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5 Things You May Not Know about Renting a Property

Published On: September 13, 2018 at 8:57 am

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With more and more people renting a property across the UK, ARLA Propertymark (the Association of Residential Letting Agents) is helping tenants understand the complexities of renting in this day and age.

According to ARLA Propertymark’s latest Private Rented Sector Report, the number of tenants looking for a new home has increased every month since May this year.

With more people looking for guidance on renting a property, the organisation has compiled a list of the five things that tenants might not know about being a renter…

Switch and save 

If you’re paying the energy bills in your property, you have the power to switch suppliers. You can often find a cheaper fixed tariff if you shop around, so it’s worth putting in the time to do so.

Double-check your tenancy agreement, however, as some contracts include a clause that means you must inform the landlord.

Redecorating

5 Things You May Not Know about Renting a Property

5 Things You May Not Know about Renting a Property

Landlords usually aren’t happy for their tenants to start redecorating their properties, but there’s no harm in asking. You need to seek permission to install extra shelving, hang things on the walls, or anything that could potentially damage the property. You’d also need to ask if you’d like to paint anything, or replace the units, etc.

There are, however, lots of things that you can do to make a rental property feel like a home without your landlord’s permission. An eye-catching floor lamp, for instance, can instantly perk up a drab living room, while laying down rugs helps you personalise your space. You could also buy cushions and throws, and make sure that you always have a vase full of fresh flowers on the kitchen table.

Letting with a pet

If you have a pet, it’s really important to be upfront about it when you’re looking for a property. Some landlords won’t allow them at all, but many will be fine with pets if you pay a higher deposit to cover any potential damage – just make sure that this is clearly stated in your contract if you agree to it.

If you find a property and the landlord won’t allow pets at all, your letting agent can help you find another suitable one.

Illegal activities 

Cannabis is illegal in the UK, and there will likely be consequences if you’re caught smoking it behind closed doors. There is usually a specific clause in tenancy agreements that says tenants must not consume illegal substances at the property, and, subject to the landlord’s consent, most contracts prohibit any smoking at all.

Running a business

Although it is legal to run a business from a residential property, you must ask your landlord for permission if you want to do so, but, remember, there are various things that they will need to consider before agreeing. They would probably have to inform their mortgage provider, as well as getting permission from the freeholder if the property is in a block of flats. They would also need to update their insurance and make sure that they are not breaking any licensing conditions that the local authority has placed on the property.

General wear and tear could also be an issue if the business wasn’t just desk-based, and the landlord must ensure that the business wouldn’t disturb the neighbours if people are coming and going throughout the day.

Peter Savage, the President of ARLA Propertymark, says: “Finding a rental property can be a stressful task, especially if you’re unfamiliar with all the clauses in your tenancy agreement, but it can also be really exciting.

“The most important thing to remember is that, once you sign the tenancy agreement and move in, you’re still bound by it. While most landlords are very willing to negotiate, these discussions do need to take place and you should never assume your landlord won’t mind without some sort of commitment in writing. Letting agents can help you both with understanding the small print in your contract and by helping you negotiate directly with the landlord.”

Landlord Argues that Scotland’s Private Rental Sector is in Need of a “Massive Shake-Up”

Published On: September 11, 2018 at 9:59 am

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Following two reports that more must be done to improve the state of the private rental sector across the UK, Scotland’s largest independent residential landlord insists that the Scottish lettings market is in need of a “massive shake-up”.

Yesterday, a landmark report was published by academics at the University of York, alongside a study by Nationwide Building Society.

Now, serial entrepreneur Graeme Carling says that he is “not surprised” that more and more buy-to-let investors are leaving the sector, given the “minefield” that is being a landlord in Scotland.

Commenting on reports that there has been a decline in buy-to-let mortgage applications, Carling believes that it is not just tighter regulations and higher costs that are to blame. The problem, claims Carling, is “the minefield of actually being a landlord in Scotland”.

He explains: “What appears, on paper, to be a tidy little investment can turn into a major headache for those wanting to earn extra income, or use buy-to-lets to invest some spare cash. Operating a building full of rentals is one thing. Running a place which is part of a collection of private properties is a whole lot different.”

Things can get “messy”, he says, if there is no compulsory property manager to oversee common repairs. Chasing other landlords for money to pay for common maintenance issues can be a full-time job, he point out, and, if solicitors are used to chase payments, it can become costly, too.

“On a few occasions, I’ve opted to swallow the costs myself, simply because I couldn’t face the hassle,” he says. “And that’s not fair.”

Carling goes on to argue that perhaps landlords and property agents should be means-tested, so that they are in a position to pay towards common repairs, should they arise.

Carling is the Co-Founder of Carling Property Group – along with his wife, Leanne – and the Owner of the newly formed PRS Group. They own and manage 350+ rental properties across Scotland, making them the country’s largest independent residential landlords.

The PRS Group aims to expand rapidly, by owning 5,000 rental properties “as quickly as possible”. Perhaps things aren’t as bad as Carling makes them seem?

