Property Practitioners Act: What landlords and tenants need to know

The Property Practitioners Act now just needs the president’s signature to come into effect, and when it does it will bring about many significant changes in South Africa’s property sector.
It will not only replace the Estate Agents Act, which has been in force since 1976, but will considerably broaden the scope of that legislation to cover commercial property brokers, bond originators, home inspectors, home owners’ associations, companies selling timeshare and fractional title, property developers and property managers as well as “traditional” estate agents.

The new legislation also defines a managing agent as anyone who collects or receives any money payable in respect of a leased property or business undertaking or who provides, procures, facilitates, secures or otherwise obtains or markets financing for or in connection with the management of leased properties.

Protection for landlords and tenants

Thus everyone who sets up in business to let and manage rental properties will now fall under the provisions of the new Act as regards trust accounts and the management of client’s deposits and monthly rentals, for example, and that means better protection for both landlords and tenants. All managing agents will also need to hold a valid Fidelity Fund Certificate (FFC) in order to claim commission on any new or renewed leases.

The Act also provides for a new Board of Authority to replace the current Estate Agency Affairs Board, as well as further protection for landlords, tenants and other consumers of property services in the form of a separate and independent Property Practitioners Ombud to deal with any complaints against property practitioners.

The new law allows for both mediation and adjudication as part of the process for dealing with such complaints, and this should help the Ombud’s office to resolve most matters quickly and efficiently. However, it is important to note that disputes between tenants and landlords will still need to be taken before the Rental Tribunal.

Other important provisions of the new legislation for landlords and tenants to note include the following:

  • A defects disclosure form is now a mandatory part of any property sale or lease agreement. The Act says that a property practitioner may in fact not even accept a mandate to sell or let a property without a disclosure form from the seller or landlord. What is more, if a disclosure form is not included in a sale or lease agreement, that agreement will be interpreted in law as if no defects or deficiencies were disclosed.
  • The buyer or tenant of any property can request the sale agreement or lease in whichever of SA’s official languages they prefer, and the seller or landlord or managing agent must comply. To assist them, sample contracts in all languages are to be provided on the new Board of Authority’s website.
  • In order for a property practitioner to legally claim commission on a property sale or lease, every other property practitioner in their agency must also hold a valid FFC. To qualify for an FFC, the practitioner themselves must produce a current tax clearance certificate and any appropriate BEE certification. What is more, practitioners who don’t have a valid FFC when a sale or lease contract is signed could be required to refund any commission paid by the property seller or landlord, on demand.

Source: BizCommunity

Rent Regulations in New York: How They’ll Affect Tenants and Landlords

Democratic lawmakers in New York harnessed their new powers on Tuesday to broker sweeping changes to rent laws in order to protect tenants in a state with some of the country’s most expensive housing markets.

The regulations that lawmakers agreed upon would stretch beyond New York City to the entire state, allowing other municipalities to enact their own rules to keep apartments affordable.

Both chambers of the State Legislature are expected to vote on the new package this week, before the current set of regulations are set to expire on Saturday.

Unlike previous regulations, which had to be renewed once they expired, the new rules would be permanent. Gov. Andrew M. Cuomo, a Democrat, has pledged to sign whatever bill lawmakers pass.

The new rules would mark a turning point for the 2.4 million people who live in nearly one million rent-regulated apartments in New York City after a steady erosion of protections and the loss of tens of thousands of regulated apartments.

“This package of legislation will reverse decades of rampant landlord abuse and enact much-needed protections for hundreds of thousands of tenants,” said Adriene Holder, a lawyer at the Legal Aid Society.

But landlords warned that removing incentives for them to renovate buildings and lowering their rental income would lead to worse housing conditions for many New Yorkers.

“You will see a slow erosion in the quality of housing going out in three or four years,” said Joseph Strasburg, the president of the Rent Stabilization Association, which represents 25,000 landlords.

There is a lot of jargon around rent, resulting in confusion about what the different terms mean. Broadly speaking, two types of rent-regulated units exist in New York City: rent controlled and rent stabilized. The changes will apply to both.

