Search Results For: buy to rent sector

Over half of UK estate agents are worried about the current market

Published On: October 18, 2022 at 10:25 am

More than half of estate agents (55%) are worried about the current outlook for the UK property market, research from House Buyer Bureau shows.

The property purchasing specialist surveyed over 600 UK estate agents, looking at their professional feeling on the current state of the market, what they are seeing on the ground from a buyer and seller standpoint, and how they are proceeding with market uncertainty at a high.

The results show that 55% of agents are worried about the current outlook for the UK property market, with just 11% stating they still felt confident about the months ahead.

26% believe that we are most likely to see a significant market crash over the coming months, with a further 37% predicting there will at least be a downward turn in house prices, while 27% are anticipating house prices to flatline.

32% stated they had seen a slight decline in business from home sellers, with 10% seeing a more significant reduction in seller activity. However, almost a quarter (24%) did state that business had been on the up.

27% also revealed that buyer demand for the homes they were selling had remained robust, although 42% have seen buyer demand levels start to decline, with a further 43% stating that buyers are also offering less compared to the pandemic house price highs of the last two years.

As a result, 41% revealed that they are now advising sellers to adjust their asking price expectations in line with the lower level of homebuyer purchasing power being seen.

33% believe the market is in for a long-term period of adjustment, lasting beyond next year. 41% believe it will be a mid-term correction lasting throughout next year, with 26% hopeful they will return to business as usual by the new year.

Chris Hodgkinson, Managing Director of House Buyer Bureau, comments: “The market is holding firm for the time being, but the wider expectation amongst those on the ground is that a correction is on the way in one form or another.

We’re already starting to see early signs of this correction with a good proportion of agents already noticing a decline in both buyer and seller activity, as well as a reduction in the pandemic high house prices that buyers are willing to pay. With many also fearing a mid to long-term period of muted market activity, it certainly looks as though the sector is in for a tougher year in 2023.”

Nation’s HMOs worth £26bn in current market conditions

Published On: September 7, 2022 at 8:39 am

Author: Em Morley

Categories: Landlord News,Property News

Tags: Revolution Brokers

Nation’s HMOs worth £26bn in current market conditions

The HMO market is estimated to be worth almost £26bn in current market conditions, according to Revolution Brokers’ latest research.

Their market analysis shows that there are currently some 55,849 HMOs (houses in multiple occupation) operational across the rental market in England. With the average HMO worth £464,546 in the current market, that’s a total market value of £25.944bn.

With 13,528 HMOs found in London alone, the capital is home to the highest proportion of HMO rental properties in England. It’s also home to the highest average HMO house price at £826,209 and, as a result, the highest total HMO market value of all regions at a staggering £11.2bn.

The East Midlands is the nation’s second HMO hotspot, with the 10,737 HMOs located in the region accounting for 19% of the nation’s total stock. However, with an average house price of £274,126, the region is home to a total market value of £2.9bn – just the fourth largest in the nation.

The South West and South East sit second and third when it comes to total HMO market value, with HMO stock in each region at £3.8bn and £3.3bn respectively.

Almas Uddin, Founding Director of Revolution Brokers, comments: “We’ve now started to see the HMO sector come under the same scrutiny as the wider buy-to-let space when it comes to a raft of new rules and regulations designed to improve tenant welfare.

“While this is, of course, a step in the right direction, it means additional time and money spent by HMO providers to ensure they are operating above board.

“The worry is that these additional requirements may deter HMO investment and reduce the level of suitable HMOs that are available, leaving tenants with no choice but to rent from those who were already providing below-par accommodation and will no doubt continue to do so. The good news is that so far, this doesn’t seem to be the case and the nation’s HMO portfolio not only remains robust, but is worth an incredible sum in the current market.”

Right to Buy generates over £3bn for London’s local authorities in the last decade

Published On: August 24, 2022 at 8:47 am

Author: Em Morley

Categories: Lettings News,Property News

Tags: Benham and Reeves,Buy to Rent,London

Rental data reveals London has become unaffordable for graduates

Over 23,000 homes have been sold under the Right to Buy scheme to London council tenants over the last decade, research from lettings and estate agent Benham and Reeves shows.

It says this this equates to 5.6% of total local authority owned dwellings stock and equates to a total market value of £3.4bn.

The analysis of historic Right to Buy data by Benham and Reeves shows that, since 2012-13, 23,061 council homes have been sold to tenants by their respective local councils.

Highest total Right to Buy sales

The highest number of council owned homes have been sold in Barking and Dagenham, where Right to Buy sales total 1,883 over the last decade.

Greenwich has also seen a similar number sold at 1,867, followed by Newham (1,716), Southwark (1,702) and Tower Hamlets (1,187).

