Posts with tag: rent growth

Rents Rising Across the UK

Published On: October 30, 2015 at 10:00 am

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Private rent prices increased by an average of 2.7% across the UK during the year to September, according to the latest data from the Office for National Statistics (ONS).

The growth was fuelled by London, where the average rent rose by 4.1% annually.

Rents Rising Across the UK

Rents Rising Across the UK

The figures also show that rents increased by 2.8% in England, 1.6% in Scotland and 0.5% in Wales.

Excluding the capital, rents grew by 1.8% over the 12 months to September.

The ONS index reports that rent prices are now rising at the fastest rate for three years.

However, in some regions of the UK, rent price growth was minimal, at 0.5% in the North East and 0.7% in the North West.

Managing Director of London estate agent Stirling Ackroyd, Andrew Bridges, comments: “Britain’s rental market is being powered by London, as the capital’s allure continues to draw graduates and professionals from around the country.

“Supply remains an unaddressed issue – more apartments are needed rapidly to combat spiralling demand. And as renting becomes the norm for all ages, the result of this mismatch is felt clearly in average rents as much as property prices.

“When people say the UK needs more homes, the true meaning is usually that London needs more homes.”1

In separate research, the Association of Residential Letting Agents (ARLA) says that housing supply in the capital continues to be an issue, but that tenants in the West Midlands are being hit the hardest by rent rises.

It reports that three in five ARLA letting agents in the region experienced rent increases in September. This is despite allegedly healthy supply levels, with the average office managing 272 properties.

In London, the average ARLA member branch manages just 124 properties.

The ARLA study was conducted online by Opinium Research among 317 letting agencies.

1 http://www.propertyindustryeye.com/rent-rises-grow-across-uk-at-under-inflation-rate/

 

 

 

 

 

 

 

 

 

 

 

 

One in Five Tenants Struggle to Pay the Rent

Published On: October 21, 2015 at 1:07 pm

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New research has revealed that millions of workers are struggling to cope with living costs due to spiralling rent prices.

According to the study by the New Policy Institute, one in five Britons live below the poverty line once housing costs are taken into account.

The issue is affecting Londoners the most, with one in four tenants in the capital hit by sky-high rents.

One in Five Tenants Struggle to Pay the Rent

One in Five Tenants Struggle to Pay the Rent

This includes 1.2m who live in working households, a huge rise over the last ten years.

One renter finding life in the capital too difficult is primary school teacher Anna Evans. The 25-year-old pays £720 per month for a house in Balham, south London, which she shares with five other tenants.

A graduate of law from the University of Birmingham, Anna says she may have to move out of London, as living costs are so high.

“I pay more than half my salary in rent,” she explains. “I just don’t have a chance to save any money.”1

Her flatmate, Joanne Wheildon is also 25 and a trainee trader. She adds: “I won’t be able to buy a house until someone I’m related to dies.”1

Rents around the UK have risen by 11% in the last five years, reaching an average of £770 a month, found the study funded by anti-poverty charity Trust For London.

Over the same period, wages have only increased by 4%. In the last decade, this has caused a 30% rise in the amount of working-age people in poverty.

In London, the average rent price has grown by 19% in the last five years, hitting £1,600 a month.

Around 860,000 private tenants in the capital are believed to be living in poverty, including 260,000 children – twice the number recorded ten years ago.

The amount of low-paid jobs has increased for the fifth consecutive year, with one in five members of staff earning less than the London living wage of £9.15 an hour.

Another worker hit by high rents is Marianna Long, an executive assistant earning £21,000 per year.

The 23-year-old pays £500 a month for a room she shares with her boyfriend in Brixton, south London.

She comments: “The rent means I absolutely cannot save. Everything goes on living expenses and paying off an overdraft from being at university in London.”1 

Chelsea Wood, a forensic scientist, also earns £21,000. She pays £700 in rent for a flatshare in Clapham, southwest London.

The 24-year-old says: “I spend so much on rent that I feel as if I am living in poverty. A lot of my friends feel the same.”1

The researchers define poverty as having a household income that is under 60% of the national median.

1 Radnedge, A. (2015) ‘Workers caught in poverty trap by soaring rent’, Metro, 21 October, p.1-6

 

Rent Rises Drop for First Time This Year

Published On: September 22, 2015 at 9:23 am

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The amount of letting agents reporting rent rises has dropped for the first time this year, according to recent research from the Association of Residential Letting Agents (ARLA).

ARLA’s August private rental sector report states that supply has also fallen to levels seen in June, following a surge in July.

Rent Rises Drop for First Time This Year

Rent Rises Drop for First Time This Year

The typical ARLA agent had 178 properties for rent in August, compared with 189 in July.

