Posts with tag: rental rises

Rents rose by 2.4% during August

Published On: September 18, 2017 at 9:02 am

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Recent data suggests that the rental market is remaining firm, despite the political and economic uncertainty impacting on the sector.

The most recent HomeLet Rental Index reveals that the average cost of a new tenancy in the private rental market during August hit £939 pcm. This represented a rise of 2.4% in comparison to the £916pcm in the corresponding month last year.

Rental Rises

According to the report, rents are continuing to rise in nearly every area of the country, with 11 out of the 12 regions surveyed seeing an increase in the year to August.

The South East was the only regions to see rents slide, down by 0.2% year-on-year.

Rents were found to be rising fastest in the South West of England, up 3.9% year-on-year, closely followed by 3.7% in Northern Ireland.

However, rental values in London remain substantially higher than in the rest of Britain, at an average of £1,609pcm. This was the first time rents in the capital had risen above £1,600pcm.

When London is excluded, the average rent in Britain stands at £776 – a rise of 2.3% year-on-year.

Rental Figures from the August 2017 HomeLet Rental Index read:

Region Average rent in August 2017 Average rent in July 2017 Average rent in August 2016 Monthly variation Annual variation
South West £838 £823 £805 1.8 % 3.9 %
Northern Ireland £634 £625 £610 1.4 % 3.7 %
West Midlands £693 £680 £670 1.9 % 3.3 %
East Midlands £617 £620 £597 -0.5 % 3.2 %
North East £538 £526 £524 2.3 % 2.7 %
East of England £926 £919 £901 0.7 % 2.6 %
North West £703 £698 £685 0.8 % 2.6 %
Greater London £1,609 £1,564 £1,569 2.9 % 2.5 %
Scotland £629 £630 £616 -0.1 % 2.0 %
Wales £626 £613 £615 2.1 % 1.8 %
Yorkshire & Humberside £630 £625 £621 0.8 % 1.5 %
South East £1,028 £1,025 £1,030 0.3 % -0.2 %
UK £939 £925 £916 1.5 % 2.4 %
UK excluding Greater London £776 £769 £759 0.9 % 2.3 %
Rents rose by 2.4% during August

Rents rose by 2.4% during August

Strengthening

Martin Totty, chief executive of Barbon Insurance Group, parent company of HomeLet, observed: ‘Whilst we’ve often observed a seasonal uplift in average rents at this time of year, there’s evidence of a trend now emerging which points to a reversal of the declines seen over the early part of this year. This will be welcome relief to Landlords who have been battered by the perfect storm of tax changes and post-Brexit uncertainties. Whether the trend continues or represents only temporary relief from the headwinds faced by property owners, the remaining months of 2017 should provide the answer.’

 

‘Whether the recent strengthening in rents achieved, seen generally across all regions of the country, is driven by more robust demand or by some restriction of supply is hard to judge. Either way, landlords will only be encouraged to invest in property over other assets if they’re convinced they can achieve reasonable returns. If not, then the supply of rental properties could become constrained.’

“Many landlords still face further increases in their costs and so will need to find a new equilibrium between their legitimate required returns and affordability for tenants. It seems the elements in solving that particular equation become ever more complex,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/a-welcome-relief-for-landlords-as-rents-rise-by-2-4-in-august

 

 

Rents continue to be driven by lack of supply

Published On: July 28, 2017 at 8:46 am

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A severe shortage of properties available continues to push rental prices upwards across the UK, according to the Association of Residential Letting Agents (ARLA).

Over a quarter of letting agents saw rents rise during June, despite a rare increase in supply of rental stock. There was a 31% rise in agents reporting rental rises during the month – the highest level since April 2016.

Supply and Demand

During the past year, the supply of rental stock has increased by 8%, with letting agent managing 190 properties on average per branch in June. Demand slipped however, with an average of 61 new tenants registered per branch – a fall from 65 in April and May.

Landlords are facing more and more pressure, following a raft of recent alterations aimed at halting the rush of investors. These include the 3% stamp duty surcharge and the phasing out of mortgage interest tax relief.

