Search Results For: buy to rent sector

Schools Having Huge Effect on PRS

Published On: July 24, 2015 at 11:00 am

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Half of families with children living in the private rental sector move house in June, July, August or September, according to Countrywide, Britain’s biggest letting agent.

Schools Having Huge Effect on PRS

Schools Having Huge Effect on PRS

Homebuyers have traditionally always paid higher prices to live within the catchment area of a good school, but this is now feeding through to the rental market, as more and more people live in private rental accommodation.

Countrywide’s latest quarterly lettings index reveals that so far this year, 28% of properties rented within 1km of an Ofsted-rated outstanding school were to families, up from under 10% in 2008.

This rises to a third of rental properties going to families with children for outstanding secondary schools.

This trend is particularly felt in London, where over half of properties rented within 1km of an outstanding school were to families.

This highlights the substantial rise in competition for school places, but also the growing number of families with children living in the private rental sector.

The London figures are most prominent for outstanding schools, but there has been a general rise in families renting in the areas around most schools.

It appears that the summer would be the best time for families to move, before school starts again. However, as applications are assessed against the address on the application form submitted in January, it seems that families may move a year before their child begins at a new school.

Homeowners moving into the area around an outstanding school move an average of just half a mile, emphasising the specific location of a school catchment area.

This distance is much shorter than for those in the private rental sector, who move three miles on average.

Similarly to homebuyers, tenants pay more to live close to a good school. But as tenants are more likely to move more, this premium is usually smaller.

This year, the average tenant living within 1km of an outstanding school paid 14% more than someone living more than 1km away. The premium for one and two-bedroom flats is miniscule, but it rises to 16% for three and four-bedroom houses.

Sometimes, if a catchment area is tight, a home on one side of the road can cost 15-20% more in rent than the same house on the other side of the street.

 

Over Half of Under-40s Will Live in PRS Within a Decade

Published On: July 23, 2015 at 10:59 am

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Over half of those under 40-years-old will live in the private rental sector by 2025, new research suggests.

Over Half of Under-40s Will Live in PRS Within a Decade

Over Half of Under-40s Will Live in PRS Within a Decade

The study, by accountancy firm PwC, also says that homeownership will fall to around 60% and the amount of households renting privately will increase to 7.2m in the same period.

PwC warns that the difficult housing situation faced by young people at present will worsen within five years.

Seb Klier, of tenant group Generation Rent, told Channel 4 News that there could be “radical action” ahead.1

He believes that angry protestors could go on rent strikes and forcefully oppose evictions.

PwC also predicts that house prices will rise at an average rate of 5% per year, making the average house price £360,000 by 2020.

First time buyers need a deposit of 18% of the property value, meaning that in 2020, they must save a deposit of £64,800.

PwC also cautions that the gap between the young and old will widen, as the young are unable to buy and many older homeowners will own their properties outright, because they have either paid in cash or paid off their mortgages.

The firm expects the number of homes owned outright to increase from 8.4m now to 10.6m in 2025, accounting for 35% of the total housing stock.

Senior Economist at PwC, Richard Snook, says: “Driven by a decade of soaring house prices before the financial crisis and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly.

“As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20-39 age group.”1

1 http://www.propertyindustryeye.com/over-half-of-under-40s-living-in-private-rented-homes-within-a-decade/

Housing Associations to Join for New 127,000-Home Project

Published On: July 23, 2015 at 8:54 am

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Two of the largest housing associations in the country are set to join together to create a 127,000-home landlord in what would be the biggest merger deal the sector has ever witnessed.

Affinity Sutton and Circle Housing have discussed teaming up to form the largest housing association in Europe, which could “set the agenda” for change in the market.

In a joint statement, the groups said that the cut to social rents in the latest Budget had provided a “catalyst” for organisations to consider merging.

Housing Associations to Join for New 127,000-Home Project

Housing Associations to Join for New 127,000-Home Project

Chief Executive of 70,000-home Circle Housing, Mark Rogers, states: “It is very early days while we model the potential that this could have, but we passionately believe that the sector needs to transform and this is one potential way to make that step change.”1

If the plans progress, the new landlord would own 5% of housing association homes, house 500,000 people and turn over £650m annually, producing a surplus of £120m, based on the most recent published accounts.

A joint document detailing the “vision” of the new team claims that the new organisation could build 20,000 new homes in just five years.

Written in January, the document sets out plans to “roll out an investment programme in all major cities.”

It reads: “Together, Circle and Affinity Sutton could lead the transformation of the [housing] association market and fundamentally change the lives of many.”

