Search Results For: buy to rent sector

Landlords and Tenants to be Consulted Over Scottish Rent Restrictions Proposal

Published On: August 21, 2018 at 9:26 am

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Across Scotland, landlords and tenants will be consulted over objectives to impose rent restrictions north of the border.

Scottish Labour intends to introduce this new legislation, relating rents to average wages, with tenants given the authority to oppose or challenge unfair charges.

Scottish Labour Leader, Richard Leonard allegedly made no secret of his desire to control rents and restrict the authority of private landlords in Scotland, despite concerns that it could have an adverse impact on tenants.

In his keynote speech, ‘Mary Barbour Law’ is named after the Red Clydeside political activist who played an integral role in the rent strikes of 1915.

Leonard has reiterated his intention to reform the rental market in Scotland.

He commented: “Too many young families are caught in a vicious cycle – a lack of affordable public housing forces people to rent privately and as a result many are paying rip-off rents which stops them saving for a deposit to buy their own home.

“Our proposals for a Mary Barbour law will seek to regulate the private rented sector to ensure that no one is forced to rent a home that pushes them into poverty or falls below the standards needed to protect their physical and mental health and well-being.

“A home is a basic fundamental human right. The Scottish Parliament must endure that that everyone can exercise this right to live in security, peace, and dignity.

“While the SNP tinkers around the edges, Labour will deliver real change. The first step towards that is this a major discussion paper to guide our reforms.”

Most Landlords Feel Optimistic about the Future of Buy-to-Let

Published On: August 16, 2018 at 8:53 am

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The majority of landlords in the UK now feel optimistic about the existing buy-to-let environment and the opportunity it presents in the future, according to the latest Landlord Sentiment Survey from Your Move.

It’s a well-known fact that the sector is currently facing a number of challenges, following several changes over the past few years, including a taxation policy that appears to penalise many buy-to-let landlords.

Despite the influx of regulatory changes over the last few years, landlords remain largely confident in their outlook, with 52% currently positive about being a landlord in the existing economic and political climate.

In contrast, only 16% of those surveyed feel negative about being a landlord, while a further 30% felt indifferent.

Your Move’s survey, which gathered opinions from almost 1,100 landlords in June, also found that the two most important considerations to landlords are ongoing maintenance and upkeep costs (83%), and the potential to make a long-term profit (80%).

Surprisingly, the least important factors were the tenant fees ban (43%) and the potential impact of Brexit (32%).

The study also suggests that the majority of landlords are thinking about the long-term when it comes to property investment. Almost two thirds (64%) revealed that they are unlikely to sell a property in the next 12 months. This supports recent sentiment from mortgage intermediaries, who expect landlord business to stabilise over the next year.

Martyn Alderton, the National Lettings Director of Your Move and Reeds Rains, comments: “Given the number of regulatory and tax changes in the buy-to-let market over the last few years, it wouldn’t be surprising if landlords felt some trepidation about the future. However, it’s great to see that the landlords we surveyed do, for the most part, remain positive about the future.

“Our research shows the majority of landlords are in it for the long-term and that’s important for the wellbeing of the private rental sector, providing much needed homes for those who cannot yet afford, or do not wish, to purchase due to lifestyle choices.”

RICS Calls for Government Review as Private Landlords Quit Sector

Published On: August 10, 2018 at 9:29 am

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Private landlords are continuing to quit the sector all over the country, while tenancy demand continues to increase.

According to the Royal Insitute of Chartered Surveyors (RICS), that smaller landlords’ desertion is the most outstanding feature of the property market.

The RICS commented: “This pattern reflects the shift in the buy-to-let market in the wake of tax changes which are still in the process of being implemented, as smaller scale landlords exit the sector.

“Significantly, the drop in instructions is evident in virtually all parts of the country.”

However, the RICS said that its member agents were continuing to report rising tenant demand.

It said that as a result of this imbalance, rent rises can be expected.

The RICS is forecasting a rise of around 2% over the next year and by 15% by the middle of 2023.

Abdul Choudhury, RICS policy manager, said: “Our survey suggests that recent Government policy and legislation changes have impeded the growth of the Private Rented Sector, which is a vital part of a functioning homes market.

“Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home Stamp Duty, and failing to stimulate the corporate build to rent market, has understandably impacted supply.