Rent control in the city became popular after World War II when soldiers returned home and sought apartments for their families. The demand caused rents to increase, leading to a housing shortage. At its height, more than two million rent-controlled apartments existed in the city, but only a small fraction remain: about 22,000, according to a 2017 survey.

For an apartment to be rent-controlled, a tenant or family member must have been living in the unit since at least July 1971, and the building had to have been built before 1947. Families can pass the unit to another member and preserve the rent-control status. A unit that falls out of rent control can be leased at market rate.

The second system, rent stabilization, applies to apartments in buildings with at least six units that were built between 1947 and 1974, as well as newer buildings that receive tax breaks for so-called affordable housing. Rent increases at stabilized units are determined by the city’s Rent Guidelines Board. This year the board allowed for 1.5 percent increases for one-year leases and 2.5 percent for two-year leases.

Tenants in rent-regulated apartments would largely see an end to big rent increases under the new legislation. The Rent Guidelines Board will continue to determine yearly increases on rent-stabilized units, but the following rules that benefited landlords would be changed or abolished:

  • Vacancy decontrol: When the legal rent for a rent-stabilized apartment reached a certain rate, currently $2,774 per month, it could revert to market-rate if there is a vacancy. The rule has led to the deregulation of more than 155,000 units since it was enacted in the 1990s. This practice would be ended.

  • The vacancy bonus: Landlords for rent-stabilized apartments have been able to hike rents by as much as 20 percent after tenants moved out. The new rules would prevent that.

  • Rent hikes based on building improvements: Landlords have been able to increase rents in regulated apartments by up to 6 percent per year if they made improvements that “directly or indirectly” benefited all tenants, such as a new boiler. That increase would now be capped at 2 percent per year. Rent hikes that were permitted if landlords renovated or improved individual apartments would also now be limited.

  • Misuse of “preferential” rents: Landlords of rent-stabilized apartments can offer units to tenants for a price lower than the legal regulated rent. But they can no longer raise the rent to the legally mandated limit when a lease is renewed, a practice that was pushing tenants out.

  • High-income deregulation: If a tenant in a rent-stabilized unit earned over $200,000 a year in two consecutive years, the landlord could deregulate the unit. That will no longer be allowed.

  • The “owner-use” loophole: Landlords and their family members have been able to remove rent-stabilized tenants from multiple units to use them as residences, a rule sometimes abused by landlords as a way to ultimately raise rents. Now, landlords will only be able to claim “owner use” for one apartment for use as their primary residence.

Trade groups and real estate lobbyists warned of dire consequences as a result of the new regulations. They said smaller landlords could be run out of business because of new limits on rent increases and restrictions on raising rent after improvements. Ultimately, they said, units and buildings could fall into disrepair.

Some analysts predicted that the New York housing market overall could be depressed because the resale market for rent-regulated apartments would lose value as a result of the changes.

The Real Estate Board of New York, an influential trade group that primarily represents larger developers, predicted that building owners would no longer have an incentive to invest in their rent-regulated units.

“This legislation fails to address the city’s housing crisis, and will lead to disinvestment in the city’s private sector rental stock, consigning hundreds of thousands of rent-regulated tenants to living in buildings that are likely to fall into disrepair,” said the Taxpayers for an Affordable New York, a coalition of four real estate groups.

The package of protections extends well beyond those living in rent-regulated apartments to all New Yorkers renting apartments:

  • Security deposits will be limited to one month’s rent and procedures will be improved to make it easier for renters to get their security deposits back.

  • Tenants who were seen as troublemakers by landlords — perhaps for standing up for their rights — would sometimes end up on blacklists that would be shared among rental agencies. That practice would be banned.

  • Tenants would be better protected during the eviction process, particularly against retaliatory evictions.

  • Unlawful evictions, such as when a landlord illegally locks out or uses force to evict a tenant, would become a crime, a misdemeanor punishable by a civil penalty of between $1,000 and $10,000 per violation.

