Posts with tag: rental market

Rents slowing across Britain

Published On: December 19, 2015 at 10:20 am

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New figures indicate that rents are seemingly slowing across Britain.

Data from the Homelet Rental Index shows that rents on new tenancies during the last three months dropped in the majority of regions. In addition, nine out of ten landlords said that they were not looking to raise rents on existing tenancies in the first half of 2016.

Steady

Rents for new tenancies either remained steady or slipped slightly in 10 out of the 12 UK regions in the three months to November, in comparison to October.

Throughout England but excluding London, the average rent for a tenancy signed in the previous three months was £743 per month, 0.7% down on the last three-month period. In Greater London, the average rent was found to be £1,544, down by 1%.

Rents slowing across Britain

Rents slowing across Britain

Furthermore, the Index reveals that just two regions saw increases for rents on new tenancies. In Yorkshire and Humberside, rents on new tenancies were 0.8% greater than in the previous three months, averaging £626 per month. In the East Midlands, rents were up by 1.2% at £635 per month.

Just 34% of landlords plan to increase rents in the coming year.

Relationships

Martin Totty, Barbon Insurance Group’s chief executive officer, said, ‘the research reveals the vast majority of landlords enjoy strong relationships with their tenants and are keen to keep them. Just 4% said they were unhappy with their current tenants, while 18% said high tenant turnover was the most stressful part of being a landlord, more than cited on any other single issue.’[1]

‘Being a landlord is a long term investment and attrition of tenants is not something landlords desire; our own clients tell us they would rather retain a good tenant over the longer period than seek additional income,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/12/rents-slowing-across-uk-says-homelet

 

 

 

Senior agent warns on landlords setting up ltd companies

Published On: December 17, 2015 at 12:44 pm

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A senior letting agency boss has warned landlords to be on their guard if they are planning on setting up a limited company in the wake of the Chancellor’s announcement in the Autumn Statement.

Anita Mehra, managing director of Benham & Reeves Residential Lettings, says Mr Osborne’s cap of mortgage relief for landlords alongside an increase of 3% in stamp duty on buy-to-let properties has seen the industry, ‘reel.’

Due to this, Mehra states that many landlords have approached her firm about information on putting their property portfolio in a limited company.

Popular

This is becoming more popular, due to the restriction on tax relief on mortgages interest only affecting individual investors and unincorporated residential property organisations, not limited companies.

Mehra notes that, ‘before going down this route, landlords need to think carefully. Transferring an existing property portfolio into a limited company structure could potentially attract Capital Gains Tax based on the market value of the property although such a move may be deferred on incorporation and allowing the landlord to roll the gain into the cost of the shares.’[1]

Instead, Mehra believes that landlords should discuss their issues with their accountants before making any decision.

Senior agent warns on landlords setting up ltd companies

Senior agent warns on landlords setting up ltd companies

Bills

‘The transfer can also see the landlord facing a hefty Stamp Duty Land Tax bill as each property is effectively considered to be sold at market value to the company even if there may be no consideration,’ Mehra said.[1]

An example Mehra gave is that people purchasing property through a company for the first time, overseas companies or other similar vehicles are permitted to pay 15% Stamp Duty Land Tax if the purchase price exceeds £1m. From April 2016, this will drop to £500,000 if the property is not for rental investment.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/12/senior-agent-urges-caution-over-setting-up-buy-to-let-limited-companies

Landlord concern over short-term prospects grows

Published On: December 16, 2015 at 11:07 am

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The buy-to-let sector continues to grow, with tenant demand remaining consistently strong.

However, a new survey has indicated that some landlords are concerned about their short-term prospects.

High demand, low confidence

BM Solutions’ buy to let quarterly index indicates that 41% of landlords reported an increase in tenant demand during the last quarter, but that confidence has fallen dramatically.

Tenant demand was highest in the East of England, with 52% of landlords reporting a rise in tenant demand over the last three months. The largest quarterly increase was recorded in the East Midlands, where demand was up by 12%.

At the lower end of the scale, the South West and North East saw the greatest drop in landlords noting increased demand over the last quarter.

