Posts with tag: landlords

Could tenants be priced out of market?

Published On: March 14, 2016 at 11:15 am

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A new investigation has predicted that private rental tenants could soon face similar financial challenges to those buying a new home.

Research on behalf of financial comparison website money.co.uk by the Centre for Economics and Business Research suggests that the cost of an average rental deposit will grow by 40% by 2026 to £1,111. The average monthly rent is predicted to rise by 28% over the same period of time.

Increases

If these predictions are true, the average monthly rental deposit will be 70% of the typical monthly salary. However, strong regional variations must be taken into account.

For example, in London, the average rental deposit is expected to rise to £2,733 by 2026. This would amount to 120% of the average monthly salary, a rise from 99% in 2015.

Across the South, deposits are expected to rise sharply. In the South East, the average deposit is predicted to hit £1,469 in 2026. This represents 83% of the average monthly salary at £1,761, a rise from the 72% recorded in 2015. In the South West, the typical deposit is thought to hit 80% of average monthly earnings at £1,437.

Rental rises

Average monthly rents are due to increase by 28% by 2026, 8% greater than average salaries over the same timeframe, which are set to grow by 20%.

The greatest increase in in rents during the next ten years is expected to occur in the capital, with growth expected to hit 39%. Other regions expected to perform well are the South West and South East, where rents are expected to grow by 32% and 34% respectively.

On the other hand, the lowest increases in rent are likely to be Yorkshire and the Humber, with a 17% increase expected. Overall monthly salary is not expected to keep up with the pace of the rental market.

Between 2015 and 2026, the typical monthly salary is expected to increase by an average of 20% to £1,576. This is lower than the projected increase in both monthly rental costs and deposits, which in turn could see many finding the cost of renting just as unaffordable as buying.

Could tenants be priced out of market?

Could tenants be priced out of market?

Blow

Hannah Maundrell, editor in chief of money.co.uk, said, ‘the rapid rise in deposits as well as rents is a double blow for everyone on the rental ladder. With the forthcoming changes to tax legislation and crackdown on buy to let mortgages likely to erode landlords’ profits, there’s little doubt these costs will be passed onto tenants. The current booming property market means deposits are likely to continue shooting upwards in the future and we could well see six weeks’ worth of rent extended to eight. Many not only face being priced off the property ladder but also the rental ladder too.’[1]

‘The Government needs to take action, without intervention the spiralling cost of deposits and rent could have a huge economic impact on the UK. Giving renters a lifeline is equally as pressing as helping people buy a house. Taking steps to address this now could be a far easier solution than dealing with the prospect of pricing home hunters off the private rental ladder,’ she added.[1]

[1] http://www.propertywire.com/news/europe/uk-buy-rent-costs-2016031411664.html

Tenants in East Midlands most satisfied with landlord

Published On: March 13, 2016 at 10:16 am

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New research has indicated that tenants in the East Midlands are most satisfied with their landlord, compared to all other regions of the country.

A survey from the National Landlords Association found that 83% of renters in the region are satisfied with their current landlord. Renters in the North West and South West were almost as content, with 82% in these areas stating that they were satisfied.

Regional reflections

Data from the report shows that there are sharp regional differences in terms of tenant satisfaction. Only 67% of renters in the North East said that they were content, which represented the lowest rate in the whole of England.

In total, an average of 79% of tenants who replied to the poll said that they were satisfied with their landlord. The South East recorded a satisfaction rate of 80%, followed by the West Midlands with 79%, Yorkshire and Humber with 73%, London 72% and the East with 71%.

