Traditional estate agents found to be good value for money

In this month's edition, we start off with reports that traditional estate agents have been found to be good value for money, in comparison to online-only providers. 

We also detail why the Tenants Fee Ban could be a good thing for landlords, there's news on a significant increase in mortgage approvals and finally, if you're interested in becoming a buy-to-let landlord, why not read our guide?

Traditional estate agents found to be good value for money

 

With recent changes to the landscape of estate agency, including online-only providers and new fee structures, it may come as a surprise to some to see that traditional estate agents are considered good value with regards to fees and value-for-money, estate agent comparison site GetAgent has found.

The review site has found that 84% of home sellers who purchased a property over the last year decided to use a traditional estate agent, with 69% of those feeling that the fee which they paid was good value for money. It would seem, therefore, that when making one of the biggest decisions that many of us will ever make, the traditional method of building a relationship with an agent who then leads you through the buying or selling process is still heavily favoured.

Colby Short, founder and chief executive of GetAgent.co.uk, said: “We’ve seen some big changes to the sector over the last decade through the rise and fall of the online agent and this consumer learning curve has led to an adjustment in opinion when it comes to the fee charged to sell a home.
“While a low fixed fee may have seemed like the future of home selling and many may have sold successfully via that model, a number of high-profile company collapses along with a consistent string of customer service failures has seen the market share of online agents fail to live up to expectation.

“Previously, the commission fee charged by traditional agents was seen as too high, I think the consumer is now starting to realise that you get what you pay for.

“To pay a few thousand pounds in commission to achieve a higher sold price while securing a buyer in current market conditions is ultimately much better value for money than a few hundred up front and no sale achieved at the end of it.

“Of course, the current lethargy plaguing the market is not ideal and has evidently had an impact on the price achieved and the time it’s taking to sell, but I think it has helped demonstrate the worth of a good estate agent which is a silver lining for the industry at least.”

Interested in becoming a buy-to-let landlord? Read our guide

 

Bricks and mortar have always been a bolthole for people looking to invest their money in a safe place and, despite recent changes to the lettings market, buy-to-let remains a popular investment avenue. If you are looking to become a buy-to-let landlord, then the results can be fruitful – follow our five tips below to start your journey!

Mortgage Matters
The first port of call if you are considering becoming a buy-to-let landlord is the mortgage market; either with your current mortgage provider if you are looking to convert a current mortgage into buy-to-let, or to the general marketplace if you are looking to buy a new property for lettings purposes. Ensure that you shop around for your buy-to-let mortgage as the marketplace is currently extremely competitive in terms of lending, which should help you to obtain favourable rates. If you are converting your mortgage, ensure that your lender has granted you “Consent To Let” before you move any tenants into the property.

Managed or Unmanaged?
With the recent surge in tenant and landlord legislation, managing your own property may seem like a daunting prospect. If this is the case, then look for a reputable estate agent who will manage the lettings process for you – this will take a lot of the stress out of letting a property for you. If you are more confident, then you may want to work with an agent to list your property and find tenants, but then manage those tenants independently – if this is the case then seek as much advice as possible and keep legislation at the top of your list as a landlord.

Landlord Insurance
When it comes to buy-to-let properties, you will need to make sure that you are covered for every eventuality. Specialist landlord insurance is a must, as well as buildings insurance, and if you have furnished a property then contents insurance may also be required. Speak to your chosen estate agent about their recommendations in terms of insurers and remember that spending a little on comprehensive cover may save you a lot in the long run.

Financials
Once you have your buy-to-let mortgage in place, you have your tenants in a fully-insured property and you are reaping the rewards, one of the key steps will be filing your taxes correctly. With buy-to-let being an investment source, you will have to pay specific taxes regarding the property and the profit which you are making from that; speaking to an accountant will help you to get your finances in order. Further to this, you will be able to offset some of your expenses and costs against tax – don’t miss out on these opportunities.

Target Market
It would be easy once you have your investment property in place to then sit back and relax. One of our recommendations would be to keep your finger on the pulse of the lettings market and adapt your property accordingly. Currently, the student lettings market is extremely popular and the potential rental yield extremely high, therefore it could be a good market to position your property within currently. As the economy changes, families may be the driving market in lettings, or indeed young professionals, therefore stay flexible with your offering and you may well be able to increase your portfolio.

Mortgage approvals hit highest level for over two years

 

After months of stifled activity caused by Brexit uncertainty, the UK property market continues to show signs of rude health. The latest example of this comes from mortgage approvals, which according to reports reached their highest levels in over two years during the month of April.

Industry body UK Finance have released figures detailing that British banks approved a total of 42,989 mortgages across the month of April. This was an increase of almost 2,500 from March’s total and marks the biggest annual increase seen in the market since March 2016. Remortgaging approvals also benefited from an increase, with a 5% rise from March to April and an 11% year-on-year rise.

The much-publicised delay of Brexit isn’t the only factor in this rise; unemployment levels across the country fell to their lowest levels since 1974 during the month of March and strong earnings growth alongside low interest rates have also played their part. Still, the delay of our exit from the European Union appears to have galvanised house buyers and encouraged them to proceed with their property purchases

“April’s marked rise in mortgage approvals suggests that housing market activity may well have got at least some temporary support from the avoidance of a disruptive Brexit at the end of March,” said Howard Archer, chief economic adviser at EY ITEM Club, an economic forecasting group.

It will be difficult for the market to sustain such numbers, especially as the year wears on and October draws nearer. Consumer confidence across the country isn’t as strong in comparison to France or Germany for example, according to the European Commission’s data, but given the shifting nature of the market over the last year, this certainly doesn’t represent a surprise.

Why the Tenants Fee Ban is a good thing for landlords

 

From 1st June 2019, the Tenant Fee Ban has been in place in England which will make it illegal for landlords to charge lettings fees and with deposits now capped at a maximum of six weeks’ rent. Whilst this policy clearly aims to provide security to tenants, the benefits for landlords are also palpable, both in the short-term and long-term.

On average, individuals are forecast to save £400 per tenancy with the new legislation and tenants should be feeling more secure without the spectre of fees hanging over them. With further moves towards pro-tenant legislation put forward by the Government, such as the abolition of Section 21 evictions (encompassing evictions whereby no fault needs to be declared by the landlord), it is clear that rigour in the marketplace is a high priority for the Government. With the so-called “Generation Rent” of younger tenants now becoming a real electoral force, this pro-tenant legislature is expected to continue in order to curry favour with this sub-section of the electorate.

Scotland, which brought in similar legislation seven years ago, has proved that banning the fees will have very little effect overall on the market. While many have been concerned that the lost fees will be reflected in higher rental prices, for Scotland only 2% of landlords actually increased rents as a direct result of the ban.

For landlords, although on the surface some of the changes to the market may seem like a challenge, many will have already adapted their practices for the market. Longer tenancies, some as long as three years, are already common in the marketplace and offer the stability which the legislation is looking to implement. A longer tenancy is clearly beneficial for a landlord as there is a long period of guaranteed stable rental income, and with a longer tenancy often comes better preservation of the property as tenants will treat the property with better due care and attention.

For landlords, the lettings market as an entity is likely to change in the long term thanks to these legal changes, bringing a different demographic of renters who rent by choice rather than necessity due to the favourable tenant market. With a new demographic of renters with higher disposable incomes available, this could provide a new avenue for landlords who are looking to increase their rental yields.