“While the current focus is rightly on using regulation to improve the experience for tenants, the Government must urgently look again at the PRS as a whole, including ways to encourage good landlords.

“Ultimately, the Government must consider the impact of its policies, and if the wish is to move away from the PRS, it must provide a suitable alternative.”

Changes in the tax treatment of private landlords were initiated by former Chancellor George Osborne.

The RICS also reported that the sales market was dormant in July, with the number of newly agreed sales almost unchanged for the fourth month running.

It said new instructions were also flat, following two months of “very modest increases”.

Due to this, the RICS said, the average inventory on the books of estate agents is likely to remain close to historic lows.

The RICS survey had 304 responses, covering 620 agency branches.

Agents commenting on the lettings market as part of today’s survey repeatedly refer to lack of stock, high demand and increasing rent.

One agent, in Oswestry, said that his firm had no properties to let at the time of the survey.

Others criticised the Government for the tax changes, including what one agent called “crippling levels of Stamp Duty”.

Winchester Landlords Suffer Worst Effects of Buy-to-Let Tax Changes 

Published On: August 9, 2018 at 9:14 am

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Tax changes have taken their toll on Winchester, making it home to the most vulnerable rental market, according to new research from Gatehouse Bank.

The second home surcharge and reduction of mortgage interest relief are amongst such tax changes that have constrained the buy-to-let market in recent years. This has created a situation in which the yield of a property is no longer considered to be the primary focus in the private rental sector (PRS).

An analysis by Gatehouse Bank has found that Winchester is the area in which landlords are suffering the most, followed by Cambridge, Chichester, Warwick and Reading.

The study has looked at data concerning how long available rentals have been on the market, alongside the affordability ratio between average salaries and rents.

In contrast to this study, others have only taken into account data concerning yields. Such studies would currently identify Padstow, Bedford, Taunton, Shrewsbury and Salisbury as the least attractive areas for buy-to-let property investors. The Gatehouse Bank study took into account opinions from across 122 UK towns and cities. It found that these locations actually rank much higher, placing 49th, 100th, 95th, 40th and 78th respectively.

 

Top Ten Places Landlords Are Most Vulnerable

Rank City/ Town Average Property Price Average time on the market (days) Annual Yield (%) Rent as a % of Earnings
1 Winchester £549,706 248 3.1 56.2
2 Cambridge £446,938 251 2.9 45.6
3 Chichester £413,343 269 3.3 45.8
4 Warwick £353,197 254 3.0 40.0
5 Reading £415,192 230 3.4 46.7
6 Woking £515,941 229 3.6 61.3
7 Watford £419,815 207 3.2 47.3
8 Chelmsford £375,346 224 3.2 42.8
9 Oxford £510,110 261 4.2 70.8
10 Guildford £571,279 202 3.6 69.4

 

Looking at the places where landlords are least vulnerable, areas in the North and Midlands came top. Bootle in Merseyside has been revealed to be the best location for rental property, followed by Inverness, Stoke-on-Trent, Barnsley and St Helens.

 

Top Ten Places Landlord Are Least Vulnerable

Rank City/ Town Average Property Price Average time on the market (days) Annual yield (%) Rent as a % of Earnings
1 Bootle, Merseyside £100,527 183 5.6 22.3
2 Inverness £184,849 124 4.8 30.9
3 Stoke-on-Trent £145,904 147 4.2 22.6
4 Barnsley £136,497 168 4.3 22.3
5 St Helens £133,460 178 4.3 21.6
6 Telford £167,408 131 4.0 25.2
7 Dundee £154,714 169 4.3 23.3
8 Oldham £146,511 173 4.5 24.5
9 Southport £195,796 115 4.2 30.9
10 Bolton £154,710 173 4.7 27.3

 

The information regarding Winchester reveals that properties listed for rent have sat on the market for almost a third longer (248 days) than in Bootle (183 days). The average yield in Winchester is at 3.1%, compared to Bootle’s 5.6%.

Major cities in the UK ended up ranking in varying positions. Manchester came 34th, Glasgow 43rd and Birmingham ranked 75th. London – where high property prices famously shrink yields and deter landlords – ranked 89th.

Renters in Edinburgh and London pay the highest rent prices compared to earnings. The cities are ranked bottom at 121st and 122nd for this factor, with rents coming in at 73% and 92% of local average earnings respectively.

