The second bungled news was something completely different – an announcement which didn’t even merit a mention on Gove’s department website.
Instead, it was left to a junior minister to tell a Commons committee that the Housing Ombudsman service (until now devoted solely to dealing with social housing landlords) would have its remit extended by the Renters Reform Bill to operate as a redress system for disputes between England’s millions of private tenants and private landlords too.
You missed that news? Of course you did – because the government failed to formally announce it.
Expand the remit
I’m going to concentrate on the Ombudsman change because, while we would all welcome clarity this decision will now mean that there are four redress systems in operation across our industry.
There is The Property Ombudsman (handling letting agents and estate agents); the Property Redress System (again dealing with letting and estate agents); and soon the Housing Ombudsman (dealing with landlords and, inevitably, their letting agents where appropriate). The fourth redress service – and I bet many readers may not even have heard of this – is the New Homes Ombudsman which arbitrates between buyers and builders of new build homes.
The decision to expand the remit of the current Housing Ombudsman from social-only to social-and-private rental sectors has been heavily signposted.
Back in May, Richard Blakeway – the current Housing Ombudsman – wrote that the creation of a private sector redress system operating between landlords and tenants was neither bureaucratic nor unfair. “Our decisions are impartial and rooted in fairness: around half of the cases we investigate are not upheld. This can be an effective way for the landlord to resolve a dispute where relationships with tenants have broken down. If something has gone wrong, the remedies are not punitive – they are simply aimed at putting the consumer back in the position they would have enjoyed had things been as they should” he told readers.
My concern is not that the new redress service which landlords must deal with is Blakeway’s, but whether across our industry as a whole we now really need four different Ombudsman services? Whatever happened to clarity for the consumer?
I appreciate it’s a lot for one body to handle a wide range of disputes: across our industry that would typically include, say, a private tenant complaining about a non-returned deposit; a buyer unhappy with the quality of a new-build home; a seller who feels the sales agent didn’t communicate an offer; and a social tenant pestered by anti-social neighbours.
The one industry-wide Ombudsman service dealing with all that would have to be large, with a strong leadership and management, and clear reporting guidelines for consumers to follow.
There will be pros and cons
But, in the way of these things, are the four Ombudsman services which are shortly going to exist not going to require their own bureaucracies, their own red tape, and rules as to whether a consumer has done enough on their own before seeking intervention from a redress service?
Is it going to be clear to the average person in the street – who will be either an owner, social or private tenant – which Ombudsman service is which?
And what of the complicated cases, which might have benefitted from a one-stop-shop Ombudsman service?
I’m thinking of the private Right To Buy owner who went on to sell the flat in question without declaring that the council tenant living next door was anti-social – which of the various Ombudsmen does that one go to?
Or the private landlord selling up, whose tenant feels aggrieved because the selling agent doesn’t give sufficient notice for viewings – which Ombudsman service works for that complaint?
Inevitably there will be pros and cons, and I accept the general point that large departments can be clumsy and slow-moving.
But if we can cope with one Department of Levelling Up, Housing and Communities to cover all those housing industry areas, and if each part of the country has one local authority to cover sometimes a million or more residents, and if we have one Competition and Markets Authority to handle the extraordinarily varied businesses of UK plc – then why can’t we have just one Housing Industry Ombudsman?
Why must we have four?
If I don’t like what’s happening, I suppose I can always complain… but who to?
During that time we’ve seen about 20 homes, and put in two offers that didn’t work out for various reasons.
We’ve been approached by someone who is going to sell their home, but is not on the market yet. They want to sell to us directly as a home for sale by the owner. We are OK with that.
However, we are also looking for advice on how to fairly compensate our real-estate agent for the work they have done so far.
What’s the best option for us? Is it wrong to ghost my real-estate agent?
Fortunate
Dear Fortunate,
The clue is in the question. Ghosting does not treat others with respect, and does not give them the explanation they deserve. Tell them the truth. Explain your situation, and have an open and honest conversation. You will feel better for doing so.
It’s great that you found a home, and one that is directly sold to you by the owner. That will save you thousands of dollars in commissions and fees that you don’t need to pay real-estate agents, so that’s a big win.
Typically, when a home is sold, the listing agent and the buying agent each get a 3% commission, both of which are paid for by the seller. The stage is set for the buyer’s agent to no longer automatically receive a 3% commission.
Last month, a Missouri court found the National Association of Realtors and two real-estate brokerages guilty of conspiring to inflate real-estate commissions, a decision that will likely have a deep impact on the U.S. housing market.
Negotiate a fee
Just because you found a house by yourself doesn’t mean you should ghost your real-estate agent. They scoured through listings for you, took you to 20 open houses, and even helped you put in two offers. For that work, you should think of how you would want to compensate them. And you seem to agree.
Have you signed anything that would require you pay them a commission if you find a house? Typically, sellers sign such contracts for a period of around six months.
Obviously, if the seller was using a real-estate agent, it would make no difference: The seller’s real-estate agent would simply have to split their 6% commission with your agent.
Assuming that the seller does not have a real-estate agent, you could negotiate a fee for the services provided by your real-estate agent thus far. Have a number in mind — say 2%, slightly less than the fee they would have gotten — and see if you and your real-estate agent are comfortable with it.
