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Em

Em Morley

London’s rental market seeing signs of recovery

Published On: January 20, 2017 at 11:13 am

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The rental market in London is being blighted by oversupply, with buy-to-let investors in the capital also suffering with unprecedented tax charges. As such, 2017 looks set to be another unsettled year for the sector in London.

However, the most recent research from Benham & Reeves reveals that many regions of the capital are actually seeing an upturn, which could signify a rebound is imminent.

Suburban Surge

The residential letting firm saw the largest rental growth outside of central London, with suburban locations with strong transport links seeing the largest rent rises. The most prominent was in Colindale in north London, which boasted rental rises of 4.7%.

Even parts of prime central London which have seen downturns have started to improve. Some postcodes in these regions have seen average rental values rise by 4% or more.

In addition, landlords in areas such as Hampstead and Knightsbridge also have reason for optimism. Lease renewals in Knightsbridge hit a huge figure of 85%, with the average length of tenancy at 17 months.

London's rental market seeing signs of recovery

London’s rental market seeing signs of recovery

Favourable

Marc von Grundherr, Lettings Director of Benham & Reeves Residential Lettings, noted: ‘There is no doubt that landlords have had a tough time of late. Rising taxes and stamp duty rates have taken their toll and it’s been hard to offer many crumbs of comfort to our landlords.’[1]

‘These latest figures, however, demonstrate that for those who are able to ride out the tough times, the market will eventually turn back in their favour. We don’t want to be too optimistic just yet as things are still undeniably difficult for many amateur property investors but nothing could be as bad as 2016. Roll on 2017,’ he added.[1]

 

[1] http://www.propertyreporter.co.uk/landlords/a-glimmer-of-hope-for-londons-besieged-rental-market.html

Scottish Rents Fall Following Pressure on the Central Belt

Published On: January 20, 2017 at 10:07 am

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Scottish Rents Fall Following Pressure on the Central Belt

Scottish Rents Fall Following Pressure on the Central Belt

Scottish rents fell in the last three months of 2016 following pressure on the central belt, according to new data from Citylets.

Figures from the letting agent portal show that Scottish rents dropped by an average of 0.9% on the same period of the previous year, to stand at £739 per month.

The Managing Director of Citylets, Thomas Ashdown, said that downward pressure on Scottish rents from Aberdeen over the past two years has typically been countered by around 6% increases in Edinburgh and, more recently, the central belt – including West Lothian and Glasgow – resulting in overall positive growth.

However, a slight drop in the rate of growth in some markets on the central belt has pushed annual national growth in Scottish rents into the red, reports Citylets.

The pace of the Scottish rental market remained virtually unchanged last year, with 61% of all properties let within a month. The average time to let a property was 31 days in 2016.

Ashdown comments: “In 2017, the private rented sector is now of unprecedented importance in Scotland’s housing mix and, overall, we see continued positive growth in major urban areas, with the exception of Aberdeen.

“However, the figures suggest that the rate of decline for Aberdeen has stabilised at the reduced level of around -15% and, indeed, the time to let has also levelled out. This all indicates that rents in the city could start to level off and the worst of the boom/bust cycle is coming to an end.”

Landlords, have you been forced to put your Scottish rents down over the past 12 months?

Although rents in England are still rising, recent research insists that prices are not increasing faster than wages in the private rental sector.

To keep up to date with the changes occurring throughout the UK’s property market, sign up to our FREE monthly newsletter here: www.34.207.192.121/register/

Buy-to-let market sees strong start to 2017

Published On: January 20, 2017 at 9:58 am

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It is widely acknowledged that 2016 was not the best for buy-to-let landlords, The raft of changes impacting on the sector, including the additional Stamp Duty surcharge and Right to Rent, saw many investors deterred from purchasing more properties.

However, 2017 seems to have started more positively, with more landlords looking to add to their property portfolios.

Surge

The latest mortgage lending figures from Fleet Mortgages indicate that there has been a surge in demand from buy-to-let landlords trying to add to their existing properties. There were 21,000 buy-to-let loans issued during November, up 13% on October, with this trend expected to continue.

Bob Young, chief executive of Fleet Mortgages, said: ‘Overall, the market has kicked off strongly at the start of 2017 and we’ve seen a considerable amount of demand and interest from advisors on behalf of buy-to-let investors.’[1]

‘We’ve seen over the course of the last 12 months the increase in demand for limited company products, particularly when it comes to new purchases, however many landlord borrowers continue to hold their existing properties in their individual names and it’s therefore important that we continue to offer competitive products in this space,’ he continued.[1]

Demand

In order to meet growing demand, Fleet Mortgages has moved to launch five products across both its individual and limited company buy-to-let ranges.

For limited companies, the lender has launched an 80% LTV 2 year fix at 4.39%. In addition, there are two lifetimes trackers at 4.2% to 75% LTV and 4% to 65% LTV. These products also come with a 1.5% fee.

Individual products include a 2 year fix at 3.79% to 80% LTV and 4% 75% LTV tracker, both requiring a 1% fee.

Buy-to-let market sees strong to 2017

Buy-to-let market sees strong to 2017

Tougher

Despite the rise in demand for buy-to-let properties, Mr Young feels there is growing frustration at the Bank of England’s Financial Policy Committee’s decision to bring in harder mortgage affordability tests.

