Posts with tag: private rental sector

Landlord confidence in the sector still sluggish

Published On: June 3, 2016 at 10:09 am

Author:

Categories: Landlord News

Tags: ,,,,

Confidence amongst UK landlords remains relatively low, on the back of alterations to tax alterations in the buy-to-let market.

However, the survey by BDRC continental also reveals that buy-to-let landlords are slowly starting to return to the market.

Subdued landlord confidence

In addition, the report shows that landlords’ buying intentions are growing, as is tenant demand. Yields have also remained stable, but confidence is still sluggish.

An increase in the rate of stamp duty land tax, coupled with reductions to income tax available on rental incomes from next year, has kept landlords confidence low.

When asked about business expectations in the next three months, 41% of landlords said that their prospects were either good or very good. This is down from 65% at the same period in 2015. However, this figure is only 2% less than in the final quarter of last year.

Purchasing prospects

In addition, the survey shows that landlords’ property purchasing intentions are above selling intentions. 19% said that they were looking to purchase a property in the coming year, with 16% stating that they intended to sell.

An increase in tenant demand has driven this trend, with 39% of landlords reporting an increase. This was up from 34% in the final quarter of 2015.

Rental yields also grew during the opening quarter of 2016, averaging 5.7% during this three-month period.

Landlord confidence in the sector still sluggish

Landlord confidence in the sector still sluggish

Best investment option

Despite the perceived negativity around the sector, rental property as an asset class is still seen as extremely favourable by landlords. 38% of those questioned said that they believed investing in the private rental sector to be a much better option than other investment options, such as the stock market.

John Heron, director of mortgages at Paragon, said: ‘increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising.’[1]

‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase intentions have risen. Likewise, although confidence remains low, the significant falls we have seen in previous quarters have abated,’ Heron continued.[1]

Concluding, Mr Heron noted, ‘the main driver of this recovery remains, as ever, tenant demand, which has risen in the first quarter of 2016 along with yields. Landlords are clearly taking the view that buy-to-let remains an attractive long term, demand driven investment, which continues to outperform other asset classes.’[1]

[1] http://www.propertywire.com/news/europe/uk-landlord-sentiment-survey-2016060311991.html

Rents rise by 2.6% in year to April

Published On: May 27, 2016 at 10:57 am

Author:

Categories: Property News

Tags: ,,,,,

Rents paid by private sector tenants in Britain rose by 2.6% in the year to April 2016, according to data released by the Office of National Statistics.

This was unchanged when compared to year-on-year results to March.

Rental rises

Since January 2011, rental prices in England have risen more than those in Wales and Scotland. This particular trend continued into the last month, with data from the private housing rental index from the ONS showing that rents rose by:

  • 8% in England
  • 2% in Wales
  • 5% in Scotland

In the year to March, rental prices rose in all regions of England. Unsurprisingly, London saw the greatest increase, of 3.7%.

As a whole, rental prices in England can be grouped in three periods. Prices increased markedly from January 2005 until February 2009, then dipped between July 2009 and February 2010. Since then, prices have spiralled.

Taking London out of the results, rental prices in England have followed a similar pattern, albeit with reduced rental rises from the end of 2010.

Rents rise by 2.6% in year to April

Rents rise by 2.6% in year to April

Regional growth

Year-on-year to April 2016, private rental prices have increased in all nine regions of England. London led the way, followed by the East and South East, with rises of 3% and 2.9% respectively. However, annual price rises have been greater in London than the rest of England since November 2010.

On the other hand, the North East, North West and Yorkshire and the Humber have continued to record the smallest annual rent rises.

Paul Smith, CEO of haart estate agents, believes rental accommodation will soon decline, as investors withdraw from the market in the wake of tax changes implemented by the Chancellor. He fears that this could lead to upward pressure on rental prices in the future.

Affordability issues

Smith said: ‘today’s data shows UK private housing rental prices increased 2.6% on the year as affordability issues in the sales market push up demand and therefore prices in the rental sector.’[1]

‘While the number of properties available to rent surged following a rush from buy-to-let investors in advance of the stamp duty changes on the 1st April, we are now seeing a decline in stock as investors withdraw from the market,’ Smith continued.[1]

Concluding, Mr Smith said, ‘ironicallym the government’s efforts to help first-time buyers by penalising investors, could end up hindering them as a shortage of rental properties will drive up rents in the long term, making it more difficult to save up for a deposit.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/uk-private-sector-rents-up-2-6-year-on-year

How do rental costs vary between North East metro stations?

Published On: May 19, 2016 at 1:45 pm

Author:

Categories: Finance News

Tags: ,,,,

Interesting analysis into the private rental sector has looked at how rents vary between North East metro stations.