Enlist your real-estate agent’s help
But here’s another route that could be a win-win for the both of you: Consider keeping them until the transaction is finalized, and make that 2% contingent on them providing those services.
After all, real-estate agents do more than just setting up open houses and showing you the property. They can help you with paperwork, purchase agreements, contacts, schedule inspections and appraisals; help you find multiple lenders; and help get you a good mortgage rate. Plus, they may be able to spot any potential red flags that you would’ve overlooked.
“I would recommend formally utilizing their [agent] in the transaction, with a negotiated fee paid by the buyer at closing,” Erin Sykes, chief economist and real-estate wealth adviser and broker at Nest Seekers International, told MarketWatch.
“This gives the buyer protection as the Realtor will have their best interest in mind, doing due diligence, and they gain the benefit of full representation,” she added.
Putting a value on time
The leverage you have is goodwill: They are getting something for their time, but they also have no other option. Many other people would simply ghost their real-estate agent, buy the house and run.
Ultimately, if you decide that you don’t want to pay your real-estate agent for not playing a role in closing on your new home, then that’s your prerogative. You can choose to not pay them a dime.
But remember this: How would you like that if the tables were reversed? Is their time not as valuable as yours? And is this the kind of karma you want buying your new home?
This week’s Big Move question was spotted on Reddit.
By emailing your questions, you agree to having them published anonymously on MarketWatch. By submitting your story to Dow Jones & Company, the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
‘The Big Move’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.
Do you have a question about buying or selling a home? Do you want to know where your next move should be? Email Aarthi Swaminathan at TheBigMove@marketwatch.com.
- Landlords have sold 300,000 more homes than they’ve bought since 2016
- The number in mortgage arrears has doubled year-on-year thanks to high rates
- Insolvencies of buy-to-let companies also rose 35% in past year
Higher mortgage rates are testing the resolve of many landlords, with more now exiting the market than entering it.
By the end of this year, private landlords will have sold almost 300,000 more homes than they have bought since 2016, according to analysis by the estate agent Hamptons.
According to one recent survey by the National Residential Landlords Association (NRLA), landlords are now more than twice as likely to sell properties than they are to purchase them.
And that number is likely to grow, as the number of landlords in mortgage arrears has doubled year-on-year from 5,760 to 11,540, according to UK Finance.
Meanwhile, the number of insolvencies among limited companies owned by buy-to-let landlords has increased by more than a third.
We look at why this is happening, and whether things are now looking up for landlords or if there is more pain to come.
Related Articles
HOW THIS IS MONEY CAN HELP
Landlords have been quietly selling for years
While more landlords are selling up, the evidence shows this is a trend that has been playing out since 2016 – long before the recent spike in mortgage rates.
In fact, fewer landlords are selling this year than in previous years, which suggests talk of a mass exodus may be over-egged.
Landlords are set to sell 139,820 buy-to-lets by the end of 2023, according to Hamptons. That is 53,000 fewer than in 2022 and 62,000 fewer than in 2021, when landlord sales peaked.
It suggests that the higher mortgage rates of the last few months haven’t resulted in an acceleration of landlords selling up. Hamptons estimates that by the end of this year, private landlords will have sold 294,300 more homes than they’ve bought since 2016.
To put that in perspective, it is more than the total number of homes in the city of Manchester (237,000) and Cornwall (288,000).
Hamptons says that Scotland is the only UK region where the landlord sell-off has accelerated this year.
Investors have made up a record 12 per cent of all sellers in Scotland so far in 2023, up from 10 per cent in 2022.
However, the gradual depletion of homes for rent over the years has taken a toll.
Across the UK, Hamptons says there are 43 per cent fewer homes available for tenants to rent this year than there were 2015.
Aneisha Beveridge, head of research at Hamptons says: ‘There’s a strong argument that landlords have been hit harder by higher rates than anyone else. However, despite these challenges, most landlords are sticking it out.
‘Most landlords cashing in are one of the 10 per cent to 20 per cent of mortgaged investors who face making losses when remortgaging at higher rates.
‘Typically, they bought low-yielding properties in the South of England relatively recently, or they’ve been aggressively maximising their leverage and extracting equity to grow their portfolio.’
Fewer buy-to-let investors are purchasing
The number of buy-to-let homes bought with mortgages has dropped this year as rates have risen, but so has the number of purchases by owner-occupiers.
Overall mortgaged purchases are down by more than a third annually, according to the latest Bank of England figures.
However, it would appear that higher interest rates might be putting off more investors than homebuyers at present.
Between January and August this year, there were a total of 38,161 homes purchased with a buy-to-let mortgage, according to UK Finance. That’s an average of 4,774 a month.
In 2022, there were 8,966 buy-to-let mortgaged purchases each month on average and in 2021 there were an average of 9,487 buy-to-let mortgaged purchases each month.
That suggests a drop of around 47 per cent on 2022 and 50 per cent on 2021.
The estate agent Savills claims the slowdown in buy-to-let purchases is even more extreme.
It says it has seen buying activity has fallen dramatically, with buy-to-let lending in the second quarter of 2023 falling by 60 per cent compared to the previous year.
In Scotland, tighter rules and regulations, including rent caps, have seen landlord purchases fall to a record low.