It also outlines proposals to merge the two organisations into a new structure with one “holding company” above separate divisions for commercial activity, housing management and charitable work.

However, these plans are in the early stages and will be reviewed after many policy changes were announced by the Government since, including the Right to Buy extension to housing association tenants.

The document said that the new group could sell off stock in 100 local authority areas, where it owns less than 500 homes, to other social landlords.

This would raise around £1 billion, which would kick-start the new development scheme. The document states: “Only the initiative of individual associations will drive better value, greater capacity and enhanced output.”

It also says that regulatory action “has had barely any impact” on partnerships in the sector.1

Chief Executive of 57,000-home Affinity Sutton, Keith Exford, continues: “[Following the Budget] both organisations are reviewing their business plans. As part of this, we are also jointly exploring if we could raise significantly more capital together, allowing us to fund a far greater building programme than we could if we stay apart.”1

In 2014, Circle Housing turned over £333.5m and produced a surplus of £44.5m, and Affinity Sutton turned over £320m with a surplus of £75m.

Earlier this year, Circle had its governance downgraded by the housing regulator due to repair failings.

1 http://www.insidehousing.co.uk/business/finance/deals/giant-landlords-enter-talks-over-127000-home-merger/7010926.article?adfesuccess=1&adfesuccess=1

Landlords and Tenants in Sheffield Protected by New Legislation

Published On: July 21, 2015 at 11:01 am

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Sheffield City Council is the first authority outside of London to introduce new legislation created to protect the rights of those living in private rental sector accommodation.

Landlords and Tenants in Sheffield Protected by New Legislation

Landlords and Tenants in Sheffield Protected by New Legislation

In the last six weeks, the Council has fined 11 letting agents a total of £37,000 for failing to comply with the new legislation, which was introduced in October 2014.

Under the new laws, letting and property management agents must register with one of three redress schemes, which have been set up to resolve issues between tenants and agents.

About 16% (35,000) of households in Sheffield now live in private rental accommodation. This has doubled in the past decade, reflecting the national level.

Councillor Jayne Dunn, Cabinet Member for Housing, says: “We want the people of Sheffield to be able to live in good, safe housing, regardless of whether it’s rented or not.

“More people are living in rented housing, as the cost of buying their own home becomes increasingly unaffordable. And we need to protect their rights.

“We are committed to this and will use all new legislation to help us. Thankfully, most letting agents and landlords in Sheffield are very good and work with us really well. But we will take firm action on the small minority that do not follow the new measures designed to give tenants a fair deal.”1

There are around 200 agents in Sheffield who charge landlords a fee to find tenants and manage their rental properties on their behalf. Most of these agents have joined redress schemes and comply with the new legislation.

The Council regulates the sector to ensure that tenants are safe and landlords meet their legal responsibilities.

In the last six weeks, it has also taken eight cases to court, prosecuting landlords and agents for breaking the law. All cases were proven. One case involved a local landlord receiving fines of over £4,300 for failing to repair or manage his rental property.i

1 http://www.24dash.com/news/housing/2015-07-20-Sheffield-becomes-first-Northern-city-to-at-on-new-renting-legislation

Boris Johnson’s Landlord Scheme is Unsuccessful

Published On: July 21, 2015 at 8:57 am

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A landlord scheme introduced by the Mayor of London, Boris Johnson, aimed at improving the private rental sector in the capital has been generally unsuccessful.

It was revealed that just 0.2% of advertisements for rental properties mentioned that the landlord or letting agent had signed up to the scheme.

Johnson launched the London Rental Standard in May last year. It is the first citywide scheme to accredit good landlords and letting agents.

He said that he hoped to “improve the experience of everyone involved, from landlord to tenant, with a clear set of good practice rules.”1

The scheme aimed to accredit 100,000 landlords and agents by 2016.

The news release for the launch read: “In time, the London Rental Standard will become an instantly recognisable feature of London’s lettings industry, helping Londoners to pick between the huge array of landlords and agents on offer.”1 

Boris Johnson's Landlord Scheme is Unsuccessful

Boris Johnson’s Landlord Scheme is Unsuccessful

However, over a year later, the official website indicates that by mid-June, just 14,452 landlords and 339 letting and management agents had signed up, significantly below the 2016 target.

A study by the Green Party claimed that the Rental Standard has failed to appeal to letting agents or tenants, despite a marketing budget of £250,000.

On Zoopla, just 114 advertisements mentioned the scheme, 0.2% of the 62,521 total listings of rental homes in July. Most were listings posted by one agent, Prime Estate Agents in Whitechapel, which included the Rental Standard in a list of schemes it is accredited by.

