Written By Em

Em Morley

What Will Brexit Mean for the Student Lettings Market?

Published On: February 21, 2017 at 9:57 am

Tags: Brexit,immigration,student landlords,student tenants,students

This month has brought the big news that MPs have overwhelmingly voted to allow Theresa May to trigger Brexit under Article 50. But what will the UK’s exit from the EU mean for the student lettings market?

With a 498-majority vote, the Prime Minister is now one step closer to reaching her goal of starting negotiations with Europe by the end of March 2017.

What Will Brexit Mean for the Student Lettings Market?

However, as Theresa May visits the House of Lords debate over Article 50, there are still plenty of questions surrounding the student lettings market; Will rents rise or fall? Will supply and demand change?

Although some experts predict a bright future for student landlords, others say the student lettings market is highly unpredictable and unstable. But it’s probably somewhere in between, believes student lettings portal StudentTenant.com.

In the last academic year, 1.72m students studied an undergraduate degree at a UK university, of which 7.2% were from EU countries.

German students top the list, with a total of 13,425 studying at university level, closely followed by French and Italian students (12,525 and 12,135 respectively).

University College London attracted 4,185 EU students, the most in 2015/16. King’s College London came in second place, with 3,560 students, while the University of Edinburgh had 3,510 EU students.

But what will Brexit mean for EU students in the future? With immigration control central to the Brexit plans, it is looking likely that non-UK students may have to apply for a student visa or short-term study visa in order to study and live in the UK.

Danielle Cullen, the Managing Director of StudentTenant, explains how Brexit will affect the student lettings market: “Naturally, landlords are worried about the uncertainty surrounding the student lettings market as a direct impact of Brexit. It is becoming increasingly alarming that EU students will have to apply for a study visa; it’s another hoop to jump through before they get access to a British university education.

“We could see a fall in EU students in the UK following Brexit, which would have a significant impact on student landlords. Supply could well outgrow demand, putting pressure on landlords to find tenants and maximise the profitability of to let properties. We’ve seen plenty of experts predict a vast drop in demand for student letting as a result of potential EU immigration restrictions, but there is still time to change that.”

She adds: “Our Government must take steps to ensure Britain remains welcoming to international students, not just for the student rental market, but to ensure British universities are innovating with the brightest and best minds.”

Following the vote to trigger Article 50, Theresa May was quick to release the Government’s plans for leaving the EU, dubbed the Brexit White Paper. The official policy document outlines the key themes for negotiation with the EU, immigration, trade and sovereignty, all of which could have a huge impact on the student lettings market.

Longer-term tenancies are increasing

Published On: February 21, 2017 at 9:45 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,rental market,tenants

An interesting piece of research sure to please buy-to-let landlords suggests that four in ten tenants expect to be renting for up to a decade.

The survey was commissioned by property and construction consultants McBains Cooper and is sure to give the build-to-rent market a shot in the arm.

Rental Accommodation

Quizzing over 2,000 people, the survey revealed that one in four people devote over 40% of their income towards funding rental accommodation.

In addition, the study showed that renters look for more traditional factors when choosing a rental property, such as size of rooms, affordability and outdoor space. These factors were found to be more important than shared amenities such as sports facilities or communal room.

Michael Thirkettle, chief executive of McBains Cooper, noted: ‘Our survey shows that renting for the longer term is becoming more common. For some it might be because they are priced out of the housing market, for others, it may also reflect a more continental attitude where people are content to rent rather than buy. Either way, the potential for PRS and build-to-rent is clear.’[1]

‘The findings will be of particular interest to investors and developers in the PRS and build-to-rent sector. Interestingly, a high proportion of the older generation are now long-term renters. This might reflect the more ‘traditional’ characteristics in terms of the most important factors people look for when choosing rented accommodation – such as room size and a garden or outdoor space, as opposed to amenities like sports facilities or a cinema and internal communal spaces,’ he continued.[1]

Longer-term tenancies are increasing

Rising Demand

Further analysis from Savills suggests that demand for rental properties will increase by over one million households during the next five years, despite Government measures intended to help more buyers get onto the ladder.