Landlords bought just 6 per cent of all homes sold in Scotland so far this year, the lowest proportion of any UK region.
In London, the lowest-yielding region in the country and where mortgaged landlords are likely to be hardest-hit by higher rates, new purchases have also slipped.
Landlords bought 9 per cent of homes sold in the capital this year, down from a peak of 20 per cent in 2015.
Hamptons says the number of homes available to rent in the capital so far this year has halved relative to 2015 levels.
‘The real supply issue facing the private rented sector hasn’t just been caused by landlords selling up, but also because there’s been little appetite among investors to purchase new buy-to-lets over the last few years,’ adds Beveridge.
‘This has reduced the number of homes available to rent which is fuelling rental growth.
‘After adding wider inflationary pressures on top, we think rents will have risen by 25 per cent by the end of 2026.’
Are landlords struggling?
Landlords who own their own homes outright will not be impacted by higher mortgage rates, whilst also benefiting from rising rents.
However, it is a totally different story for the two million-plus landlords who currently have a mortgage. Many will be seeing their profits decimated by higher mortgage rates.
The average buy-to-let mortgage is currently at a rate of around 6 per cent. With this rate a landlord requiring a £200,000 interest-only mortgage will be paying £1,000 a month in mortgage costs if buying or remortgaging at the moment.
> Check how much a new mortgage would cost you using our calculator
Add that to void periods, repairs, maintenance, letting agent fees, compliance checks, insurance and service charges and it shows how reliant many landlords will be on rents rising in order to make a profit.
At an average outstanding rate of 6 per cent, Hamptons estimates that nearly two thirds of rental income paid to mortgaged landlords will be spent paying mortgage interest.
Many landlords remain protected from higher rates in the short term by their existing fixed deals, however.
There are a total of 2,030,000 buy-to-let mortgages outstanding, according to UK Finance.
Roughly two thirds are on fixed rates, with the remainder either on a tracker rate or a standard variable rate.
As landlords’ fixed mortgage deals expire, the number of cheap rates will continue to dwindle unless rates fall substantially from here.
Neela Chauhan, partner at accountants UHY Hacker Young says: ‘The increase in interest rates has hit landlords incredibly hard.
‘Many are questioning whether they can continue in the market – and some have already quit altogether.’
‘The increase in mortgage costs is not the only issue for landlords – they have been hit hard from all sides in recent years.
‘Tax changes have made it far tougher for buy-to-let investors. Ultimately, it’s renters that will feel the pain from that as the number of properties available falls.’
Is the worst still to come?
The pain caused by higher interest rates is showing up in increased mortgage arrears and insolvencies.
The number of buy-to-let mortgages in arrears rose to 11,540 in the three months of July, August and September this year, representing a 29 per cent increase on the previous three months.
Year-on-year, the number of buy-to-let mortgages in arrears has doubled.
Brokers were unsurprised by the data given the headwinds currently facing buy-to-let.
Craig Fish, director at London-based broker, Lodestone Mortgages & Protection, says: ‘When it comes to remortgaging, many landlords are finding that they are unable to do so, due to insufficient rental income and are having to stick with their current lender on higher-priced products,’ he says.
‘Historically, before the tax changes, landlords would have had surplus funds with which to weather this storm, but due to higher taxation, those reserves are now depleted and so mortgages go unpaid.
‘This Catch-22 situation is seen in these worsening numbers in the buy-to-let sector. Worse is yet to come, and it seems there is no solution.
Ranald Mitchell, director at Norwich-based Charwin Private Clients, said that what started as a dream for many could end as a nightmare.
He adds: ‘This is a staggering rise in arrears and sadly unsurprising, but worryingly, we have not seen the worst of this. There is so much pressure on landlords as arrears increase and tenants struggle to make rent payments.
‘Falling into arrears like this has a huge impact on the ability to refinance or mortgage for years in the future, and will have far-reaching consequences for their credit profiles. What was once a dream has turned into a nightmare for many.’
Alongside rising mortgage arrears, insolvencies of real estate investment companies have increased 16 per cent in the past 12 months according to Mazars, a tax and advisory firm.
It says in the 12 months to September, 738 real estate investment companies became insolvent, up from 634 the 12 months prior to that.
Of all real estate investment businesses, insolvencies amongst buy-to-let landlords increased the most over the past year, rising by 35 per cent, from 201 to 271.
Rebecca Dacre, partner at Mazars, said: ‘The real estate sector has been hit particularly hard over the last three years. More and more businesses in the industry are reaching the end of the road.
‘Landlords are in a difficult position, often carrying large amounts of secured debt which leave them with little room to negotiate, especially as the property market downturn impairs the value of the property.’
‘Insolvency can be inevitable and within the residential market, will sadly take more and more rental properties off the market and away from prospective tenants.
‘A driver for insolvencies amongst landlords is that interest rate hikes have driven up mortgage repayments, leading to some landlord companies struggling to service their debts.’
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- I’ve been buying hats at local car boots and want to rent them out
- How do I start and will I have to pay tax on any earnings?
- Have a question for our business doctor? bankondave@thisismoney.co.uk
I’m a single mum with two children and work part-time at my local supermarket.
