorised to act on his behalf has a right to view the property to assess its condition and to carry out necessary repairs or maintenance at reasonable times of the day. The law says that a landlord or agent must give a tenant at least 24 hours prior notice in writing (except in an emergency) of such a visit. Naturally, if the tenant agrees, on specific or odd occasions to allow access without the 24 hours prior written notice, that is acceptable. A clause in the tenancy agreement which tries to diminish or over-ride a tenant's rights in this respect would be void and unenforceable.

Q. What about Renewals and Extensions of a Tenancy?

A. This is a very common situation and the ARLA Agent will normally negotiate between the parties and prepare the necessary formal documentation for a replacement tenancy or fixed term extension.  If no further fixed term is created to follow on from the end-date of original term, and assuming notice to end the tenancy has not been served, the tenancy can simply hold over as a "periodic tenancy" e.g. rolling on with basically the same terms and conditions and in line with how the rent is due to be paid. This is usually monthly.

Well I really hope this information helps - being away from home can be an physically and emotionally hazardous so I am always happy to help!  Right then I'm off to cheer up Malcolm as he's feeling a little low - no Postie to terrorize!
 

Come on Malcolm - Walkies!  

I love to hear from my readers so let me know your thoughts - email me at editor@lenwell.com

As widely expected, The Bank of England's rate-setting committee kept UK interest rates on hold at 0.5% for the seventh successive month in October 2009.

Interest rates remained on hold as data continued to show that any UK economic recovery remained patchy at best.  But with the Lettings Industry widely believed to be the best performing sector of the Property Market, is it not time to look at how Landlords can start to bring more fluidity to the market through increases in rent?

'From a mortgage lending point of view, the changing dynamics of UK interest rates have forced lenders to retreat into their shells offering borrowing on only the most onerous terms.  This has quickly moved the large successful agents from a perceived oversupply to a definite lack of property available.' commented Rob Wellstead, Managing Director of Lenwell Property Services.
What we need is for lenders to become more proactive and launch new mortgage products that reflect the needs of today's investor.

Looking at it from the other side of the coin, has the decrease in interest rates had any effect on rental yields?  In theory, high interest rates are linked to high rents ergo, when interest rates hit their unprecedented low rents froze at best and decreased at worst.  As with most commercial entities though, it is simply a case of supply and demand and, with the number of high quality new developments available, you need to be offering a quality product to ensure a swift rental at an increased monthly rent value. 

The Association of Residential Letting Agents' (ARLA) advice on rent increases is clear.  Their website states 'In general terms, rent of an existing tenancy can only be increased once every twelve months. Where an assured shorthold tenancy holds over as a statutory periodic tenancy, a specific prescribed form (a section 13 notice) must be used to notify tenants of a proposed increase in the rent.  It is usual, if creating a longer fixed term tenancy at the outset (or one with a binding option to renew), to include a clause that allows for an increase of the rent on an annual basis, typically linked to, or as a multiple of, something like the Retail Price Index (RPIX) or similar.'

A happy tenant is a very valuable commodity.  The sensible Landlord will understand the old adage 'A bird in the hand is worth two in the bush'!  Understand that interest rate changes and an uncertain financial future affect us all.  Your tenant may really struggle as there may already be a big strain on their monthly out-goings; however, if your rent is artificially low, steady incremental increases may be the answer.  Remember; if you choose to increase your rent make sure you pick the optimum time to do so. Ask yourself - do you think interest rates are as high as they will go in the next 6 - 12 months?  Are you offering a quality product?  Is the product you are offering in a sparse or saturated market? 

Don't be afraid to increase rents, but do ensure you talk to your Agent about it first.  A decent Agent will be fully informed as to prevailing market conditions and will be able to advise you on the most appropriate increase - if any!  At this stage, while uncertainty surround the future of interest rates it may be wisest to take a watching brief, especially this close to Christmas which can be a notorious time for high numbers of vacant properties that can easily stand empty for 6 weeks!

The Editor
editor@lenwell.com