31st July 2008 - CHOOSING THE RIGHT AGENT

Everybody knows that the sales market is currently going through a difficult period. This of course makes life difficult not only for vendors and purchasers for also on agents who rely on selling houses for their livelihood. The lettings market however remains extremely strong. As a result there seems to be a relentless growth in the number of new agents starting up or firms who have previously relied on house sales all of a sudden entering the lettings market. It could be argued that currently letting houses is easy. It is important however for home owners to understand the real difference between selling and letting. If you are selling a house you want an agent who is going to get the best price for you at a competitive fee and do an honest straightforward job. Once the property is sold that is it, it is a done deal.

Letting is very different. Letting is an ongoing transaction which may last several years and it is not just a question of putting a tenant in a property and collecting the money. Lettings is a very complicated business with very many pitfalls and it is after the tenant has moved in that the expertise of a good letting and management agent really comes to the fore. It is something which can only be learned with experience. On many occasions we have taken over properties from inexperienced agents and are horrified with the standard of service which they have been providing their landlords. Tenancy agreements which are not strictly legal because they have not been dated or signed correctly, blank faces when electrical checks are mentioned and deposits incorrectly held etc. etc. This is quite horrific.

The question landlords need to ask themselves is whether they would trust their health, family, car or anything else important to them to someone who has “just started out”.

Landlords should think very carefully before appointing agents as there is now a huge choice in the City. Landlords should be asking how long the agent has been letting properties. (There are some very good firms in Cambridge who have been in business for 25 for many years including ourselves.) Also ask what professional organisations do they belong to? ARLA, RICS? How experienced are their staff? Are they able to offer a 24 hour emergency call out service? Are they authorised by the FSA to deal with the landlord’s insurance? Do they have any cover when the “lettings person” goes on holiday or is ill? Do they know what to do when something goes wrong?

Letting property and property management is a skill learned over many years. Expertise comes with practice and practice comes with experience.

7th August 2007 - Buy to Let Market

Bradford & Bingley have recently published a Buy to Let Confidence Study which is a representative sample of property investors in the United Kingdom.

Most home owners and investors will be aware that the sales market is now considerably quieter than it has been for many years probably largely due to the rise in interest rates. The survey was commissioned in light of interest rate rises. 42% of landlords had experienced void periods in the last six months and of those 42% 50% said it was for four weeks or less. This still means that a quarter of the market has experienced void periods of more than four weeks. This is not the experience in Cambridge where the rental market remains not only very strong but now very competitive. A number of years ago tenants would rent virtually anything as they had no choice. We are now estimating that the majority of tenants are viewing at least ten properties before making up their mind and therefore it is critically important that landlords present properties properly and that they are correctly and attractively priced in order to attract tenants.

71% of landlords reported that they had no arrears. This means that 29% have! Again this is not experienced with problem arrears running at less than 0.25% of the portfolio we manage.

62% expected rents to stay the same over the next six months. This is very much in line with our own experience with rentals having been stable for some considerable time but subject to seasonal variations as is normal.>br>
We all read in the press reports of people who have made fortunes with large buy to let portfolios. 6% of those who responded had 25 or more properties but by a long margin the highest percentage was 63% who had between one and five properties with 35% having between one and two properties. This indicates that the buy to let market is still very much populated by small investors perhaps looking for a securer pension.

Confidence in the buy to let market did however remain strong. There was a level of optimism that the demand for rented accommodation would continue to grow and will always remain. We agree! for information regarding buy to let contact Robert Russell on 01223 521152 or for information relating to buy to let mortgages contact Phil Duff on 01223 569306.

17th November 2006 - HIPS AND A DRY RUN

Cambridge has been nominated as one of the areas for the dry run of the Home Information Pack (HIPS) which the government is intent on introducing next year. For those members of the public who are unaware what a HIP is it will be a pack which vendors will need to provide before their property can be marketed with documents like draft contracts, searches, guarantees etc. included. Originally it was also going to include a condition report on the property although this has now been dropped.

The idea of the pack is to speed up the house selling and buying process. The whole thing is almost universally regarded with disdain and scepticism by agents, has been campaigned against by the National Association of Estate Agents in its current form and has already cost and wasted millions of pounds with Home Inspectors having the rug pulled from underneath them halfway through expensive training courses only to be told that, whilst their services will be needed to carry out energy ratings, the condition report will become optional (and therefore of course not taken up). It is therefore little wonder that, despite the fact that Cambridge has been selected for a dry run, there is little interest in many agents in participating.

