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Em Morley

Record Month for Student Lettings in January, Reports Agency

Published On: February 14, 2017 at 9:25 am

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Online student letting agency StudentTenant.com has reported a record month for student lettings in January.

Record Month for Student Lettings in January, Reports Agency

Record Month for Student Lettings in January, Reports Agency

The firm experienced strong growth in property uploads, viewings and bookings over the past month.

The latest data from StudentTenant shows that property searches on the student lettings site rose by a whopping 75% in January.

Property requests were five times the average in January, highlighting the trend of students booking properties almost nine months before they move in.

The record-breaking number of confirmed bookings and lettings followed a surge of demand, as students rushed to secure housing for the next academic year.

In addition to its record month for student lettings, StudentTenant saw an increase in traffic in the final quarter of 2016, as students rushed to find a home. The firm’s data indicates that property searches were up by 74% and landlord sign ups by 22% in November, as both parties prepared for the January rush.

Figures also suggest that students were twice as likely to sign up to StudentTenant in November and December, as they began their search for properties for the next academic year.

The Managing Director of the student lettings site, Danielle Cullen, says: “It’s been another brilliant month for us. We’re extremely happy with the performance of StudentTenant over the past year, especially in January, as our team has been working extremely hard to keep up with the surge in demand. Figures reveal that January is the busiest time of year for students searching for properties, so it’s extremely important for us to get landlords on our site before demand peaks.

“The trend to book property so early is a long-standing tradition in a lot of UK cities, which can be both positive and negative for students. Booking somewhere with a group of people so far in advance means a lot can change in terms of both relationships and financial stability, so we always encourage students to make an informed decision before they secure somewhere.”

She adds: “2016 was a fantastic year for us, and our record requests and bookings are yet more great news. Our continued growth in the UK is underpinned by a heavily growing market, which is very exciting to be a part of.”

Landlords, have you seen a surge in student lettings already this year? If not, you should be putting your properties on the market soon!

Where are the best regions for buy-to-let yields?

Published On: February 13, 2017 at 12:56 pm

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New research from property peer-to-peer lender Kuflink has looked at the average rental yield in 50 major UK towns and cities to determine where the best locations are for investors.

The data shows that properties in Manchester and Salford led the way, with typical yields of 6.7% and 6.6% respectively. Hull, Luton and Rotherham saw the most prominent increases in average rental yields during the final quarter of 2016.

Returns

Despite the large rents available in southern England, yields in the North are normally greater, reflecting the varying property values in the two regions.

Cambridge for example, gives an average rental yield of just 2.7%.

The top-ten towns and cities in the UK in terms of rental yields were found to be:

Town Region Average rental yield (%)
Manchester North West 6.73%
Salford North West 6.68%
Portsmouth South East 5.75%
Leeds Yorkshire 5.67%
Cardiff Wales 5.59%
Coventry West Midlands 5.37%
Southampton South West 5.19%
Nottingham East Midlands 4.90%
Birmingham West Midlands 4.73%
Stockport North West 4.65%

At the other end of the scale, the ten towns and cities with the lowest average rental yields were:

Town Region Average rental yield (%)
Cambridge East 2.73%
Chester North West 3.04%
Chelmsford East 3.07%
London South East 3.25%
Wolverhampton West Midlands 3.27%
Carlisle North West England 3.29%
Doncaster Yorkshire & the Humber 3.39%
Wakefield Yorkshire & the Humber 3.41%
Rotherham South Yorkshire 3.54%
Northampton East Midlands 3.57%
Where are the best regions for buy-to-let yields?

Where are the best regions for buy-to-let yields?

For rental yields, the top-ten towns and cities seeing an increase in average yields were:

Town Region Average rental yield (%) Dec 2016 Average rental yield change (%) Oct-Dec 2016
Hull Yorkshire & the Humber 3.78% 0.31%
Luton East 3.91% 0.30%
Rotherham South Yorkshire 3.54% 0.28%
Swansea Wales 4.14% 0.26%
Dudley West Midlands 3.72% 0.25%
Cambridge East 2.73% 0.23%
London South East 3.25% 0.23%
Aberdeenshire Scotland 4.31% 0.23%
Edinburgh Scotland 4.09% 0.22%
Doncaster Yorkshire & the Humber 3.39% 0.20%


Available Properties

In addition, the research shows that there are now fewer than 41,000 homes under £250,000 in the UK, down from 58,000 in October.

London has just 2,000 properties for sale under £250,000, with prices continuing to soar. Birmingham saw the largest drop in properties available under £250,000-showing a decrease of 1,373 homes between October and December 2016.