By region, tenant demand altered in the last three months as followed:

Property location Tenant demand in Q2 2015 (Net increase) Tenant demand in Q3 2015 (Net increase) Quarterly change (% point change)
East of England 48% 52% 4%
London (Outer) 40% 48% 8%
South East 41% 47% 6%
East Midlands 35% 47% 12%
London Central*** 35% 45% 10%
Yorks & Humber 35% 39% 4%
West Midlands 37% 38% 1%
Wales 36% 38% 2%
South West 45% 37% -8%
North West 27% 34% 7%
Scotland 30% 33% 3%
North East 39% 31% -8%

[1]

Outlook

The report revealed that confidence in the UK’s financial market has dipped, with 25% confident about the outlook for the next quarter, as opposed to 37% in quarter two of this year. Landlords also reported a fall in confidence in the private rental sector as a whole, with 34% saying they were positive about the sector, as opposed to 59% in Q2 of 2015.

61% of landlords said that they intend to live off the rental income generated by their portfolio when they eventually retire. A further 36% said they would make a decision based on market trends at the time.

Landlord concern over short-term prospects grows

Landlord concern over short-term prospects grows

Void periods recorded also increased during the last quarter, with 35% of landlords experiencing this in Q3, as opposed to 29% in the previous two quarters. In addition, the average rental yield achieved dropped to its lowest level for five years, falling to 5.6%.

By region, landlords in Yorkshire and the Humber and Wales saw the highest rental yield of 6.1%. Those letting in Scotland and Outer London saw the lowest, with 5.1% and 4.8% respectively.

Average rental yields per region were over the last quarter were:

Property location %
Yorkshire & the Humber 6.1
Wales 6.1
North West 5.9
East Midlands 5.8
West Midlands 5.7
North East 5.6
East of England 5.6
South West 5.5
South East (excl. London) 5.4
London (central) 5.2
Scotland 5.1
London (outer) 4.8

[1]

Spotlight

Phil Rickards, Head of BM Solutions noted, ‘there has clearly been a spotlight shining on the Buy-to-Let market and Private Rental Sector for most of 2015. Landlord confidence in the outlooks for the private rental sector as a whole and landlord’s own lettings businesses have seen statistically significant declines when benchmarked against Q3 2014.’[1]

‘However, the market is still holding up and at the same time four in 10 landlords report demand has increased in the areas where they hold properties during the last quarter and yields remain strong. There’s no doubting 2016 looks like a challenging year ahead however I take comfort in the fact there’s still a need for a strong private rental sector along with good quality housing to support demand,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-confidence-dr0ps.html

 

 

Rental market sees start of seasonal slowdown

Published On: December 15, 2015 at 11:48 am

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A new investigation by Landbay suggests that the UK rental market entered a seasonal slowdown over the last month. Research from the report shows that rents fell by 0.4% in November to stand at £1,290.

There was no festive cheer for landlords in London, where rents were down by 0.6%, bringing down the overall UK average. Typically, the rental market in the capital is sensitive to fluctuating demand from tenants and often sees this type of seasonal slowdown as demand from the summer relaxes.

Yearly rises

However, rents did continue to rise on a year-on-year basis. UK rents were 2.9% greater than in November last year, with wages also up by 3.0%.

These rent increases were driven by one-bed homes, popular with young professionals. Rents in these properties were up by 4% year-on-year, while three-bed properties saw a 3.6% increase.

Rents have seen a upward trend since January 2013 and have climbed by 7% from this period. Wage growth has risen by 4.8% over the same timeframe. One-bedroom rents have increased by 8.6%.

The Southeast was revealed to be the area with the quickest rental growth over the last year.

Rental market sees start of seasonal slowdown

Rental market sees start of seasonal slowdown

Slowdown

John Goodall, CEO of Landbay, said that, ‘a seasonal Christmas lull has finally managed to put the brakes on the speedy London rental market. But this is a case of notching down a gear rather than an emergency stop, Rents continue their upward trajectory, albeit at a slightly less frenetic pace.’ He observes that,’ London’s rental market is a very sensitive to changes in supply and demand. The November dip is likely to reflect softening tenant demand as new hiring slows in the run-up to Christmas and fewer people move to the capital for work.’[1]

‘On an annual basis rental inflation is tracking wage growth quite closely,’ he continued. ‘Scotland was only part of the UK to see rental growth below 2%. The big picture is that we are in the midst of a housing crisis and that wages are rising-both these facts mean that rents are more likely than not to continue to climb next year. With house prices rising at the same time it is a little wonder that there is such a strong appetite for investments that are secured against British homes.’[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-market-slows-as-uk-enters-festive-period.html

North West England most lucrative area for landlords

Published On: December 14, 2015 at 3:42 pm

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The North West of England has received an early Christmas present with the news that it is the most lucrative region in Britain for private sector landlords.

