Source

Rupert Steiner, Daily Mail
28 April 2009, 7:59am

Legal & General has held talks with the Government about investing in the residential housing sector.

Buy-to-let: Legal & General may invest in residential housing

Pension funds are entering the buy-to-let market to take advantage of comparatively high rental incomes following a spike in demand for accommodation.

The insurance giant held discussions with the Government-backed Homes and Communities Agency within the last month about so called ‘build-to-let’ opportunities and partnerships to develop homes from scratch.

Buy-to-let has previously been the preserve of small time entrepreneurs, but institutions are now seeking to muscle in.

Pension funds in the past have invested to take advantage of rocketing house price values, rather than relatively modest returns from rentals.

But property values have plunged and rental demand has soared along with rental returns, known as yields.

‘It is clear pension funds and other institutions are looking at purchasing residential portfolios,’ says Jon Neale, head of development research at Knight Frank.

‘There is a bigger market for rental housing than in the past.’

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The latest report by Christopher Hamer, the Ombudsman for Estate Agents (OAE) shows a massive 200% annual increase in letting-related complaints, highlighting the need for the public to be acutely aware of rapid changes in the property letting industry

Ian Wilson, Managing Director of Martin & Co, the UK’s largest dedicated letting agency, with over 160 offices across the UK, said, “The Ombudsman’s report illustrates a dangerous phenomenon that should be of concern to anyone letting, or thinking of letting their property.”

“As properties fail to sell, we have seen a sizeable increase in the number of new (and sometimes reluctant) landlords entering the market. These are the very people who need protecting from the unscrupulous, uneducated or inexperienced letting agent who claims to be able to represent their best interests. However, there is also a corresponding increase in the number of estate agents entering the lettings arena as a way of bolstering their dwindling sales revenues – with potentially disastrous consequences.

“Not only is the continual-service role of the letting agent surprisingly different to the quick-fix function of an estate agent, but there are also over 100 pieces of letting-related legislation in which to be conversant. Indeed, these are so critically important that the Martin and Co Training Academy has an extensive ongoing nationwide training programme for our franchisees and their staff (delivering “best practices”), as well as the 200 or so new staff we expect to recruit (using our internal recruitment team) during 2009 to cope with the 40% year on year growth of our business.

“Knowing how intensively letting agents need to train, and the pressure they are currently under to deliver ambitious results without compromising customer service excellence, it is not a job for the fainthearted. Landlords should be extra vigilant when choosing a letting agent. Martin & Co clients have peace of mind knowing they are dealing with a business that agrees to meet defined standards of customer care, and has a published complaints procedure.”

The Ombudsman for Estate Agents scheme is changing its name on Friday (May 1) to the Property Ombudsman Service (TPOS).

The new name reflects the growth of the scheme, which is expected to open its doors to commercial property agents, HIP providers, personal search firms and some overseas agents.   The OEA was controversially founded as the Ombudsman for Corporate Estate Agents in 1990, as a marketing device for the corporate.

At first it excluded independents from membership but later accepted them. Many independents believed that it only did so because it needed the extra revenue, and a number of agents boycotted the scheme.   However, membership grew once the NAEA made it a mandatory condition of their own membership Since then, under HIP and consumer redress legislation, it has become mandatory for all sales agents to belong to an approved redress scheme – of which there are only two.

The OEA is far larger than the RICS’s scheme, SOS, and claims around 95% of the market.  OEA numbers have also been boosted by Letting Agents. Both ARLA and NALS make membership mandatory.  For the change of name, there will be a new logo for window displays, in blue with the OFT Approved Codes symbol alongside for sales offices, and in green without the OFT logo for Lettings.  Commercial property sales members will have a black logo when the scheme expands soon to cover some of their activities.

TPOS chief operating officer Bill McClintock said: “Expansion of our scheme will help ensure its healthy future and spread costs over a wider membership base.
“As the principal means of redress for consumers in the property sector, reflected by 95% of UK estate agency offices being covered by our scheme, and our widening fields of activity which will also extend to including HIPs and property search providers, we consider the old name no longer reflected all that we do.”

Membership has increased dramatically in the past few years and at the same time OEA has also expanded to take in Lettings as well as its original remit to cover agents selling residential property. In the near future, we will also be embracing some commercial property activities as well as the UK end of foreign residential property transactions.

“We have submitted our Lettings Code of Practice to the OFT for endorsement under its Consumer Codes Approval Scheme, which we see as vital in current market conditions where Lettings are dominating activity.”

Source www.tpos.co.uk
www.nalscheme.co.uk
www.arla.co.uk
www.rentright.co.uk