However, the amount of prospective tenants in the private rental sector rose slightly in August. Letting agents reported an average of 36 house hunters registered per branch, up from 35 in July.

Just three in ten (33%) agents experienced monthly rent increases in August. This is down from 37% in July.

In the South West, two out of every five agents (42%) witnessed rent prices rising in August, up four percentage points from the previous month.

Only 12% of agents reported rent price growth in the North West during this period.

Tenants in Wales are also paying more in rent, with the amount of landlords putting prices up increasing by three times from July. In August, 36% of letting agents in Wales saw prices rise, up by 25% from July, when only 11% of agents reported growth.

In London, the number of homes available to rent continued to decrease in August, driving demand levels higher and putting added pressure on hopeful tenants.

Only 110 properties are registered per letting agent branch in the capital, down from 117 in July. Finding a rental home in London is becoming increasingly challenging.

Managing Director at ARLA, David Cox, comments on the research: “Our findings this month are good news for the majority of tenants, as less are experiencing rent hikes.

“However, a third of agents are still seeing landlords pushing rents up, which reflects the sorry state of affairs in the market.

“With increasing pressure on the dwindling supply of housing and the number of house hunters growing, rent increases are unfortunately very common – as one in three tenants are experiencing.

“Despite the fact they have fallen this month, it is likely they will go back up again over the next few months.”1

1 http://www.propertyindustryeye.com/rent-increases-fall-for-first-time-this-year-says-arla/

Rents Increase 15% Since May 2010

Published On: May 8, 2015 at 11:24 am

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Rents in England and Wales have risen by 15.2% since the last general election of May 2010, found Your Move and Reeds Rains.

This growth is faster than inflation, which was 11.6% in the same period. After the effects of inflation, rents increased by 3.6%. This is a 0.7% rise per year since the last Parliament.

The average rent in March 2015 was £768 per month, found the latest Buy-to-Let Index from Your Move and Reeds Rains.

Annual rent growth is now at the fastest pace for two years, with the average rent in England and Wales up 3.7% in the last year. Rents have not risen this quickly since the year to April 2013, when they increased 3.9% annually.

Between February and March 2015, rents grew by 0.3%. This fell from the 0.4% increase seen in January to February this year. It was also the second month in a row of rental growth after November, December and January saw rents fall, which is common in winter.

After rents rose this year, they are just £2 away from the record high recorded in October 2014, of £770 per month.

Director of estate agents Reeds Rains and Your Move, Adrian Gill, says: “Since 2010, the private rented sector has absorbed over a million extra households. With social housing in decline, alongside a parallel decay in the number of people owning their own home with a mortgage, private renting has stood in to fill the gap.

“With only small real terms rent rises, this has generally been a success, and tenants are now half as likely to fall behind on rent as at the peak of the financial crisis. However, this sector is carrying the weight of the housing crisis, and that will mean faster rent rises in future if supply doesn’t keep up.

Rents Increase 15% Since May 2010

Rents Increase 15% Since May 2010

“Without more homes every year to match a rising population, housing will inevitably become more expensive. And with one in five households now renting privately, this section of the population won’t be an exception to those fundamentals.

“Over the next five years, politicians of all stripes can’t just hope that this problem will go away. Britain needs more homes, and over the long term, investment by landlords will only provide places to live as quickly as those homes are given planning permission and completed.”

Regional rents

The highest annual growth was seen in the East of England, at 12%. The average rental property in this region is now much more expensive than in the South East.

London experienced the second largest rent rises, at 5% since March 2014. Yorkshire and Humberside was third at 3.3%.

Contrastingly, rents in the East Midlands are 0.2% lower than the previous year, and the South West has experienced no annual changes.

On a monthly basis, the East of England has also had the fastest rent increases, up 2.5% on February 2015. The North West is close behind at 2.3%, and Yorkshire and Humberside follows at 0.4%.

Rents in the East Midlands have fallen by 0.6% between February and March, and the North East and Wales witnessed rents 0.5% lower than a month previously.

Gill continues: “Generally the quickest rent rises have traced the most buoyant jobs markets, and this matches a very positive picture for the East of England. By similar logic, the East Midlands had previously seen very robust rent rises to rival London, but this has now tapered out. This could be a pause for breath or signal a deeper slowdown for the East Midlands’ previously powering local economy.

“Another stand-out area is the North West. Rents in this area are outperforming and on the ground we’ve seen this effect clustered particularly around the potent Manchester economy. It’s clear that the North West powerhouse, centred on Manchester, is fast becoming the London of the North, with a deepening premium compared to areas like the North East, North Wales, or much of Yorkshire.