Both Manchester and Liverpool made it into the top-four cities for rental yields.

Northern Rule

Online property marketplace LendInvest’s latest quarterly report indicates that Sunderland, Blackburn and Durham also rank highly in the list, as the North as a whole enjoys substantial yields. In terms of house price growth, London and the South East lead the way.

Lendinvest’s report also looks at trends in rental yields, capital gains and total gross return on investment. The top 15 performing postcode regions for capital gains were all located in London and the surrounding area. Inner London however stands in 18th place for rental yield, but top for capital gains.

Capital gains carry on tracking average house prices, with 80% of the 15 best postcode areas also featuring for average house prices. However, the report shows that rental yields are no indication of average house values. Just one of the top 15 postcode areas for rental yields featured in the top 15 for property prices.

Impact

Christian Faes, chief executive of LendInvest, feels that the stamp duty tax changes coming into force next year could have a serious impact on the market. Faes said, ‘there could be some weakening in London’s dominance of capital gains tables if house price growth does soften slightly as forecast and as new buy to let stamp duty hikes take effect.’[1]

‘Inner London margins may narrow slightly, creating opportunities for house prices in other postcode areas, particularly those in the South of England, to better compete,’ he continued. [1]

North West England most lucrative area for landlords

North West England most lucrative area for landlords

Faes went on to say that he feels changes to mortgage interest tax relief and stamp duty for buy to let landlords will ultimately professionalise the market. ‘Landlords whose tax payments under the new regime make letting their properties unsustainable, may make arrangements to leave the market. In turn, we will see fewer highly geared rental properties that push up prices and take stock out of the housing supply for aspiring owner occupiers and first time buyers drawn to densely populated urban area for work.’[1]

Cross Country

Mr Faes also said that there is no one place for market leading yields and capital gains. He believes that 2016 could be the year for the, ‘cross country landlords,’- landlords who live in one city but rent out homes in another.

‘We could expect to see more landlords letting property in the North and Midlands’ major urban areas for more immediate upside, without moving from their family homes in which gains can be longer to materialise,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-rents-yields-2015121411318.html

 

 

Tenants Looking to Move Into New Home by Christmas

Published On: November 27, 2015 at 1:03 pm

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Tenants Looking to Move Into New Home by Christmas

Tenants Looking to Move Into New Home by Christmas

Whether you’re a landlord with hundreds of properties in your portfolio, or a homeowner who has a spare room, now is the perfect time to get your home on the rental market. According to letting agent Leaders, many tenants are hoping to move into a new property by Christmas.

This means that you have a great chance of your house being let very soon!

Lettings Director at Leaders, Jane Wilkinson, explains: “The run up to Christmas might not seem like the obvious time to put your property on the lettings market, but demand from tenants is extremely high at the moment, with many people keen to move and get settled in their new home before Christmas, so it is actually an excellent opportunity.”

Stay one step ahead of your fellow landlords at this time by making your property available to rent now – many wait until the new year to put their homes up to let.

Wilkinson continues: “Everybody knows January is a busy time for lettings, but by putting your property on the market now, you can get a head start on the competition to secure motivated and quality tenants. In the unlikely event your property is not let before Christmas, you will be in pole position to reach out to applicants looking to move in the new year.”1

If you are currently going through a void period, now is the perfect time to prepare your property for the winter and any prospective tenants that may be moving in in the very near future.

And if you’re considering selling your rental property at this time, it is good to know that millions of people start their search for a new home during the festive season. A huge 15.7m visits were recorded on Rightmove between Christmas Day and New Year’s Day last year. Therefore, it is a good idea to get your property listed during this time, while fewer homes are available.

Whether you’re looking to rent your property or put a house up for sale, remember to find all of the latest residential landlord information on Landlord News over the festive period!

1 http://www.propertyflock.co.uk/f/18FD948E8