Search Results For: buy to rent sector

Landlords Switching to Holiday Lets Could Cause Rental Crisis

Published On: January 31, 2020 at 10:11 am

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Landlords Switching to Holiday Lets Could Cause Rental Crisis

An uptick in the number of buy-to-let landlords considering switching to short-term holiday lets is sparking concern in an industry where supply is already struggling to meet demand.

New research from ARLA Propertymark estimates that as many as 470,000 privately rented homes could soon be converted to short-term and holiday rentals, in part due to legislative and tax changes in the private rental sector (PRS).

ARLA Propertymark’s research, in conjunction with Capital Economics revealed that the number of active listings on Airbnb rose by 33% in the UK from 168,000 in 2017 to 223,000 in 2018, with London being the area of highest growth (almost four-fold between 2015 and 2019).

As the number of short-term lets increases, the brunt of the change is felt by residential tenants who find that they have less choice of long-term rental properties.

In the research, the landlords of 230,000 properties said that they were ‘very likely’ to make the move to offer short-term lets. A further 240,000 said that they were ‘fairly likely’, bringing the total to 470,000.

David Cox, ARLA Propertymark chief executive, commented: “The growth in short-term lets is particularly concerning for the traditional private rented sector. As landlords are continuously faced with increased levels of legislation, it’s no surprise they are considering short-term lets as a chance to escape this. 

“Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs.”

ARLA Propertymark has made the following recommendations to limit the impact of short-term lets on the private rental sector:

  • Carefully consider the impact of any future regulation that may incentivise landlords to start using their properties for short-term lets and thereby reduce housing supply for local people trying to find a home
  • Ensure a level regulatory playing field between short-term and long-term lets including protections for tenants and health and safety requirements
  • Ensure a level taxation playing field between short-term and long-term lets so there are no advantages for commercial landlords using their properties for short-term lets
  • Identify ways to improve enforcement of cases in which commercial landlords are not complying with local planning laws or the 90-day limit for short-term lets in London
  • Recognise that the impact of short-term lets on housing supply is not uniform across the country and ‘one size fits all’ regulations are unlikely to be optimal
  • Distinguish between using one’s primary residence for short term lets when the property is being under-utilised and commercial landlords renting out entire properties on a full-time basis
  • Monitor and track the number of entire properties on sharing platforms by hosts with multiple listings in different areas to inform future policy
  • Consider introducing limits on short term letting activities in areas in which there is a demonstrable impact on private rented housing supply.

Revealed: The most in-demand areas to rent a property in the UK

Published On: January 21, 2020 at 10:34 am

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Revealed: The most in-demand areas to rent a property in the UK

The most in-demand cities to rent a property have been revealed in new figures, and there are some surprising results.

Rental management platform Howsy released the figures, based on 23 major cities, plus each borough of London. They worked out the demand for each are by looking at the proportion of already let rental properties as a percentage of the total listings found online.

The method may not be totally accurate, and doesn’t account for the time taken between a property being let and the listing to be taken down, but it definitely gives a good indicator of where is the most in demand.

Out ahead, with the highest demand for rental property, are the London boroughs of Bexley, Bromley, Sutton and Lewisham, all with 38% of rental stock listed already being snapped up.

After those, is the highest demand in an individual city; Newport. They found that 35% of all rental homes on major portals already being let.

Closely following behind are Bristol (34%), Nottingham (33%), Cambridge (33%) and the London boroughs of Merton (32%), and Croydon (31%). 

When the London boroughs are taken out of the running, the top 10 looks like this: 

LocationRental demand
Newport35%
Bristol34%
Nottingham33%
Cambridge33%
Belfast25%
Plymouth23%
Portsmouth23%
Bournemouth23%
Leicester18%
Manchester18%

At the other end of the spectrum, Aberdeen ranks as the city with the lowest demand for rental property, with just 5% of listed rentals having already been let. 

After that, it would appear that the high financial barrier of renting in London is a deciding factor in low demand, with Kensington & Chelsea and Westminster both only having a score of 7%. 

Calum Brannan, founder and CEO of Howsy, said: “The buy-to-let sector may have had a rough ride of late but the UK rental market is still heavily relied upon by many in order to put a roof over their head and as a result, many cities still provide a great opportunity for buy-to-let investors due to the lower levels of available stock and consistently high tenant demand.  

“When looking to invest, this combination of high demand, an affordable initial cost and a good rental yield should all be considered in order to maximise a return. For those that do their research and tick these boxes, bricks and mortar remains a very sound investment despite attempts to dampen the financial return via stamp duty hikes and changes to tax relief.

“Hopefully, a newly refreshed Government will realise that the buy-to-let landlord is the backbone of the UK rental market and we need to encourage investment into the sector rather than deter it.”

UK Cities – Top 10 Lowest Demand

LocationRental demand
Aberdeen5%
Swansea8%
Leeds9%
Edinburgh10%
Birmingham14%
Cardiff14%
Newcastle14%
Liverpool15%
Sheffield16%
Southampton16%

London Boroughs – Top 10 Highest Demand

LocationRental demand
Bexley38%
Bromley38%
Sutton38%
Lewisham38%
Merton32%
Croydon31%
Greenwich30%
Haringey29%
Enfield29%
Kingston-Upon-Thames27%

London Boroughs – Top 10 Lowest Demand

LocationRental demand
Kensington & Chelsea7%
Westminster7%
Camden11%
City of London12%
Hammersmith & Fulham13%
Ealing14%
Brent15%
Tower Hamlets19%
Barnet19%
Richmond-Upon-Thames20%

RLA suggests pro-growth measures to avoid looming rented housing supply crisis

Published On: October 25, 2019 at 8:29 am

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rented housing supply crisis

A rented housing supply crisis could be on the horizon, as a new survey shows more landlords are selling properties than buying, whilst demand continues to increase.

According to the Residential Landlords Association (RLA)’s survey of over 2,700 landlords, almost 25% have seen demand for private rented property increase over the last three months. Only 15% said that demand had fallen.

However, 41% have said they haven’t noticed a change.

According to this research, over the next 12 months, we will see 31% of landlords sell at least one property. Only 13% said they plan to buy at least one.

These figures have also been supported by statistics from other organisations:

  • Rightmove’s data shows a shortage in private rented housing together with a strong demand from tenants has led to record asking rents across most of Great Britain.
  • The Royal Institution of Chartered Surveyors (RICS) has warned of an acceleration in rent increases over the next five years as a result of this demand for housing outstripping supply.

A programme has been designed by the Government over recent years to cut investment in private rented housing through various tax increases. It hopes to encourage more houses to be available for purchase by owner-occupiers.

The latest figures, however, show that this strategy was a failure. The RLA is now calling on the Government to adopt pro-growth measures. It suggests scrapping the Stamp Duty levy on the purchase of additional properties where landlords add to the net overall supply of homes available, including bringing long-term empty homes into use.

David Smith, Policy Director for the RLA, said: “Those who argue that a smaller private rented sector is good for tenants wanting to buy a home are plain wrong. The Government’s policies are choking off the supply of homes to rent whilst demand remains strong. This is only making life more difficult and potentially more expensive for those looking for somewhere to live.”

“Without an urgent change of course and the introduction of pro-growth policies the situation will only become worse.”

Three-quarters of UK tenants are happy renting, Landbay research shows

Published On: October 23, 2019 at 8:41 am

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UK tenants are happy renting

Three-quarters (75%) of UK tenants are happy to rent, according to new research from Landbay, the buy-to-let focussed marketplace lender.

Of this 75%, a third (33%) said that they are happy to rent forever. This study questioned 2,000 private renters in the UK, offering insight to landlords on the wants and needs of their tenants.

The survey looked into men’s and women’s preferences for renting over homeowning and found very little difference between the two genders. 36% of men are to be happy renting forever and 31% of women made the same response.

Looking at the age ranges of those who took part in the survey, nearly two thirds (64%) of those aged 55+ are also happy to remain tenants. In comparison, Landbay highlights that less than a third of 35-54-year-olds chose this response and that they are more likely to want to own a home.

Only 17% of those living in London are happy to stay renting, compared to 46% of Welsh tenants.

Of those who aim to buy a property, the average length of time tenants are prepared to wait is 4.1 years, with men content to wait 4.6 years and women 3.8 years.

The top three reasons for why these tenants remain to rent are:

  1. I don’t want to/can’t make the financial commitment of buying a home – 46%
  2. I have fewer responsibilities than an owner (i.e. my landlord is responsible for most issues) – 40%
  3. I like the flexibility of renting – 33%

John Goodall, CEO of Landbay, comments: “Renting affords significantly greater flexibility than homeownership and, at a time when house price growth is uncertain, remains the best option for a significant number of people. It’s clear from this data that those who choose to rent are happy doing so, and indeed would like to continue doing so forever.”

“The financial hurdle of homeownership is for many too great a stretch and frankly they don’t want to make the commitment. The reality is owning a home isn’t the right choice for many, which is why the private rental sector needs to be supported properly if we are to house this growing portion of private sector tenants.”

Are property investment platforms the solution for buy-to-let landlords?

Published On: October 2, 2019 at 8:34 am

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property investment

54% of buy-to-let landlords say that have been affected by recent tougher tax treatments and tighter bank lending criteria, according to new research commissioned by secured property lender Fitzrovia Finance.

The research also shows that many have decided to sell and reduce their property holdings.

One in five of those interviewed for the research stated that they have reduced the number of buy-to-let properties in their portfolios. 15% said they have been deterred from investing in more properties.

Looking at those who have sold buy-to-let properties over the past two years, the average cash released from the sale was £129,746. 8% of these property investors said they used the funds to invest through property debt investment platforms. One in three believes that as the buy-to-let market has become less attractive, they will use property debt investment platforms more.

Information has been gathered by Fitzrovia Finance on what investors want to see in a property debt investment platform before deciding to use one. Top of the list is the offer of attractive secured property lending opportunities, with new regulations to make the sector safer and more transparent taking the second spot.

Features that would motivate landlords to start investing through property investment platformsBuy-to-let investors percentage
Attractive secured property lending opportunities33%
New regulation that will make the sector more transparent and safer29%
Trust in the company’s management team and track record 28%
Attractive risk -adjusted returns26%

Brad Bauman, CEO, Fitzrovia Finance, has commented: “Property debt investment platforms are a good alternative for landlords who understand the asset class and the risks involved.  As the buy-to-let market becomes less attractive, our research suggests that many may increasingly turn to property debt investment platforms for attractive risk adjusted returns but without the hassle of managing tenants or carrying out costly maintenance.”

Results revealed for InterBay’s buy-to-let refurbishments report

Published On: October 1, 2019 at 9:24 am

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refurbishment

Mortgage lender InterBay Commercial’s report reveals refurbishments made by landlords have resulted in drastic improvements to the quality of private rental sector (PRS)

The report, entitled Unlocked value: The role of refurbishment in buy to let, shows:

  • The proportion of homes in the PRS in England deemed non-decent by the Office for National Statistics (ONS) has fallen for ten consecutive years, decreasing to 24.5% from 44% in 2008.
  • The number of non-decent homes has fallen in absolute terms, down by 275,000, despite the sector growing by 45% over the period, adding 1.5m homes.
  • It is highlighted that the latest English Housing Survey shows that 84% of private renters were satisfied with their current accommodation.
  • A survey of over 700 property investors shows 70% of landlords who recently undertook a refurbishment did so to improve the property.
  • The same survey revealed 45% made improvements to increase a property’s capital or yield.
  • The analysis shows that landlords typically spent £12,000 per refurbishment, depending on the type of refurbishment.
  • Heavy work, such as a conversion or extension, stood at an average of £40,000.
  • Light work, such as modernisation or redecoration, came to an average of £7,000.
  • Overall, 28% of landlords spent less than £5,000 on their last refurbishment and 43% spent less than £10,000. Only 13% spent more than £100,000.
  • 82% of those who undertook such work saw monthly rent rises as a result. The average rent for a refurbished property rose by £81 per month, up by 8%.

Darrell Walker, Head of Sales, InterBay Commercial commented: “It may be an easy target for political point-scoring, but the PRS has been a success story since the financial crisis, catering for a growing proportion of the population that either cannot or chooses not to purchase a home. As the PRS has grown, it has also professionalised. As it has done so, the standard of accommodation for tenants has improved drastically too.

“Refurbishment has been central to this improvement. It is a win-win for tenants and landlords. Tenants see better quality accommodation, while landlords improve the rent they receive and maximise the value of the property. And with interest rates still bumping along the bottom, those borrowing to support refurbishment can access historically cheap funding to enable improvement works.

“Nonetheless, continued investment in the sector is not a foregone conclusion, and it must be supported rather than undermined. Landlords have been buffeted by the headwinds of policy change since 2015, and costs have risen for investors. Should this rate of change continue, it will weigh on landlords’ decisions to spend more on their portfolios, and risks undermining a decade of progress.“