Posts with tag: rents in London

Landlords in London being more strategic

Published On: May 15, 2017 at 9:09 am

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The raft of recent tax changes is making it harder than ever for landlords to make substantial returns from their buy-to-let investment.

Despite this, a new report has revealed that investment in the private rental sector continues to increase in London.

Purchasing

Following a slight lull in activity following the introduction of the 3% stamp duty surcharge on additional properties, an investigation from Benham & Reeves Residential Lettings suggests that landlords are now looking to add to their portfolios.

In addition, the findings suggest that the majority of landlords are undeterred from the phasing out of mortgage interest relief.

Marc von Grundherr, lettings director at Benham & Reeves, observed: ‘Predictions that a flood of landlords will abandon their buy to let portfolios have been greatly exaggerated. In fact, we have seen very few clients exit the rental market this year – in fact most are actively looking to invest further.’[1]

Landlords in London being more strategic

Landlords in London being more strategic

Costs

The Government’s alteration to mortgage interest tax relief is expected to result in rent increases for tenants, with landlords left with little option but to pass on some of these increased costs.

However, Mr von Grundherr notes that strong demand for rental property is putting pressure on rents. Benham & Reeves saw a rise of 12.7% in lettings transactions during the first quarter of the year, in comparison to the same period in 2016.

Continuing, he said: ‘Property continues to remain a very stable investment in light of stock market volatility and historically low interest rates. The fundamentals continue to remain strong and that is why our outlook on London property continues to be bullish.’[1]

‘Professional investors have been able to navigate these legislation changes and capitalise on these localised rental hotspots,’ he concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/5/landlords-adopting-a-more-strategic-approach-to-investing-in-londons-btl-market

 

Average Londoner left with little alternative but to rent

Published On: October 28, 2016 at 11:03 am

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A lack of affordability in the capital is driving chances of potential buyers getting onto the property ladder further out.

While the gap between income and house prices has increased across most-regions of the UK in recent times, the situation is more acute in London.

Capital Pains

The average home in the capital now costs around 12 times the average income. This goes a long way to explaining why many would-be buyers are being priced out of the market in certain parts of the country.

Now, the issue has been highlighted by crowdfunding platform Property Partner. In an extraordinary claim, the platform says it would take an average of 121 years for the average Londoner, earning £34, 320 per year, to save up for a deposit in the average price flat in the capital. This now costs more than £457,000.

It does not come as a surprise to learn that many workers in London are being priced out of the market in all 33 boroughs. Those in the city of London are facing a nigh-on impossible task to ever own a property in the capital.

Even in Barking and Dagenham, the most affordable London borough, a first-time buyer earning the typical London salary would need to wait 31 years to purchase their first property.

In Kensington and Chelsea, it would take around 389 years to save for a deposit for the average flat in the borough!

Average Londoner left with little alternative but to rent

Average Londoner left with little alternative but to rent

Staggering

Dan Gandesha, CEO and founder of Property Partner, said that: ‘It’s staggering that if you have no help from family or friends and you hope to buy on your own, it’s now almost impossible to afford anywhere in London. Even in the ten most affordable boroughs you’d need to be saving an ambitious 20% of your net annual salary to stand a chance of getting the deposit together before you reached middle age.’[1]

‘The British obsession with owning their own home is now for many, at least in London, a pipe dream,’ Mr Gandesha added.[1]

Concluding, he noted: ‘In Germany, long-term renting is generally accepted and the cohort of long-term renters in the UK is growing, by force of circumstance. Build-to-rent is one of many ideas to help solve the UK’s housing crisis and the quicker we can provide good quality, professionally managed home, for both the public and private lettings sector, the better.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/10/average-londoner-left-with-no-choice-but-to-rent

 

PCL rents in check despite rising demand

Published On: July 11, 2016 at 9:26 am

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Yearly rental value growth in prime central London was down again during June, according to a new report.

The investigation by Knight Frank revealed that annual rents were down by 3%, despite an increase in rental demand for properties in the capital. Large stock levels and uncertainty in the financial market is keeping this growth steady.

Economic and financial uncertainty

The report indicates that the rise in rental stock is partly down to the ongoing uncertainty in the sales market. Early figures are suggesting that some vendors are holding fire on letting their property until further clarity over Brexit is established.

However, demand remains strong and the number of new prospective tenants registered in June was the largest seen since September 2015. Meanwhile, the number of new tenancies agreed in June of this year was nearly the same as in May.

