OFT vs Foxtons - Update 8th May 2009

I have spoken to David Oliver at the National Federation of Property Professionals this morning who has advised that the Foxtons / OFT case was heard on 27th April and the Judge has asked for time for the case to be considered before making a verdict. The decision is thought to be expected at the end of May. Watch this space!

Avoid an empty property creating you a void period

Excess supply and falling rents is a ‘pattern replicated over most of the UK’ according to the FindaProperty rental index. There is an increase in properties being let by “Accidental Landlords” who have decided not to sell and let and as a global recession is stronger in Europe than the UK there has been a decline in Corporate Relocation, there has been more empty stock in the upper end of the rental scale, all of which has contributed to the falling rents.

So as a Landlord - what do you have to do to ensure your property is the one that is getting the viewing's and most importantly, securing a tenant?

SurreyLets are keen to explain to Surrey Landlords that in your property needs to stick out from the crowd. If the property is furnished, it should be staged to best demonstrate what rooms are used for and what space is available. Property should be sparkling clean and neutrally decorated. Externally the property should have kerb appeal, clearly identifiable with a number or a name and the front looking really smart and well cared for.

Once you are satisfied the price is right and the presentation perfect and the property is still untenanted, SurreyLets suggest you try some tenant incentives like a "rent free" period (after all - if the property is going to sit empty for another month two weeks free is irrespective if your tenants move quickly) or a "cash back" upon checkout at the end of the tenancy. I know of one Landlord at the moment who has a holiday let that's sitting empty, so she is advertising a weekend away to her tenants, another Landlord in Cobham offered 2 weeks rent free and within days the property was let above others in it price range - do anything to stand out and attract prospective tenants to your property.

The way we do business is changing......

The way in which we do business is changing. As a nation we have gone from the cottage industries where we shopped locally and knew the name of the bank manager and only did business with those who we knew and trusted, to the 90’s world of overseas call centres and automated calling. The world wide web offering making the world a contactable smaller place, the rise of the large and faceless corporation and the relief when we heard we were only 5th in the queue to now, 2009, the last part of the first decade in the third millennium. The phrase “Third millennium business” is becoming more frequent, but what actually is it and why is a Letting Agent writing about it?

Third Millennium business will bring together the era of Web2 and the rise of social media. As we are more conversant in technology than ever before we will use the web to upload and share more. Facebook was one of the largest rising social network groups amongst middle aged people. We use the web to find businesses and services and to find and share information with other people. We use people in our friend groups and contact lists on social media sites to link into business and products. The faces and contributions of people on these sites become people we trust and want to do business with. Third Millennium business cuts out the larger corporations because people buy people first and gravitate to do business through people they trust. We no longer automatically trust the suited corporate bankers, the hard sales person and the politician. This form of Authority is not what it once was, we want to do business with people we trust, people with a profile, we want honesty, transparency, accountability, communication. We want to deal with people

SurreyLets uses these principles in its marketing as an online virtual company. It offers a complete lettings and property management service, corporate and private relocation, home search services and add on products like rental guarantee. You deal with the director, Sally Asling, who is a Fellow member of ARLA and been in Lettings for 18 years has an impressive CV covering all aspects of the industry. SurreyLets is the vision of Sally Asling who wanted to offer a more personal and professional service to Landlords and Property Investors. Recognising the changing pace of third millennium business SurreyLets can be found on Twitter and posts current and relevant information and industry news via the means of blogging. SurreyLets deals in real time internet mediums so that wherever you are in the world, contact is easy quick and simple.

Why is SurreyLets Different?

I am often asked why SurreyLets is different. To answer this, I need to explain a little letting's history first!

Having worked in this industry most of my working life, over 18 years I have seen the industry go through dramatic change. In the early 1990's when letting for the first time commercially was gaining a momentum and "Buy To Let" was leading the market through to today where we have an industry that is very different. I recall that there was not that much legislation to hand back in the early 1990's, and certainly very little regulation for Agents. Estate Agents were suffering in the Housing Slump of the late 1980's and were turning to letting's to be the new "Cash Cow" - after all, anyone could let a house!