Over the past few years, I have been buying good quality fascinators from charity shops and boot sales whenever I spot them.
Typically, I buy them for between £3-5, they are all in good condition and are bespoke labels.
I have now amassed some 100 hats of all shapes, sizes and colours – and my plan is to keep snapping them up whenever I spot them between now and next Easter.
It’s for a business idea I want to set up where I rent these hats out for weddings and events, such as horse racing days. I live within 15 minutes of a major racecourse.
Fascinators are one of those items that us women often spend a small fortune on, wear once and they end up gathering dust in the loft.
I want to rent them out locally – and I think £15 is a fair price. I can meet people with the fascinators when they are going to the racecourse or one of the local churches near-by and collect them from a designated point the next day. I’m not looking to send to them by post.
My idea is that if I can get 10 of these rented out each weekend between April and October – peak wedding and race season – I can make a nice side-income to supplement my part-time wage.
However, I don’t know how to spread the word. I’m not particularly social media savvy – what are your tips?
If I did rent out 10 hats a weekend for six months, would I need to pay tax? Should I charge people a deposit, in case of any damage sustained or I don’t get the fascinator back? And if so, how can I facilitate that?
Dave Fishwick, This Is Money’s business doctor, replies: I can see you are passionate, and that is such an essential part of starting any business – if you have passion, drive and determination, you can usually find a way of making it work.
My advice is firstly, you must go fishing where the fish are! That means you need to be seen in the most cost-efficient way possible in all places that anyone would be looking for a unique hat for a special day.
It’s easy to think that when you hire something, it’s money for nothing for the product, but I have a dear friend called Franz, who has been in the hire business for many years, and a hire fee certainly isn’t for nothing.
Leasing and hiring always look good on paper, but the logistics of delivering, insuring and looking after products with relatively small margins can be challenging.
Apart from the usual costs and overheads of running a business, other expenses include loss and damage, cleaning costs and general wear and tear to the product, which can’t be reclaimed from deposits.
You should charge deposits because if you don’t, some of your products will not be returned.
Ideally, the hire charge, which you should charge upfront with the deposit, should cover the cost of the product and a reasonable profit so if they don’t return it, you’ve effectively sold it to them and you don’t lose out.
With higher-value products like vehicle hire, you can’t expect the customer to outlay this much money and card fees would become unrealistically high to take and refund large amounts.
This can be dealt with using pre-authorisation, which doesn’t take money from the customer’s account but would allow you to access a pre-agreed amount if they don’t fulfil their end of the hire agreement.
Another problem with hiring is that while you might think it should be clear-cut that the deposit will cover any damage, you might find that the person who hired it might argue the point, saying that something just fell off it rather than admit that they’ve damaged it.
A hire company needs to keep signed copies of a hire agreement, setting out its terms and conditions for the contract to be legally enforceable.
I advise hiring a hat from your biggest competitor, watching how they deliver the product, taking a close look at their contracts, policies and procedures and perhaps borrowing the agreement’s wording.
They will have spent considerable money having it drawn up.
You’ll have to decide if you’re only going to accept cash or if you’re going to use other payment methods like payment apps and card services.
Bear in mind that these services usually charge fees, so I would recommend that you use cash in the initial trial stages rather than setting up accounts with payment service providers immediately.
My advice is firstly, you must go fishing where the fish are! That means you need to be seen in the most cost-efficient way possible in all places that anyone would be looking for a unique hat for a special day.
Social media is the best way to market your idea: it will cost you more in time than money, which is generally preferable for an early-stage business, especially one intended to operate on a small scale.
You say you’re not social media savvy, but I imagine you are on at least one or two platforms.
There are college courses to learn about social media, but you’ll probably know as much by asking your kids. Also, post an advert in the supermarket where you work.
Some social media platforms like Instagram are image-focused, which would suit your products.
Quality photographs and pictures are crucial to promoting anything. Facebook and WhatsApp are more focused on friend networks.
I also advise you to contact your local race course, perhaps set up a small stall on event days, and link up with race course Facebook groups. Contact local wedding planners and attend wedding fairs. All should be helpful to promote your business.
Whether the income is taxable would depend on the part-time income from your job in the supermarket. If the total income from the supermarket and profit from hat rentals is more than the Personal Allowance (currently £12,570), the amount above the Personal Allowance is taxable.
You are allowed to deduct the higher of the relevant actual expenses and £1,000 to determine the profit on hat rentals.
For example, if you rent out ten hats for £15 for six months, the income from rent would be £3,900.
If the expenses relating to the rents were only £750, you could deduct the higher figure of £1,000 to get a profit on the rentals of £2,900.
This would be the figure you would add to your supermarket wage to determine your total income. You would be required to complete a personal Tax Return if the total income is over the Personal Allowance.
Another thought is that perhaps you could start branching out into renting out men’s hats and use all the same marketing to advertise both at no extra cost.
You could supply male and female hats to a couple, earning double the money without additional costs.
Recently, I found it very difficult to rent a quality traditional City banker’s bowler hat to wear at the Bank of Dave Netflix film premiere, and I needed to buy one just for the event.
You could see if it’s more profitable to sell some hats rather than just hiring them out. Perhaps try it as an experiment.