Rents continue to be driven by lack of supply

Rents continue to be driven by lack of supply

David Cox, Chief Executive of ARLA, observed: ‘With the cost of living on the rise and inflationary pressures tightening, the last thing tenants need is for their rents to continue rising.’

‘However, the fact that supply looks to be rising, while demand has dropped slightly indicates a move in the right direction for the market. Ultimately, to stop rent prices from increasing too much, we need to find the balance between supply and demand,’ he added.[1]

 

[1] https://www.landlordtoday.co.uk/breaking-news/2017/7/housing-shortage-drives-up-rents

 

 

 

Where are the best regions for rental growth?

Published On: April 28, 2017 at 8:39 am

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New figures from Your Move show that the average rent in England and Wales during March stood at £800, a rise of £2 in comparison to the previous month.

However, this was a fall from the £811 per month seen at the back end of 2016.

Rental Rises

The latest Your Move England & Wales Buy to Let Index shows that rents increased in six of the ten regions covered by the analysis during March, in comparison to February.

This was driven by rises in the East of England, with prices here increasing 1.6% in the last month. Now, values are 7.4% greater than in March last year.

Valerie Bannister, letting director at Your Move, noted: ‘In previous months we have seen rents in the South East rise as people looked to move beyond the capital, but it is the East of England which appears to be seeing the benefit as rents here have risen 7.4% in the last year.’[1]

Capital Slowdown

On the other hand, rents in London continue to slow. The capital saw rental decline on both a monthly and yearly basis. The average rental property in the capital let for £1,203pcm during March 2017, a fall of 6% month-on-month.

Bannister continued by saying: ‘Rents in London have declined in the last 12 months, falling from £1,297 a year ago to £1,203 in March 2017.’[1]

The capital was not the only region to experience a rental decline in the last month and year. In the North East, prices now average at £525pcm, after seeing a fall of 3.7% since February and 3.1% since March 2016. However, it remains the cheapest place to rent, according to the survey.

When are the best regions for rental growth?

When are the best regions for rental growth?

Yields

In terms of yields, the average in England and Wales was 4.5% in March, a fall from the 5% seen in March last year.

Regions with greater house prices continue to have the lowest yields, therefore it is not a surprise that the average yield in London was 3.2% last month.

At the other end of the scale, properties in the North East saw the largest yields, of 5.2% in March. The North West also saw healthy yields of 5% over the same period.

[1] https://www.landlordtoday.co.uk/breaking-news/2017/4/where-are-rents-rising-fastest-in-england-and-wales

 

Rents in London forecasted to increase as demand rises

Published On: December 6, 2016 at 10:40 am

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Property agents Portico has forecasted that the cost of renting property in London is likely to increase in the coming months, as the balance between supply and demand increases in the capital.

Portico estimates that rising demand from the increasing population, coupled with unemployment levels, could put more pressure on rental values in the city. This could also push up yields for buy-to-let landlords.

Blow for tenants

This prediction will come as a blow for tenants who are already struggling to keep up with their rental payments. The monthly outlay for tenants in Greater London hit an average of £1,543 in October, according to the latest figures released from referencing firm Home Let.

Mark Lawrinson, regional sales director of Portico, noted: ‘The population is growing, the job market is buoyant and people are still coming to live in London-so while supply is decreasing, demand is continuing to grow.’[1]

‘It’s this imbalance between supply and demand that is likely to increase rental prices, while weaker transaction prices will push up rental yields’ he continued.[1]

Rents in London forecasted to increase as demand rises

Rents in London forecasted to increase as demand rises

Rising rents

Another report from Savills last month indicated that rents are set to increase considerably faster than house prices over the next five years. This report suggests that rents will rise by 19% by 2021, with house prices increasing by 13% over the same period.

In addition, the gap is predicted to be more pronounced in London, where rents are indicated to rise by 24.5%. House prices are forecasted to increase by 10.9%.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/12/rents-in-london-set-to-rise-as-demand-for-homes-outstrips-supply

 

Airbnb listings achieve twice the rent of long-term lets in the capital

Published On: November 1, 2016 at 12:41 pm

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New research from data company Propcision has revealed that across the capital, typical Airbnb rental rates for apartments are double those of longer-term rental rates.

However, the report also shows that despite the growth of Airbnb listings, there are still too few listed properties to damage the size of the rental market in the capital.