  • Landlords would be required to provide at least 30 days notice to tenants if they intend to increase the rent by more than 5 percent or are not going to renew the lease

Source: New York Times


Average Property Values Continue To Rise In May

Average property values rose by 5.2 per cent over the past year, according to the latest May Halifax Property Price Index – a dramatic jump in property values by recent standards.

The increase represents the biggest annual rise since the start of 2017, and brings average property values to £237,837

However, the lender stated that the overall message was one of ‘stability’ and that May’s sharp rise in prices was against a backdrop of ‘particularly low’ growth in the same period last year.

On a monthly basis, property values rose by 0.5 per cent, down from a 1.2 per cent rise the previous month, while in the quarter to the end of May prices were 2.5 per cent higher, compared to 4.2 per cent growth in the previous quarter.

Britain’s housing market has slowed since 2016’s Brexit referendum, driven by price falls in London and neighbouring areas, exacerbated by higher purchase taxes on homes costing over 1 million pounds and on second homes and small landlords.

The figures stated by Halifax are in contrast to the latest data released by Nationwide, which reported a much lower annual growth rate in property values of just 0.9 per cent, and a monthly growth rate of 0.6 per cent.

Managing director at Halifax, Russell Galley, said: ‘We saw a slight increase in house prices between April and May, but the overall message is one of stability.

‘Despite the ongoing political and economic uncertainty, underlying conditions in the broader economy continue to underpin the housing market, particularly the twin factors of high employment and low interest rates.’

Mr Galley said that this was supported by industry-wide figures, which suggest ‘no real change’ in the number of homes sold each month, while Bank of England data show the number of mortgages being approved rose by almost 6 per cent in April, reversing the softness seen in the previous month.

He concluded: ‘We expect the current trend of stability to persist over the coming months, though clearly any downturn in the wider economy would be keenly felt in the housing market.’

Source: Residential Landlord

New Residential Construction Prices and Sales Dip in U.S.

First Annual New Construction Price Drop in 7 Years

According to Redfin, sale prices for newly built homes in the U.S. fell 1 percent year over year to a median of $363,900 in the first quarter of 2019, the first such drop in seven years.

Sales of new homes in the U.S. were also down 3.1 percent year over year in the first quarter of 2019, the third consecutive quarter of declines. Supply of new homes was up 4.2 percent in the first quarter, the fourth consecutive period of increases.

The small declines in new-home sale prices and sales and the rise in supply were expected. Redfin first reported that demand for new homes was cooling in the second half of 2018 as builders started dropping prices and offering incentives to agents and buyers showing interest in new construction, such as free design upgrades.

Connie Durnal, a Redfin agent in Dallas, said builders are now using other methods to lower prices for new homes in her area, such as smaller lot sizes and including fewer upgrades in spec homes (those that are built without a buyer lined up). Lowering prices is part of an effort to sell some of the new-home inventory that’s been piling up in Dallas (supply of new homes in the Dallas metro was up 14.7% in the first quarter).

“The market for new homes is shifting. Builders are readjusting their pricing to be more competitive, both in low-end and high-end homes. Some of my clients have been able to buy new homes at prices we never could have negotiated a year ago,” Durnal said. “One reason builders are able to offer homes for lower prices is because in some cases, they’re building on smaller lots farther away from the city center, like in the northern suburbs.

They’re also reducing monetary incentives such as design center credits and built-in blinds in favor of offering the home for sale at a lower price. That way, builders end up netting the same amount of money on a sale but homebuyers may feel that they’re getting a better price.”

New construction is a key ingredient in the affordability of housing markets, but it is limited by the labor supply of construction workers. In a separate analysis, Redfin determined the share of homes affordable on the median personal income for construction workers in some of the nation’s largest metros.

St. Louis is the most affordable place for a construction worker to buy a home, with 67.3 percent of homes for sale affordable on the median personal income for construction workers in the area, the highest share of any U.S. metro. It’s followed by two Midwestern neighbors, Cleveland (64.7%) and Chicago (62.5%). Those metros are also relatively affordable for the population as a whole: In all three places, more than half of homes for sale are affordable on the area’s median household incomes.