Darren Johnson, Green London Assembly member, comments: “Voluntary accreditation schemes only work if tenants know how to look out for the badge, creating demand that landlords might respond to. Even the agents who are members of the scheme don’t publicise it and don’t let tenants search for accredited landlords.

“The scheme is a flop and is no substitute for adequate regulations.”1

He believes that the answer is compulsory licensing for all landlords, saying that more secure tenancies and rent controls are needed to protect tenants.

Generation Rent’s Dan Wilson Craw says there are numerous issues with the Rental Standard: “It is basic, basic stuff. If a landlord isn’t already doing most of these things, they’re probably breaking the law.

“The scheme is a long way off critical mass and having currency among tenants. Even if it achieved that, there’s nothing forcing landlords who don’t comply to get better and with demand so high, those landlords will always find tenants.”1

Higher profile agents, such as Foxtons and Winkworth, have blogged about joining the scheme in the past, but the Green Party has noted that it is not mentioned in their advertisements for rental properties.

A spokesperson for Foxtons says: “As one of the initial agents to sign up to the London Rental Standard, Foxtons fully supports any initiative that helps to raise standards within the private rental sector and with the backing of the Mayor of London, it’s gained great momentum.”1

Deputy Mayor for Housing, Land and Property, Richard Blakeway, notes that London was one of the first cities to set professional standards for its rental sector.

“Over 130,000 properties are now managed under the London Rental Standard, with a rapid growth in the number of accredited agents who manage the bulk of rental homes,” he says.

“This ambitious project is one of a range of policies pioneered by the Mayor to support 2m Londoners renting, including the creation of a long-term, institutionally backed private rented market and rent to buy to help people convert rent into equity.”1

1 http://www.theguardian.com/money/2015/jul/20/boris-johnson-good-landlord-scheme-flop

Housing Supply Crisis is Worsening, says Rightmove

Published On: July 20, 2015 at 2:12 pm

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The shortage of supply on the housing market is worsening, says Rightmove.

The property portal has found that the number of new vendors has dropped 10.6% in the past year.

However, Rightmove reveals that demand is still high, with traffic and enquiries to agents both up 22% in June compared to June 2014.

The site also says that asking prices for properties new onto the market have reached another record high, rising 0.1% month-on-month to an average of £294,542.

Housing Supply Crisis is Worsening, says Rightmove

Housing Supply Crisis is Worsening, says Rightmove

Demand is strongest for small properties with up to two bedrooms.

The amount of inquiries for small homes is 24% higher than for larger houses with three or more bedrooms.

However, the greatest decrease in supply is in the standard first time buyer sector.

Miles Shipside, Director of Rightmove, explains: “The greatest mismatch between demand and supply is at the lower end of the property ladder, as no doubt many buyers in this category would like to afford to buy a larger home, but have had to accept that it is out of their reach and downsize their aspirations to increase their chances of a successful purchase.

“The forthcoming extra tax burdens on buy-to-let investors may help to tip the balance in favour of first time buyers, but the consequent drop in rental property supply could push up rents.

“More supply of affordable starter homes for the growing demand from both renters and buyers is required, which means more new builds for both sectors to meet the country’s current and future housing needs.

“The challenge for Government, planners and developers is how best to ensure the right properties are built in the right locations and at more affordable prices.”1

Two agents have reacted to Rightmove’s revelations, noting high property investor activity in the lower price range.

Trevor Binch, Managing Director of Merrick Binch in Coventry, comments: “We’re finding that any properties on the market with us at under £150,000 – so your typical two-beds or some three-bed terraced – are selling immediately.

“There are a lot of investors snapping up these types of properties and this, coupled with the fact that a lot of sellers aren’t coming to market, is making the supply shortage worse.

“While there are some new developments being built in Coventry, there just isn’t enough to satisfy the demand, especially at the lower end of the market.”1

Donald Collins, Director at Go View London in Ealing, adds: “The natural consequence of a growing London population, young professionals trying to get on the ladder and investors looking for long-term investments, is a big shortage of two-bed properties coming to market.

“For properties we have on between £400,000 to £700,000, half of the interest comes from residential buyers and half from investors.

“The fact that investors have a long-term focus of building their portfolio and in many cases handing it down to their kids, means that these kinds of properties in the right locations won’t come back round on the market for about 15-20 years.”1

1 http://www.propertyindustryeye.com/supply-crisis-worsening-says-rightmove-as-new-instructions-dive/