Listings

Propcision compared over 17,000 Airbnb actively managed listings for studios, one and two bedroom properties to gage more of an understanding about the impact of Airbnb in London.

In a statement, Propcision said: ‘It is no surprise that short-term rental rates are twice as high as long-term rental rates. This does make sense as Airbnb landlords absorb costs for utilities, furnishings and conveniences such as the internet. Factor in the flexibility of having a day-to-day and weekly rental arrangement and it easy to rationalise the cost of an Airbnb rental being higher.’[1]

‘The argument that Airbnb is impacting affordable housing appears tenuous. The number of listings in Greater London areas is exceptionally low and highly unlikely to impact long-term rental rates in the surrounding area,’ it continued.[1]

Airbnb listings achieve twice the rent of long-term lets in the capital

Airbnb listings achieve twice the rent of long-term lets in the capital

Worst performers

In London, the boroughs of Hackney, Kensington and Chelsea and Tower Hamlets generate the worst returns for long-term rentals, in comparison to the rest of the capital.

On the other hand, Westminster had the greatest number of actively-managed flat or house listings. However, the borough still performs under the London average, with Airbnb properties achieving just under twice the income of a long-term rental investment in the same region.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/10/typical-airbnb-listings-bring-in-twice-the-rent-of-long-term-lettings

 

 

 

Rental rises continue through August

Published On: September 7, 2016 at 10:13 am

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New figures from the HomeLet Rental Index suggest that the rental market has remained steady in the face of economic, political and legislative changes.

The Index has recently been redesigned in order to include additional data on new tenancies, alongside property type and location. Results show that rents agreed on new tenancy agreements increased in most areas during the three months to August, albeit at a moderate rate.

New tenancy costs

According to the data, the average price of a new tenancy in the private rental sector rose by 3.1% in the period to hit £913pcm. This was a rise from the £885pcm recorded in August 2015.

August 2016’s HomeLetRental Index shows that rents have risen in eleven out of twelve regions of the UK year-on-year. The North East was the only region to see a fall in annual rents, with prices down by 1.6%.

While rents continue to rise, they do so at a more contained pace. The 3.1% increase seen during August is comparable to rises of between 3.5% and 3.8% seen over the previous four months. The largest slowdown was evident in London and the South East.

Results by region can be seen below:

Region Average rent in August 2016 Average rent in July 2016 Average rent in August 2015 Monthly variation Annual variation
East of England £915 £911 £864 0.4% 5.8%
Wales £654 £649 £622 0.8% 5.2%
North West £699 £693 £670 0.8% 4.3%
West Midlands £674 £658 £652 2.3% 3.3%
South East £1,034 £1,027 £1,001 0.7% 3.3%
Northern Ireland £627 £618 £610 1.4% 2.8%
Greater London £1,497 £1,492 £1,457 0.4% 2.7%
South West £799 £789 £787 1.3% 1.6%
Yorkshire & Humberside £640 £637 £632 0.5% 1.3%
Scotland £629 £643 £622 -2.1% 1.1%
East Midlands £621 £618 £615 0.5% 1.0%
North East £535 £543 £543 -1.6% -1.6%
UK £913 £907 £885 0.6% 3.1%
Notes: Based on new tenancies in August 2016 Based on new tenancies in July 2016 Based on new tenancies in August 2015 Comparison of average rent in August 2016 and July 2016 Comparison of average rent in August 2016 and August 201

[1]

Rental rises continue through August

Rental rises continue through August

Finding a balance

Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, observed: ‘The latest Index reflects a market in which landlords are engaged in a delicate balancing act: they’re aware of tenants’ concerns about affordability while also conscious of the need to achieve target yields. August’s figures suggest that rents are continuing to rise at a sustainable pace-ahead of price inflation, but well below house price increases, which were running at close to 6% according to the most recent data.’[1]

‘In the medium to longer term, the fundamental driver of rents will be the balance between demand and supply for rented property. We expect demand in the private rental sector to continue to grow, in line with demographic changes such as population growth and as affordability concerns remain in the house purchase market, so it is important that we see efforts to support supply,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/rents-continue-to-rise-in-august