Continuing from last month’s blog post, there is an alternative to tenants paying a 5 week deposit; The Zero Deposit’s scheme. We have been trialling this scheme for the past few months and are happy with the uptake. Moreover, we have seen that it is an effective marketing tool for both the landlord and tenants. Here is a summary of the deposit scheme if you were interested in the idea:

Zero Deposit reduces the upfront cost of renting for tenants. This helps speed up the process of letting and reduces void periods. A tenant purchases a Guarantee that provides landlords with the same protection as a traditional security deposit. The tenants remain fully accountable for looking after the property and paying their rent. After the tenants have agreed to the scheme, landlords effectively get the same cover as a six-week deposit. However, ‘Zero Deposit’ does not mean zero responsibility. Zero Deposit approves claims within two working days and then pursues tenants for payment. If you can’t settle a dispute with your tenants, the evidence will be sent for expert evaluation by TDS, who have over 10 years’ experience settling similar end-of-tenancy disputes.

If you are interested and would like to find out more about the opportunities, feel free to get in touch with a member of our team.

With the decision on the future of Brexit delayed until the end of October, the industry together with our own sales team have seen a slight glimmer of hope in the dwindling sales market. Over the past month we have seen buyer interest increase and even sales agreed. It is no surprise to us that the sales market is picking up as the Summer season brings out a flurry of new instructions, although the majority of instructions are from sellers who have attempted to sell in previous years but have failed to do so at the price they are looking for. If you are considering selling it’s best to get an up to date valuation of your property.

If you would like to book a free valuation in, you can either contact our office or use the free tool on our website that will give you an indicative range. Remember our sales fee is only 0.95% plus VAT on successful sale with no tie in agreement.

As you may have read from previous correspondents sent out, the tenant fee ban is now in effect as of the 1st June. This means for all new tenancies on an AST, landlords are now liable for the cost of the inventory check-in and check-outs, and deposits will be capped at 5 weeks. There is a raft of other changes, but these are the most prevalent ones for our landlords. To recap, here is a bit about the tenant fee ban:

The Tenant Fees Act bans most letting fees and caps tenancy deposits paid by tenants in the private rented sector in England. The aim of the Act is to reduce the costs that tenants can face at the outset, and throughout a tenancy. The landlord will be responsible for paying for the service, ensuring the fees charged reflect the real economic value of the services. The only payments that landlords or letting agents can charge to tenants for new contracts are rent, a refundable tenancy deposit capped at no more than 5 weeks’ rent where the total annual rent is less than £50,000, or 6 weeks’ rent where the total annual rent is £50,000 or above, a refundable holding deposit capped at no more than 1 week’s rent, payments associated with early termination of the tenancy when requested by the tenant, payments in respect of utilities, communication services, TV licence and Council Tax and finally a default fee for late payment of rent and replacement of a lost key/security device.

Transactions are down a staggering 41% on 2014, buying activity is at its lowest level ever recorded and prices are down around 20% from their peak. Buying activity is at the lowest ever recorded. This is a direct result of the unprecedented instigation of successive new residential taxes culminating in the 3% additional stamp duty for second homes in 2016.

Two general elections, a referendum and the Brexit uncertainty have all added fuel to the fire. London’s housing markets have weathered the Brexit uncertainty better than many feared, especially at the higher end. After a difficult 18 months of falling values and transactions, Prime Central London property prices started to recover in Q1 2019, not only have tax hits now been assimilated in current pricing but the ‘Brexit Effect’ is more than accounted for by now.

We are pleased by the apparent light at the end of the tunnel as prices have been discounted so much by those with no choice but to sell, that those investors are proactively looking at real value opportunities. It is our job to guide you through these opportunities.

Investors are poised to pay an extra £36 billion on building rental homes by 2025 to capitalise on the growing demand from renters who can’t get onto the property ladder. It is thought that professional landlords who are already in the sector will opt for period conversions in London, where they can maximise on capital growth while potentially adding additional bedrooms via building extensions. In Manchester, our buyers are only opting for new builds as the demand from generation Z (aka millennial’s) seek to look for developments with amenities and open plan spaces to both live and work in.

It is expected that an extra 560,000 households will be living in the private rented sector by 2023. There are already 111,092 rental homes under construction or being planned for the UK, with more than half of these current investments in London. We believe that large-scale professional private-rented sector landlords are well placed to take these changes on board, as well as satisfying some of the structural shortfall in our housing supply.

To find out more information about getting onto the property ladder or investing on building rental homes, feel free to contact a member of our team.

With the ‘Tenant Fees Act’ limiting the level of deposit landlords and agents can take, the concept of deposit free renting is looking more attractive for renters. Contrary to popular belief, deposit free renting does not mean you as the landlord do not hold a deposit. Instead, you have an ‘insurance’ product that is the equivalent of 6 weeks rent which is more than the impending 5 week deposit cap. The idea is that the tenant pays a deposit replacement company a fee to obtain this insurance. We recommend Zero Deposit which is the only one FSCS regulated. The Residential Landlords Association has been working with Zero Deposit to develop a trusted supplier relationship. Any disputes go through them and are adjudicated by the TDS.

The best part is that claims are paid out in a matter of days instead of the 4 – 6 months time span we have seen with the DPS recently. The most common question we get is that landlords think the quality of the tenant will change if they opt for this, but this is not the case. They still need to pass the same criteria as they would have done so if they paid a deposit.

Jon Notley, CEO of Zero Deposit explains, “Our objective was to ensure that when a landlord asks: ‘is it as good as a traditional deposit’ the answer had to be yes.”

If you read last month’s newsletter you will have seen we covered the tenant fee ban coming into force on the 1st of June where agents and landlords can no longer charge for referencing, admin or check in and check out reports. Deposits will also be capped at 5 weeks with annual rent below £50,000, and 6 weeks rent for tenancies above £50,000. Furthermore, this month we can reveal that agents will only be able to take a maximum of 1 weeks rent upfront from a tenant as a ‘holding deposit’ and if the tenancy agreement is not signed by both parties within 15 days of the deposit being taken, the deposit must be refunded unless the tenant confirms an extension in writing.

We have also understood that no call out fees can be charged. This is in addition to the ban on check-in and check-out fees.

Take a look at our new “Premium Let & Managed” service, this service includes the costs of the check-in and check-out reports and safety certificates. As an extra incentive our new premium service can also be paid monthly out of the rent instead of yearly in advance.

We have seen that the uncertainty we are facing in our political landscape has brought growth in the London property market to a steady halt – however, despite this we continue to see the Manchester market flourish. A number of our landlords have invested in one and two bedroom apartments in Manchester and Salford and we are pleased to report, they are taking advantage of 6% plus yields.

Vesper Group’ clients that are still keen to invest in property are now looking for alternative locations to London to invest. Manchester has grown substantially over the last few years, developing from being a city with a large student population to one with growing population of young professional which is aiding the rental market. A number of employers are relocating to Manchester to reduce costs and are subsidising employees rents in order to attract talent from London to the north of the country. With mortgage rates at an all time low there are some great buy to let rates which can be availed of.

Entry prices in Manchester start from £250,000 for a 1 Bedroom apartment and £290,000 for a 2 bedroom apartment. At Vesper Group we suggest buying a 2 bedroom apartment to benefit from the maximum rental income.

If you would like to find out more in relation to this do not hesitate to ask one of the team.