Research conducted by property firm KIS reveals that rents can alter by an average of £66 from station to station. Choosing the correct location could save as much as £500 per month in rent!

Fees

Data from the investigation shows that the average cost of renting a home on the Metro Map is £560. However, there is a £545 difference between the £938 a month paid to rent in Haymarket and Monument and the £393 paid in Jarrow.

At £808, Jesmond is the most expensive place outside of central Newcastle in which to rent. This is followed by West Jesmond (£726) and Tynemouth and Gateshead (£723).

On the flip side, Jarrow (£393) is the cheapest place in the region to rent, followed by Tyne Dock (£399), Wallsend (£412) and Hadrian Road (£413).

The map also reveals the average cost of renting a two-bedroom property within a quarter of a mile of all of the Metro’s 60 stations. This shows where Tyne and Wear renters can potentially locate a bargain.

Highs and lows

Excluding central Newcastle, the top five most expensive places to rent in Tyne and Wear per calendar month are:

  • Jesmond-£808
  • West Jesmond-£726
  • Tynemouth/Gateshead-£723
  • Whitley Bay-£673
  • Cullercoats-£660

The five cheapest areas to rent are:

  • Jarrow-£393
  • Tyne Dock-£399
  • Hadrian Road-£413
  • Chichester/Byker-£423
  • Meadow Well-£425
How do rental costs vary between North East metro stations?

How do rental costs vary between North East metro stations?

Between stations, the largest differences were found to be:

  • Manors to Byker-£477
  • North Shields to Whitley Bay-£235
  • Gateshead to Central-£212
  • Gateshead to Gateshead Stadium-£148
  • Haymarket to Jesmond-£130

Location

Managing Director of KIS, Ajay Jagota, commented, ‘location, location, location is one of the classic golden rules of property, but month after month I’m stuck struck by the fact that people are prepared to pay as much as £5724 a year to live in a particular area. To put that into context Metro journey of three or four minutes-or even a bike ride of a little more than five-from Gateshead to Gateshead stadium is worth almost £2,000 a year in rent.’[1]

‘It’s not just the rents that cost, it’s deposits too,’ Jagota considered. ‘If you want and can live in the heart of Newcastle, you’re not just going to have to find the best part of £1000 every month in rent, the chance you’ll need to find £1407 just to move in.’[1]

‘Research this week suggests there are only five places in the UK were renting is cheaper than buying and none of those are anywhere near the North East. One of the major stumbling blocks to buying a home is all-too often the difficulty buyers have in saving up a deposit, and extra costs like deposits can really make a difference to people’s ability to save,’ Jagota concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/choosing-the-right-metro-stop-could-save-500-per-month-in-rent.html

House Prices Rise over Five Times Faster than Wages

Published On: May 19, 2016 at 9:54 am

Author:

Categories: Property News

Tags: ,,,

House Prices Rise over Five Times Faster than Wages

House Prices Rise over Five Times Faster than Wages

The average house price in the UK has risen over five times faster than average weekly earnings in the past five years, according to analysis of the latest Office for National Statistics (ONS) data by the Resolution Foundation.

The study found that house prices have increased by 36% since April 2011, while weekly earnings have risen by just 7% over the same period.

This separation between house price and wage growth has been even more marked in London and the South East, where property values have surged by 57% and 39% respectively. However, the average weekly salary has only risen by 5% in the South East, and has actually dropped in the capital – the product of reductions in bonuses at the top level of earnings and strong employment growth in lower paying positions.

Even in Scotland and the North East – where house price growth has been the lowest over the last five years – property values have roughly doubled the rate of earnings inflation.

The Resolution Foundation claims that this post-millennial surge in house prices has caused a dramatic shift in housing tenure. Homeownership has fallen from around 70% of all households in low to middle incomes to 55% over the last decade. The proportion of people renting from a private landlord has doubled over the same timeframe, to 27%.

The Senior Policy Analyst at the Resolution Foundation, Lindsay Judge, comments: “Runaway house prices have had a clear feed through to living standards in recent years. Most obviously it has priced people out of homeownership, pushing significant numbers into the private rental market.

“But rampant house prices inflation isn’t just a problem for wannabe homeowners. It has increased the stock of mortgage debt, and fuelled demand for renting that is driving up costs there too. Ultimately, we all pay for house price inflation by spending a greater share of our incomes on housing.

“The solution to this housing crisis isn’t easy – especially in London. It will require radical action to both boost the supply of housing for all tenure types, and improve conditions and security in the UK’s private rental sector.”

Tax Changes will Drive Much-Needed Landlords from the Sector, Says Report

Published On: May 18, 2016 at 8:41 am

Author:

Categories: Finance News

Tags: ,,,,

Recent buy-to-let tax changes will drive the country’s much-needed private landlords from the private rental sector, according to a new report from the London School of Economics (LSE).