‘One thing we are aware of however is the increased frustration around many lenders’ rent to income calculations, their ever-changing criteria, plus major difficulties when it comes to finding products on sourcing systems and being able to compare like-for-like,’ Young concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/strong-start-to-the-year-for-buy-to-let-market

Private Sector Rents Not Rising Faster than Wages

Published On: January 20, 2017 at 9:28 am

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Private Sector Rents Not Rising Faster than Wages

Private Sector Rents Not Rising Faster than Wages

Private sector rents in England are not rising faster than wages, in stark contrast to the social rental sector, where rents have increased faster than earnings, according to a new report from the National Audit Office.

Although private sector rents in England aren’t rising as fast as wages, the report does note that London is the exception to this. In the capital, rents are rising much faster than earnings, warns the National Audit Office.

The Residential Landlords Association (RLA) warns that this is a result of a chronic shortage of housing across all tenures in London. Indeed, it has been suggested that London’s housing bubble may finally burst this year, which would cause property owners to lose thousands off pounds off their assets and private sector rents to plummet.

The Royal Institution of Chartered Surveyors has also warned, “rents are being squeezed higher due to demand consistently running ahead of supply”, in its latest analysis of the sales and lettings markets.

The RLA cautions that there will be further pressure on private sector rents as a result of the forthcoming changes to mortgage interest tax relief.

The Policy Director of the RLA, David Smith, says: “Today’s findings from the National Audit Office will surprise those who have falsely sought to argue that landlords are profiteering. The question must surely now be why the heavily subsidised social rented sector is seeing its rents increasing so much more than earnings.

“We cannot afford to be complacent. Forthcoming changes to mortgage interest relief, due to be rolled out from April, will serve only to place upwards pressure on market rents, stifling the supply of homes to rent and reducing choice for tenants.”

He warns: “In the end, those who will suffer will be tenants unable to save for a house of their own, and the many vulnerable people, such as the homeless, who rely so much on the sector to provide a home for them.”

Landlords and tenants leaving lettings market in London

Published On: January 19, 2017 at 2:51 pm

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Demand from tenants in the residential lettings market in London is possibly slowing down, with landlords looking outside of the city for greater yielding investment.

A report from the National Landlords Association revealed that the number of landlords reporting a rise in tenant demand during the final quarter of 2016 fell by nearly 30% points. This was in comparison to the same period 2015.

South East Rises

Findings from the report also show that 40% of landlords in the South East saw a rise in tenant demand during the period. This was the highest recorded in the UK, which, the NLA suggests, shows more tenants are looking outside of London for more affordable accommodation.

What’s more, the firm points out that the drop in rental demand in central London coincides with a more conservative approach from landlords looking to purchase in London during the coming months.

Just 5% of landlords operating in London said that they plan to purchase in the next three months, the lowest across all regions and down by 15% from one year ago.

Landlords and tenants leaving lettings market in London

Landlords and tenants leaving lettings market in London

Northern Highs

In comparison, the number of landlords operating in the North East planning to purchase in the next three months has nearly doubled, from 10% in 2015 to 19% last year.

Landlords in Yorkshire have also expressed a desire to buy, up from 10% during 2015 to 16% in 2016.

Carolyn Uphill, chairman of the NLA, noted: ‘It looks like central London is simply becoming too expensive for most people, regardless of whether you want to buy, invest or rent.’[1]

‘For many tenants the practical solution of moving out of the city to more affordable suburbs with good transport links is becoming increasingly appealing. In turn, it seems that landlords have been quick to respond, turning their backs on the capital and looking to other areas where the upfront cost of acquiring property is lower, and the potential yields to be had are higher,’ Uphill added.[1]

[1] http://www.propertywire.com/news/uk/landlords-tenants-leaving-lettings-market-central-london-costs-rise/

Surveyors Report a Subdued Property Market for Lettings and Sales

Published On: January 19, 2017 at 11:50 am

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Surveyors reported that the property market, for both lettings and sales, was subdued at the end of last year.

The Royal Institution of Chartered Surveyors (RICS) has released its latest UK Residential Market Survey, covering December 2016, looking into activity in the lettings and sales markets.

Surveyors Report a Subdued Property Market for Lettings and Sales

Surveyors Report a Subdued Property Market for Lettings and Sales

Surveyors saw a slight drop in sales activity at the end of last year, while many are predicting a decline in volumes over the next three months.

The report shows that 1% more chartered surveyors saw a fall rather than a rise in sales in December, with just 4% more respondents anticipating an increase in sales over the next three months, down from 18% previously.

However, in the longer term, the 12-month sales outlook is much more positive, with 32% more surveyors expecting sales to rise rather than fall this year, compared with 31% in the November survey.

More surveyors are also expecting house price declines in the next three months, but, over the year, 49% more forecast growth, up from 40% in November and the strongest level seen since May 2016.

The latest official statistics, for the end of last year, show that house prices remain resilient across the UK.

In the lettings sector, surveyors said new landlord instructions were more or less flat, projecting rental growth to average around 5% per year over the next five years. However, recent reports warn that rents are close to hitting an affordability ceiling.

The Chief Economist at the RICS, Simon Rubinsohn, comments on the lettings and sales markets report: “A familiar story relating to supply continues to drive both the sales and lettings market, impacting on activity, prices and rents.

“The eagerly awaited Housing White Paper should help to create a more positive framework for new build delivery, but, with the best will in the world, it is going to take time before the resulting uplift in the development pipeline begins to impact on the opportunities for either homebuyers or tenants.”

He adds: “Meanwhile, the latest RICS survey provides further evidence that both price and rent pressures are continuing to spread from the more highly valued to more modestly valued parts of the market for good or ill.”

How do you think the lettings and sales markets will fare over the coming 12 months?