This may have been around 18 years ago - but there is some argument to state that these patterns are happening again. But has the industry learnt its lesson? There well may be lots of legislative change, but is it being implemented by the masses of small start ups and who is regulating it? Or is it only discovered when its too late?

I also recall that when the sales market picked up in the mid 1990's when letting's legislation started creeping in that several Agents who were starting to again do well with Sales, dropped letting's like a stone. Suddenly all those management queries were too much trouble, all available staff were resourced back into sales and Letting's firmly had the place of the poor relation. Who suffered? The agents existing client Landlords. There were stories also in the 1990's of companies who did lettings closing, leaving clients stranded and in some scenarios taking the money held on deposit with them. Lets be under no illusion that with the rate of Lettings Agents opening, could these trends be repeated?

For many larger organisations in the realisation that letting's would provide a steady income stream, they began to invest in the Lettings side of the business. These companies invested in their staff and put them through courses offered by The Association of Residential Letting Agents who formed in 1981. ARLA became a voice to support letting agents and Landlords and to communicate, and make sense of, the legislation that came in fast and thick as the country saw the problems that had been created by the lack of regulation. The industry was without doubt improving.

However, for many larger corporate companies, it is my opinion that the balance at some point tipped and Letting's became a little too much focused on front line sales.It became a money making machine and less of an ongoing dedication to service and support. Companies separated the paperwork from the sales people and created letting's negotiators who were target driven, but knew little about the legislation or contract law. The back office staff often great administrators, but lacked in expertise. I spent considerable time in my career dealing with "Customer Service Issues" and top of the list of faults was internal communication. The offer was not always put through correctly, details were missing that became a problem further into the tenancy. As ARLA courses became more expensive, not everyone did them. Many branch staff would have no industry qualifications, sometimes each branch with just one member with a basic foundation knowledge. As the industry grew further some companies departmentalised accounts / property management / renewals etc and clients had several numbers to call for points of contact often spanning the length of the UK if not overseas! Whilst sales soared, service slipped. The administration centre roles employed untrained people often starting a career and placed them in charge of managing clients property. This is not the case with every agent, there are some agents that are larger and have retained the balance, there are some who have not.

Over 18 years the way a property is marketed has changed totally. I recall 18 years ago newspaper adverts were the only media used. Now, very little is gained from the paper and the main portals quote as many as 95 -97% of tenants are finding a home via the Internet. More recently mediums such as Facebook and Twitter are working as this deals in realtime. However, the corporate world for the majority holds is, in terms of its marketing, restrictive and the staff in branches are dictated to following the "same old" methods, that are rapidly becoming outdated.

Corporations in the mainstream are closed, controlling and selective. We are now seeing the rise of the Individual, the consumer is demanding that personal service is bought back, they want to know who they are dealing with and they want that person to be an expert in their field, not a one trick pony. They don't want to be "sold to", they want to have information so they can make informed decisions, they want to form a relationship with a person who they trust and have a mutually beneficial relationship.

So, why is SurreyLets different? Its different because I have experienced and lived through the changes in the industry. There are over 100 pieces of legislation that have been digested into everyday speak and even more invaluable are the thousands of scenarios I have practically dealt with. Anyone can learn, experience has to be gained. I can see what is wrong with the industry, and therefore have built my business on what I believe is right. I am an individual member of ARLA and SurreyLets is in the process of becoming a member body, because I believe that the industry should be regulated and the consumer should know that their agent has client money protection, insurance and are conforming to a code of conduct.

Above all I believe that we have to bring back good, honest personal service, we need to bring back the basics of being available and caring about what we do and caring about each other as people first and foremost. Its not solely about doing lots of deals without a second thought and most of all, not running away when things go wrong. This industry has its pitfalls that are sometimes unavoidable, but being able to help my clients through that is something I will do. I may not have a magic wand, but my knowledge, experience willingness to listen and help is what makes Surreylets different.