You have already bought many hats from the car boot sales, So I say give it a try, but don’t take on too many overheads or costs initially if you can help it and, most importantly once again, my most valuable piece of advice is: Go fishing where the fish are! Good luck.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.
- Justin Timberlake has listed his Franklin, Tennessee estate for $10 million
- The former NSYNC singer is a native of Memphis, Tennessee
- The property has 127 acres and comes with private woods and landscapes perfect for horseback riding, fishing, mountain biking, and more
Justin Timberlake is waving ‘Bye, Bye, Bye’ to Tennessee and hoping to sell his property for a whopping $10 million eight years after buying it for $4 million.
The former NSYNC singer has listed his 127-acre plot in Franklin – located about 20 miles south of Nashville – just a few hours from his hometown of Memphis.
The sprawling land deal comes with unique mountain views and an abundance of green space perfect for horseback riding, fishing and mountain biking.
On top of its amenities for the nature lover, the property also boasts stone walls and a close proximity to the cozy village of Leiper’s Fork.
The new buyer will also be in good company with famous neighbors in the area like Nicole Kidman and Keith Urban, Trisha Yearwood, and Tim McGraw and Faith Hill.
The news of the listing comes on the heels of rumors that he will reunite with his former bandmates and create new music for the first time in two decades.
The singer and actor is poised to turn a massive profit should he find a buyer for the estate, first purchased in 2015.
With two private entrances, the property is also a remote paradise for nature lovers looking to get away from the hustle and bustle. One of the main entrances has a covered bridge that creates a welcoming and rustic atmosphere when welcoming guests to the property.
For those who have an affinity for the water, Dobyns Branch Creek runs through the area and gives life to the heavy green area.
Currently, the estate does not appear to have a home built on the premises.
Additionally, the future buyer could face issues with development as a conservation agreement has limited the scope of development.
It’s unclear what prompted Timberlake to put the land on the market and if he and wife, actress Jessica Biel, are looking for another plot of land in his home state.
It wouldn’t be surprising, however, as an insider told US Weekly in 2021 that they like raising their sons – Silas, 8, and Phineas, 2, – away from the limelight and LA.
‘They both prefer the country life. It’s great for the boys because they have so much space and freedom,’ the source told the outlet.
The insider said in a 2021 interview that it was always Timberlake’s dream to raise his kids in the same state and with a love of nature like him.
‘He always said that’s where he wanted to settle down and raise kids,’ they shared.
‘Jessica loves it there but she wanted a place in the mountains too, so they have the place in Big Sky, [Montana]. That way they can have the best of all worlds,’ they said.
In an Instagram post from 2018, Timberlake said he was proud to be from Memphis and from Tennessee while promoting his book, ‘Hindsight.’
‘Memphis isn’t an easy place to describe, but if you’re from there, you’re proud to be. I know I am,’ the singer wrote.
Biel and Timberlake have kept a large real estate portfolio over the years that includes properties in Los Angeles, New York City, Tennessee, and Montana.
In 2021, the couple listed their Southern California property for a staggering $35 million, two decades after he purchased the home for a fraction of that total.
Biel and Timberlake listed the 10-acre property, which has seven bedrooms and 13 bathroom home on Mulholland Drive as they moved to the country.
‘The Social Network’ actor had bought the home for $8 million in 2002 at the peak of his boy band career with NSYNC, before finding success once again as a solo act.
Shear Edge founder Logan Williams with his company’s strong wool pellets – pitched as a replacement for plastic without manufacturers having to retool any of their machinery.
At just 27, Christchurch inventor Logan Williams (Ngāi Tahu) is in the process of selling his fourth startup – Shear Edge, which allows manufacturers to substitute wool fibre-based pellets for plastic, without buying new machinery
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So how does it all work?
- Most common property scams affecting homeowners and tenants are revealed
- High risk areas include conveyancing fraud, as well as fake buyers and landlords
- Savvy home buyers and tenants can protect themselves using our top tips
Moving house can be stressful enough without having to deal with property scams.
The most common types of scam can include conveyancing fraud, as well as coming up against fake buyers and fake landlords.
We take a closer look at what is involved, and how you can potentially avoid being a victim of property fraud depending on whether you are a homeowner or a tenant.
Jim Winters, a director of economic crime at Nationwide Building Society, said: ‘A property is one of the most expensive things we own, so it’s no surprise they are a target for fraudsters.
‘Moving into a new home can often be stressful and with lots of paperwork we can feel rushed into getting things done.
‘When under pressure it can be easy to miss the signs of a scam that you might normally see, leaving people at risk of losing their house deposit or money they have paid for a holiday home.
‘That is why we would always urge anyone buying a property to confirm the bank details for their deposit directly with their solicitor, either via a letter or over the phone rather than via email as this can be intercepted.
‘When renting a property, use a trusted lettings agency or holiday rental company and always pay by card where possible to give you more protection. If in any doubt whatsoever, contact your bank or building society.’
Homebuying scams
The main types of property scams listed below have been identified by online estate agents Sold.co.uk.
It also outlines some steps that you can take to help you avoid being the victim of property fraud.
Friday afternoon fraud
So-called ‘Friday afternoon fraud’ involves a criminal hacking the email of a buyer, or their conveyancer.
