Posts with tag: rental market

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

Agent jailed after foiled ‘back to back sale’ attempt

Published On: March 7, 2016 at 10:21 am

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A rogue letting agent has been jailed following ‘thoroughly dishonest’ behaviour.

Stephen John Jones was sentenced to 10 months behind bars, following an attempted fraudulent transaction.

Mr Jones tried to con an 89 year-old woman, by attempting to by her flat in his wife’s name for £10,000 less than the price he intended to sell it for. As such, Mr Jones was found guilty of an attempted ‘back to back sale.’

Offers

Jones actually received a genuine offer of £27,000 for the flat but did not inform the pensioner, who had expressed her desire to use any funds to pay for her nursing home fees.

The transaction was foiled after the police uncovered the fraud after a tip-off.

Caernarfon Crown Court was told that the 89 year old owner of the flat in Colwyn Bay resided in a nursing home. As a result, her flat was advertised in Mr Jones’s agency to be sold for £17,000 at the end of the year 2014.

However, it became apparent that Mr Jones intended to sell the property to his wife. After this, Jones wanted to arrange a back to back sale, which would see the property sold for £27,000, making him a profit of £10,000.

Agent jailed after foiled 'back to back sale' attempt

Agent jailed after foiled ‘back to back sale’ attempt

Charges

In court, Owen Edwards, serving as defender for Mr Jones, said that the accused was a hard-working family man, who built up his business renovating properties. Mr Edwards said, ‘as a result of that work he became an estate agent because there were advantages in having a one stop shop.’[1]

‘He’s entirely aware he’s the author of his own misfortune. It’s a case where others will suffer as a result,’ Edwards added.[1]

Judge Harris-Jenkins told Jones that he had acted in, ‘a thoroughly dishonest manner,’[1] which could have had severe detrimental effects on a vulnerable elderly woman.

[1] http://www.propertyreporter.co.uk/business/thoroughly-dishonest-agent-jailed-for-10-months.html

 

Most common struggles faced by landlords revealed

Published On: February 26, 2016 at 10:44 am

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A new investigation has looked at the struggles landlords face and the most common demands put on them by their tenants.

According to the survey conducted by property management specialists London Shared, one-third of buy-to-let landlords said that the full-on nature of the role made it more stressful than they first imagined.

Responsibilities

The research quizzed 500 UK landlords, who noted that the job of being a landlord is far from straightforward. Worryingly, 76% of landlords said that their tenants do not understand their responsibilities as renters. 10% of landlords said they had experienced anxiety problems due to the behaviour of their tenants.

Many landlords said that they are call for 24 hours, with 34% saying that they had received calls in the middle of the night from renters.

Of the landlords questioned, the top five minor issues that they said they have been called out for were:

  • Unblocking the drain (23%)
  • Lost Keys (19%)
  • Turning the heating back on (14%)
  • Changing a light bulb or fuse (13%)
  • Mowing the lawn (7%)

Repairs

Another worrying stat was that 43% of respondents to the survey said they were unsure of their responsibilities when repairing a property.

Just 24% of landlords said they were clear on their legal obligations for adequate HMO licensing and just 18% said they knew they had to apply for a HMO licence.

Additionally, the survey found that landlords spend an average of 11 hours per month managing their rental property. 83% said they spent up to £5,000 per year on property repairs from their rental accommodation.

Most common struggles faced by landlords revealed

Most common struggles faced by landlords revealed

Arrears

A major source of landlords’ stress was underlined by 40% of those questioned saying that they had received their rental payments late. Of those that said that they had received late payments, 18% said they had defaulted on their bills.

When looking further at those that have either had late or missed payments from their tenants, 11% said they were unable to pay off their existing debt. 22% said they had to go to court to reclaim money owed to them by their tenants.

Many landlords were found to be dependent on their rental income to pay off their mortgage, with over half stating this was the case. 23% said they used rental incomes to renovate their homes, while 13% said it paid for their children’s rental fees.

Notices

Some tenants are causing such a problem for their landlords that 24% said they had to serve notice on them. Of those that served noticed, the main reasons for doing so were found to be rent arrears (69%), property damages (44%) and inappropriate behavior (24%). Furthermore, 18% said that they served notice as their tenants sublet the property without consent and 11% after finding out their tenants were using the home for illegal purposes.

Despite it being illegal to live in a property once an eviction warrant is given, 44% of tenants who had been served notice refused to leave. As such, 25% of landlords said that this caused them extra financial stress. 13% of landlords admitted that they wished their rental property was managed by somebody else!

 

Retirees still investing in buy-to-let

Published On: February 23, 2016 at 10:10 am

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A new assessment on buy-to-let investment has revealed that retirees are still looking to purchase in the sector.

Data from a report by Fidelity International indicates that retirees putting tax free cash from their pensions into buy-to-let has remained constant during the last year. This is despite the forthcoming tax changes.

Alterations

On April 6th 2016, a buy-to-let investor will be permitted to pay an extra 3% stamp duty in comparison to residential buyers. In addition, higher-rate tax relief on mortgage interest will be cut from April 2017, to the basic rate of 20%. As such, landlords will be able to claim less for wear and tear suffered in their properties.