SurreyLets - this is the name
Understanding People, Understanding Property thats its aim!

Testimonial kindly provided by Vanessa Warick of 4Wallsandaceiling. 4walls are an inspirational property company embracing social media and inspiring people in property.

"It has been a genuine pleasure to have Surrey Lets as one of our service providers. Sally has tremendous experience in the lettings arena, and is truly committed to offering exceptional service to both Landlords and tenants. She offers a highly personal and professional service which is what makes her stand out in the over-crowded lettings world"

NLA reporting high rental arrears, SurreyLets advise Landlords to take rental insurance

SurreyLets are advising Landlords strongly to take out rental insurance on their new tenancies in the light of recent data from the National Landlords Association.

According to research from the National Landlords Association (NLA), 37 per cent of landlords currently have tenants in arrears.

• Over the last six months, 44 per cent of Landlords have experienced rental arrears. The NLA says this explains, in part, the increased number of repossessions and why a growing number of landlords are having problems meeting their mortgage repayments.

• When faced with arrears, the NLA's research showed that only 50 per cent of landlords attempted to recover the loss of earnings through the courts. This was because, while most landlords found the court system straightforward, many reported waiting times of over three months before their case was even heard.

SurreyLets Director, Sally Asling comments: "These statistics are worrying, Many Landlords have a tight margin between rental payments in and mortgage payments out, a month or two or arrears could present serious problems for a Landlord, and I am amazed that for approx £100pa Landlords are still not taking out a rental guarantee insurance, which is widely available"

Sally Asling further comments "SurreyLets have noticed a considerable number of Landlords trying to Let through the private ads and not re marketing through Agents. When questioned, Landlords are explaining that as rents have gone down, there is no margin to pay Agents fees, so they are trying to do it themselves. This is leaving them exposed as the quality of referencing is generally not so good, and the quality of tenants normally not so good as they are avoiding using an agent for a reason, and in my experience this is to avoid stringent reference checks that good agents undertake"

SurreyLets, offer via Endsleigh Insurance, several options for Landlords to purchase Rental Guarantee Insurance once the tenants have passed reference checks through Endsleigh. The cost can be from as little as £55pa on a single occupancy tenancy and from £99 for a property - quotes are available on request.

Sally Asling states "Here at SurreyLets we appreciate times are tough and money is tight. We appreciate the importance of letting a property quickly at a rental that can be viable, and above all we believe in putting the right tenant into a property where the tenant has undergone stringent vetting and we advise all Landlords to take out rental protection - for peace of mind. No agent Guarantees the rental, despite what service they offer, only an insurance product will do this. The statistics speak for themselves, so for a small amount of premium, it could be a saving grace."

For more information about SurreyLets please visit the website www.surreylettingsandpropertymanagement.co.uk or call 01483 282 470

SurreyLets - Interested in the outcome of the Foxtons VS OFT case

Following much criticism from Landlords about Unfair Terms in Letting Agents contracts, the Office of Fair Trading this week has welcomed a Court of Appeal judgement (OFT vs Foxtons) which is due to be heard on 27th April 2009

Foxtons, like many Letting Agents charge a renewal fee, normally equivalent to the Tenant Finding Fee, when a contract is renewed by the existing tenants. Landlords for many years have felt that a "Tenant Finding" or "Tenant Introduction Fee" should be a fee charged once for the service of introducing / finding a tenant. Indeed, at the end of that initial period, a Landlord is right to ask " why am I paying this again? I have paid it once". The agents argument is that the fee is calculated on "The gross monthly rental for the duration of the Let" - therefore if a Landlord is enjoying the benefit of that tenant that the agent introduced, they should have the right to the fee "for the duration" from the tenant.

The OFT issued the proceedings under the Unfair Terms in Consumer Contract Regulations 1999 in the early stages it appealed against a ruling by Mr Justice Morgan that any injunction on unfair terms could only apply to future Foxtons’ contracts - opposed to current existing contacts. The Court of Appeal has now overturned this ruling, confirming the OFT’s long-held view that it can take enforcement action in relation to both existing and future contracts.