The Government has set a target of building 400,000 new affordable homes for sale over the course of this current parliament. However, Savills forecasts that Britain will require an extra 220,000 homes for rent per year.

Susan Emmett, director of residential research at Savills, said: ‘Demand for rented homes could still rise more sharply than we have forecast. Government policy should focus on supporting the development of new homes to rent as well as to buy.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/increase-in-long-term-rentals

Tenant Demand Still Rising Despite Government Intervention in Buy-to-Let

Published On: February 21, 2017 at 9:24 am

Author: Em Morley

Categories: Landlord News

Tags: landlord taxes,private rental sector,tax changes,tenant demand

Tenant demand for private rental housing is still rising, despite Government intervention in the buy-to-let sector, reassures Paragon Mortgages following its latest Private Rented Sector Trends report.

Tenant Demand Still Rising Despite Government Intervention in Buy-to-Let

The Government’s plans to restrict tax relief on buy-to-let finance costs, which were announced in the 2015 Summer Budget, compounded by the 3% Stamp Duty surcharge, caused uncertainty amongst the landlords surveyed, with the proportion of those expecting to sell their properties reaching its highest ever level (25%) in the first quarter (Q1) of 2016.

However, as the tax relief changes edge closer, landlords have begun to develop strategies to mitigate the impact of the reduction, causing the number of landlords looking to sell to drop to 17%, while the proportion of landlords considering a buy-to-let property purchase grew to 13% in Q1 2017, up from a record low of 9% in the same period last year.

Tenant demand

Of the 204 landlords surveyed, 94% described tenant demand as stable or growing, with less than one in 30 suggesting a decrease.

Tenant demand continues to affect average void periods, which remain unchanged at 2.7 weeks, with 48% of landlords reporting that their properties stand empty for less than two weeks. Average yields are also remarkably stable, at 6.1%.

Property purchases

Among the landlords looking to purchase, they are most likely to buy terraced houses (62%), flats/maisonettes (31%), or semi-detached houses (23%). Notably, the proportion most likely to buy flats/maisonettes has dropped from 67% in the previous quarter.

The Managing Director of Paragon Mortgages, John Heron, says: “With no material improvement in the supply of new housing against a background of strong population growth and household formation, it is no surprise that landlords are continuing to experience strong rental demand. It is promising, therefore, that there has been some improvement in landlord buying intentions, albeit from a low base.

“Any boost this gives to improving supply to the sector, however, needs to be balanced against the additional upward pressure that we are likely to see in rents as a result of the phased impact of the changes to the taxation of rental income.”

Have you experienced stable or even growing levels of tenant demand?

Agents get chance to air their views on white paper

Published On: February 20, 2017 at 2:38 pm

Author: Em Morley

Categories: Property News

Tags: housing market,property,rental market,White Paper

The Housing Minister Gavin Barwell has organised a number of regional meetings for property professionals in order to hear their views on the controversial Housing White Paper.

This document was released one fortnight ago after a series of delays and was largely given a lukewarm response.

Events

Barwell’s office at the Department of Communities and Local Government is organising these events in order to get the sector’s view on the paper in person. The first event is taking place today.

Barwell observed: ‘The challenge of increasing supply cannot be met by Government alone. That is why I want to hear from a wide range of stakeholders-councillors, local authority planning and housing officers, large and small developers, housing associations, estate agents, letting agents and others-about what they think about the White Paper and how we can work together to fix our broken housing market.’[1]

The time and location of these sessions are indicated below:

London, hosted by GLA, 20.02.17, Monday February 20, 6 30pm-8pm.

Manchester, hosted by the National Housing Federation, Tuesday February 21, 2pm-3.30pm

Agents get chance to air their views on white paper

Cambridge, hosted by Cambridge City Council, on Wednesday February 22, 3pm to 4.30pm;

Gateshead, hosted by Northern Housing Consortium, on Thursday February 23, 10.15am to 10.45am;

York, hosted by York City Council, on Friday February 24, 9.30am to 11am;

Taunton, hosted by Taunton Council, on Thursday March 2, 3pm to 4.30pm;

Surrey, hosted by South East England Councils, on Monday March 6, 10.45am to 12.15pm

Full details can be found on the Chartered Institute of Housing Website

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/housing-minister-wants-agents-to-tell-him-what-they-think-of-white-paper

Santander to get rid of controversial mortgage clause

Published On: February 20, 2017 at 11:09 am

Author: Em Morley

Categories: Finance News

Tags: Buy-to-Let,landlords,mortgage clause,Santander

After much controversy, Santander has said it is going to scrap its buy-to-let mortgage contract clause, that requests landlord to increase rents by, ‘as much as can be reasonably achieved’ where possible.

