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Following a successful two-year trial, a new up-front rental payment system is being rolled out across the UK. Known as the Advanced Rent Option, the new system provides letting agents with the option of offering landlords one year’s rent in advance as part of their service package.

According to those responsible for the ARO, the scheme could radically change the private lettings industry by enabling agents to build better relationships with landlords.

The Advanced Rent Option simply enables agents to provide upfront payments when securing the business of landlords and has proven to be an extremely popular and powerful prospecting tool during the scheme’s initial trial.

Simon Shine rock, who created and launched the ARO, said that response among small to medium-sized businesses in particular has so far been outstanding.

“This project has been in the pilot stage for two years, and it has proven to bring huge benefits to the lettings market, offering peace of mind to landlords as well as an invaluable marketing and prospecting edge for selected agents,” he said.

“The response since launch has been beyond our expectations, and we have been able to demonstrate that ARO is the holy grail of landlord prospecting and lead generation, attracting more landlord inquiries at a lower cost than any other form of marketing.”

“Now agents across the UK can stand out from the crowd by offering landlords something that no one else can. ARO is available for reliable, proactive, and go-ahead agents who understand the value of the ARO and how to use it to fast-forward their businesses and grow their managed portfolios.”

“We are looking forward to working with our ARO licenced agents to offer landlords a better, more secure, and more versatile service.”

Elsewhere, Moss Property director Sanjay Gandhi has been making use of the scheme for several months, with ARO having played a direct role in helping him grow his local business.

“I wanted to look at ways to generate new landlords and thought that ARO would be the perfect product to do that. We have competitors in the town who offer a rent guarantee, but the difference with that product is they take a 35 per cent cut and don’t really offer market value,” he said.

“Since launching ARO a few months ago, we’ve grown our portfolio by around three to four per cent. I’ve got to highlight that it’s not for everyone. I’ve had many landlords who’ve said they like the idea but are happy to have the rent paid monthly and go on with our standard service. But we would not have been able to speak to that landlord if we didn’t ARO in the first place.”

“It’s been a great new business generator and has helped to bring more landlords into our standard service, as they know that with us, they can switch over to an ARO licence should they decide they want it at a later date.”

Price comparison site Compare the Market has been handed a £17.9 million penalty for falsifying information presented to customers. The service that enables customers to compare the market for mortgages, insurance, and other financial products faces accusations of artificially inflating home insurance costs.

The Competition and Markets Authority (CMA) reports that Compare the Market unfairly prevented insurers from advertising their products at lower prices elsewhere. This may have subsequently prevented thousands or even millions of consumers from accessing the best possible deals on their insurance premiums by providing them with misleading information.

Compare the Market has subsequently responded, stating that the company “fundamentally” disagrees with the ruling and maintains its innocence.

“We fundamentally disagree with the conclusions the CMA has drawn and will be carefully examining the detailed rationale behind the decision and considering all of our options,” read the statement issued by Compare the Market.

Limiting access to competitive deals

Compare the Market was created for the sole purpose of simplifying the process of comparing offers from as many providers as possible in order to access the best possible deal; however, the accusations of the CMA suggest that those who used the service to compare the market for insurance quotes may have been deliberately denied access to the most competitive offers.

“Price comparison websites are excellent for consumers. They promote competition between providers, offer choice for customers, and make it easier for consumers to find the best bargains,” commented Michael Grenfell, speaking on behalf of the Competition and Markets Authority.

“It is therefore unacceptable that Compare the Market, which has been the largest price comparison site for home insurance for several years, used clauses in its contracts that restricted home insurers from offering bigger discounts on competing websites, so limiting the bargains potentially available to consumers.”

Furthermore, the published findings of the CMA included the following conclusions:

• The insurers bound by the contracts were prohibited from offering cheaper deals on other price-comparison websites.
• Rival comparison sites could not offer lower prices, for example, by lowering their commission fees to encourage insurers to quote lower prices on their platforms.
• Without the clauses, Compare the Market itself would have had to compete harder to get lower prices from the home insurers.

In an interview with BBC Radio 4, Mr Grenfell accused Compare the Market of ‘anti-competitive’ activities that ultimately stood to both harm the competition and prevent customers from accessing the best possible deals on their insurance products.

“We show that it had real anti-competitive effects, that there were cases where insurance companies wanted to offer promotions or discounts on other websites, and they were prevented from doing so as a result of the clauses,” Mr. Grenfell told the BBC.

The investigation into Compare the Market’s anti-competitive behaviour was conducted over the course of three years. The company has since indicated its intent to challenge the ruling.

If looking to get the best possible deal on a loan, mortgage, or financial product of any kind, compare the market in its entirety with the help of UK Property Finance.

In what’s being heralded as a victory for both common sense and the economy as a whole, housing minister Robert Jenrick has confirmed that the UK’s housing market will remain active during the second lockdown.

The government recently outlined new restrictions with an initial end date of December 2, though the second lockdown is not expected to have nearly as devastating an impact on the housing market as the first.

In addition to confirming that the market will remain open, Mr. Jenrick also indicated that further details will be published by the FCA on new mortgage payment holidays for existing borrowers. He was also adamant in pointing out that those looking to relocate or purchase their first homes over the next four weeks will have every opportunity to do so.

“The housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance,” he said.

“Tradespeople like [sic] electricians, plumbers, and repairers of domestic appliances can enter your home. They will need to follow social distancing guidance that has already been published,” he added, while confirming hardware shops will be authorised to continue doing business.

A question of demand

Though the decision to keep the housing market open during the second lockdown has been welcomed across the industry, some have questioned whether demand will be sufficient to sustain its performance.

Mortgage consultant Chris Sykes expressed concern over the likelihood of prospective buyers purchasing properties during lockdown, along with the extent to which the new restrictions could make it even more difficult to qualify for a mortgage.

“The question remains: how many people are going to be out and about viewing property given the circumstances?” he said.

“Ultimately, this is likely to entrench the current trends for those looking to move to houses with more space, both outdoors and to work remotely, and means areas outside major cities are likely to see higher demand than pre-COVID.”

“A second lockdown and the corresponding economic repercussions are exactly why mortgage lenders have been cautious of late.”

“We expect to see further restrictions on borrowing, certainly for those with deposits smaller than 20 per cent, with these products almost certainly becoming even harder to find, and those that are available will charge even higher rates to account for the risk.”

A less severe slowdown

While the second lockdown will inevitably have an impact on the housing market, most experts believe it will not be nearly as severe as the previous total shutdown.

“Thankfully, this second lockdown is unlikely to be as devastating as the first,” said Melanie Spencer of MCI Mortgage Club.

“But there will be a shrinkage of customers who work in affected sectors such as leisure, retail, and hospitality, as lenders will naturally adjust their risk appetites; therefore, for those fortunate not to be overly affected, they will still have the opportunity to take advantage of the stamp duty holiday, but it will create further divides between the haves and have-nots.”

“Finally, given the unknown quantities of the EU/UK trade agreement and the potential impact on the UK consumer in 2021 on affordability as duty on imported goods is likely to rise, we might just see the final push for property before we dive into even further uncertainty.”