A typical construction worker would find it near impossible to find a home they could afford to buy in any major California metro. In San Jose, just 0.1 percent of homes for sale are affordable on a local construction worker’s median income, making it the least affordable metro for construction workers, followed by San Diego (1.5%) and San Francisco (1.8%).

The fact that less than 20 percent of homes for sale in each California metro covered by this analysis (Los Angeles, Sacramento and Riverside, in addition to those already listed) are affordable for construction workers is representative of the larger housing crisis in the entire state. Between 2010 and 2018, California built the fewest apartments and for-sale housing units per new resident of any state except Arizona, with just one unit for every 3.1 newcomers (Arizona built one new unit for every 3.2 newcomers). Other states averaged around one new unit for every two new residents during the same time period.

San Jose provides an example of the housing affordability problems associated with a lack of supply. Although inventory has been recovering in recent months, the market continues to feel the effects of 15 consecutive months of double-digit supply declines through mid-2018. The lack of inventory drove prices from a median of $820,000 at the beginning of 2017 to more than $1.1 million last month.

Meanwhile, wages for construction workers in San Jose have hardly risen. Annual salaries hovered around $60,000 throughout 2017 and 2018, about 12 percent higher than they were in 2012. Home prices in the area more than doubled from 2012 to 2018.

“It might seem like the solution to the housing shortage is straightforward–just build more homes–but in many California metros construction workers aren’t paid enough to cover their own housing costs, which makes attracting construction workers to build those homes quite difficult,” said Redfin chief economist Daryl Fairweather.

“To solve the housing crisis, the government needs to step up and subsidize new construction. Some voters might find it distasteful to give wealthy developers subsidies, but those subsidies could come with strings attached like higher pay for working-class construction workers.”

Source: worldpropertyjournal

MPC Capital Launches Commercial Real Estate Platform

MPC Capital AG has launched a new commercial real estate platform called ‘InTheCity’.

The platform will be run by MPC Capital’s Dutch subsidiary, Cairn Real Estate, and initially consists of eight assets, valued at around EUR 120 million.

It will follow Cairn Real Estate’s office strategy that focuses on assets located in close proximity to major transport hubs in strong regional cities in the Netherlands. These assets must also be highly sustainable, offer flexibility to tenants and have a focus on employee well-being.

The seed portfolio consists of eight assets that were initially acquired by Cairn Real Estate in 2016 under a redevelopment mandate. The assets were originally from the former ‘Transit’ portfolios and have yielded a strong return for the initial investors.

The properties total roughly 63,000 sqm of office space and are located in Groningen, Leeuwarden, Zwolle, Utrecht, Amersfoort, Schiedam and Haarlem. All office space is fully let with leases set to run for another five years.

Source: Investmenteurope

Indiabulls Real Estate Shares Surge for Second Straight Day

New Delhi: Shares of the Indiabulls Real Estate (IBREL) surged as much as 17% in two days on buzz of US-based Blackstone acquiring a part of the promoters stake in the company. Indiabulls Real Estate in a statement to stock exchanges said its promoters intend to dispose of up to 14% of the fully paid-up share capital of the company (out of the aggregate 38.72% fully paid up share capital of the company) to third-party investors.

Indiabulls Real Estate shares rose as much as 10% today on NSE, following 6.5% gain on Thursday. At 10:40 am, Indiabulls Real Estate shares were up 1%, paring most of the early gains.

The stake sale is in line with the company’s promoters’ strategy to focus on financial services in the long run, Indiabulls Real Estate statement added.

Mint on Thursday had reported that the Blackstone-Embassy joint venture plan to buy part of the promoters’ stake in Indiabulls Real Estate.

In March last year, Indiabulls Real Estate sold a 50% stake in its marquee office properties in central Mumbai to Blackstone for $730 million or 4,750 crore. The developer had then said it will use bulk of the money to pare debt.