Richard Lambert, chief executive officer of the NLA, said, ‘good landlords make up the majority of the market so it’s not surprising that the majority of tenants are satisfied.’[1]

Tenants in England most satisfied with landlord

Tenants in England most satisfied with landlord

Far from insecure

‘Private renting is far from the insecure, uncertain and unhappy picture that it is often made out to be and these findings will help to reassure existing renters and those looking to make their home in the private sector. However, it doesn’t help the minority of tenants who are dissatisfied,’ Lambert continued.[1]

Concluding, Mr Lambert said, ‘the NLA provides a range of training and accreditation opportunities for landlords in order to help them develop and improve standards so they can provide a better service but this is only part of the solution. Both central and local Government must also commit more resources to tackling poor standards and weeding out bad landlords.’[1]

[1] http://www.propertywire.com/news/europe/rental-tenants-satisfaction-survey-2016030311628.html

 

What do students require from their rental accommodation?

Published On: March 12, 2016 at 12:04 pm

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A new survey has uncovered what students really want from their rental accommodation.

Investing in student property is still popular amongst buy-to-let landlords, who are enticed by the thought of substantial rental yields, low void periods and manageable tenants.

Students Needs

Research conducted from 500 tenants by the Mistoria Group revealed students’ top requirements from their housing to be:

  • Safe and secure accommodation-89%
  • Fast broadband connection-88%
  • A washing machine-76%
  • Close proximity to university campus-72%
  • High-quality accommodation-59%
  • Good proximity to local amenities-47%
What do students require from their rental accommodation?

What do students require from their rental accommodation?

Worries

The cost of going to university is currently at its highest ever level. It comes as little surprise then to learn that students’ greatest concerns are to do with financial issues.

These top financial worries were found to be:

  • Cost of food-66%
  • Public transport fees-42%
  • Mobile Phone bills-40%
  • Energy costs-14%

Accommodation

Mish Liyanage, Managing Director of the Mistoria Group, said, ‘our data shows the vast majority of students want to live in high quality, shared accommodation, with good internet access and affordable bills. We also know from previous research that the overwhelming majority of students (80%) want to live in shared accommodation with friends. Only 5% want halls of residence and just 3% of students want to live in a self-contained room or flat.’[1]

‘If landlords and investors provide the right type of property, they will be able to attract lucrative students,’ Liyanage continued. ‘Student accommodation offers investors a number of attractive features such as high yields as students settle for less space than other tenants; high occupancy; and it is neatly counter-cyclical, as more people go to university during economic downturns.’[1]

[1] http://www.propertyreporter.co.uk/landlords/what-do-students-actually-want-from-their-rental-accommodation.html

 

Lawyers warning on stamp duty deadline

Published On: March 11, 2016 at 11:20 am

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The Law Society has warned its members to inform clients and estate agents if there is a chance that ongoing transactions for additional homes could miss the March 31st deadline to avoid stamp duty hikes.

In an address to members, the Society said that the deadline is piling pressure on those involved in transactions. However, it accepts that the deadline is immoveable and that lawyers should inform all of those who could be affected if one element of a deal could threaten to see it fail to be completed before the set date.

Warning

More specifically, the Society told members, ‘you should warn your client that if completion is fixed for a date on or before March 31 but completion takes place after March 31 then, provided the transaction is subject to the new SDLT provisions, the additional SDLT will be payable. The reasons for a delayed completion will not be material and will include the sellers’ default.’[1]

‘You should explain to your clients that there are aspects of the transaction which are to some extent beyond your control, for example, if you are still waiting for a mortgage offer or search results, or if the transaction is leasehold and you are still awaiting information from managing agents and landlords, or if you are not certain that those on the other side of the transaction-or indeed further along the chain-will be in a position to deal when requested and that you are therefore unable to give warranties as to timings,’ the note continued.

Lawyers warning on stamp duty deadline

Lawyers warning on stamp duty deadline

Further information of the implementation of the stamp duty is expected in Wednesday’s budget. The Law Society is instructing members to tell clients of the uncertainties until that time.

For comprehensive news on budget announcements that will impact on the sector, keep checking Landlord News for the latest updates.

