We often blog about the growing attention and value in the Manchester Property Market, as an independent letting agent, we have our finger on the pulse for all things property in Manchester and can advise you of the local trends and developments in the Manchester Property Market.
Recently The Manchester Evening News ran an article following a study by Hometrack, which set Manchester as the UK’s third most valuable Property Market in the UK. You can read the article here
Selective Licensing is currently active in North Manchester for 315 properties, this scheme has been in place since March 2017, and has required private landlords to pay Manchester City Council £750 per property to continue letting their properties – under threat of prosecution under Section 95 of the 2004 Housing Act
As one of North Manchester’s leading letting agents, we actively manage properties within this area and have had first hand experience of the process for Selective Licensing.
We are an ARLA registered agency, we are members of the RLA, NFOPP, the NLA and the Property Ombudsman Service. These are not just fancy letters, they all mean things for the way we operate and the standards to which we keep our properties, these associations in themselves regulate our activity, we hold nationally recognised qualifications in Property Lettings and Management and we closely follow latest legislation and regulations.
We do a good job.
Why then, when we pay all of our regulating bodies an annual fee to audit and monitor our activity are we paying Manchester City Council an additional £750/property to confirm what has already been proven beyond doubt by the highest authority in the Housing Market?
What Needed to Change?
Of the 315 properties targeted in Crumpsall, we manage or own around 40 of them so are well aware of the localised and wider issues affecting Crumpsall.
One of our regulatory bodies, the RLA, says this about selective licensing:
“An area may be designated for selective licensing either (i) if the area is (or is likely to be) an area of low housing demand or (ii) the area is experiencing a significant and persistent problem caused by anti social behaviour and some or all of the private sector landlords are failing to take action to combat the problem that it will be appropriate for them to take.”
From our experience, Housing Demand in Crumpsall is no lower than other areas in North Manchester, the entire city has high demand for housing, with a booming population and an ever expanding City Centre, affordable and accessible housing is at a high premium. Anti-social behaviour is somewhat out of our remit, we ensure the tenants renting our properties are of good standing, they keep their homes well and they can afford and do pay their rent on time, but anything above neighbour disputes of noise or rubbish, antisocial behaviour is wholly outside our sphere of influence as managing agents or as landlords. The third clause about Private Sector Landlords “failing to take action to combat the problem that it will be appropriate for them to take”, is a little vague, but as ARLA registered agents, we have rules and requirements in place for ensuring we are fit and proper persons to be managing the properties.
Was the problem the landlords, was the problem the demand for property or was the problem Anti-Social Behaviour?
Whats the Point?
Every property that we manage in Crumpsall has passed its Licensing Check to date, we had some disputes; at one inspection, that we didn’t attend with the council, they reported we were not eligible for a license for that property because there were no smoke alarms in the property. Immediately we called the tenant, popped round, and as they opened the door, we saw the downstairs smoke alarm in the hallway and within a minute we had checked and verified both smoke alarms in the property were correctly installed and working. When we queried the council, they admitted they had got the property “mixed up with another one”.
At £750 per property and potentially a landlords livelyhood at stake, is this really the kind of mix up that we want to be seeing by Manchester City Council?
Since 2015, If we let a house to someone without smoke alarms, we would be liable for recourse from: ARLA, NLA, RLA, NFOPP, Property Ombudsman and a £5000 civil penalty from the Government. We would be fined, our memberships stripped and we would not be able to operate as an agent.
Whilst its very positive that Manchester City Council are concerned and actively ensuring the safety of its residents, Licensing only applies to the private rented residential sector. Housing Associations/Local Authority housing is exempt, Owner Occupiers are exempt, Student Halls are exempt, live in landlords are exempt and care homes are exempt. So actually, the only properties that are liable are those which are privately rented.