The OFT issued the proceedings under the Unfair Terms in Consumer Contract Regulations 1999 in the early stages it appealed against a ruling by Mr Justice Morgan that any injunction on unfair terms could only apply to future Foxtons’ contracts - opposed to current existing contacts. The Court of Appeal has now overturned this ruling, confirming the OFT’s long-held view that it can take enforcement action in relation to both existing and future contracts.

However, what is interesting in this is if the OFT is successful in its case against Foxtons, then it will impact contracts issued by every letting agent the length and width of the UK. All contracts will be required to follow the ruling - which could have an overwhelming impact on the letting's industry. One firm of solicitors are already poised to help Landlords wishing to challenge their letting agents over renewal fees paid over the last several years. If the court agree that renewal fees could be paid back to Landlords on exisiting contracts - I question how many agents in the current climate will have the funds to survive this. One can only hope the court are sensible in the judgement to take into consideration the affect on all parties

There is also the question of Rent Collection and Management Fees being placed under scrutiny. Agents "typically" charge 10% for Let Only, 12.5% for Rent Managed and 15%+ for Full Managed. The latter two are normally collected monthly as an ongoing fee. However, it is clear that there is an element of the Let Only fee that is built into this, so it will call to question the ongoing % charging at 12.5 or 15% for the term.

The way I see it, the industy will have to adapt a different fee structure, with a % or Fixed Letting Only Fee payable once the tenants move in and a % taken monthly for ongoing services such as rent collection or management. This is a policy that SurreyLets use as it belives itself to be transparent and fair.

Complaints against Estate agents will shift to Lettings as Estate Agents venture into Lettings with little experience....

Complaints against Estate Agents have increased despite the property market slump state the Ombudsman for Estate Agents with one trade body reporting that they expect the majority of complaints to shift toward letting's in coming months.

ARLA - the Association of Residential Agents has sites that one of the reason for this is that many Estate Agents are shifting their business into lettings as house sales have been low. ARLA aslo stated that in their survey amongst its members as many as 76% reported that Estate Agents in their area had started to do lettings.

SurreyLets Director, Sally Asling comments " Its hardly surprising to hear that complaints are increasing, to be a good letting's agent you need to know a lot more than just negotiating an agreed rental price, which is what many Estate Agents think is involved. I hear many negotiators in the industry who have been roped into letting's to boost business think it really is as easy as getting an offer and agreeing a rental. One only hopes that their is a great deal of expertise in the branch to follow the let through correctly"

Ian Potter from ARLA states, "This is a big concern for Landlords and Consumers.....In order to make the transition from an Estate Agent to a Letting Agent, they need to have studied more than 100 different pieces of Lettings Legislation, and pass a minimum competency test to ensure their ability to advise clients to the required standards"

Sally Asling, SurreyLets comments " I agree 100% with Ian Potter. Estate Agents who do not have the required competency could be doing a huge dis-service to their clients and may not protect them because they do not have the right knowledge. Historically, I have seen Estate Agents issue the wrong tenancy agreements, not serve correct notices and not advice clients of the correct legislation leaving them with the problems further down the line."

Sally Asling is also keen to points out that Landlords who are most vulnerable are first time Landlords. As many homeowners cannot or do not want to sell in the downturn, they look at lettings instead. However the Letting's Market has undergone total transformation in the last decade and Estate Agents who are not trained in Letting's may not be equip to ensure they are able to service Landlords who will not be aware of legislation regarding the Law and Letting's or knowledgeable in issuing correct advice about Tax, Management, Notices etc. Letting's is an ongoing client relationship, and Landlords should look for expertise in their Letting Agent.

SurreyLets Director, Sally Asling has 18 years experience in Residential Letting's and Property Management and is a Fellow member of the Association of Residential Letting Agents. SurreyLets are dedicated to ensuring their clients receive the very best advice so they may make informed decisions.