Property Articles

A trial version of the Government’s contoversial home information packs (HIPs) will be extended to 12 regions of England and Wales, including the M4 corridor.

The packs aim to give home buyers more information at the start of the process and shift the emphasis from the buyer to the seller to collate information about a property before it is sold.

The sustained growth of the residential rental sector is reflected in the increase of the lettings staff employed.

According to recent surveys, the total number of lettings staff seem have risen by approximately a quarter. However, the male staff working in residential lettings and property management are still heavily outnumbered by a margin of more than 2 to 1.

Frequently, landlords and tenants seem to get confused over “furnishing”.

Many landlords often wonder whether or not to furnish their investment property. Mostly the answer tends to lie in the type of accommodation and the demand the property attracts. For example, one-bedroom flats are likely to interest young professionals or couples. These tenants tend not to own their own furniture. On the other end of the scale, if you are looking to let a large family home, the prospective tenants are likely to have accumulated plenty of furniture over the years. Even the families coming over from overseas are likely to bring over their furniture as part of their “ex-pat” packages.

However, most confusion seems to be around the middle bracket. Whether or not to furnish a two- or three-bedroom flat is a dilemma for most landlords.

Tenants also usually have vastly differing expectations. As a result, at Appletons, we would advise landlords to be as flexible as possible. With stores such as Ikea or Homebase offering very good value furnishings, landlords should consider furnishing the flats - either fuly or partly - to secure a good, long-term tenancy. We would warn, however, not to overfurnish the flat before finding a tenant. It is much easier to buy more furniture but removing and storing unwanted furniture can be problematic for many landlords.

Equally, tenants should be open-minded when it comes to furnishings. “Fully furnished” does not necessarily mean it comes with every amenity. Although some landlords provide kettles and microwaves as part of the furnishings, there are no standardised regulations as to what constitues a “furnished flat”. As a tenant, expect to provide a few items of your own but if you are concerned about a particular item, it is important to discuss it at the negotiation stage. If possible, put your request in writing. That way, no one is in any doubt as to what is to be included.

Interestingly, the value of a property on the lettings market does not vary too much depending on whether or not it is furnished. However, the way the property is presented often has a major impact on the price that can be achieved. Old and scruffy furnishings can make a property difficult to let, thus reducing the rental rate that can be achieved. That is not to say that every investment property needs to have a plasma TV but the furniture should be in good condition and suit the property . It is also vital to keep the furnishing neutral. Quirky properties reflecting the landlord’s personal taste are a real challenge to let. Instead, let tenants personalise the flat with their own soft furnishings, and knick-knacks.

Abbey National, Britain’s second-largest home loan provider, has recently announced that the home buyers can now borrow up to five times their salary with a new mortgage.

This has sparked fierce concern from consumer groups, claiming that this is likely to bankrupt people. Some people are even calling this move irresponsible and careless.
A close examination of the the mortgage suggests that this loan is not going to help the UK’s average first-time buyer. The individuals or couples with a 25% deposit and an annual income of more than £50,000 will be able to apply. Moreover, it is aimed at those borrowers with good credit ratings and low debt levels. The average salary in the UK is approximately £30,000.

The bank stated that this new mortgage was due to the UK’s ever increasing house prices. The average UK house price is around £180,000 – but vastly higher in London and the South East. Mortgage lenders calculate how much they will lend based on an earnings multiple, usually around 3.5 times the salary of the individual or couple taking out the loan. Abbey’s move follows recent moves from the Bank of Ireland Mortgages and Bristol & West to increase their standard salary multiple allowances from 4 to 4.5.

Affordability?

Let’s look at some realistic figures to see how this mortgage adds up. A couple borrowing £250,000 with a shared annual income of £50,000 would face repayments of about £1,400 a month - £17,000 a year. If this couple has borrowed £250,000, they would be buying a property for more than £330,000, which would require a deposit of around £80,000 (25% of the purchase price) and a stamp duty payment of about £10,000 (3% of the purchase price). To qualify for the mortgage, this couple would need: Almost £100,000 in savings to cover the deposit and stamp duty

• To earn more than twice the average salary, either individually or collectively
• To have a good credit rating
• To not be lumbered with many other debts

One thing is clear: this is not a mortgage for the average first-time buyer.

The Tenancy Deposit Protection (or the Tenancy Deposit Scheme) is aimed at helping protect landlords and tenants for raising standards in the residential lettings market for all the Assured Shorthold Tenancies.

The Housing Act 2004 first announced the introduction of the Tenancy Deposit Scheme in 2005.

The launch date was then deferred to April 2006 in order for the Government to handle concerns by key stakeholders, including tenants, landlords and letting agents.

Again the scheme was put back to October 2006.

We are now in October 2006 and the Government seems to be in need of yet more time. Following consultations with the key stake holders, one of the main issues seems to be about the release of deposits where there are rent arrears and abandonment of tenancies. So, the new provisional start date is set for April 2007.
It will also allow more time to inform those involved about tenancy deposit protection.

This article is merely our interpretation of the important changes in the way tenancy deposits are dealt with. We would advise all our landlords and tenants to seek further advice. Comprehensive information and a good FAQ can be obtained from the “Communities and Local Government” website at http://www.communities.gov.uk/index.asp?id=1503894 .