LETTINGS UPDATE: London market view
The lettings market has been hit with a raft of changes over the last few months. Here, Silvia Eldawi, lettings director for Northfields Estates, shares her views on their impact.
The most significant change on the cards for the lettings industry in 2010 is yet to come. It is an increase in the maximum assured shorthold tenancy threshold of Housing Act 1988 tenancies from the current £25,000 per annum limit to £100,000. Naturally, this will mainly impact the prime London residential lettings sector, where a number of properties exceed this threshold.
Taking into account inflation and rising rents in the past 20 years, it is most certainly the right time to increase the original threshold of £25,000, introduced in 1990 to exclude luxury lets. The increase will offer greater consumer protection for tenants and better legal redress for landlords, and overall make life easier for letting agencies as one procedure will apply for the majority of tenancies.
My only concern is that as thousands of existing contractual tenancies will come under the AST umbrella overnight, this will without a doubt lead to a further surge in litigation in respect of unprotected deposits. Many more deposits will have to be protected thus exacerbating the strain already on the deposit protection schemes.
I am appalled by the recent increases in the Tenancy Deposit Scheme fees, and the manner in which they were communicated. How can any business plan and budget for the year ahead with such unexpected fee hikes? We were taken aback at the short notice of the price increases, and would have expected at least 90 days’ notice for such a significant change. There was no time to react, and the renewal fees high court judgement can’t help but spring to mind, with regard to possible future action from within the lettings market.
We are in agreement with The National Landlords Association, that the proposal for a TripAdvisor.com-style tenant website to review landlords is completely unworkable, since it would require extensive policing. The main issue with subjective feedback sites is that negative experiences considerably outweigh the positive, and this will not serve to improve the quality of the private rented sector. From a personal experience if I were to rely on comments from TripAdvisor.com when booking a hotel I would never end up going on holiday! If anything, I would propose a site that reviews estate agents with quantitative measures to encourage the industry to offer outstanding customer service - something that many agents go unrecognized for. It is time to change the public’s perception of the stereotypical estate agent. While similar sites already exist, they are not publicized enough and are very basic in terms of functionality. Alongside the proposed regulation of agents, such a forum will certainly weed out the rogue agents.
We are experiencing a greater demand for rental properties and a shrinking supply as accidental landlords return to the sales market. Supply is also being hit as tenants opt to extend their tenancies and remain in their existing properties. This is a far cry from the upward mobility of tenants we experienced between 2004 and 2008, and helps explain the findings of a recent study, which suggest that the average age of a first-time buyer has risen from 27 to 37 during the last 30 years.
With more tenants chasing fewer properties in 2010, we are expecting rents to rise in line with inflation.
Meanwhile, the corporate lettings market has seen a much-welcomed resurrection in 2010 as the global economic climate becomes more positive and companies start reinvesting in relocation packages for their senior executives. This year, we will be opening our first central London office in Paddington to cater for this fast-moving central London market.
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