Posts with tag: private rental sector

Most Rental Properties Going for the Full Asking Price

Published On: March 14, 2016 at 9:38 am

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Most rental properties in the UK are going for the full asking price, according to the latest data from Countrywide.

The property firm found that the average rental property achieves 99.9% of its asking price – the highest since 2007, and evidence that tenants are losing their bargaining power.

In London, the average agreed rent is just over the asking price, at 100.9%. In Wales, the price achieved is lower, at 98.7%, but is still extremely close to the advertised rent.

Most Rental Properties Going for the Full Asking Price

Most Rental Properties Going for the Full Asking Price

Countrywide discovered that in the last year, 12% of lets were agreed at more than the initial asking price.

This figure is higher in London, where one in five tenants pay more than the advertised rent. On average, they pay an extra £94 per month, which equates to an additional £1,578 over the course of the average 17-month tenancy.

In the UK as a whole, tenants who pay over the asking price hand over an average of £44 a month. In Wales, this figure drops to £24 per month.

Countrywide has found that London has had the largest rate of growth in rent prices of anywhere in the UK since 2007, with rents up by 34% over their pre-recession peak. In the UK as a whole, rents have risen by 12% over the same period.

Despite these increases, the proportion of lets agreed at more than the asking price has risen in each year since 2008, indicating the power that landlords have over those stuck in the private rental sector.

In 2008, just 3.5% of lets were agreed at over the asking price, while 23.5% of tenants were able to negotiate a lower rent price.

This year, the amount of tenants able to negotiate price reductions has tumbled to 8%.

The Research Director at Countrywide, Johnny Morris, comments: “The combined effect of growing numbers of people renting and a lack of supply has seen tenants’ ability to negotiate diminish.

“Tenants are having to compete more often and with more people in order to rent the home they want, meaning they need to offer more to stay ahead of the crowd.”1

A month ago, Countrywide reported that average rents are now the highest on record, at £906 per month.

1 http://www.propertyindustryeye.com/tenants-lose-bargaining-power-and-face-paying-over-he-odds/

 

 

Will the Private Rental Sector be Out of Reach for Many in the Future?

Published On: March 10, 2016 at 12:23 pm

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Categories: Finance News

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Worrying new research suggests that spiralling rent prices and high deposit requirements will put even the private rental sector out of reach for many in the future.

It is well known that young first time buyers are struggling to get onto the property ladder, but now Money.co.uk has estimated that in ten years’ time, the average rent deposit could hit £1,111 – a huge 70% of the average Briton’s monthly income of £1,576.

In London, deposits are expected to rise to £2,733 – a whopping 120% of a Londoner’s average monthly salary of £2,281.

Will the Private Rental Sector be Out of Reach for Many in the Future?

Will the Private Rental Sector be Out of Reach for Many in the Future?

The website believes that private landlords will require a deposit equivalent to six weeks’ rent by 2026, while monthly rent prices will go up by over a quarter (28%) to £1,111 over the same period.

Overall, rent price growth is expected to exceed average monthly salary inflation across the UK, which is estimated to increase by just 20% in the next decade.

Money.co.uk predicts that deposits will increase significantly across the whole of the south of England.

In the South East, the average deposit is expected to reach £1,469 by 2026 – over four-fifths (83%) of the average monthly income of £1,761, and up from 72% in 2015.

Meanwhile, in the South West, the average deposit is set to be equivalent to 80% of the average monthly earnings by 2026, up by 14% from 66% of the average salary in 2015.

The Editor-in-Chief of Money.co.uk, Hannah Maundrell, explains the forecast: “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 on to 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.”

She continues: “Tenants are stuck between a rock and a hard place, and the situation is only likely to get worse. Many not only face being priced off the property ladder, but also the rental ladder too. This could force people to borrow the extra cash they need for a deposit on loans or credit cards, pushing up the cost and creating a perfect storm for a major renting crisis. Maybe the bank of mum and dad should prepare itself for another withdrawal? Or, we could see many left with little choice but to live with their parents well into their 40s.”

Maundrell insists: “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 of the private rental ladder.”1

How do you see the upcoming changes to landlord finances affecting how you set your rent prices and deposit requirements?