Highest proportion of total council homes sold

Across the capital as a whole, the total number of Right to Buy sales accounts for 5.6% of all local authority owned homes.

In the City of London, just 62 homes have sold via Right to Buy, which accounts for 14.4% of all council homes located there.

Right to Buy in Newham has seen 10.2% of council owned homes sold. In Barking and Dagenham, the figure is at 9.8% and in Tower Hamlets it’s 9.5%.

Redbridge also makes the top five, with 9.4% of total council homes in the borough being sold via Right to Buy in the last decade.

Highest Right to Buy sold value

The market value of homes sold via Right to Buy across the London market has hit a £3.415bn in the last 10 years, Benham and Reeves reports.

When it comes to the highest sold value, it’s the London Borough of Southwark that sits top. Right to Buy sales have generated £3254.5 million since 2012, with Greenwich (£223.5 million), Barking and Dagenham (£222.3 million) and Newham (£201.7 million) again making the top five.

Islington also ranks as one of the boroughs to see the highest sold value of Right to Buy homes to council tenants, generating £198 million since 2012.

Marc von Grundherr, Director of Benham and Reeves, comments: “Right to Buy may have been an incredibly successful initiative when it comes to giving council tenants the ability to climb the ladder and many have seized the opportunity to do so in the last ten years.

“Of course, in doing so these local authorities have essentially shot themselves in the foot, as it severely reduces the social housing stock available to them to satisfy the huge demand from those who are still in desperate need of it. The irony is, that it then costs these councils more, as they need to rely on renting from the private sector at a higher price to house those in need.

“As a result, we’ve now seen some councils start to reverse this trend and reclaim formerly council owned homes from their owners. Which does beg the question that, having made some quite sizeable sums from selling in the first place, why London’s local authorities haven’t invested appropriately in the provision of new homes for council tenants?”

London rental costs set to increase by £1,412 per year by 2025

Published On: July 14, 2022 at 11:18 am

Author: Em Morley

Categories: Lettings News,Tenant News

Tags: London,rent prices,Rentd

SpareRoom study shows most affordable places to rent in the UK

Using the last decade of rental market data for each London borough, rental platform Rentd has forecast what the average cost of renting could look like in London by 2025.

The largest London monthly rent increases are forecast to be seen in the boroughs of Kingston, Newham, and Barking and Dagenham, Rentd reports.

The research shows that currently, the average London rent is £1,629 per month, having increased by 24% in the last decade. This is a 2.4% average annual rate of growth.

Based on this annual rate of growth, Rentd’s forecast estimates that this could hit £1,747 per month by 2025, a further 7% increase. This would mean the average London tenant would be paying £118 more per month, or £1,412 more per year.

Rentd’s research estimates that Kingston upon Thames could be due to see the largest increase in the cost of renting. Currently the average monthly rent in the borough stands at £1,519 per month having increased by 59% in the last year alone. This is forecasted to climb by 17% to a monthly average of £1,783 by 2025, adding £3,171 to the annual cost of renting.

Newham is also forecast to see a 17% increase in rental values, meaning tenants would be paying an additional £3,068 per year to rent within the borough.

Tenants in Barking and Dagenham (+14%), Waltham Forest, Richmond and Greenwich (+13%) could also face some of the largest percentage increases in the average monthly cost of renting, while Richmond (+£2,940), Wandsworth (+£2,507) and Hackney (+£2,364) are also due to see some of the largest monetary increases in the annual cost of renting.

At £2,359 per month, Westminster is currently the second least affordable London borough when it comes to the cost of renting, with just Kensington and Chelsea home to a higher average monthly rent (£2,716).

However, Rentd’s forecast suggests that Westminster rents could climb by just 1% by 2025, an increase of just £27 per month or £329 per year.

Ahmed Gamal, Founder and CEO of Rentd, comments: “The cost of renting within London has increased considerably over the last decade, driven by a sustained level of tenant demand, not just because the cost of buying is so high, but also due to a move towards long-term renting as a lifestyle choice, not just a necessity.

“Despite this, the government has done its best to deter investment into the London rental market, with a string of legislative changes designed to dent the returns available to landlords. This has further reduced the level of available stock within the capital and contributed to the high increase in the cost of renting that London’s tenants face today.

“While it’s great to see the London rental market demonstrate a high level of resilience following what was a fairly complicated pandemic period, more must be done to entice investment into the sector to prevent the future cost of renting spiralling out of reach for the average tenant.”

Report finds increasing rent prices are due to shrinking private rented sector

Published On: June 8, 2022 at 9:57 am

Author: Em Morley

Categories: Lettings News,Property News

Tags: Generation Rent,Propertymark,rent prices

Propertymark has found that rent prices are increasing due to landlords selling up and reducing the available rental stock.