It is something can happen any day of the week, but committing the crime on a Friday allows the scammer to escape immediate investigation, with victims sometimes not realising they’ve been conned until the following Monday.
The hacker contacts a buyer, posing as the solicitor, and gives them fake bank details for them to transfer their deposit into.
The way they achieve this depends on whose account they have hacked. They can send emails from the conveyancer’s real email address, or if it’s the buyer’s emails that have been hacked, they’ll make a new email account with a similar address to the real one, usually with one character changed.
This allows them to send fake communications without the buyer even noticing the change.
These scammers can take months to strike, monitoring the emails until they have a suitable opportunity to attack, according to Sold.co.uk.
They often gain access to email accounts through data leaks and use software to scan for keywords like ‘house sale’ or ‘conveyancing’.
Ensuring you have a different password for everything is important to minimise the risk of being hacked.
Keep an eye on email addresses, and watch out for small changes like a letter being removed or a full stop being added – subtle things that could easily go unnoticed.
Before transferring your whole deposit to your conveyancer, do some checks to make sure you have the legitimate bank details and you’re not sending everything to a scammer.
Send a small amount first, such as £1, and call them on their registered phone number to make sure they have received it. Only send the full deposit once this has been confirmed.
Fake buyers and sellers
Fake buyers can pretend to make an offer on your property and withdraw it right before completing, and they use the information gathered in the offer process to commit title fraud.
This is where the scammer changes the title deeds of the property into their name and can then apply for loans using your home as collateral.
If an unfortunate homeowner hasn’t spotted that their title deeds have been changed into a scammer’s name, a potential buyer could be at risk of getting scammed, too.
You can put a restriction on your title, so that HM Land Registry can’t register a sale unless a solicitor or conveyancer confirms that the application was made by you
Most at risk of being a victim of this type of scam are homes that are empty due to the owner living abroad, properties without a mortgage, properties that are rented out, and people who have previously had their identity stolen.
Once in their name, scammers can try and sell the property without the true owner even noticing.
You can sign up to HM Land Registry property alerts, which will let you know if anyone tries to change the register of your property so you can take action.
You can also put a restriction on your title, so that HM Land Registry can’t register a sale unless a solicitor or conveyancer confirms that the application was made by you.
HM Land Registry prevented 43 fraudulent applications in 2021-2022, with an estimated value of just over £31million. This is an increase in fraudulent applications prevented since 2017-2018, when it recorded 24 cases.
Fake holiday homes
People have also fallen victim to scams when trying to buy a holiday home overseas.
Villas and apartments are advertised on sites such as Facebook and eBay using photos taken from legitimate estate agent websites, and then the scammer will ask for a deposit before you’re able to go and see the property.
In some cases, you could be convinced to pay the full amount without seeing it in person, because the scammer pressures you to act fast by telling you someone else is about to purchase it.
Do a reverse image search to see if the photos have been used elsewhere, and if they’re linked to an estate agent, contact them directly.
Don’t send any money until you’ve seen the property for yourself and have confirmed that it is real, and is actually for sale.
Rental scams
Fake landlord scams are taking advantage of rising rents, and advertising properties on sites such as Gumtree and SpareRoom that don’t exist.
The scammers rely on people needing somewhere to move into as soon as possible, and not having time to go and view the property in person.
They may even send a tenancy agreement to make it seem legitimate, but then after you’ve sent them a deposit and first month’s rent, they are not heard from again.
You may even arrive at the property and find someone else living there, who has no knowledge of it being rented out.
Never send money to a landlord without seeing the property for yourself, or otherwise confirming that the listing is legitimate and definitely available for rent.
Fake tenant competition
Landlords can try and pressure you into paying more than necessary by enlisting the help of a friend.
The landlord gets someone to attend an open viewing and appear interested in the property that you want, offering slightly more for a deposit.
If you’re interested in the property too, you might be pressured into offering an even higher deposit to secure the listing.
By law in England, deposits are capped and can only be up to five weeks rent. Make sure you don’t pay any more than is actually legal.
When the Reserve Bank of India’s (RBI) Monetary Policy Committee, in its second bi-monthly monetary policy meeting of FY24 this week, decided to leave the repo rate unchanged at 6.5%, economists and industry experts felt their expectations were met. But what does it mean to the homebuyer who, post-pandemic, saw the housing market get an unexpected boost and continues to see residential real estate sell at a rapid clip?
No doubt, the housing sales bull run significantly improved homebuyer sentiment and made housing autonomy the new watchword during and soon after the lockdowns.
But, what is driving housing demand now is a completely reimagined homeownership sentiment coupled with vastly improved investment logic.
After the RBI hiked the repo rate several times and then maintained it at 6.5%, home loan interest rates also increased. While interest rates may come down in the future, property prices will still rise. The increased value of the acquired property will compensate for a marginal percentage hike.
Also, most Indians don’t want to buy just any house. In most cases, they have already shortlisted the most desirable options. They may even have identified their #1 preference, at least for the most desirable project, if not the exact unit.
Should the RBI announce lower repo rates in future, and banks recalibrate their home loan lending rates, waiting for too long to buy a home can involve what is known as a high ‘opportunity cost’ — the loss of potential gain from one alternative (buying now) when another alternative (buying later) is chosen.