Advice for landlords on setting the perfect rent price can be found here: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

1 https://www.landlordtoday.co.uk/breaking-news/2016/3/are-people-being-forced-off-the-rental-ladder

 

79% of tenants happy with their landlord

Published On: March 10, 2016 at 10:24 am

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Categories: Landlord News

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A new survey of over 800 Private Rented Sector tenants has returned pleasing results for buy-to-let landlords.

According to the investigation by BDRC Continental, 90% of those questioned said that they felt their rental accommodation is their home.

Satisfied

Further data from the survey indicates 79% of tenants are satisfied with their current landlord. 13% replied that they had rented from a rogue landlord in the past, down from 15% in the previous quarter.

Surprisingly, average rents decreased amongst respondents, sliding from £660 in quarter three of 2015, to £607 in quarter four.

As a result, those believing their rent to be either good or very good value increased from 18% and 48% in quarter three to 20% and 49% respectively n quarter four of last year.

The average length of time tenants are staying in the sector for has also risen, from 12 years in quarter three of last year, to 14 in the final quarter. Respondents to the survey were found to have spent an average of 9.5 years in their present rental properties.

79% of tenants happy with their landlord

79% of tenants happy with their landlord

Changing demographic

John Heron, Director of Mortgages at Paragon, noted, ‘our latest tenant survey data highlights the way in which tenure distribution in the UK is continuing to change. In common with the most recent English Housing Survey we are seeing greater numbers of families living the in the PRS and for longer periods of time. This has coincided with improved levels of satisfaction and better value, it is clear that many tenants in the PRS regard the sector as their long term home.’[1]

‘This latest data highlights more clearly than ever, the vital role the PRS now plays in housing Britain and housing policy needs to be applied carefully, to reflect this fact and to avoid impacting those who rely on the PRS for a home,’ Heron added.[1]

[1] http://www.propertyreporter.co.uk/property/90-of-tenants-consider-their-rented-property-to-be-their-home.html

 

Eviction orders for tenants fall in Q4 of 2015

Published On: March 8, 2016 at 10:15 am

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The final quarter of 2016 saw 26,676 court orders issued for the eviction of private rental sector tenants.

According to the survey by Your Move and Reeds Rains, the number of orders was down by 0.4% in comparison to quarter three of 2015. Annually, there were 5.3% fewer evictions than the 28,167 recorded in the same three-month period in 2014.

Falls

Data from the report indicates that 32% of private tenants are in serious rent arrears, of more than two months rent. At present there are 82,900 renting households in the serious arrears bracket.

Cases of landlords falling behind with their own finances have also dropped. In the final three months of 2015, there were 5,500 cases of buy-to-let mortgage arrears, a fall from the 3.5% recorded in the previous quarter.

Annually, the total number of buy-to-let mortgages in arrears has fallen by 54% after totalling 11,900 cases in the last quarter of 2014.

Eviction orders for tenants fall in Q4 of 2015

Eviction orders for tenants fall in Q4 of 2015

Growing

Adrian Gill, director of Your Move and Reeds Rains, noted, ‘landlords and the buy-to-let industry have come in for serious criticism over the last year-but the overwhelming evidence points to a vital, growing and successful industry.’[1]

‘Landlords in the UK are providing more homes to let every month, expanding supply for tenants-who avoid any serious problems paying the rent in more than 98 per cent of cases. When late rent does happen, landlords appear to be extremely flexible in the majority of cases and eviction orders and decreasingly necessary. Buy-to-let mortgages are also increasingly reliable for lenders, as landlords are ever less likely to fall into arrears themselves,’ Mr Gill added.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/over-26-000-eviction-orders-served-on-private-tenants-in-one-quarter

 

Tenants staying in the PRS for longer

Published On: March 7, 2016 at 1:40 pm

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Landlords are being warned to prepare for longer tenancy agreements, following a new survey by the Association of Independent Inventory Clerks (AIIC).

Data from the report shows that the average length of a private tenancy is now four years, up from three and a half recorded in the previous survey.