Tarlochan Garcha, CEO at Kuflink, noted: ‘The rift between north and south continues, but this time the attention is turning north. Buy-to-let properties in the North can be a steady investment, attracting renters who cannot afford to step onto the property ladder and therefore choose to rent in good locations, which are well-suited to their lifestyle.’[1]

‘Manchester and Leeds are both bustling cities, popular with young professionals and families, and can offer solid returns for landlords. While Birmingham, which has a growing business district and is soon to benefit from HS2, cutting journey time to London to just 49 minutes, is also firmly on the map as a strong buy-to-let spot,’ Garcha continued.[1]

Concluding, Garcha noted: ‘It could be time for landlords to turn their attention away from pricey London and look to the UK’s regional cities.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/britains-highest-yields-the-best-areas-for-buy-to-let

Save Your Energy!

Published On: February 13, 2017 at 11:21 am

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Martyn Reed, Managing Director of energy performance specialists Elmhurst Energy, looks at energy efficiency legislation affecting landlords:

The energy efficiency standard in private rental properties is amongst the lowest within the UK housing sector. The Government has turned its attention to this market with a stated aim to address this, not just because of carbon reduction commitments, but also due to the high levels of tenants living in fuel poverty.

Last year, two pieces of legislation relating to energy efficiency of properties, which have a real impact on landlords, came into force: the Tenant’s Energy Efficiency Improvement and Minimum Energy Efficiency Standards, both of which are part of the Private Rental Sector Energy Efficiency Regulations 2015.

Martyn Reed, Managing Director of energy performance specialists Elmhurst Energy

Martyn Reed, Managing Director of energy performance specialists Elmhurst Energy

This new energy efficiency legislation gives more rights to tenants and sets a minimum standard of energy efficiency. Since 1st April 2016, all domestic tenants have had the right to request consent for energy efficiency improvements. This applies to all privately rented domestic properties let under an assured tenancy and a regulated tenancy. This will be widened to cover an assured agricultural occupancy, protected tenancy and statutory tenancy. There are some exceptions. If the building is exempt from having an Energy Performance Certificate (EPC), then a landlord is not required to provide consent. The tenant must also show that the measures could be installed with no upfront cost to the landlord. However, residential private landlords cannot unreasonably refuse consent to a tenant’s request for energy efficiency improvements if the various criteria are met. It’s imperative therefore that landlords are aware of their obligations and do not get caught out by these changes.

Coupled with this legislation, from 1st April 2018, the minimum EPC rating for private rental properties will be set at a band E. The regulations will initially only apply upon the granting of a new tenancy to a new tenant and a new tenancy to an existing tenant. However, from 1st April 2020, the regulations will apply to all privately rented property within scope, which are those that have an EPC or are required to have an EPC as per existing EPC legislation. While some exemptions apply (including where improvement measures would devalue the property by more than 5%, or where properties are unsuitable for wall insulation) there are penalties if regulations are not met, with fines up to a maximum of £5,000.

So, now is the time for landlords to begin planning and implementing the energy efficiency improvements to their property portfolios.

Hints and tips

Complying with energy efficiency legislation 

  • Assess your property’s energy efficiency rating using an Elmhurst accredited energy assessor to produce a Energy Performance Certificate (EPC). It is recommended that you only rely on a recent EPC as changes in the building, in technology and fuel prices can all impact the EPC recommendations. You can find an energy assessor in your area via a search facility here: elmhurstenergy.co.uk
  • Don’t get caught out by the Deregulation Act, as EPCs are central to this legislation too. As a landlord entering a short-term tenancy, you risk losing your right to issue an eviction notice under Section 21 if you have not complied with all your legal obligations, including the provision of an EPC.
  • If your property does not reach energy efficiency rating band E, plan for energy saving measures such as cavity wall, loft insulation, hot water, cylinder insulation or double-glazing. Your EPC will indicate options including estimates of cost, payback and the predicted improvement in your rating.
  • Landlords with multiple properties may consider using energy efficiency software such as Elmhurst’s Streamline EPC, which can help you to calculate the effect of improvements over your portfolio of properties.

Don’t see the energy efficiency measures as punitive. Remember, energy efficiency measures do require some initial outlay, but will save your tenants money, make their home more comfortable and add to the value of your property run. Think of them as an investment in your business.

For more details on Elmhurst Energy, please visit: www.elmhurstenergy.co.uk

Lending to property developers falls post-Brexit

Published On: February 13, 2017 at 10:59 am

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A new report from peer-to-peer lending platform Saving Stream has revealed that amount lent by banks to property developers slipped in the month leading to the Brexit vote.

What’s more, it appears that this has also struggled to recover as banks cut lending to the sector as a whole.