Tom Bill, head of the capital’s residential research at Knight Frank, said, ‘for investors able to see through the current bout of political uncertainty, there are also grounds for longer-term positivity.’[1]

Yearly yields

Gross yields in June stood at 3.1%, substantially greater than the current record-low yield on ten-year Government bond of around 0.8%. Bill notes that financial indecision has been heightened since before the Brexit vote, something he feels will cause tenants to rent for longer.

Bill observed, ‘more broadly, uncertainty over the result of the referendum has been replaced by uncertainty over the more nuanced question of the UK’s relationship with Europe and demand will strengthen further as clarity emerges surrounding key negotiating positions. As this process unfolds, it should be remembered that no candidate for prime minister has indicated any willingness to relinquish London’s role as Europe’s leading financial centre during negotiations with the EU.’[1]

PCL rents in check despite rising demand

PCL rents in check despite rising demand

Tax cuts

Chancellor George Osborne has suggested that he may move to cut corporation tax, meaning London will strive to stay competitive in comparison to other European cities.

Mr Bill feels that the possibility of an interest rate cut in Britain is likely to push activity up. He noted that the likelihood of further cuts by central banks in other countries will lead to overseas investors to look for higher returns on offer from rental property in London.

Concluding, Bill said, ‘this search for yield will be allied to a favourable currency play due to the current weakness of Sterling. Meanwhile, other fundamentals that remain unchanged after the referendum include the supply shortfall and projected population growth over the next decade in London, factors that will continue to underpin demand for rental property.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/prime-central-london-rents-remain-in-check-despite-greater-tenant-demand

PCL rents drop for first time in two years

Published On: February 17, 2016 at 2:12 pm

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The final quarter of 2015 saw rents drop in the capital for the first time in two years, according to a new report.

Cluttons estate agents has provided data suggesting that average Prime Central London rents dropped by 2% over the year to stand at £1,097 per week.

Falls

In addition, Cluttons claim rents are slipping faster than capital values, with average gross rental yields dropping to 3.16%. Despite this, the firm has reported an increase in buy-to-let activity in an attempt to beat the upcoming stamp duty surcharge.

Regions that have seen the most significant dips in rents include Notting Hill, where they slipped by 6.4%, Hollands Park (4.4%) and Marylebone (3.9%).

PCL rents slip for first two in two years

PCL rents slip for first time in two years

‘Landlords are growing wary of burgeoning supply levels at virtually every price point and are adjusting their rental incomes accordingly,’ said Faisal Durrani, head of research at Cluttons. ‘Furthermore, many tenants don’t realise they’re actually paying less than their predecessors in many cases. Some landlords are on the back foot and have been slow to adjust to the evolving conditions and are now undercutting one another to secure tenants,’ Durrani continued.[1]

Stamp Duty changes

James Hyman, Cluttons’ head of residential agency, noted, ‘in the lead up to any tax changes, there is always an increase in activity and the looming SDLT changes are no different, which we expect will become more evident in the coming weeks.’[2]

To this end, Cluttons has forecasted a reduction of the lettings market during 2016, but a growth of more than 16% before 2020.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/prime-central-london-rents-fall-for-the-first-time-since-2013

London rents up as sales slow

Published On: July 13, 2015 at 12:34 pm

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New research has indicated that as a result of changes to stamp duty rates, restrictions on borrowing and the rising value of the pound, property sales across the capital have cooled.

According to Benham and Reeves Residential Lettings, the much-expected post election surge in sales has not happened and as a result has led to stale prices and a dip in transaction numbers.

Rental rise

On the other hand, the lettings market in the capital was found to be growing, with values increasing sharply across the majority of London postcodes. Data from the report shows that rental values rose by between 2%-4% in London during the last quarter, with particularly strong growth recorded in the centre of the capital.[1]

Kensington saw rents rise by just over 7% in the period, with Chelsea almost matching this substantial growth rate. However, even better rises were recorded in parts of East London with growth of 11% in both Bethnal Green and Bow.[1]

London rents up as sales slow

London rents up as sales slow

Lettings Director of Benham and Reeves Residential Lettings Marc von Grundherr, commented, ‘George Osborne reformed the stamp duty system in his Autumn Statement last December, it had a huge impact on the property market in London. Most homebuyers in London are paying considerably more in stamp duty with the top rate now standing at a staggering 12%.[1]

‘Inevitably, people are choosing to rent rather than buy and even those who are hoping to buy will end up renting for longer to save for this additional cost. The stamp duty changes have been a gift horse for many landlords who have seen rents stagnate over the last few quarters,’ von Grundherr added.[1]

[1] http://www.propertyreporter.co.uk/landlords/rents-rocket-as-londons-sales-market-finally-cools.html