As such, the organisation said that more thorough preparation must be conducted by landlords, including choosing furniture and interior design schemes.

Rises

The report also found that 46% of 25-24 year olds live in the Private Rented Sector during 2014-15, up from 24% in 2004-05.

Patricia Barber, Chair of the AIIC, noted, ‘despite numerous reports suggesting that the average tenant doesn’t want a long-term contract, the official statistics show that average tenancy lengths are increasing-particularly among families-as people rent for longer.’[1]

These figures should make landlords think more about what features could make their rental property feel more homely. In addition, they should consider how these changes might entice renters to stay in the property for longer.

Organisation

Barber also believes that a rise of longer-term renting underlines the importance of landlords being organised with their administration requirements. She said, ‘when tenants stick around for longer, often the chances of confusion and disagreement over certain issues are increased when the tenancy does eventually come to an end.’[1]

Tenants staying in the PRS for longer

Tenants staying in the PRS for longer

As a result, she said, ‘the longer time goes on, the more likely landlords and tenants are to forget details from the tenancy agreement or important information about the deposit and that’s why stringent administration- keeping copies of everything and organising it accordingly-is so important.’[1]

Important inventories

The AIIC is reminding landlords of their duties and the need for evidence and records, particularly for longer-term tenancies. A professionally prepared, thorough and detailed inventory is essential at the beginning of all tenancy agreements.

‘There are more grey areas over the condition of a property the longer a tenancy goes on,’ Barber continued. ‘A detailed inventory will help landlords and tenants to determine exactly how the property’s condition has changed over the course of the tenancy, what can be deemed fair wear and tear and what needs to be replaced and therefore deducted from the tenant’s deposit.’[1]

An inventory , which has been signed and agreed by the tenant, is the most important piece of evidence that a landlord or agent can possess, if a dispute should arise at the conclusion of a tenancy.

[1] http://www.propertyreporter.co.uk/landlords/landlords-warned-they-must-prepare-for-longer-tenancies.html

30% of All Households to Rent from Private Landlords in 30 Years

Published On: March 2, 2016 at 9:37 am

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The private rental sector will continue to grow over the next 30 years, leading to 30% of all households renting from private landlords, according to the latest prediction from franchise estate and letting agent firm Martin & Co.

This forecast was announced in a breakfast briefing yesterday, held to acknowledge the 30 years since Martin & Co let its first property.

The company’s CEO, Ian Wilson, stated that forthcoming changes to landlord taxes and Stamp Duty for buy-to-let investors will not stop landlords making profits.

30% of All Households to Rent from Private Landlords in 30 Years

30% of All Households to Rent from Private Landlords in 30 Years

He claimed that the gradual reduction in mortgage interest tax relief on buy-to-let property loans will not affect many landlords.

He said: “A current income after tax of £1,789 per annum would fall to £894 if rents remain unchanged. However, a 5% per annum increase in rents would take income – after tax – to £1,858 per annum in 2020.”1

Speaking of the more imminent Stamp Duty surcharge, Wilson commented that it is possible that landlords will leave the sector, leading to lower rental property stock levels.

However, he thinks that this will push rent prices up, making monthly yields more attractive to existing landlords, while encouraging investors to return to the buy-to-let market.

As of 1st April, buy-to-let landlords and second homebuyers will be charged an extra 3% in Stamp Duty on properties costing £40,000 or more. The change has led to many investors rushing to buy before the surcharge is implemented.

The Managing Director of Martin & Co, Michael Stoop, also expects the sector to adapt in order to provide private rental accommodation for the rise in larger families who must rent their homes.

He said that landlords would diversify their portfolios by purchasing larger properties in less affluent areas, such as three and four-bedroom houses with gardens.

The firm told those at yesterday’s briefing that as a group, it manages 45,000 rental properties – equivalent to the size of Winchester.

Martin & Co has around 300 offices, trading under five different brands.

How do you expect the changes to landlord finances and the expanding private rental sector to affect how you invest in the market?

We will continue providing information for landlords on all issues that may affect their lettings businesses.

1 http://www.propertyindustryeye.com/private-tenants-to-grow-to-30-of-all-british-households/