However, these changes have done little to dispel retirees’ appetite for buy-to-let investment. Fidelity International said that 7% of their retirement customers used their tax-free money to invest in a rental property during January. This was the same proportion seen in the last six months of 2015.

In all, property purchases remain popular with retirees, making up 14% of all usages of tax-free pension money during 2015. This percentage has typically been split 50/50 between buy-to-let and owner-occupier purchases.

Retirees still investing in buy-to-let

Retirees still investing in buy-to-let

‘No Brainer’

‘The British love affair with all things property is well-documented and for many retirees, buy-to-let is seen as a no brainer investment given the spectacular rise in property markets, particularly in London, over recent years,’ noted Maike Currie, investment director for personal investing at Fidelity International. ‘Tax changes aside, the illiquidity of the housing market as well as costs in the way of maintenance, stamp duty, mortgage arrangement fees and a host of unpredictable outgoings can chip away at income. Not to mention the time and effort required to manage a property and the risk that it may lie empty between tenancies,’ she continued.[1]

‘Investing in property funds allows investors access to an income stream without the hard work and unexpected costs of a tangible property. Buy-to-let in retirement may work for some but with the added extras that come with it, it’s worth asking yourself whether you really want to be managing a property in your eighties?’ Currie concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/2/retirees-love-affair-with-buy-to-let-continues

 

Tenants staying in PRS for longer

Published On: February 22, 2016 at 11:33 am

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Latest government figures suggest that private rental sector tenancies are getting longer.

Additionally, data from the report shows that the typical length of residence in a family-sized rental unit is increasing.

Rises

The English Housing Survey 2014/15 shows that in the last 10 years, the proportion of privately rented homes with dependent children has risen from 30% in 2004-05, to 37% in 2014/15.

In addition, the average length of private sector residencies rose to 4 years, from 3.5 one year ago. The survey also found that tenants living in privately rented accommodation for a greater length of time generally paid less.

Tenants staying in PRS for longer

Tenants staying in PRS for longer

Break down barriers

As a result, the RLA has called on the Government to break down barriers that prevent longer-term tenancies. These include restrictions imposed on landlords by lenders

RLA chairman Alan Ward, believes, ‘more can be done to help landlords offer longer term tenancies without the need for compulsory three or five tenancies. We are calling on the Government to use the Housing and Planning Bill to remove barriers preventing landlords from offering longer tenancies, including mortgage and leasehold conditions that may prevent this.’[1]

‘Notable increases in the average length of time tenants stay in a private rented property show the system already enables longer tenancies that so many are calling for. Landlords are already meeting tenants’ requirements and there is no need for heavy-handed legislation that would disrupt supply of badly-needed accommodation,’ Ward went on to say.[1]

 

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/private-rental-sector-tenancies-for-families-are-getting-longer

 

Buyers 10% better off than renters

Published On: February 22, 2016 at 10:06 am

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Categories: Finance News

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New research from Lloyds Bank indicates that those getting a foot on the property ladder are better off than those renting.

According to the data, first-time buyers are £865 per year more wealthy than tenants in the rental market.

Costly

The average monthly buying fees, inclusive of mortgage payments, attributed to first-time buyers purchasing a three-bedroom property stood at £672 in December 2015. This was £72 lower than the average monthly rent of £744 paid by renters in the same type of property.

This shows an increase of £105 over the course of the last year. Average monthly rents have risen more sharply, showing a 3% increase, in comparison to a 2% rise in monthly buying costs.

At present, the financial gap between buying and renting (£865) is more than double the saving of £397 recorded in 2010. In this period, average rents have gone up by 23% (£139) per month from £605 and buying costs have risen by 17% (£100 per month) from £572,

Since 2009, buying has been the cheaper option.

Regional variations

Average monthly buying costs in the South East (£965) are £65 greater than the average rental costs in the UK. This is the only region in Britain where renting is the more cost effective option.

Alternatively, buying is more affordable than renting in monetary terms in the North West, where the average first-time buyer pays £133 per month less than the average renter. This was followed by Scotland, where owner-occupiers pay £120 less and Wales, where buyers enjoy savings of £103.

Buyers 10% better off than renters

Buyers 10% better off than renters

First-timers

First-time buyer numbers hit 310,000 in 2015, slightly down from the 311,700 recorded in 2014. However, this is a rise of 60% since first-time buyer totals fell to a low of 193,700 in 2011.

The number of first-time buyers made up 46% of house purchase made with a mortgage during 2015. This was up from 36% at the beginning of the downturn in 2007.

Mike Songer, Mortgage Director at Lloyds Bank, observed, ‘we’ve seen a significant shift over the past five year, with people consistently paying less on average per month when owning their property as opposed to renting. In 2015 this gap widened by over £100 to an annual saving of £865.’[1]

‘This has been helped by record low mortgage rates and rising private rents, making owning a home a much more attractive proposition than renting. This steady improvement in the costs of buying compared to renting has helped to boost the number of first-time buyers over the past few years, who now account for 46% of all home sales in 2015-up from 36% in 2006. Official government schemes, such as Help to Buy have also played a part in helping first-time buyers as have improving economic conditions,’ Songer added.[1]

[1]  http://www.propertyreporter.co.uk/finance/buying-10-better-off-than-renters-says-lloyds.html