The key findings of its report ‘A shrinking private rented sector?’ state that 53% of buy-to-let properties sold in March 2022 left the private rented sector (PRS).

It also states 84% of respondents reported a decrease in new investors in the PRS over the past three years.

An overall 49% reduction in available rental properties per branch was recorded in March 2022, compared to March 2019.

Nathan Emerson, CEO of Propertymark, states within the report: “Our research presents a worrying picture for private renters. The number of properties available to rent has been diminishing with a large portion of landlords choosing to sell their properties. A lack of property is the root cause for rent increases and rising figures on social housing lists.

“We know from our qualitative research that the most common reasons for landlords to choose to sell their properties and no longer provide homes are around risk, finances and viability.

“Landlords and letting agents have been the subject of extreme legislation changes as the UK Government tries to improve the sector. However, without a middle ground, these changes are actually proving detrimental to those they are supposed to protect. Sadly we do not see this improving as the sector braces itself for more changes within the anticipated Renter’s Reform Bill and upcoming energy efficiency targets.”

In response to the report, Dan Wilson Craw, Deputy Director of campaign group Generation Rent, comments: “Rents are rising and would-be tenants face bidding wars or demands for multiple months’ rent up-front.

“That is a result of large numbers of people moving back to cities since summer 2021 as universities and offices reopened, putting a strain on homes coming to market. We’re seeing similar rent inflation in the US and Australia.

“When landlords sell up, their properties don’t disappear. They continue to be lived in, either by tenants of the new owner, or by an owner-occupier whose old home is now available for a private renter to buy. Supply and demand stay the same so rents are unaffected.

“Reforms to the rental market are necessary to give private tenants better quality, longer term homes. The government has said that landlords will be able to evict in order to sell or move in – though we believe these grounds should come with protections against abuse. If some landlords are unhappy with that, they won’t be missed.

“Government plans aside, rents are too expensive, so we need to build more of every tenure in the places people want to live, to make sure everyone can afford a home.”

Tenants earnings are below rental affordability threshold in five of England’s regions

Published On: March 29, 2022 at 8:20 am

Author: Em Morley

Categories: Tenant News

Tags: Rentd

Landlord portfolios shrink due to government policymaking

Research by leading rental portal Rentd has found that the earnings of the average tenant sit below the rental affordability threshold in five of England’s regions.

The research looked at the current average income of a tenant and how it compared to the average level of rental affordability based on the benchmark of two and half times the average rent.

The research shows that the average annual income for a rental tenant in England is currently £28,116. This is 12% below the wider average.

Rentd says as a rule of thumb tenants should work to a rental affordability ratio of earning 2.5 times their rent in order to live comfortably. However, this is also a gauge that many letting agents will use when deciding if you are eligible to rent a property.

It says the average rent bill in England is £968 per month, or £11,616 per year. This means a tenant needs to earn £29,041 per year for their home to be truly affordable. This is, however, £925 more than a tenant’s average annual income.

As many as five regions are home to tenant earnings that come in some way below the rental affordability ratio of 2.5 times income. In London, the average tenant earns £39,585 a year but with annual rent costing an average of £21,084, this means they’re coming in -£13,125 below the affordability threshold. In the South East, they’re falling -£4,531 short; in the South West, it’s -£4,046; in the North West it’s -£2,985; and in the East, affordability is missed by -£1,471.

However, the research shows four regions offer a great chance of rental affordability.

In the North East, where the average annual rent cost is £6,996, a tenant would ideally earn £17,490 a year in order to live comfortably. In fact, the average tenant income for the regions is £25,878, £8,388 above the affordability threshold. This makes the North East the most affordable region in England.

In the East Midlands, the average tenant has an income £4,878 above the threshold; in Yorkshire & Humber, average income is £3,978 above the threshold; and in the West Midlands, income is £1,740 above the threshold.

Founder and CEO of Rentd, Ahmed Gamal, comments: “Rental affordability has been a burning topic for quite some time and unfortunately, it still remains a serious issue in today’s rental market. More and more of us are remaining reliant on the rental market until far later in life and this means more tenants fighting it out for a limited supply of rental homes.

“Rather than tackle this issue head on and look to increase rental stock supply, the government has actually looked to reduce the number of landlords operating within the sector via a number of changes such as tax relief and an increase in Stamp Duty on buy-to-let homes.

“They’ve done so in order to increase supply to an overheated housing market to gloss over the fact that they simply haven’t built enough houses, leaving the nation’s tenants out in the cold as a result.

“At the same time, wage growth simply hasn’t kept pace with the wider cost of renting and living and this has only helped increase the issue of affordability within the rental sector.”