Monthly Archives: April 2017

Is there a future for traditional estate agency?

view of traditional estate agents for sale and to let boards

I was prompted to write this after receiving something in my email inbox about how traditional estate agencies are suffering in the current Brexit market.

Estate Agencies on the High Street

Once upon a time, if you were looking to sell, buy or rent a property you would either check out the ads in the local paper and/or wander down the local high street and have a chat with people in the local estate agencies. People do still do this, but a huge and increasing number now simply go online, usually heading straight for the main portals like Rightmove, Primelocation and Zoopla, or maybe the agents’ own websites.

Nowadays, there are agents set up to exploit this new world, such as Purplebricks.com who just charge vendors a fairly low fixed fee to market their property. Of course this does save vendors a huge amount but only if the property actually sells, because of course, traditional agents’ fees are dependent on the sale actually completing.

Agents’ high commission

But it is true that with astronomical property prices (in some parts of the UK) the traditional agent’s 1.25% fee actually can translate into a huge amount of cash. It’s not uncommon in London and the South East for quite ordinary properties to sell for £700,000 or more. At only 1.25 % this means that vendors are having to give the agent £8750.00 PLUS 20% VAT. And for agents who are charging 1.5% it amounts to a staggering £10.500 plus VAT!

The High Street Estate Agency – who still needs it?

However, estate agents will rightly point to the huge expense of maintaining a high street presence and having to spend money on expensive newspaper advertising. But are either of these really necessary anymore? How many people actually bother to visit a high street agent with all the problems of city centre parking etc? And do purchasers really pay much attention to the local paper even? Not only are printed ads often out of date but sadly, local papers, like so much other printed media are in serious decline.

Perhaps the future lies in much more ‘stripped-down’ a la carte estate agencies, where they do not maintain high street offices but work out of ordinary offices not in city centres. Furthermore they would not advertise unless the client wishes to pay for it and rely almost entirely on web interaction. This would mean that fees could be much less and still allow the agents to make decent profits.

Landlords and letting property

As for lettings agencies, I think much the same applies. In fact, as a landlord unless you live far away from your rental investment, it really does not make sense to use an agent at all. You can now use companies who will let you access the main property portals for a very small fee. However, if you do not use a letting agent , obtaining Landlord Rental Guarantee and Legal Expenses Insurance together with thorough referencing is even more important – but still much cheaper than using an agent.

I am sure that, except for selling, renting and buying the most prestigious and up-market properties, the future is in this much more ‘stripped-down’ letting or sales agency.

 

Landlords and Letting – Affordable Landlord Insurance

Will you be forced to repay rent to your tenants?

view to let and for sale signs, typical of signs landlords would look for

Yet more anti-landlord legislation starts to become operative this April (2017). This one is unimaginatively called The Housing & Planning Act 2016.

How does it affect landlords? Will YOU be forced to repay rent to your tenants?

If you are found guilty by a tribunal of any of the following offences you can be ordered to pay back up to 12 months’ rent…

  • Failing to comply with an Improvement Notice under section 30 of The Housing Act 2004.
  • Failing to comply with a Prohibition Order under section 32 of The Housing Act 2004.
  • Any breach of a banning order made under section 21 of the Housing & Planning Act 2016 (this act)
  • If you use violence to gain entry to a property under section 6 of the Criminal Law Act 1977.
  • If you illegally evict or harass the occupiers of a property under section 1 of the Protection from Eviction Act 1977.

Making an example of transgressing landlords

The above applies whether you are receiving rent direct from a tenant or wholly or partly from the local authority. The act also states that tribunals need to take deterrence into account when fining landlords and urges making examples of transgressors to dissuade others.

Either your tenant(s) or the local authority can apply for Rent Repayment Orders.

These powers come into effect on 6th April 2017.

The main points of the new laws are…

• Civil penalties of up to £30,000 as an alternative to prosecution for certain specified offences.
• Extension of rent repayment orders of up to 12 MONTHS’ rent, to cover illegal eviction, a breach of a banning order and certain other specified offences (coming into force on 6 April 2017);
• There’ll be a database of rogue landlords and property agents who have been convicted of certain offences or received multiple civil penalties (scheduled to come into force on 1 October 2017);
• Banning orders for the most serious and prolific offenders (scheduled to come into force on 1 October 2017).

The full dreary details are here.

Landlords and Letting – Affordable Landlord Insurance