[1] https://www.estateagenttoday.co.uk/breaking-news/2016/3/lawyers-advised-to-inform-agents-if-stamp-duty-deadline-cannot-be-met

 

 

February saw surge in buying in England and Wales

Published On: March 11, 2016 at 10:26 am

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Latest data released by Home.co.uk has indicated that there was a surge in buying activity across the country in the last month.

The price of property increased by 0.9% nationally in February, with annual rises currently standing at 7.9%.

Short stock

Rising prices are being driven by a very low property stock, with the number of properties coming on to the market down by 4% in comparison to one year ago. In the West Midlands, 12% less fresh stock made it onto estate agents’ books in the last month, again in comparison to February 2015.

In addition, the South West is also showing shortages in supply, with 8% less stock registered than in January.

February saw surge in buying in England and Wales

February saw surge in buying in England and Wales

Prices were up in the North and in Wales during February, but marketing times continued to be high in both regions. In contrast, strong competition between buyers has pushed the typical time on market in the South East and East of England down to 47and 49 days respectively.

The current 7.9% increase in prices in comparison to March 2015 is expected to grow, with supply of housing worsening in many UK regions.

Snapping up

Further figures from the report shows that the East of England, London and the South East saw massive drops in marketing times, with buy-to-let investors looking to snap up homes before the stamp duty increases come into play.

Typical time of properties on the market dropped to 102 days across England and Wales, 17 days less than March 2015. However, the average annual home price appreciation in the two countries dropped slightly to 7.9%.

Legislation could seriously affect accidental landlords

Published On: March 10, 2016 at 11:55 am

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So-called accidental landlords are being warned that they could be refused cheaper mortgages, due to a lesser-known piece of legislation.

The EU Mortgage Credit Directive, coming into force at the end of the month, has been designed to stop, ‘risky’ mortgage lending. In addition, the initiative redefines landlord mortgages as ‘consumer lending,’ forcing them to be subject to tighter lending criteria.

Checks

In addition, new mortgage affordability checks will be introduced as part of the scheme. These are being implemented to ensure borrowers can afford their repayments-not only at their initial rate, but also if rates were to spiral by up to 6%.

These rules will also apply to those who are remortgaging. This means homeowners who are changing mortgage deals in order to take advantage of lower rates could be told they are unable to make repayments cheaper than what they are already making.

This move is most likely to impact on so-called accidental landlords-those who did not purchase a home intending to rent it out, but circumstances have forced them to do so.

Unaware

Alarming research from Direct Line indicates that 62% of new buy-to-let mortgage applicants are unaware of the changes. This figure increases to 71% for accidental landlords.

From next year, alterations to mortgage tax relief will see landlords unable to claim tax relief on mortgage repayments. At present, landlords can deduct mortgage interest repayments from their bill. However, the changes will see them instead receive a tax credit equivalent to 20% basic-rate tax on this amount. If interest rates were to rise, some landlords could well finish up paying tax on losses.

Legislation could seriously affect accidental landlords

Legislation could seriously affect accidental landlords

Ludicrous

Ajay Jagota, founder and MD of sales and lettings firm KIS, noted, ‘it sounds completely ludicrous for lenders to deny people cheaper mortgages because they can’t afford them and there’s good reason for that-it is completely ludicrous!’[1]

‘There is no question that this directive will create mortgage prisoners, people stuck overpaying on loans at a time when mortgage rates could be falling to their lowest ever levels. Literally anyone can end up an accidental landlord-through inheritance, through family breakdown or through having to relocate for work. Most of the time they have no ambition other than to cover their costs until their circumstances change and there’s a real risk that they might have to raise their rents just to cover those costs,’ he continued.[1]

Concluding, Jagota said, ‘lenders should have the right to waive the affordability criteria when they’re remortgaging if there’s no increase in borrowing. If nothing else, this directive seems to fly in the face of EU’s commitment to a free market by denying people access to the full range of financial products available to them.’

[1] http://www.propertyreporter.co.uk/landlords/eu-tells-accidental-landlords-they-cheaper-mortgages.html