This controversial wording was exposed last month by Mortgage Strategy, after a private landlord has spotted the clause in her mortgage contract. It appears that the clause has been in Santander’s contracts for nearly six years.

Wording

The landlord in question noted: ‘The public views landlord as greedy, but how many people are aware that landlords are being forced to increase rents by banks such as Santander?’[1]

‘The Santander contract states that when rents are up for renewal the landlord must get written advice from a qualified valuer (as to) whether the market rent at the date of the review is likely to be higher than the rent currently payable.’[1]

Unsurprisingly, the clause has been slammed by leading industry figures.

Santander to get rid of controversial mortgage clause

Ray Boulger, senior technical director at John Charcol, observed: ‘This doesn’t square very well with the best interests of consumers.’[1]

Meanwhile, Lucy Hodge, managing director at Vantage Finance, called Santander’s clause as: ‘excessive and disproportionate’, stating she could not see: ‘any sense in it whatsoever.’[1]

Last week, a Santander spokesperson stated that the policy was under review, but said, ‘it is for the landlord to set a rent that both they and the tenant agree upon.’ Now however, the bank has moved to drop the clause altogether after acknowledging that, ‘it can be misunderstood.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/santander-tells-landlords-to-raise-rents-by-as-much-as-can-be-reasonably-achieved

One Third of Letting Agents in Milton Keynes Fined for Not Displaying Fees

Published On: February 20, 2017 at 10:49 am

Author: Em Morley

Categories: Property News

Tags: displaying fees,letting agent fees,letting agents,Milton Keynes

Around one third of all letting agents in Milton Keynes have been fined by the council’s Trading Standards department for not displaying fees, as required by the law.

The 30 agents were fined thousands of pounds for failing to display the fees they charge to landlords and tenants.

All of the letting agents in the town were initially contacted and reminded of the law on displaying fees, but, worryingly, many did not know they are legally obliged to do so.

One Third of Letting Agents in Milton Keynes Fined for Not Displaying Fees

Rightmove currently lists 108 sales and letting agents in Milton Keynes, which is broadly in line with the 105 contacted by Trading Standards.

The department acted after new legislation in 2015, under the Consumer Rights Act, requires letting agents to display the fees they charge both in their offices and online.

Throughout the past year, Trading Standards officers carried out research to check if agents in the borough were displaying the required information. They found that many of the agents were not aware of the legislation and what it means for them.

Trading Standards then wrote to all of them, with an explanation of their responsibilities and a warning of financial penalties if they failed to comply.

Two months later, officers followed up the letters with visits to the letting agent offices.

While most – 75 – had displayed their fees correctly, 30 agents were still breaching the law on displaying fees.

Councillor Mick Legg, the Cabinet Member responsible for Trading Standards, comments: “In these days of very high mortgage costs, many people are renting, and many of them really are in the hands of letting agents.

“It is important that information about fees is absolutely transparent from the start, and our Trading Standards team tried to work with local agents when the Consumer Rights Act came into force to ensure that they were aware of their responsibilities, to enable would-be tenants to receive the information they are entitled to when choosing which agent to use.”

He expresses: “It’s disappointing that, despite warnings from our Trading Standards team, some letting agents still failed to comply with the new Consumer Rights legislation. However, we hope these fines will send a strong message to letting agents across the borough to get their house in order.”

All 30 letting agents received fines from Trading Standards for their continued failure to comply with the law on displaying fees, two of which appealed to the First-tier Tribunal, but were dismissed earlier this month by the hearing judge.

The judge also ordered them to immediately start displaying fees and display which redress scheme they belong to and whether they offer Client Money Protection, which is also required under the same law.

Letting agents, remember that you must comply with the law on displaying fees or face hefty fines.