Blackstone had also bought Indiabulls Real Estate’s commercial office property in Chennai One Indiabulls Park for around 900 crore.

Indiabulls Real Estate had posted a 95% decline in its consolidated net profit at 108.56 crore for the fourth quarter of the last fiscal as against 2,181.13 crore in the year-ago period, according to a regulatory filing.

Source: Livemint

Advice about anti-money laundering in the UK property market provided for agents

Updated guidance on anti-money laundering has been issued by HMRC to estate agents as concerns are being raised about loopholes in new legislation to make ownership more transparent.

The new advice rounds up the various laws that estate agents have to comply with and it also heads off an argument long advanced by sales agents that they do not handle money.

The new advice says that while this may be so, estate agents have knowledge of both sides of a transaction and how a purchase is funded and agents that take deposits, including auctioneers, do handle money.

The new advice spells out the policies, controls and procedures that agents must put in place, and says agents must ‘devote enough resources to deal with money laundering and terrorist financing’.

The advice also deals with risks where there are non-face to face customers, and where agents accept introductions from another agent, as in cases of sub-agency, as well as spelling out the relationship with the ‘counterparty’, ie, the buyer, who is not the customer of the sales agent, or a seller who is not the customer of a relocation agent or property finder.

However, concerns have been raised that new legislation aimed at preventing the property market in the UK being used for money laundering has loopholes that need to be fixed before it becomes law.

According to the Joint Committee on the Draft Registration of Overseas Entities Bill a lack of information about anonymous owners needs to be addressed. It points out that between 2004 and 2015 some £180 million of UK property was subject to criminal investigation as suspected proceeds of corruption, and this may be just the tip of the iceberg.

In 2017 some 160 properties worth over £4 billion were identified as being purchased by high corruption-risk individuals, and 86,000 properties in England Wales have been identified as owned by companies incorporated in secrecy jurisdictions.

It has been more than three years since the Government pledged to introduce a transparent register of the foreign entities that own UK property, and of the individuals who actually control them.

‘Time is of the essence and regardless of the effect of Brexit on the parliamentary timetable, this legislation is needed now,’ the committee said in its recent report. In particular it is concerned that the current Bill allows the Government to exempt certain entities from publishing their information, and in some cases from disclosing it at all.

It is also concerned that any register will not be fit for purpose due to information being out of date and to be transparent sellers of property should be required to update their ownership information once a year, but also update information about proposed transactions before they take place, thus capturing information at the point where most money laundering occurs.

The committee also says that the current proposals lack verification checks to deter individuals, including criminals, who want to submit false information. Without such checks the draft Bill risks failing to achieve its primary aim of increasing transparency about who really owns land and it believed that enforcing this new law may be difficult. The report therefore suggests that civil penalties will be easier than criminal sanctions to enforce abroad, and against land or other assets in the UK.

Martin Cheek, managing director of anti-money laundering firm SmartSearch, said that going forward, properties in the UK that have already been purchased using the proceeds of crime need to be identified and that while the unexplained wealth orders are an attempt to address these, it will be a very slow process.

He also pointed out that the UK needs to have a robust system in place for foreign purchases of high value property and whilst other countries, including the Crown Dependencies such as the Cayman Islands, allow opaque ownership, the process will never be 100% watertight.

According to Tom Beak, associate in the real estate team at legal firm Kingsley Napley, the current draft Bill is unlikely to make it impossible to launder money, just much harder.
‘It it seems inevitable that the Bill’s effectiveness will rely on the enhanced due diligence of acting solicitors to ensure that proposed buyers or sellers are appropriately registered,’ he said.

Source: Property Wire

Rents show stability in the prime London lettings markets

Rents are widely stable in the prime lettings markets in London, with little movement on a quarterly or an annual basis, the latest analysis report shows.

Overall rents in prime central London were unchanged on a quarterly basis and down just 0.2% year on year, according to the May 2019 report from real estate firm Knight Frank.

The data also shows that in the outer prime London lettings market rents fell by just 0.3% quarter on quarter and on an annual basis by only 0.1%.

