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LettingFocus

Unbiased buy to let, property investment and letting coaching, mentoring, advice and seminars for landlords from top selling property author and media commentator.

Rugg Review Government Response by Lawrenson of Lettting Focus

In this bog I will look at the Government Resposne to the Rugg Review
But first, did you know that 90% of UK households are potentially eligible to access state aid to cover their housing costs?
I have to say that surprised me too when I read it in a piece of research from Knight Frank.
So, no longer do you need to be a key worker to get help. Knight Frank say that £60,000 of household income is now the accepted limit for eligibility for access to most shared ownership schemes and they add that there is talk of this limit being raised to £74,000 in London where Mayor Boris Johnson has “equated eligibility to cover everyone paying basic rate income tax.”

Front of Queue
Of course, just having a household income of £60K won’t cut you to the front of the queue for one of the many schemes.
A friend of mine who tried to find out more was told that most of the schemes were already fully “sold” out of cash within a very short time of getting the money in from the state.
Mmm, what a strange state of affairs it is when money for housing is rationed to those fastest off the mark for one or other of the subsidised or shared ownership housing schemes?
It all show that we really need a fresh debate and new thinking on housing.

Government Response to Rugg Review and Consultation
Talking of fresh thinking, if you ever have a few hours to spare you really ought to read the generally excellent and well observed Rugg Review into the Private Rented Sector.
For the most part it is full of good ideas and reasoned arguments.
Also, worth a read is the Government’s Response to the Rugg Report and Invitation to Consultation. Put "Government Response to Rugg Review" in your Search Engine.
Whilst I liked the Rugg Review, I did have a few issues with the Government’s Response to it.
In particular, the Government does not think that landlords have to “wait too long to get a possession hearing.”
Well that is a matter of debate.
What they don’t seem to understand is that once a landlord has an order in his favour, it does not end there.
If the tenant does not go by the end of the period in the possession order notice, then the landlord has to appoint a bailiff – and this all takes a long time.
In the experience of one of my clients (who by the way got his tenant from hell from one of the many fly by night letting agents), at least another 6 weeks can be added to the process.

Section 21 and Section 8
Also, they don’t understand that you can only use Section 21 (the so called accelerated possession procedure) when the fixed term in a tenancy agreement has ended.
If it hasn’t ended and is not is nearing the end soon, then you must use the Section 8 notice and normally you cannot even start proceedings until at least 2 months is overdue in rent.
This actually means that from the last time you received rent to having a bad tenant forcibly evicted by bailiffs can easily take 5 to 6 months. I’m sure most people - even the Government - would accept that this is an unreasonable period of time.

Government Fixation with "Build to Let" Won’t Die
Also, unless I have got this wrong, I recall that Dr Rugg recommended against the involvement of big institutions in “build to let” given that she found that small landlords did a pretty good job as it is on the whole. (All we need to do is weed out the rogue landlords – a thing we are all agreed on!)
So, given the good growth of private rented sector (from 8% of all housing stock in the late 80s to about 12% now) and the generally happy view that most tenants have of their experiences in it, why does the Government seem to be so determined to get the big institutions involved in the sector?
Is there something we should know? Is it just me, but I always smell a rat when a Government wants to give something to big business even when its own advisors have indicated it may not be such a bright idea.
There goes the gong for my dinner. Must go!

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property book for the last 3 years.
What’s unique about LettingFocus is that I offer independent unbiased
property seminars covering property investment and letting because unlike most people in the buy to let and property “advice” business I am not linked to a property company, developer, agent or bridging loan financier.
I can tell you where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to make sure you get tenants who are going to pay the rent and how to manage a rental property to make money.
I can also comment on how to avoid getting a bad tenant.
I can answer most questions on letting property because I have been a landlord and property investor myself for over 25 years.

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Are New Build Flats Good Investments? Lawrenson of Letting Focus Takes a Look

If you are thinking of buying a new build flat, be careful because it’s now clear that increasing numbers of properties bought off-plan as buy-to-let investments are being sold at large losses through auction.
Auction houses are reporting a steep rise in the number of new builds going under the hammer.
Many of these are flats bought off-plan two or three years ago with rental guarantees.
They were often bought on fixed-rate mortgages which came to an end at the same time as the rental guarantees finished, leaving landlords stuck on much higher borrowing costs, buy wth lower rental income and possibly no tenant.
It gives me no pleasure to say I have been predicting this for 5 years.
The situation is, of course, especially grim for flats where investors have bought in a block of hundreds of other investors who are in the same situation.

New Build Prices Going Down
New build prices have also gone down each month for the last three months, according to SmartNewHomes, while UCB Homeloans, part of Nationwide is one of the main lenders who has stopped lending to landlords buying new apartments. It's not the only lender to have stopped either.
Knight Frank research show that yields are now at their lowest levels on new build flats.
Chris Town of the Residential Landlords Association is quoted in “The Times” telling of one landlord in Leeds who has recently been forced to reduce his monthly rent from £1200 to £800. My message is to avoid areas where there is an oversupply or can be expected to be an oversupply of the same kind of property in the future- and where there are too many landlords chasing a small pool of tenants. This is the situation in many cities in the north and the midlands of England right now. And it will remain so for some time.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased
seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unreguated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

THE PAGES AT OUR SITE, LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
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For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
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Related Article
This article look at the credit crunch and how it is going to affect house prices generally:
http://www.lettingfocus.com/pages/myarticles_CreditCrunch.html

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Copyright of Blog: David Lawrenson 2009. This blog is updated roughly once a week usually on a Monday or Tuesday.
WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
Over on the right hand side under all the previous blog entries you will find a button which says “Site Feed.” Simply copy the site feed link into your News Reader or News Aggregator.
If you have a website & are thinking of reproducing material here, that’s fine but we DO require a link to the blog to be included, including also all the links in this section. (The full article including all links must be available to ALL VIEWERS of your site and not restricted.)
Copyright: David Lawrenson 2007. This blog is updated at least twice a week. Permission must be sought before using the material in the blog.

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