There are other factors to consider while deciding on buying a home now:
1. Whether buying a home big enough to accommodate future requirements such as added family members, a home office, and generally enough buffer space to not be crowded.
2. There is little point in buying smaller, costlier homes in central locations if the buyer can work remotely and live more spaciously in a cheaper suburb well-connected to the workplace by public transport.
3. The project should have enough lifestyle amenities, especially health-boosting features like a jogging track, swimming pool, tennis court, and gym. The pandemic has highlighted the need for greater health focus and the importance of good security and green open spaces.
Some of the top integrated township properties are now the top option for those who want a better quality of life, adequate connectivity to work, and superior capital appreciation on their investment. Don’t just buy four walls — invest in a future-proofed lifestyle.
The hybrid work culture has taken firm root, and many companies continue to allow it. The gig work economy is also firmly entrenched, so much so that major IT companies decided to clamp down on ‘moonlighting’ by their employees. The quest for entrepreneurship, both Internet-based and traditional, which took off during COVID-19 shows no signs of slowing down.
Simultaneously, housing prices have increased again, making residential real estate the top-performing asset class for over two years. This has brought back investors intent on snapping up choice options for healthy rental income and capital appreciation.
Interest rates in single digits
Given the current unchanged rates, the outlook for those looking to buy their first home via a home loan soon remains favourable. Interest rates from most banks will continue in single digits. With top banks, they currently hover between 8.7 and 9.65%. A future rate hike, if any, may push the rates into double digits. The persisting financial instabilities in advanced economies of the world may have repercussions in India, causing the RBI to take such a step to face these headwinds,” says Anuj Puri, Chairman, Anarock Group.
Even if we disregard the above demand drivers, another established market dynamic is at play —high demand for any product generates more demand in a well-known snowball effect. There are elements of FOMO (fear of missing out) involved as more and more Indians see their neighbours move into their own homes. After all, buying a home is still considered the pinnacle of financial independence and social ‘arrival’ in India.
What data tells us
Sales have skyrocketed, and pent-up inventory has been decreasing steadily. According to real estate consultants Anarock, the robust housing sales momentum in Q1 2023 brought down residential inventory in the seven large metros to just 20 months, from 42 months by Q1 2018-end — the lowest overhang in five years. In this quarter, around 1,13,770 homes were sold in these cities, an increase of 14% over Q1 2022.
The demand is highest for bigger homes, with sales of 2, 3 and 4 BHK homes outstripping that of affordable smaller homes. Bigger homes can multi-task most efficiently when managing domestic and work life and are also in the highest demand on the resale market.
International real estate consultancy CBRE’s ‘India Market Monitor Q1 2023’ shows extraordinary growth in the sales of luxury homes in Q1 2023 — a massive 150% year-on-year growth in these top seven cities. As many as 4,000 luxury homes were sold this quarter, as opposed to 1,600 in the same period the year before.
Supply follows demand. According to a survey by real estate data analytics firm PropEquity, the number of homes sold in tier-1 cities in India in Q1 2023 considerably outstripped the number of units launched in this period. In these, 93,600 residential units were launched during the January to March 2023 quarter compared to 1,23,938 sold units.
By all yardsticks, the Indian housing market is on an unprecedented roll and shows no signs of slowing down anytime soon. Neither increasing home loan interest rates nor rising prices have slowed down demand, ensuring that it is sustainable and on a constant upward trajectory.
Due to the consistently high end-user demand, investors have also gotten back into the fray. After several years, housing prices have begun increasing again by as much as 7% in Q1 2023 alone, according to a report by PropTiger.com. Residential real estate is now the top-performing asset class, and housing prices do not fluctuate madly like stocks and precious metals.
While these are exciting times when an unprecedented number of homeownership dreams are finally being realised, people are also troubled regarding the global economic outlook and its undoubted impact on India’s consumption story.
Depending on which industry they are employed and at which level, homebuyers must judge their situation carefully before pressing the commit button on a home loan. But, as we can see by the unrelenting sales numbers, securing an owned home remains most Indians’ top priority.
The writer is Managing Director, Pharande Spaces.
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No real estate is perfect. That statement becomes especially clear when a seller wants to sell. Buyers will seize upon every imperfection, issue, and little piece of hair on the asset as the basis for a price reduction.
Looking ahead to that process, a seller can choose from a few possible strategies.
As one strategy, the seller might seize on the ancient principle of caveat emptor – let the buyer beware. That strategy says the seller should disclose as little as possible—just whatever the buyer specifically requests and the seller can’t avoid disclosing, if that—and resist any disclosure as much as possible. The seller should let the buyer kick the tires, do whatever investigations it can, and figure out any deficiencies of the property. Maybe the buyer will miss some!
As a second strategy, the seller might decide that in 2023 buyers of real estate don’t miss much. They know how to mine the Internet and other sources for third-party information on a property. They have competent inspectors, lease reviewers, and other consultants. If a seller takes that approach, then the seller might offer buyers a complete “data dump”—every possible bit of documentation about the property—recognizing that the seller has nothing to hide. Even if the seller did have something to hide, the buyer would probably find it, so why bother? And why go through the process of making the buyer ask for things? Just provide everything. Still, the buyer might miss any deficiencies, and that would be a good thing for pricing.