Lending Falls

Data from the investigation shows that the amount lent by banks to developers has slipped by 7% year-on-year, from £16bn outstanding in December 2015 to £14.8bn in December last year.

Saving Stream said that the value of loans outstanding in the sector fell substantially in the run up to the Brexit vote. Values fell from £16bn in December 2015 to £14.8bn in June, with figures not recovering in the last seven months.

This fall in lending to developers is reflective of the on-going uncertainty around the Brexit decision and its subsequent impact on the UK property market.

Some economists have forecasted that consumer spending will fall later this later, with business confidence also waning. As a result, the willingness of banks to lend to developers has slipped.

Lending to property developers falls post-Brexit

Lending to property developers falls post-Brexit

Opportunities

The reluctance of traditional banks to lend is subsequently leading to more opportunities for alternative lenders, such as peer-to-peer platforms. This alternative platform is allowing investors and developers to invest in new asset purchases through liquidity.

Liam Brooke, Co-Founder of Saving Stream, noted: ‘Brexit uncertainty has hit property developers hard over the last year as traditional sources of funding tighten their belts.’[1]

‘There is a wealth of good investment opportunities out there and although banks may be paring down lending in the sector, it’s business as usual for alternative finance providers. Despite Brexit, the advantages of investing in UK property remain in place. Interest rates are likely to stay low, whilst the UK’s housing shortage is unlikely to be resolved any time soon,’ Brooke added.[1]

 

 

 

[1] http://www.propertyreporter.co.uk/finance/lending-to-property-developers-struggles-to-recover-post-brexit.htm

Right to Rent Scheme Leading to Discrimination Against Britons

Published On: February 13, 2017 at 10:17 am

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The Right to Rent scheme is leading to discrimination against Britons, especially ethnic minorities, in the private rental sector, a new report shows.

The study, by the Joint Council for the Welfare of Immigrants (JCWI), found that foreigners and British citizens without passports, particularly ethnic minorities, are facing discrimination in the private rental sector as a result of the Right to Rent scheme, which was designed to crack down on illegal immigration.

The report reveals that 51% of landlords said the scheme would make them less likely to consider letting to foreign nationals. In addition, 42% of landlords stated that they were less likely to let to someone without a British passport as a result of the scheme. This rose to 48% when they were explicitly asked to consider the impact of the criminal sanctions involved with the scheme.

In a mystery shopping exercise conducted by the JCWI, an enquiry from a British Black Minority (BME) tenant without a passport was ignored or turned down by 58% of landlords.

The Right to Rent scheme requires landlords and letting agents to check the immigration status of all prospective tenants, and refuse a tenancy to illegal migrants. If they fail to comply with the scheme, landlords and agents face a fine of up to £3,000 or a prison sentence of up to five years.

The JCWI believes that the scheme creates structural incentives for discrimination against foreigners and ethnic minorities.

Currently in force in England and expected for roll out across the rest of the UK, the Right to Rent scheme does not contain adequate safeguards against discrimination, adequate mechanisms to monitor discrimination, or any form of redress for victims of discrimination, warns the JCWI. The organisation is calling on the Government to abandon the scheme and immediately halt any plans for roll out.

Right to Rent Scheme Leading to Discrimination Against Britons

Right to Rent Scheme Leading to Discrimination Against Britons

The Chief Executive of the JCWI, Saira Grant, says: “We have been warning for some time that the Right to Rent scheme is failing on all fronts. It treats many groups who need housing unfairly, it is clearly discriminatory, it is putting landlords in an impossible position, and there is no evidence that it is doing anything to tackle irregular immigration.

“Creating a so-called hostile environment that targets vulnerable men, women and children is bad enough, implementing a scheme that traps and discriminates against British citizens is absurd. Expanding the scheme to devolved nations without taking into account the discrimination it causes would be misguided and unjustifiable. It is time to stop the scheme before it does any more damage.”

The JCWI’s research suggests that landlords who have no desire to discriminate are being forced to do so by the scheme, with individuals who have a full right to rent a home in the UK being disadvantaged, along with others who should have access to housing.

Landlords can be heavily fined or even imprisoned if they do not comply with the scheme. This, combined with the complexity of the immigration checks they must undertake, means that, in some cases, they are pushed to choose tenants who they consider a safer bet because they hold a British passport, ‘seem British’, or their name sounds British, the report reveals.

The Chairman of the Residential Landlords Association (RLA), Alan Ward, responds to the findings: “We share JCWI concerns over document discrimination, and these findings reflect issues that the RLA raised right from the start. The Government’s own figures show the Right to Rent scheme is not working, so maybe it is time to scrap it and think again. With the threat of a jail sentence hanging over landlords if they get it wrong, it is hardly surprising that they are being cautious.