The number of tenancies agreed in both markets increased by 11% in the 12 months to April compared with the previous 12 month period. This followed a 13% uptick in March, the highest increase in seven years.

The higher value rental market in London has also strengthened over the year with the total number of deals per Knight Frank office between £1,000 and £4,000 per week some 13% higher in April this year than the same month in 2018.

Demand has risen in recent months as some buyers appear to have responded to political uncertainty by renting, the report suggests.

The report points out that demand in the high value lettings market, which is growing forcibly, evident by a notable 2.4% increase in the number of tenants registering with a budget of between £1,000 and £4,000. But the equivalent figure below £1,000 was flat.

Source: Property Wire

Tanzania and Zambia to build US $1.5bn oil pipeline

Tanzania and Zambia are set to construct an oil pipeline running from Tanzania’s commercial capital Dar Es Salaam to the Zambian mining city of Ndola at a cost of US $1.5bn.

Tanzania Energy Minister Medard Kalemani confirmed the reports and said that the pipeline will be built by both countries to transport refined products between the neighbouring states.

While presenting his Ministry’s 2019/20 budget plan in the administrative capital of Dodoma, the Minister said that a feasibility study was scheduled to be carried out in the coming financial year.

Tanzania-Zambia petroleum products pipeline (TZPPP)

The TZPP is a proposed pipeline meant to transport refined petroleum products from Tanzania’s sea-port of Dar es Salaam on the Indian Ocean through central Tanzania and northern Zambia to the Zambian mining city of Ndola, in the Copperbelt Province, a total distance of 1,349 kiometers.

The pipeline will have take-off points at Morogoro, Iringa, Njombe, Mbeya and Songwe regions on the Tanzanian side. It is expected to reduce challenges in transporting petroleum products to Zambia and to many inland regions of Tanzania, where the pipeline will pass.

Zambia, a land-locked Southern African country and Africa’s top copper producer, depends on its neighbor, Tanzania for the majority of its oil imports, sourced mainly from the Middle Eastern countries.

“The project will go a long way in reducing challenges of transporting petroleum products in the countries that use our ports to import fuel and open up business opportunities,” said Kalemani

Source: Constructionreviewonline

Glasgow Rental Returns Quickest In UK For Buy To Let Property Investment

Glasgow rental returns have been found to be the best the UK for returning buy to let property investors original outlay.

With Glasgow rental returns averaging £10,140 per annum, the original average property cost of £129,764, plus property tax of £5,190, giving a combined total of £134,954 was recouped in just 13.3 years.

The next best city in the UK for returning property investment quickly was Belfast, which took 15.8 years on average, with another Scottish city, Aberdeen, taking third place at an average of 17.8 years.

The report, carried out by letting agent Benham and Reeves, looked at the average house price plus the cost of buy to let stamp duty and annual rent, and ranked each area on the number of years it would take for this annual rent to recoup the cost of buying in each area and paying taxes such as land and Buildings Transaction Tax in Scotland and Stamp Duty south of the border.

With Glasgow rental returns coming top and Aberdeen in third place, it is hardly surprising that when it comes to countries as a whole, Scotland offers the quickest return on property investment with the annual rent returning the original asking price in 17.7 years. This despite Edinburgh taking average 21.6 years to recoup the cost of the average property price of £263,868.

Northern Ireland was the second quickest country to return the full initial investment through rental at 18.9 years, followed by England at 25 years and finally Wales at 26.4 years.

Nottingham was the quickest area in England to see rental income recoup the initial costs of buying a property at 18.4 years, followed by Newcastle at 18.5 years.

Director of Benham and Reeves, Marc von Grundherr, said: ‘Buy to let investment is a complicated business, even more so given the changes to the sector of late, however, the primary indicator of a good investment is always going to be the rental yield available.’

With relatively low initial purchase costs, good Glasgow rental returns could amount to good financial sense for aspiring buy to let property investors wherever they are based in the UK.

Source: Residential Landlord

Translate »