As a third strategy, the seller might go out of its way to identify issues and weak points that a careful buyer will probably find in its investigation. In 2023, almost every buyer of any substantial commercial real estate is a careful buyer. They aren’t buying on the back of an envelope or in between phone calls. Whatever deficiencies exist, a prospective buyer will almost certainly identify. With that in mind, a seller might not try to hide or bury its weak points and hope that the buyer doesn’t find them or take them seriously. Instead, a seller might go in the opposite direction and affirmatively disclose them in a direct way. This way, those weak points won’t come up as surprises or smoking guns. They won’t give the buyer new leverage once the problems are discovered, or an excuse for a price retrade at the end of the due diligence period. The buyer will have to find some other excuse instead.
On the other hand, if the seller had said nothing the buyer might have missed the problems entirely, because the seller either stonewalled the buyer or buried the buyer in documentation, the two other possibilities suggested earlier above.
In the context of a competitive sales process, if the seller discloses any issues or concerns about the property as part of the initial due diligence disclosures, each buyer has an incentive at the bidding stage to figure out how to live with those issues or concerns as much as possible. Yes, they might result in a reduction of the buyer’s offer, but the buyer has every incentive to make that offer as appealing as possible. If the seller then plays its cards right, the buyer would have a hard time coming back and complaining about the issues and concerns that were disclosed.
Early disclosure by the seller also has the advantage of preserving the buyer’s trust. If the buyer has to discover an issue by itself, the buyer will often lose trust in the seller, concluding that the seller was trying to hide something, trying to sell a Class A product that’s really a Class B or C product. Once the buyer loses trust, all further negotiations and interactions will probably be much more painful, if they continue at all.
On balance, sellers ought to think seriously about disclosing problems and issues before buyers find them. Transactions usually tend to work out better that way. Ultimately, though, it’s the seller’s decision.
While owning a home is traditionally every Indian’s ambition, skyrocketing real estate costs, particularly in metro areas, have caused many people to choose to rent rather than to buy. The decision between renting and buying puts an individual or family in a difficult situation considering the financial strain. It has been noted that those who can afford a home tend to value home ownership more, with renting serving as a common middle ground. Both options have distinct advantages and downsides. Renting vs. buying has different expenses depending on where you reside and the housing market there. It’s not just about ownership, it may also be a lifestyle decision.
Deciding whether to buy or rent is a significant choice that impacts your financial situation, way of life, and personal objectives. Depending on your lifestyle and financial position, you can select any one of the options. Both require a consistent source of income and may also take some effort to maintain.
Decision-making is simple if you are clear about your needs. For instance, if you can afford it and want to live somewhere for a very long time — say, 10–20 years — having your own home makes sense. You can contrast your rental expenses with EMIs. However, renting is preferable if your job necessitates constant relocation. Renting also enables you to have a low-cost place to live, freeing up your income for investments and wealth accumulation. It’s challenging to buy a house for a short time and sell it when you move.
Compared to the pre-pandemic era in 2019, the demand for residential rental homes in India’s top seven cities has surged by 10%–20% in 2022. We are looking at 21 million households out of a total 70 million if we believe the census statistics that 30% of urban households are renters inside the 31% official urbanisation rates. According to a Knight Frank analysis, there would be an additional 37 million renters if we considered the additional 32% of unexplained urbanisation based on satellite data at 50% rental. The share of rentals and the demand for the rental business will rise as a result.
The need for rental housing is anticipated to be strong, particularly in the managed housing market as businesses encourage their staff to work from the office to increase productivity. Regardless of the state of the real estate market, rentals typically experience growth and traction.
The most pervasive misconception about renting is that you waste money every month. That is untrue. You must remember that having a place to reside always involves some sort of financial outlay. Renting gives you complete control over your monthly housing expenses. Your lease specifies this sum so you can make appropriate plans. In rare situations, if you reside in a large apartment your landlord might also include homeowner association (HOA) dues, storage fees, and utility charges in that sum.
Here are some attractive benefits of choosing your own home:
Flexibility: Flexibility in terms of a variety of factors, including where you want to live, how much rent you want to pay, and how easily you can move across the world without having to worry about fixed costs. While owning a home may limit your mobility options, if you move, you won’t have to worry about finding a new place to live or the expense of your furniture when you return.
Ease of relocation: Before moving, a homeowner must sell their current residence. In some instances, this could take up to a year or longer. However, the majority of renters only sign one-year leases. Most of the time, the tenant can end the lease by giving the landlord notice of at least one month.
No property taxes: Since you don’t receive the bill, you don’t pay the property taxes. But since your landlord might pass this expense along to you, you still wind up footing the bill. And if you decide that your landlord is giving you too much information, you may always leave to start over.
Low upfront expenditures: Purchasing a house comes with a number of upfront costs that could strain your finances. In contrast, you might need to pay a security deposit and a few months’ worth of rent upfront if you rent a home.
Renting is a preferable choice for people who want to avoid the difficulties related to buying, the costs of upkeep, and property taxes. However, look at renting and purchasing from a long-term perspective. Purchase when you are confident that you will stay put and have the necessary savings, credit, and income stability.
The writer is Founder & CEO, NestAway Technologies.
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