“There are more than 400 acceptable documents proving right to rent from within the EU alone, and landlords are making risk-based decisions and only accepting documents that they recognise and have confidence in. The RLA supports landlords by offering immigration and Right to Rent courses, which guide them through the complex process – including a section on the Equality Act and how to avoid discrimination.”

The scheme is a key part of the Government’s drive to lower net migration, with authorities hoping that an inability to rent a home in the UK will push migrants who have no legal status in Britain to leave the country. However, the JCWI report shows that the Government is not monitoring whether the scheme is achieving this aim, or whether it is pushing vulnerable people into the hands of rogue landlords.

In a further mystery shopping exercise, a white British tenant without a passport was 11% more likely to be ignored or turned down by landlords than a white British applicant with a passport. This is particularly worrying considering that 17% of British citizens do not hold a passport.

BME communities are the worse impacted by the scheme, found the JCWI. Where neither the white British tenant nor the BME British tenant had a passport, the BME tenant was 14% more likely to be turned away or ignored. The JCWI’s mystery shopping exercise found no evidence of ethnicity discrimination where a non-BME and a BME British citizen both held passports, demonstrating that the discrimination arises from the scheme itself.

Worryingly, 85% of inquiries from the most vulnerable individuals, such as asylum seekers, stateless persons and victims of modern day slavery, who require landlords to do an online check with the Home Office to confirm they have been granted permission to rent, received no response at all from landlords.

Kirby Costa Campos, a US citizen who is married to an EU national and has a full right to rent in the UK, explains how the scheme has affected her: “Two days before we were supposed to move in, we get an email from the rental agency saying: ‘We’re not going to release the keys to you, you’ve lost your deposit with us, because you’re not legal in this country.’ It was awful. I was crying for that entire 24-hour period. I mean, I have a six-year-old. My child was going to be on the street. It was awful, it was absolutely awful.”

Clare Higson, a member of of the Eastern Landlords Association, looks at the scheme from a landlord’s perspective: “How can we, as landlords, ever know really if someone has got the right to rent? Why should we be working as immigration officers? When actually we haven’t got a clue and we certainly don’t have any information or any training. I feel I have absolutely no way at all of telling whether or not someone has got legitimate immigration papers – how would I recognise a false passport or travel document?”

Do you feel that the Right to Rent scheme is fuelling discrimination in the private rental sector?

Number of cash landlords at highest level for 10 years

Published On: February 13, 2017 at 10:02 am

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The proportion of landlords using cash to pay for a property hit 61% in January 2017, which was the highest since records began in 2007.

Investors choosing to purchase since the introduction of the 3% Stamp Duty surcharge in April 2016 have used more cash transactions to fund their buys.

Cash Increases

In the last decade, the proportion of landlords purchasing with cash has increased steadily. In 2007, only 41% of landlords purchased a home without a mortgage.

By region, landlords in the North of England were most likely to use cash in order to fund their purchases. 70% of those investors in the North West used cash to fund their transactions-the greatest proportion seen in the country.

London landlords however are more likely to use mortgage finance. With property prices in the capital rising, there has been a considerable fall in the number of landlords not using a mortgage.

In fact cash purchases drive both the top and bottom of the rental market, with the most and least expensive properties more likely to be purchased with cash. In the last year, 65% of homes with a value of less than £125,000 were paid for using cash. 64% of landlords paid in cash for properties totalling £1m or more.

Costs

During January 2017, the cost of a new let was 2.6% greater than in the same month last year-the quickest January increase for two years. 36% of landlords increased rent when signing a new tenancy, a rise from the 27% seen last year.

Rental growth has been driven by regions outside of London-rents in the capital being 2.7% lower than last year.

Number of cash landlords at highest level for 10 years

Number of cash landlords at highest level for 10 years

The three regions seeing the quickest growing rents were Wales (8.8%), the South East (8.2%) and the East of England (7.8%).

Johnny Morris, Research Director at Countrywide, noted: ‘On average landlords sell a home once every 17 years meaning as prices have increased, a significant amount of wealth has built up in the sector. This is now fuelling cash purchases.  With the forthcoming tapering of tax relief on mortgage interest payment, landlords have less of an incentive to borrow, suggesting more cash activity in 2017.[1]

‘Rents are rising at twice the pace of last January and there are signs that rental growth is starting to pick up in much of the country.  Ten months after the introduction of the stamp duty surcharge the number of homes on the rental market is showing signs of coming down.  If this fall continues over the next few months, it is likely to support rental price growth,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/cash-landlords-at-highest-levels-in-10-years.html