In contrast to this data, the North of England is home to the top three cities for affordability. Hartlepool, Darlington and Stockton-on-Tees make up the top three.

On average, the study has found that properties available to rent in the UK have been sitting on the market for 197 days. Meanwhile the typical yield is 4.6% and the average proportion of earnings to rent is 37%.

Charles Haresnape, CEO at Gatehouse Bank, which offers buy-to-let finance for landlords, commented: “What our research shows is that famous Northern hospitality is not a myth. It’s a great place not only to be a landlord but also to live, with cities in the North and the Midlands performing much better across all indicators.

“Rental properties are let far quicker than in the South, which is no surprise when major cities like Liverpool and Manchester are within commuting distance of smaller towns like Bootle.

“What’s really striking is that in the areas that performed best, rental rates were far more affordable and this correlation underscores the symbiotic relationship between renters and landlords in areas where their investments could be deemed safest.”

Buy-to-Let Special Report States “Increasing Shift Towards Areas with Higher Yields”

Published On: July 25, 2018 at 9:54 am

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The Mortgage Lender has commissioned a special report, which has found that buy-to-let investors are increasingly on the look out for properties that are cheaper and result in a higher yield.

Martin Ellis, the UK’s leading housing economist, is the author of the report. He has also predicted a rise in interest rates by 0.25% within the next few months and that house price growth will increase by no more than 2-3% by the end of this year.

Peter Beaumont, The Mortgage Lender deputy chief executive, said: “Our special report on the buy-to-let market looks at the macro and micro economic environment for buy-to-let investors and the factors that are likely to influence landlords’ investment choices over the coming years.

“It also highlights the need for a flexible and competitive buy to let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased.”

Currently, buy-to-let mortgages represent nearly 13% of new mortgage lending in the UK. It has fallen by 28% in 2017 and is now at £10.7 billion, in comparison to £14.9 billion in 2016. However, despite this fall, 2017 still saw growth, with an annual average 67% higher than what it was in the period from 2009 to 2013.

Buy-to-let remortgage activity has also been stable, with the volume of lending in 2017 only 0.6% lower than it was in 2016.

There has been a considerable amount of growth within the private rented sector (PRS) in recent years. 4.7m households in England are currently renting privately, which amounts to one in five. 46% of those aged 25-34 years old live in the PRS. This is almost double the statistic from 2006, which stood at 24%. The amount of tenants aged 35-44 years old in the PRS has also substantially increased over the last ten years, from 11% to 29%.

Landlord Exodus Continues, as RLA PEARL Estimates Further Drop in Private Rented Homes

Published On: July 13, 2018 at 8:03 am

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The latest research report from RLA PEARL (the Residential Landlords Association) has been released, concerning key trends in the private rented sector (PRS).

It has revealed specifically that support from landlords for the sector is dwindling. As well as the estimated 46,000 private rented homes that have already been lost, it estimates a further net loss of 133,000.

The recent Government tax changes are thought to be the main reason for this drop, as they have dissuaded many private landlords from continuing their investments in the sector.

Previous research from RLA PEARL has shown that 62% of landlords believed that the profitability of their investments would be reduced by at least 20%. 67% responded that they were considering minimizing their investment due to these tax changes by the Government.

Within his post on the RLA website, Supporting Private Landlords not Pushing them out is Key for a Modern Sector of the Future, Dr Tom Simcock, the Senior Researcher for the RLA, states: “These changes make it easier for those who are wealthier and cash-rich to invest in the private rented sector, over those middle-income earners that may look to purchase a property with finance.

“While also limiting the access of the sector for the more vulnerable tenants and those who can’t afford to buy nor can’t access social housing.”

Dr Simcock also discusses the Government’s recent announcement for the consultation on three-year tenancies: “This could be beneficial for both landlords and tenants in the right circumstances and signifies a move towards an evolved modern private rented sector.

“However, in the international examples of private rented sectors, where there are longer-term tenancies, there is also smart taxation policies that support private landlords to provide long-term homes.”

He concludes: “We need to move to a broader but fair reform of private renting; with improved access to justice for landlords and tenants, expanded options for security of tenure, and reformed taxation policy that supports not penalise private landlords.”