Fit & Proper Persons
Selective Licensing essentially is a 5 year certificate to say that you can rent out one particular property. You are checked to be a “Fit and Proper Person”- essentially this is like a Landlords DBS Check, they look for:
any criminal convictions to do with violence, drugs, sexual offences or fraud
whether we have broken any laws to do with housing or being a landlord
whether we have been found guilty of unlawful discrimination
whether we have previously managed House(s) in Multiple Occupation (HMO) and broken any approved code of practice.
and they do this for every single property. Just like the ill thought out DBS checks, its a repetition of work and a waste of resources- checking this 40 times in as many days, will not produce any different results, but will keep someone busy and generate £30k of income for the council.
Why are Manchester City Council choosing to line their own pockets at the expense of landlords, agents and ultimately private rented tenants?
Do we agree with Selective Licensing?
Yes and no.
We recognise, accept and embrace the need to raise housing standards across the city. We absolutely agree that the rogue landlords and those providing housing that is not fit for habitation need to be cracked down on and dragged to standard.
But, we do not agree that reputable landlords, agents and those working well within the law should be further penalised to make up for the failings of others. Especially when Selective Licensing has been a scheme run in the past and was proven beyond reasonable doubt that it was at best ineffective and a major contributing factor to increasing rental rates in an area.
How Could it Improve?
The same scheme has, this week, been rolled out in areas of Rusholme and Moss Side, although Crumpsall was a “pilot”, it seems no changes have been made to the way the system runs and no lessons learned from implementing the initial wave of Licenses.
As the regulations and controls for rogue landlords are already in place by governing bodies, why hasn’t Manchester City Council considered teaming up with reputable and regulated agents, offered an affordable and mutually cooperative package for Licensing to ensure standards are raised and upheld by agents, and Landlords who self manage then have the option to be Licensed and monitored by the council OR use an already licensed agent who then takes liability for maintaining standards.
With over 60% of Manchester Private Rented sector Landlords already using an agent, this would give the landlords choice, the local agents an opportunity to lead the raising of standards, save the council resources AND ultimately prevent the entire burden of the cost of licensing ultimately landing on the tenants lap.
Right now, the way this scheme works, will do nothing to help tenants with affordability.
This week our lettings manager, Joe, discusses a real life example of a landlord increasing the rent on a property by 35% and managing to let this property within just one day. He talks about the benefits of properly maintaining a property, and how cosmetic improvements can have a huge difference on your return on investment as a landlord.
The North Manchester Rental Property Market continues to boom and demand is at a never before seen level, as an independent agent, Joe is helping landlords across the city realise the potential of their investments and achieve maximum returns. You can see more videos like this on our youtube channel: www.youtube.com/channel/UC1De9fjnKz1NtdI45iZE9XA/videos
To talk further with Joe about Investing in property in North Manchester, call him on 0161 681 3724 or drop him an email email@example.com
Earlier this week we met as a team and were notably hawkish about what may come to light this week in the the budget. The chancellor told us what we all already knew, the future is indeed uncertain. In this, the so-called “budget for the next generation” we have a number of key takeaways and thoughts.
Keeping politics and personal opinions out of the blog, we have included below just the facts as we see them, and the major factors that will cause an impact to the people we work with on a day to day basis. We are happy to discuss any of the key points here and how they will affect you. Either call us on 0161 681 3724, or leave a note in the comments section at the end of the blog and we’ll respond and open up the debate.
Landlords and second homeowners
A 3% Stamp Duty surcharge on second homes and Buy to Let properties from 01 April 2016 will be introduced and larger investors will not be exempt as previously thought from the stamp duty charges, meaning all purchasers of Buy to Let properties will pay the additional tax. This was expected not to be of concern to people owning 15 or more houses however this isn’t the case it applies to everyone.
21st March – Mortgage Credit Directive From 21st March consumer buy-to-let mortgages (on rented properties that are not being used as part of a business) will be regulated by the Financial Conduct Authority (FCA). Second charge mortgages (also known as secured loans) will also come under regulation. This could mean that financing deals become a little harder
Capital Gains Tax (CGT) will be cut from 28% to 20% for higher rate taxpayers and from 18% to 10% for basic rate taxpayers. Residential property sales and carried interest will be exempt from Capital Gains Tax (CGT) being introduced on 06 April 2016.