The introduction of the HIP is still being campaigned against, the Conservatives have said that if they were in power they would abolish it (does this mean it could be introduced and then when we have a change of government it will be abolished?) and will yet again the government back off just prior to introduction? This is a common policy and many will remember the in 2006 investors were going to be allowed to use part of their personal pension scheme to buy residential property, insurance company pension provides and other companies invested millions if not billions of pounds in getting ready for this only for the Chancellor about two weeks before representation to withdraw it. The introduction of HIPS has already been put back several times and dry runs have been taking place in Bristol for years.

Independent agents will, as they always do, be ready for full implementation if and when it happens. Russells have in fact been offering a dry run opportunity to vendors for some considerable time with what is called HIP Light. This was essentially a pack without a survey. Public interest is almost zero.

It may well happen, in fact it probably will and Russells as one of the leading independent agents in the area will be ready. It is however not going to solve any problems. Vendors will need to pay for the packs either up front or at the end of the process if they sell their house but will inevitably be faced with a bill if they put a property on the market and then subsequently withdraw it. This will further still diminish the number of properties available for sale and there will be a significant reduction in the number of people putting their house on the market when they see something that they would like to move to. How many cash strapped home owners are going to spend £700 on the possibility that they might or might not get the house that they want? The government tell us that the process needs speeding up. Whilst the current system may not be perfect, in November our Littleport office dealt with one sale that went from viewing to completion in less than three weeks. This is by no means unusual and it can be done in a matter of days if there is a will to do it. What normally holds up a sale is a chain and problems with the property which are highlighted after survey. The HIP is not going to make any difference to this at all.

It is just another example of government tinkering in something that they do not understand and have not properly investigated and researched. I do not think any agent would argue that the system does need some changing. The NAEA and RICS agree that the system is not perfect and needs changing but the HIP is not the way to do it.

30th October 2006 - CHANGE OF NAME AND NEW OFFICE

Russell Residential are very proud to release the launch of their new logo and a slight change in the name from Russell Residential to Russells. The new logo and brand coincides with the opening of Russells fourth office in the prominent Fore Hill location in the City of Ely.

The new City of Ely office will offer a full range of services including Residential Sales and Lettings and also independent mortgage advice in house and be able to carry out independent surveys.

The Sales Department will be headed by Roy Thomson who has previously worked in Ely and knows the local market extraordinarily well.

The Lettings Department will be headed by Maria Morgan who has been based at the local Littleport office for a number of years and is looking forward to the challenge of Ely where Russells already have a substantial market share.

To coincide with the new logo and opening Russells are also pleased to announce that Ashley Carter who heads the Sales Department at the local Littleport office will become an Associate Partner as will Maria Morgan with Rob Mills who has overall responsibility for the Ely and Littleport operation becoming Company Secretary.

Robert Russell partner of Russells said that he was extremely excited over the new development for many reasons. “The Ely office will complement the already well established and highly successful Littleport branch and is a natural progression filling in the gap between Cambridge and Littleport. We will genuinely be able to offer an unrivalled and unparalleled level of service and coverage with the two local offices. All Littleport and Ely properties will also be offered from our existing Cambridge Head Office and Sawston branch in South Cambridgeshire.” As for the new appointments Robert said “I am extremely pleased to be able to reward those members of staff who had shown commitment and loyalty to the firm over the last few years. The new appointments are richly deserved.”

He added “We are particularly excited about our new logo which embodies everything we are about being professional but dymamic. It incorporates our trademark colour and handshake. We decided to change the name from Russell Residential to Russells as it had become apparent over the last two years that everybody was calling us Russells in any case. It seemed the natural thing to do”.

Finally Robert Russell said that more than anything else he was delighted to be coming home to Ely. Robert started his professional Estate Agency and Chartered Surveyor career for John V Rogers in Ely in 1979. Robert was born and bred in Ely living in the City for 23 years. He said “We will genuinely be able to say that we are offering a local service by local people rather than making these things up simply for advertising!”

Russells are a genuine family business with Teresa Russell also being a partner and their daughter Claire working at the Cambridge office.

