Summer has finally arrived. The sun is out, shirts are off, sun hats are on, and Harry Styles is in. But most importantly, it’s time for our June Residential Expert discussion with former Propertymark Chief Executive and Just Move In Ambassador, Mark Hayward. Here’s what Mark has to say about the latest property news…
JMI: The Renters Reform Bill is obviously back in the news. Is it finally happening?
Mark: Well, it was in Queen Speech last month, slightly disguised. The government has continued to promise something but thus far it’s failed to materialise as a Bill. However, at least we’ve finally seen the much-promised white paper. And there’s still time before the summer recess for the government to crack on.
The problem in recent times is that we’ve had so many different housing ministers. And now, with Boris Johnson in choppy political waters, the worry is that the government will prioritise other matters. However, this white paper seems to be a big step forward. Shelter have described it as a “game changer”.
JMI: Should landlords be nervous about the suggested reforms or should they be more philosophical?
Mark: I think the sector will need a little time to digest the proposed changes. There’s been a lot of scaremongering but I think the Renters Reform Bill could, in a sense, help to legitimise the landlord. And a landlords’ register would certainly be good for the authorities because they’ll be able to identify where rented property actually is, and then tax it.
The truth is that some level of reform was probably inevitable. We do need a landlords’ register and tenants do need redress. But it’s important to remember that good landlords should have absolutely nothing to fear. I’m sure we’ll talk more about this next time when the dust has settled a bit.
JMI: The time it takes to get from offer to exchange is a real pain for the sector. What do you make of the current situation and can agents do anything about it?
Mark: It’s certainly a pain. The process should take about 12-16 weeks but it often runs over 20. Whereas agents used to convert their pipeline - that’s the time it takes to go from sold subject to contract to completion - four times a year, they can barely do it three times now.
When it comes to potential solutions, I’d like to see a simplification of the legal process. And it should be mandatory for any home going on the market to be ‘sale ready’ rather than just ‘marketing ready’. So the seller would’ve already done all the paperwork and the lawyer done all the preliminary work when a buyer comes along. In other words, buyers will get a ‘sales pack’ like they do at auctions. Then the process can move forward quickly.
JMI: What’s changed from a few years ago? Why is it taking so long now?
Mark: One problem is that the conveyancing industry is currently under resourced. The sector used to be having transactions at 1.25 and 1.7 million per year, and the legal and financial system was able to cope, but the strange thing is that technology hasn’t made the process much easier yet.
People are also reluctant to take decisions on their own. Prices have gone down, too. Conveyancing used to cost around £1,500 when everything was done manually but now you can get it done online for only a few hundred pounds. Quality therefore suffers.
Referral fees are also a problem. Are agents going to refer their customers to the best conveyancer who will get the job done satisfactorily and speedily?
JMI: Can you see a future where technology finally speeds things up?
Mark: I think so. Technology could come into its own, especially if the different parties involved start communicating on a single platform. And the sector’s been talking about a property logbook, where all of a home’s information is instantly accessible (and automatically updated) for a while now. I know that lots of people, including the Land Registry, want it to happen. But it’s going to take time.
One of the problems facing the sector is that people simply aren’t moving as much as they used to. Well, if they made it easier and simpler to move home then maybe more people would do it. Therefore, we’ve got to find a way of coordinating everything and creating a system that works.
JMI: A recent Propertymark report suggested that the private rented sector is shrinking. What are your thought on this?
Mark: Yes, the sector has seen some contraction over the last couple of years. This is partly because smaller non-professional landlords have decided to sell up as they’re worried about legislation. They also see high prices in the sales market and think they’ll get a good price.
Having said that, of course, rents have gone up, too. And there’s still strong demand for rental properties; so I think we have to look at other factors as well. For example, the rise of short-term lets like Airbnb and the exodus from urban centres at the start of the pandemic, although that’s reversing now.
I do wonder, however, whether Propertymark’s report has been slightly misreported. Yes, there are fewer properties available to rent. But that isn’t the same thing as a drop in the total number of rental properties out there. It could be that there’s a similar amount of people living in rented accommodation but they’re simply staying put for longer; therefore many rental properties simply aren’t hitting the market and getting counted in the statistics. Basically, the headlines could be giving a false impression.
JMI: The cost of living crisis isn’t going to help this. Moving home is expensive so people are more likely to stay where they are.
Mark: Absolutely. The other problem here is that landlords might feel pressured to put their rents up in response to inflation. And if they do that then a lot of tenants will be hit hard.
In the meantime, I hope that the government puts its arm around tenants and the media stops portraying landlords as villains. After all, we need more landlords. It would help if the sector were regulated, too. People would have fewer concerns about becoming a landlord if there was a stronger regulatory framework in place.
JMI: The government is in a spot of bother at the moment. Do you think they’ll do something dramatic like abolishing stamp duty to throw voters a bone?
Mark: The conservatives are the party of homeowners so it’s possible. And stamp duty will probably be reformed eventually. But there will always be a ‘property tax’ of some kind so we might see stamp duty and council tax rolled into one, or something like that, instead.
The problem with this idea, of course, is that a new annual tax would eat into disposable incomes. Therefore, we might see a different approach like tax relief on mortgages, or rather the interest paid on mortgages. But it’s got to be something substantial rather than just window dressing.
JMI: Thanks Mark. That just about wraps things up for this month. Enjoy the sunshine.
For a full, uncut version of the interview, you can watch that here: