Posts with tag: landlords

Sharp Decline in Rental Property Levels Recorded

Published On: June 16, 2016 at 11:00 am

Author:

Categories: Property News

Tags: ,,,,

Following a robust lettings market in April, a sharp decline in rental property levels has been recorded for May.

The Agency Express Property Activity Index reveals that new listings dropped by 11.9% and let properties fell by 11.1% last month, marking the greatest monthly decrease for May since the firm’s records began in 2012.

Recent figures from the Council of Mortgage Lenders (CML) have also confirmed that buy-to-let borrowing dropped hugely in April after a rush of landlords flooded the market to beat the 1st April Stamp Duty deadline.

Sharp Decline in Rental Property Levels Recorded

Sharp Decline in Rental Property Levels Recorded

Therefore, while May’s figures appear dramatic, they do remain somewhat distorted by the Stamp Duty changes.

The Director General of the CML, Paul Smee, comments: “There is a sense of calm after the storm this month, as lending eased back, following the significant rises in activity in March, as borrowers looked to beat the second property Stamp Duty deadline. We expect the market to take several months to return to its previous levels after the lending surge.”

Agency Express’ index recorded that all 12 UK regions saw decreases in new listings, while ten regions experienced a fall in let properties in May.

Some of May’s better performing regions include:

Number of properties to let 

  • Scotland: -4.1%
  • West Midlands: -4.2%
  • Wales: -5.2%
  • Central England: -6.7%
  • North West: -8.6%

Amount of let properties 

  • South East: +10.1%
  • Scotland: +4.1%
  • East Anglia: -3.7%
  • East Midlands: -10.5%
  • North East: -10.6%

The top performing region for May was the South East, where the number of let properties rose by 10.1%, marking a record best for May.

Strong figures were also recorded in Scotland, where let properties increased for a fifth consecutive month, by 4.1%.

The largest decrease was seen in the East Midlands, with the amount of properties to let falling by a record of 29.9%.

The Managing Director of Agency Express, Stephen Watson, says: “The Property Activity Index historically shows us a drop in figures throughout May. However, this month we have seen a much greater fall than in years previous. An unseasonal rush in activity throughout March, followed by a reactive dip in April and reduced lending has certainly blurred May’s figures. Now, with the impending EU referendum, it may be some time before we see a more balanced view of the UK lettings market.”

Serious rent arrears down by 4% in Q1 of 2016

Published On: June 15, 2016 at 9:48 am

Author:

Categories: Finance News

Tags: ,,,,

Encouraging new data has revealed that 3,100 less households were in serious rent arrears in the first quarter of this year, in comparison to the final quarter of 2015.

This represented a fall of 4%, believed to be a direct result of the improving employment market.

Falling arrears

In absolute terms, 86,200 tenants in Britain are in excess of two months behind in paying their rent. This is in comparison to 89,300 in quarter four of last year.

Since 2008, there have been an average of 92,600 tenants in serious rental arrears during the first quarter of each year. This underlines the positivity of the most recent figures.

Adrian Gill, director of estate agents Your Move and Reeds Rains, noted, ‘fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent. Serious rent arrears peaked in Q3 2012 when 124,800 households owed more than two months’ rent-and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course. The direction of travel looks very positive.’[1]

‘A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no-one should be complacent – managing a property is never simple.  Some landlords are being held back from buying property by the Stamp Duty Surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents – hitting affordability,’ Gill continued.[1]

Serious rent arrears down by 4% in Q1 of 2016

Serious rent arrears down by 4% in Q1 of 2016

 

Drops

The total number of tenants more than two months behind with their rent has dropped by 16% since just before the financial crash in Q2 of 2008. Then, the total number of tenants struggling with serious arrears stood at 102,900.

This is particularly encouraging when looking at how the sector has grown during the same period. In 2008, there were 3.6m households living in the private rental sector in Britain. After just 8 years, this has grown by 62% to hit 5.8m households.

Gill observed, ‘the massive growth in the number of homes available to rent – driven by both deliberate landlords and accidental landlords coming into the market – has ensured that rents have not outpaced the ability of tenants to pay. The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of the rapid expansion of the private rented sector and the addition of millions of extra houses and flats to rent.’[1]

Eradicating evictions

More positivity came with the news that the number of eviction orders has dropped considerably. In Q1 2016, there were 26,230 court orders made for eviction as a result of possession claims by landlords, down from 26,964 in the final three months of 2015.

Concluding, Gill said, ‘the evidence is clear – landlords’ finances are the healthiest they’ve been for nearly a decade. Back in 2009, with a distressed purchase market, many owners didn’t want to sell their properties if they inherited or no longer wished to live in their old home – which led to more accidental, DIY landlords. As a result of this, and with more tenants in financial difficulties, buy-to-let mortgage arrears were far higher.’[1]

‘Since then the private rented sector has changed. Now, with the rise of deliberate landlords with a professional attitude to their investment, the average property investor is more likely to have a business plan and a more professional approach to letting their property.’[1]

[1] http://www.propertyreporter.co.uk/landlords/serious-tenant-arrears-fall-4.html

Rise in landlords incorporating their business

Published On: June 13, 2016 at 1:16 pm

Author:

Categories: Landlord News

Tags: ,,,,

A specialist buy-to-let mortgage firm has observed that lending to landlords that have set up limited companies has risen substantially in the first quarter of the year.

Data from Kent Reliance’s Buy To Let Britain report, shows that 38,000 landlords set up as private limited companies were lent to in Q1 of 2016. This was more than the total lending figure in the whole of 2015.

Rise in lending to limited companies

Further data from the report indicates that the number of loans to private limited companies will increase to around 100,000 by the end of 2016.

Many landlords have chosen to incorporate following the 3% additional Stamp Duty land tax that came into force on April 1st. Borrowing through a limited company sees investors taxed at lower corporation rates. What’s more, they are able to offset financial costs against rental income.

Kent Reliance also said that rents are increasing, as landlords look to offset their increased bills. According to the lender, 40% of landlords believe rents will increase during the next 6 months, by an average of 5.6%.

Rise in landlords incorporating their business

Rise in landlords incorporating their business

Blame game

Almost three-quarters of landlords who are looking to increase their rents blame the reduction in mortgage interest tax relief, which will come into force next year.

Separate research from the Council of Mortgage Lenders shows that the total value of rent collected by buy-to-let landlords in Britain over the last year was £53bn. This was a rise of around 10% from one year previously.

Tenants’ satisfaction is high as demand grows

Published On: June 10, 2016 at 9:03 am

Author:

Categories: Property News

Tags: ,,,,

A new investigation has uncovered that the demand for rental accommodation in Britain is increasing, but there is a high degree of satisfaction amongst tenants.

The survey of more than 1,800 Private Rented Sector landlords and tenants uncovered positive sentiment towards the current and future states of the market.

Positive tenants

Undertaken by BDRC Continental on behalf of Paragon Mortgages, the survey shows that despite new measures introduced by the Government to cool the market, rents actually rose in Q1 of 2016.

The total number of buy-to-let landlords reporting demand as increased, either slightly or significantly, stood at 39%. 36% of landlords described tenant demand as stable.

As a whole, the sector is seeing high levels of satisfaction. 79% of tenants questioned said that they are satisfied with their current landlord. 85% of tenants said that they consider their current rental property to be their home, with 69% believing the rate of rent they pay to be good or very good value for money.

Lengths

Interestingly, the average length of time tenants are spending in their current properties presently stands at 7 years. In addition, the average length of time that tenants are spending in the PRS in total is reported to be almost 13 years.

Buy-to-let landlords also agree that the Private Rental Sector plays a vital role within housing in the UK. The social housing sector has lost around one million homes since 1991 and 78% of landlords agree that the PRS has compensated for the decline of this sector.