New Homes Required for Growing Number of Life-Long Renters

Published On: September 6, 2018 at 9:00 am

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While most private renters in the UK aspire to buy property, the reality is that many people simply cannot afford to get a foot on the housing ladder due to high house prices, with many people, particularly millennials, set to rent for the rest of their lives.

With the number of new homes being built across the UK still significantly below the level needed to meet demand from buyers, Britain’s housing shortage has now reached crisis point, with the number of prospective renters also dramatically outweighing the volume of homes on the market.

The latest figures from ARLA Propertymark show that the supply of homes available to rent dropped last month, while demand from renters hit a near 12-month high, and this trend looks set to continue moving forward, as reflected by the slump in the UK home ownership rate, owed largely to fast rising house prices and pitifully meagre wage growth since the financial crisis.

Owner occupiers in the 35-44 age group, for instance, has fallen from 71.6% to 52.4% over the last 11 years, while private renters have increased from 11.4% to 28.5% over the same period. Social renters in this age group have risen slightly over the same period from 17.0% to 19.1%.

But the housing market is simply not prepared for the growing numbers of life-long renters as the number of new-builds coming onto the market remains significantly below the rate required to meet demand, according to DJ Alexander.

Aside from the low number of new homes coming onto the market, the property management firm points to the fact that many buy-to-let landlords are contemplating leaving the property market due to recent government changes to the financing and regulation of the sector, which is also having an adverse effect of rental supply.

If the private rented market shrinks while social housing growth remains relatively flat there is a risk that the much larger number of life-long renters may find their options limited by a lack of housing stock.

David Alexander, managing director of DJ Alexander Ltd, said: “The BTL market has become much tougher in recent years with changes to affordability, access to finance, and a reduction in the tax benefits of property investment.

“All of this has led to a softening of the market and the option for many landlords of either leaving or contemplating leaving the marketplace.

“The result is potentially a fall in the number of private rental properties available although this will be different across the UK with some rental markets stronger than others.

“Therefore, many life-long renters, of whom there are a growing number in their thirties and forties, may find their choice limited by a smaller marketplace.”

With a growing number of life-long renters emerging there is going to be an increasing need for more social housing, more private renting, and more affordable homes across the country, according to Alexander.

He added: “The government and local authorities need to work together with the private sector to ensure that we have a sufficient housing stock to serve the changing needs of the UK population.”

“This means the freeing up of more land in areas where demand is high for property development, a steady and continuing programme of social house building, the encouragement of the private sector to build more homes in areas of greatest need, and the encouragement of a strong and vibrant private rented sector.”

Homeownership: The Ultimate Goal for Generation Rent

Published On: August 30, 2018 at 10:00 am

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A recent report provided by the law firm Collyer Bristow, reveals that homeownership remains an ultimate goal for the generation rent, with price being prioritised above location, and deposits funded through savings.

The Homeownership Attitudes and Aspirations report is based on hopes of a panel aged 20-44-year-old men and women in London and the South East living in rented accommodation and in their homes. This will be annually repeated.

It details that 73% of men and 57% of women intend to buy their dream home within the next 5 years. 29% reported that the intend to buy their own home within the next 5 years. 29% report that home ownership in the same timeframe is unrealistic, with just 9% saying they have no aspiration to buy a home at all.

Furthermore, 100% of 20 to 24-year olds hope to buy their own home, falling dramatically to 59% for 25 to 34-year olds ad increasing slightly to 63% for 35 to 44 year olds.

Partner in Commercial Real Estate at Collyer Bristow commented: “We all know that there is a housing crisis in the UK and that it is particularly acute in London and the South East. We have seen developers bring forward new tenures, such as dedicated Build-to-Rent schemes, but home ownership remains the ultimate goal.

“It is interesting that all of our panel’s 20-24-year olds say that they will own their own home, only for those hopes to be dashed when the reality of buying a property hits home. That picks up slightly, perhaps as our panel start to marry and think about starting a family.”

Homeownership Attitudes and Aspirations asked both homeowners and those wanting to buy a home how they funded or intend to fund the deposit on their home.

Personal and joint savings lead the way for those that have purchased (63%) or intend to purchase (62%). The ‘Bank of Mum and Dad’ does play a role with 32% receiving help from their parents to fund their purchase. Help to Buy remains important with 23% only able to get onto the property ladder with help from the government.

Alex O’Connor said: “Given that for many home buyers personal savings play a big role, it is perhaps not surprising that price (77%) trumps location (61%) when buying. One statistic that did surprise us was the high number of purchases reliant on inheritance: 31% of homeowners had inherited property or cash and a further 21% expect to inherit property or cash to fund a property purchase.”

Alternative property tenures are growing in popularity, particularly in Greater London, with dedicated Build-to-Rent or private rented sector (PRS) schemes taking hold. Co-living schemes, where occupiers rent a room or small suite with extensive communal spaces and lifestyle events, are attracting considerable attention.

Whilst just 1% of the Collyer Bristow panel currently live in a co-living scheme, 74% would consider them at some point in the future, attracted by a fixed monthly fee for a room in a central location. Co-living schemes appeal almost equally to men (78%) and women (70%) and equally to 20-24-year olds (69%), 25-34-year olds (76%) and to 35-44-year olds (70%).