There will be an 8% surcharge to landlords selling a buy to let property meaning this benefit is not being passed onto landlords. We consider the reason behind this that because of recent tax changes in stamp duty and also the clause 24 meaning less tax relief on mortgages of BTL property’s (unless held in a ltd Company) many landlords are already considering selling if they were to benefit from the CGT reduction this would encourage more meaning an increased amount of property to the market that may create a crash in prices.
We consider all the recent changes in tax and legislation on current landlords will increase the rents. There will be more landlords moving out of the market along with no large increase in building will increase demand. As LHA rates are frozen for the next 4 years this will mean either attracting working tenants or expecting LHA tenants to top up their rents.
THE NOTHERN POWER HOUSE
We all have our own views on the current effectiveness of the Northern Powerhouse, or lack thereof, but the budget statement did have some promising news for our region, my key takeaways were:
A major issue for Manchester – and one the government has been under pressure to address.In response the Chancellor strayed out of his usual territory to set up a £115m fund to help tackle rough sleeping. Most of that will be used to provide ‘low cost’ accommodation for people leaving hostels before they get into regular housing, creating 2,000 new beds.
It is also delaying a planned cap to local housing allowance by a year – and getting immigration officials to work more closely with local authorities to send back EU migrants who end up sleeping rough, a significant problem in Manchester.
The city has seen rough sleeping rise tenfold since 2010 and there is no sign of that rise slowing.
It is so far unclear how that money will be allocated – whether it will be done according to population size or the current rough sleeping figures.
Nevertheless the big structural problems that underpin our rising homelessness still remain: cuts to benefits and a chronic housing shortage but this is only expected to get worse by the unfair taxing of landlords
Greater Manchester has been handed control of all its business rates in replacement of its main central government grant.
Along with Liverpool and London, the area will move towards a model where it is far more reliant on the taxes it raises from local firms going forward.
At first sight the figures for 2016 would suggest Greater Manchester as a whole will be £80m better off as a result.
However there are all sorts of unknowns – including what happens if a huge economic downturn hits the region, such as when the steel industry collapsed in the north east.
There are currently revaluations taking place across the country, due to come in in 2017, that will be used to reset the amount paid by businesses in rates – so that could dramatically alter the amount of income available to councils.
Within Greater Manchester there is the issue of how the money will be redistributed, given that as it stands areas such as Rochdale and Oldham would lose out significantly compared to those such as Manchester and Trafford, which would gain enormously.
But perhaps the biggest danger is also contained within the Budget: thousands of small businesses – 90,000 across the north west – being taken out of business rates altogether.
That looks dangerously close to making a very generous tax cut – and making town halls pay the price.
High Speed III train between Manchester and Leeds has been given the green light. This will only help as increased infrastructure and improved transport can only help house pricesProbably the most significant part is £161m for the Highways Agency to speed up improvements to the M62 on both sides of Manchester , but money was also committed towards bringing town train journeys between the two cities to half an hour.
He also found £4m towards the eventual transformation of Manchester Piccadilly – and other northern stations – ahead of HS2’s arrival in more than a decade’s time.
Greater Manchester is to become the first English region to get new powers over the criminal justice system.
Chancellor George Osborne used the Budget to announce further devolution of powers to the area.
The change means decisions on offender management, education in prisons and work with youth offenders will be made locally.
The region’s Labour mayor, Tony Lloyd, said “we will have to read the fine print” to make sure there is “no loss”.
The Chancellor also announced the region will get a new prison and will keep 100% of business rates, beginning next year. Greater Manchester Combined Authority, which comprises the region’s 10 councils, said it will have more control of funding to support both offenders and victims of crime.
It is proposing devolving other budgets, including for female offenders, young offenders and those sentenced to fewer than two years in prison, which would mark a major change to the current system.
Announcing the change, Mr Osborne said: “This is the kind of progressive social policy that this government is proud to pioneer”