6th March 2006 - HOUSING HEALTH & SAFETY RATINGS SYSTEM (HHSRS)

This legislation comes into force on 6th April 2006 and is part of the 2004 Housing Act. The legislation replaces the old fitness standard which dates back to 1919.

Local authorities will have a duty to keep housing conditions in their area under review. If either as a result of that review or as a result of a complaint from a tenant or neighbour, they can inspect a property if they think that there is a health or safety hazard existing within that property. They will carry out an inspection under the legislation and will assess any hazards within a property as either a category 1 or a category 2 hazard. There are 29 hazards summarised within the legislation which apply to things such as dampness, excessive heat, cold, pollutant, lack of space, inadequate lighting, excessive noise, poor hygiene, bas sanitation, poor water supply, likelihood of accidents, electric shocks etc. Any inspection carried out by the local authority will take into account these 29 hazards but will also take into consideration the most vulnerable age groups for these hazards and the occupancy of the property. For instance category 19 which is Falls Associated with Baths etc. only applies to the most vulnerable group which is the over 60’s. This will not apply to the vast majority of rented accommodation let on the open market as the majority of tenants are younger than this.

If the Council identify any category 1 hazards they will need to be addressed and dealt with immediately. Until such time as the legislation comes into force and we can all see how the system works it is difficult to give definitive advice although it is likely that the local authority will in the first instance make an informal approach to a landlord (or their agent) but if the approach is ignored they will have the power to serve an Improvement Notice. In cases, if there is an imminent risk of serious harm to the occupants, the Council can serve an emergency notice to remove the hazard. The Council can, with or without agreement of the owner, carry out works required within a notice and charge accordingly. It is however assumed that this procedure will only be used in emergency situations or where all other negotiation has failed.

An owner or agent where an Improvement Notice or Prohibition Order has been served can appeal normally within 21 days. This appeal will be held by the Residential Property Tribunal. These work in a similar way to risk assessment panels.

The landlord’s responsibility would be to ensure that they maintain their properties in a safe and healthy state. Owners will be obliged to comply with the terms of the Improvement Notices if they are served. Agents will be responsible for ensuring that any works are carried out and adequate funds are available to do this.

Tenants' Deposits and How They are Held

The provisions included in the 2004 Housing Act relating to the way tenants’ deposits are held are to be introduced on 6th April. The full set of rules and guidelines has yet to be published although we expect it to be available in late March.

It is however proposed that there will be two schemes, the Custodial Scheme and the Insured Scheme. The Custodial Scheme is specifically aimed at landlords who have traditionally held their own deposits. Landlords will be required to register with the scheme and place deposits with them within 14 days of the start of the tenancy advising the tenants where the deposit has been lodged. Failure to do so will result in the courts ignoring Section 21 (repossession notices) and the landlord will be fined up to four times the amount of the deposit, money which would be given to the tenant!

As members of the RICS and ARLA we will be part of the Insured Scheme. This will allow us to continue to hold deposits in the same way that we always have as stakeholder. There will however be very strict time guidelines in relation to how deposits are dealt with and returned. A requirement of the Insured Scheme is that deposits are held as stakeholder which means we must agree dilapidations between landlord and tenant at the end of a tenancy. Any dispute will be referred to a Dispute Resolution Service or alternatively the County Court.

In practice we feel there will be very little change to the way that we have always dealt with deposits.

Once the full guidelines have been published we will provide landlords with a further update.

Gas Inspections and Certificates

All landlords will know that it is a legal requirement to provide tenants with a Landlord Gas Safety Certificate (if there is gas at the property) on an annual basis. At a recent case in the Winchester Crown Court a landlord was fined a total of £42,000 for breaches of the Gas Safety Regulations which resulted in the death of a young girl. As a result of this decision the Principal Inspector of the Health & Safety Executive issued a statement to the effect that not only must gas appliances have an annual check but they must also be maintained in a safe condition. This means that, as well as the annual inspection (which is like an MOT on a car) an annual service of the boiler by a Corgi registered engineer in accordance with the manufacturer’s instructions (like a service on a car) is also required.

For many years our own Corgi engineers have not only carried out an annual inspection but also a boiler service.

If you arrange for your own gas inspections can you please ensure that you instruct your Corgi engineer to carry out a service as well as an inspection.