“Each local market can also be split further, into the top and bottom sections of the market. This is most clear in the capital. At the upper reaches of the London market there is plenty of stock, but generally at lower rents, there is a massive stock shortage, as tenancy lengths have increased taking out of the churn in the market and reducing choice.”

Yields

The gross rental yield on the average rental property in England and Wales was 5% in March 2015, a steady figure compared to February. However, this is down by 0.1 percentage points since March 2014.

Considering the small rise in property price growth and fewer void periods, total annual returns on the typical rental property were 12.2% in the year to February, not taking costs such as mortgage repayments into account. A year ago, this figure was 10.8%.

Therefore, the average landlord in England and Wales has received a return of £21,078 in the past twelve months, before deductions such as maintenance costs. Breaking down this figure, landlords earned £8,259 from rental income and made £12,819 in capital gains.

If these trends continue, the next twelve months will see the average landlord making a total return of 14.5%, or £26,861. Of this amount, rent will earn them £9,216 and capital gains will make £17,645.

Gill comments: “Rising rents are supporting steady gross yields, in line with the long-run average of just over 5%. And rental yields should stay steady in the immediate future, as market rents grow vigorously while property prices rise at a similar rate. However, landlords are also benefitting from steady price rises, as the bonus of capital accumulation adds considerably to total returns.

“Tenants looking for the lowest possible rents depend on landlords investing in new properties to keep up with growing demand for places to let. Yet if and when those same tenants start looking for a home to buy, they often find themselves in competition with landlords to buy a home. Again, building more homes is the only way around that dilemma. But in the meantime, healthy investment and competition between landlords should help tenants avoid excessive rent rises.”

Tenants’ finances

In March 2015, 7.4% of rent was in arrears, down from 7.6% in February. This is also lower than the 7.8% of late rent a year ago.

In the longer term, rent arrears are improving significantly. At the last general election in May 2010, 10.7% of all rent due was in arrears, following the record high of 14.7% in February 2010.

Gill concludes: “While renting is becoming more expensive, it appears this is driven by an improving jobs market and above all by real progress in people’s wages.

“Tenants as a whole are managing to keep on top of rent today better than in previous years. The proportion of rent owed to landlords has halved since its peak at the start of 2010.

“That said, recovering from the financial crisis has taken half a decade, and it remains to be seen how quickly a better economic picture will make inroads into the remaining cases where tenants are falling behind on rent. But the long-term trend is clear and it’s going the right way.”1

1 http://www.landlordexpert.co.uk/2015/04/27/uk-rents-rise-15-since-may-2010/

Rent Growth Stabilises Across UK

Published On: September 18, 2014 at 9:36 am

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The latest Homelet rental index has found that the average monthly private rent across the UK, excluding London, is now £729. London’s average monthly rent is £1,464.1

The August index revealed that rental price rises in the UK steadied in August, as every region of the UK saw smaller rent increases than in previous months. The study also found that some regions that have previously seen high monthly growth, have dropped in August.1

The figures from the index saw rental rises were significantly lower than in previous months, with just London and the South East showing increases of over 2%, at 2.4% and 3% respectively.1

Rent Growth Stabilises Across UK

Rent Growth Stabilises Across UK

Two areas that have been showing strong growth in recent months, East Anglia and the South West, have seen stability in August, as rents in East Anglia rose by only 1%, and the South West recorded a decrease of 0.9% in rental prices.1

In Scotland, Wales, the North West and northeast England, rents were also down. The biggest drop was in the North West of England, with rents on new tenancies last month an average of 3.5% lower than in July.1

However, rents rose by 1.9% in the West Midlands, and 1% in the East Midlands and Northern Ireland.1

Martin Totty, Chief Executive of Barbon Insurance Group, comments: “August can traditionally be a slower month for the rental market and similar dips have been seen in rental prices in previous years.

“Nevertheless, the cooling in the rental sector may prove to represent the beginning of a trend towards a more settled market after several months of much more significant growth.

“A similar cooling has been seen in the wider housing market, with house price indices recording an easing of house price growth.”1

On a yearly basis, rental growth seems to still show strength, as just the North East and the East Midlands report lower rents for new tenancies in August than in the same month last year. Within London, rents rose by 11.4% on last year, East Anglia’s by 8.4% and the South East by 5.3%. Around the UK, the average UK private property rent increased by 8.2% in the year to August.1

Totty concludes: “While a calmer period for the rental sector is likely to be welcoming by landlords and tenants alike, with affordability concerns having increased in some parts of the country in recent months, demand for rental property is set to remain strong.”1

1 http://www.landlordtoday.co.uk/news_features/Renting-growth-easing-across-UK