Alex O’Connor concludes: “The home market is changing rapidly with new tenures emerging and institutional money looking to change the rental market for the better. Whilst our panel might choose to rent for longer, home ownership remains the ultimate goal. The housing crisis is not going to disappear any time soon.”

Belvoir Issues Rental Index and Calls on Government to Take Urgent Remedial Action in Autumn Budget

Published On: August 28, 2018 at 9:30 am

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Average House Price Drops Between April and May

Belvoir’s 2018 Q2 rental index reveals that more landlords are deciding to sell up, and less are investing in the Private Rental Sector (PRS), due to increased legislation and punitive taxation policies. Belvoir is calling for the Government to take urgent remedial action in the Autumn Budget to incentivise those landlords who are offering necessary high-quality accommodation for the UK’s ever-increasing tenant population.

Belvoir CEO, Dorian Gonsalves, commented: “Property supply and tenant demand is something that Belvoir has been tracking closely, ever since the government embarked on a flawed policy to try and reduce the number of investment landlords so that more first time buyers could enter the market,

“Belvoir has continually warned that this policy would not work, as the UK’s rising population requires more homes across all tenures, including those people wishing to buy, people wanting to rent privately, and of course people requiring social housing.

“Belvoir’s 2018 Q2 rental index shows that more agents than ever before are reporting that landlords are selling up. A sample survey of Belvoir franchisees reveals that there has been a slight increase (from 46% to 48%) in the number of offices reporting that their landlords are selling up to three properties, and an increase from 7% to 17% of landlords selling between six to 10 properties. One Belvoir office reported that they currently have 17 families on notice due to landlords putting their properties on the market.

“Although government policies such as a loss of mortgage tax relief, and increased stamp duty on second homes are hurting landlords, they still have a choice as to how to invest their money, whereas tenants have little or no choice of where to rent due to a reduction in supply.

“Belvoir’s Q2 rental index revealed just a slight increase in average rental inflation across the UK, with a similar number reporting static rents, but if landlords continue to sell up because their business model in the PRS is being continually attacked, it will undoubtedly result in a further shortage of properties, and inevitable increases in rents, as predicted in the latest RICS report, which stated that rents are likely to rise by 15% over the next five years.

“Concerns about the possibility of mandatory three-year tenancies may also influence the decision of landlords, and there are real concerns that there could be an increase in homelessness, as there is insufficient social housing to accommodate people.

“The majority of landlords are not actively against three-year tenancies. Our survey shows that tenants are already remaining in their homes for longer, with 40% staying for 19-24 months, and 17% choosing to rent a property for over two years. One office reported that their average tenants are staying for over four years, with another reporting the average as 2.5 years.

Should three-year tenancies become mandatory, landlords need reassurance that they can gain possession of their property when needed, and will be protected against tenants who do not pay their rent, or abuse a property or indulge in anti-social behaviour.

“We are urging the government to do more in the Autumn Budget to address stock shortages in the UK, by incentivising the new build sector with low maintenance homes through more Help to Buy and Buy to Rent schemes to provide more homes to own.

“Landlords also need rewards and incentives to encourage them to remain in the PRS, such as reversing current tax increases and introducing tax breaks, as well as initiatives such as tax incentives for landlords who buy large properties and turn them into several affordable and low maintenance flats suitable for the rental sector.
“It is anticipated that more landlords will make a decision about whether to retain their portfolio in 2019 when tax bills have been calculated and the true extent of any further erosion to their profits is seen. The Autumn Budget is the perfect time for the government to introduce the incentives that landlords who offer good quality properties at a reasonable rent really need.”

Major Regional Difference in Landlord Experience and Buying Habits

Published On: August 28, 2018 at 8:12 am

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Buy-to-Let Remains a solid investment option, Broker Insists

Buy-to-let landlords in the Midlands continue to invest in the sector on the back of a ‘positive outlook’, however, elsewhere in the country, landlords are generally scaling back, particularly in London, recent figures reveal.

Recent data from UK Finance, reveals that buy-to-let mortgages for property purchase have dropped by 40% overall since 2015, subsequent to the announcement of tax and regulatory changes for the sector.

However, the latest survey of over 680 landlords conducted by BDRC on behalf of Paragon, discovered that landlords in the Midlands seem to be challenging the trend, endorsed by strong, regional economic growth. A thriving higher education sector and continued, effective regeneration of Britain’s second city, Birmingham.

Moreover, landlords remain picking up property in the East and West Midlands, despite a significant drop in purchase activity in Central London and more modest reductions across the rest of the country, as a result of higher rental yields, in the region, with East Midlands landlords currently achieving a 6.7% average rental yield, whilst those in the West Midlands are attaining yields of 6.2%.

Some 42% of landlords in the East Midlands and 33% in the West Midlands claimed that tenant demand was rising, in comparison to the 24% of landlords who indicated growing demand.

Managing Director of Mortgages at Paragon, John Heron, commented: “These findings highlight a big regional difference in landlord experience and buying habits.
“Some central London landlords appear to be scaling back a little while landlords in the Midlands continue to invest on the back of a positive outlook.”