Latest news from Gilson Bailey

The UK has the cheapest Estate Agent fees in Europe

For most of us, the purchase of a property will be the biggest single expense which we ever have to cover, and the fees associated with this are often touted as expensive. However, a recent report has shown that fees in the UK are the lowest in Europe and therefore the old myth of expensive fees has been debunked, with other parts of Europe up to five times more expensive than the UK.

The average commission paid on the sale of a property in the United Kingdom is 1.2%, according to analysis from GetAgent, which is lower than all other European countries, with Denmark and Ireland next cheapest at 1.25% and 1.75% respectively. On the other end of the scale is Romania with an average fee of 6% - five times more than the UK.

“I think it’s fair to say that estate agents in the UK have a tough time of it when it comes to justifying their fees, with the predominant opinion being that they charge to much for the service provided,” said Colby Short, GetAgent’s chief executive officer.

“This really isn’t the case and as this research shows, the UK is actually home to the lowest estate agent fees in the EU and therefore you could argue, the best service as well. Of course, the price of property means there is a degree of relativity and the 6% commission you might pay in Romania will be a lot lower due to the lower cost of getting on the ladder,” he pointed out.

“So while you consider if three to four thousand pounds is a justifiable spend when selling a property for hundreds of thousands, remember you could be paying upward of ten thousand if you were to live in another area of Europe,” he added.

Lettings developments; The Tenant Fee Ban

If you’re a tenant or landlord, then it has been hard to avoid all of the recent coverage of the Tenant Fee Ban. Essentially, the new Act means that tenants will no longer be charged for extra services from June this year. Take a look at the key points below to make sure that you are up-to-date with the latest legislation, whether you’re a tenant or a landlord.

Headline changes:

Landlords will only be able to hold up to 5 weeks rent as a tenancy deposit.
The holding deposit, to ensure the tenant application, can be no more than one week’s rent.
All other payments will be banned with the exception of contractual default penalties.

What can no longer be charged for:

Charging for a guarantor form
Credit checks
Inventories
Cleaning services
Referencing
Professional cleaning
Having the property deflead as a condition of allowing pets in the property
Admin charges
Requirements to have specific insurance providers
Gardening services

Two default fees are exempt from these changes and can still be charged for should the tenant break the Tenancy Agreement. These exceptions will have to be written in to the contract, however, in order for a landlord to be able to charge tenants, despite being also highlighted in the new legislation;

1)Late rent fees

Under the new Act, landlords will be able to charge a late rent fee for payments more than two weeks overdue. The fees can be charged at an additional 3% plus the Bank of England base rate at the time, but this must be charged on a pro-rata basis.

2)Lost keys

Once the new legislation comes in to the place, a landlord may only charge up to £5 for a replacement key, and they must provide a receipt.

To read more about The Tenant Fee Ban click here to see the legislation in full.

Lettings developments; Fitness for Habitation

With the furore around the Tenant Fee Ban, it has been easy to miss the latest lettings legislation which came in to place last month on 20th March – the Fitness for Human Habitation Act. The implementation of this Act means that tenants will have further rights to request improvements to homes which fall in to the “sub-standard” category.

The Fitness for Human Habitation Act is a revival of the Landlord and Tenant Act from 1985, essentially reinforcing the covenant and bringing the standard of lettings accommodation back to the forefront of legislation.

Who does the Act apply to?

The Act will apply to;
• Tenancies shorter than 7 years, starting on or after 20th March 2019
• Tenancies renewed for a fixed term on or after 20th March 2019
• From 20th March 2020 the Act will apply to all periodic tenancies that started before the initial commencement date of 20th March 2019 – landlords with current tenancies therefore have 12 months before the requirements from the Act come in to place.

How would a property be deemed unfit for human habitation?

The Act stipulates 29 different ‘hazards’ which determine whether a house is ‘fit for human habitation’. The hazards included but are not limited to;

• Condensation, damp and mould growth
• Excessive cold or heat
• Security (or lack, thereof)
• Fire, gas and electrical safety
• Natural lighting
• Water supply
• Sanitation
• Facilities for preparing and cooking food
• Hazards posed by the internal arrangement
• State of repair

Your property might be deemed unfit “If, and only if, it is so far defective in one or more of those matters that it is not reasonably suitable for occupation in that condition.” If a property is deemed unfit, then it is the landlord’s responsibility to make improvements to the property and/or compensate the tenant.

Are there any exceptions to the Act?

There are some exceptions in cases where:
• The problems with the property are caused by tenant behaviour
• The problems are caused by ‘acts of God’ such as storms, floods and fire
• The problem is caused by the tenants’ belongings

To read the full government legislation click here.

Mortgage market gets off to strong start

With almost 67,000 mortgages approved in January, 2019 has started strongly for the property market. Despite fears for the housing market this year, this represents an increase in activity from the end of 2018, showing that 2019 could surprise many when it comes to the upward trend in property.

“January’s rise in mortgage approvals is at odds with recent data and surveys which had suggested that Brexit and economic uncertainty could having a dampening effect on housing market activity,” said Howard Archer, chief economic advisor to the EY Item Club.

The surprise seen amongst analysts indicates that the upsurge in activity is unexpected, but there are several factors that are contributing the market’s current health. A major contributor is, of course, the low interest rates in the market, which have supported purchasers and given the lending industry much confidence. Many current property owners have used these historically low levels in order to refinance their loans and find a better deal.

The emergence of first-time buyers as one of the major forces in the property market is another contributing feature to this unexpected upsurge, as well as the increase in mortgage applications, as for the first time since 1995 first-time buyer mortgages made up over half of mortgages approved in 2018.

The strength of the first-time buyer market in 2019 can be seen in the 25,000 mortgages taken out in the first month of 2019 by first-time buyers, according to banking trade body UK Finance. A total of 33,621 mortgages were approved to purchase a home last month, according to data from UK Finance which represents high street banks and building societies. This also represents an increase when compared to February 2018 of 1.8% - which is fairly significant considering the march towards Brexit was firmly taking place through February.

With summer firmly established as the most popular time to buy and sell, we are moving into a particularly busy time of the year for property and therefore, this resurgent health of the market should continue for the foreseeable future.