89% of landlords also noted that the PRS has an important role to play in accommodating people priced out of owning their own home. 74% agree that the sector is vital in housing those excluded from social housing accommodation

Tenants' satisfaction is high as demand grows

Tenants’ satisfaction is high as demand grows

Changing trends

John Heron, Director of Mortgages at Paragon, observed, ‘the rise of the PRS and the decline of the social housing sector have been the predominant trends in the UK’s changing housing tenure over the last 20 years. This data gives an interesting insight into how both tenants and landlords perceive these trends.’[1]

‘It’s good to see tenant satisfaction at such high levels. The sector often suffers from negative PR and the good work done by the vast majority of landlords to provide homes for those who cannot or do not want to buy goes unremarked. This survey clearly demonstrates that the PRS is increasingly providing longer term solutions in housing and that responsible and professional landlords are supporting the provision of housing to those that rely on the PRS for their home,’ Heron added.[1]

[1] http://www.propertyreporter.co.uk/landlords/tenant-demand-and-satisfaction-remains-high.html

Stamp Duty surcharge already cooling market

Published On: June 8, 2016 at 1:20 pm

Author:

Categories: Finance News

Tags: ,,,

The increase in Stamp Duty surcharge has already began to cut new properties coming onto the market, according to new research.

New rental properties listed by buy-to-let landlords in May were down by 5.7% on levels seen in March, the study from property crowdfunding platform Property Partner shows.

Stamp Duty slowdown

Following the rush of landlords putting new properties onto the market before the Stamp Duty deadline of April 1st, there was an unsurprising lull in listings, down by 15.4%.

In addition, new listings dropped so heavily in some areas, they fell below levels seen in March, before the additional 3% surcharge came into force.

During May, new rental property listings slipped in 91% of towns and cities in the UK. Worcester saw the largest fall in rental supply of 42.6%. This followed a 48.9% surge in new listings during April. Other main areas in terms of drops were Bedford and Derby, with falls in new rental listings of 41.7% and 41% respectively.

The table below indicates the towns and cities which saw the largest falls in new property listings during May:

Town/City Region % drop in new rental property listings
Worcester West Midlands -42.6
Bedford South East -41.7
Derby East Midlands -41
Poole South West -39.6
Gloucester South West -37.1
Swindon South West -31.7
Chelmsford East -31.3
Solihull West Midlands -29.9
Bournemouth South West -29.8
Rotherham North East -29.5
Stamp Duty surcharge already cooling market

Stamp Duty surcharge already cooling market

Temporary highs

Dan Gandesha, CEO of Property Partner, stated, ‘As anticipated, the rush of investors buying before April’s stamp duty hike caused a temporary spike in rental supply, which now seems to have been swiftly reversed. New rental listings in May were down almost 6% on March, before the surcharge spike. With high and rising demand, any prolonged fall in rental supply would only have negative consequences for tenants.’[1]

‘It’s likely that rents would increase as landlords, facing less competition, pass on their additional purchase costs to tenants. A lack of available properties would also force more tenants into accepting poorer quality accommodation, particularly in areas with an acute shortage of stock. June’s figures will show whether this is just a market adjustment, or something more fundamental. It’s unfortunate timing with the EU referendum just two weeks away,’ Gandesha continued.[1]

Concluding, Gandesha noted, ‘April’s Stamp Duty changes are just the first in a series of additional costs being piled on traditional buy-to-let. In the longer term, the private rented sector must be professionalised, to provide Generation Rent with enough quality homes at rents they can afford.’[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-supply-dr0ps-57-after-stamp-duty-hike.html

27% of landlords thinking of using online agent

Published On: June 6, 2016 at 11:15 am

Author:

Categories: Landlord News

Tags: ,,,

A new survey has revealed that 27% of landlords believe an online letting agency to now be a better option for managing property than a more conventional one.

The investigation, carried out by property consultancy Allsop, also indicates that 31% of buy-to-let landlords are now considering going online in order to save money.

Online letting agents

Further results show that 59% of landlords feel that Government tax changes for the private rental sector will harm their investment profitability. A further 41% said that they are now considering incorporating their business.

40% of investors asked in the survey said that they feel rental growth will increase during the next six months.

37% have been encouraged by heightened demand from their tenants, up from just 4% in the previous six months.

27% of landlords thinking of using online agent

27% of landlords thinking of using online agent

Changing preferences

In conclusion, Allsop stated, ‘it would not surprise us if the preference for online lettings grow in the coming years. A hybrid model of providing expert advice by technological advances, allows for innovative management and letting solutions.’[1]

This news comes on the heels of the launch of Britain’s first online commercial estate and letting agency last week. Virtual Commercial is looking to provide those looking to set or let a commercial home in England and Wales a fixed fee service to help them with their duties.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/6/over-a-quarter-of-landlords-consider-online-letting-agents-to-save-money