The Taking Stock document also claims that some landlords will pass their increased costs onto tenants, which will stretch household budgets and push homeownership further out of reach.

The report analyses the private rental sector and its importance to the UK housing market.

Although the Government has focused on improving the institutional build-to-rent sector, the report insists that small private landlords will continue to be the backbone of the private rental sector.

The LSE believes that demand for private rental housing will continue to grow, and to meet this, there must be investment in the sector.

Tax Changes will Drive Much-Needed Landlords from the Sector, Says Report

Tax Changes will Drive Much-Needed Landlords from the Sector, Says Report

However, it notes that landlords in the UK are already treated less favourably for tax purposes than many other countries, ahead of further clampdowns.

These measures include a 3% Stamp Duty surcharge on buy-to-let properties, the removal of the Wear and Tear Allowance, and a reduction in mortgage interest tax relief.

We have expert advice from Nova Financial’s Paul Mahoney on how to factor these changes into your business: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

The authors of the Taking Stock report, Kath Scanlon, Christine Whitehead and Peter Williams, reveal that the private rental sector has more than doubled in the last 15 years, now accounting for around one-fifth of all housing.

Despite Government initiatives to encourage institutional investment, the majority of homes are owned by small landlords with just one or two rental properties.

“Even if institutional investors enthusiastically enter the market, individual landlords will remain dominant – as they are across Europe,” says the report. “Shrinking the sector therefore does not seem a sensible way forward, given what we know about unmet demand and need.”

Regardless of buy-to-let tax changes, the authors suggest that demand for private rental housing will continue to grow, with individual landlords remaining the main providers. They raise concerns over whether there will be sufficient landlords to meet continuing growth in tenant demand.

However, the LSE believes that the growth of buy-to-let is in part due to low returns in other asset classes, which is likely to continue. Additionally, it states that high house prices and large deposit requirements make it unlikely that young households will be able to purchase their own homes, which will further increase their reliance on the private rental sector.

Scanlon says: “There have been a number of recent changes in the tax treatment of small landlords, and more generally in the tone of policy discussion about the private rented sector.

“These decisions seem to reflect anecdotal rather than hard evidence, as there is a striking lack of data about landlords and their business models. The current Government favours institutional landlords, but even if that part of the sector were to grow rapidly, small landlords would still be the backbone of the industry.”

She insists: “We need a private rented sector that works for the long term with policies that reflect the housing challenges the UK faces.”

Rental arrears and repossessions fall in Q1 of 2016

Published On: May 12, 2016 at 10:51 am

Author:

Categories: Finance News

Tags: ,,,,

According to the most recent report from the Council of Mortgage Lenders (CML), repossessions in the first quarter of 2016 fell to their lowest on record.

Data from the report shows repossessions fell to 2,100, with 1,500 home-owner properties and 600 buy-to-let.

Should this rate continue during 2016, this would put the yearly number of repossessions at 8,400.

Falls

In addition, mortgage arrears continued to drop. For the first time in more than ten years, the number of mortgages in arrears of 2.5% or more dipped below the 100,000 mark.

There were 96,200 loans in arrears at the end of March, falling from 101,700 recorded at the end of December. What’s more, this was significantly down on the 111,200 recorded in the first quarter of 2015.

The decline in mortgage arrears and repossessions in recent years underlines the positivity surrounding the private rental sector. However, further data from the Ministry of Justice shows that eviction rates are much higher.

Statistics show that there were 42, 728 rental evictions in England and Wales by county court bailiffs in 2015. This was against just 5,594 mortgaged property repossessions by county court bailiffs.

Rental arrears and repossessions fall in Q1 of 2016

Rental arrears and repossessions fall in Q1 of 2016

Experiences

A more detailed look at the CML data highlights experience in both the home-owner mortgage market and the buy-to-let market. Arrears rates are greater amongst home-owners than buy-to-let landlords, but the repossession rate is less. Lenders obviously look to avoid repossessions to allow home-owners breathing space. However, many landlords look to protect their position more quickly on buy-to-let as tenants move on.

CML director general Paul Smee commented, ‘we cannot completely avoid the risk of any individual household experiencing arrears or repossession. But lenders continue to work very effectively to help their borrowers through periods of difficulty when they do occur and borrowers should be reassured that most cases of arrears can be resolved and will not lead to repossession.’[1]

Smee believes, ‘the key to dealing with difficulty is to tackle it early and to communicate with your lender as soon as you think you may be facing problems.’[1]

[1] http://www.propertyreporter.co.uk/property/repossessions-and-arrears-continue-to-fall.html