Posts with tag: rents

Young struggling to get onto property ladder

Published On: February 22, 2016 at 12:49 pm

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Another report has underlined the notion that young people are becoming trapped in the rental market, due to spiralling house prices.

An investigation by the independent Social Market Foundation think tank has revealed that an extra 1.8 million people have been unable to get their foot on the property ladder since 2001.

Young struggle

The report shows that if home ownership levels among 25-34 year olds during 2016 remained the same as 2001, an additional 1.8 million people in this age group would now be owner-occupiers. Despite this, they are being faced with barriers in getting onto the ladder due to high property values, tighter lending criteria and difficulties in saving for a deposit.

Data from the investigation underlines a lack of housing supply as the most prominent factor in the lack of young homeowners. Results indicate that Britan will see a shortfall of nearly 1.3 million homes by 2026, if current supply levels and lack of growth remain constant over the same period.

In addition, the report looks at how the market could grow over the next decade and warns that supply could continue to come up short in the face of rising demand.

Young struggling to get onto property ladder

Young struggling to get onto property ladder

Boosts

This follows results from a different survey released last week by the independent Resolution Foundation body, which indicated that home-ownership for young, working class households could slip to just one-in-ten by 2025.

Claiming crowdfunding could be used to boost savings of young, would-be buyers, the report also suggests that the supply of new homes could be increased by providing crowdfunded equity to small and medium-sized constructers.

Social Market Foundation economist Katie Evans, also the author of the report, said, ‘getting onto the housing ladder is becoming harder and harder for young people. Our failure to build enough homes means this problem threatens to stretch into the future. Property crowdfunding could be the means to tackle both demand and supply.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/another-report-shows-younger-people-locked-out-and-forced-to-rent

 

 

Annual rental prices up in 11 out of 12 UK regions

Published On: February 10, 2016 at 10:08 am

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Residential rents rose year-on-year in 11 out of the 12 regions of Britain, with the most prominent rises in the South East of England and the East Midlands.

Overall, the typical rent in Britain, with the exception of Greater London, is now £740 per month. In London, average rents stand at £1,510 per month, according to the most recent rental index from HomeLet.

Slow progress

The data indicates that only the North West of England has seen a fall in rental prices over the last twelve months. Prices here fell by 3.4% from £646 per month to £624.

However, rent costs for new tenancies in Greater London are increasing at the slowest rate seen for nearly two years. The January index shows that Greater London prices are 6.2% higher for the three months to January 2016, in comparison to the same point in 2015. This is the least amount of growth seen in the capital since March 2014.

By contrast, rent prices in other regions continued to increase. The South East of England recorded rises in rent prices of 7.2% in the three months to January 2016. The East Midlands also saw a significant rise of 6.8% in rental prices in the same period.

Annual rental prices up in 11 out of 12 UK regions

Annual rental prices up in 11 out of 12 UK regions

Monthly differences

On the other hand, monthly data gives a different outlook. Rental prices in the UK, excluding Greater London, were 0.2% greater in the three months to January 2016, than in the three months to December 2015. In Greater London, rents have slipped by 0.9% over the same timeframe.

In all, six out of the twelve British regions recorded rises in rental prices during the three months to January 2016.

Martin Totty, chief executive officer of Homelet’s parent group, Barbon Insurance Group, said,’ it’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely.’[1]

‘The fact that UK wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact if the long term structural imbalance in supply and demand of property,’ he added.[1]

Concluding, Totty said, ‘landlords achieving higher average rents over time also suggests that tenants starting a new tenancy are proving they can afford higher average rents. With demand outstripping supply, some would-be tenants may be able to outbid rivals for properties, which could drive higher rents.’[1]

[1] http://www.propertywire.com/news/europe/uk-rental-price-index-2016021011539.html

 

Demand for rental homes to pass 1 million in 5 years

Published On: February 2, 2016 at 11:45 am

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More analysis of the rental market, this time from real estate advisor Savills, has found that demand for rental accommodation could rise by more than one million households over the next five years.

This will come as a blow to the Government, which has set of target of building 400,000 affordable properties over the course of the Parliament. If the predictions are true, the firm says that there will need to be a further 220,000 homes for rent per annum.

Changes

Upcoming changes in legislation for landlords will see demand for accommodation slow, but Savills still predict that the sector will grow by 1.1m households by 2021.

The steady economic recovery and record low interest rates have still not stemmed the tide of demand for rental property. In fact, house price inflation pushing ahead of wage growth has served to move homeownership even further out of reach for many. This comes at a time when social housing stock has dipped by 2.8% in the last five years, meaning more households have been forced back into privately rented accommodation.

According to the latest English Housing Survey, private renting has grown by a huge 17,500 households per month in the decade to 2014. The Government hope that their policies, including Shared Ownership schemes and Right to Buy/Help to Buy will reverse this spiral, by helping more people access the property ladder.

Demand for rental homes to pass 1 million in 5 years

Demand for rental homes to pass 1 million in 5 years

Sharp rises

‘Demand for rented homes could still rise more sharply than we have forecast,’ noted Susan Emmett, director Savills residential research. ‘We would question whether policies can accelerate housebuilding enough to see the Government’s target of 400,000 affordable homes for sale reached in the timescale set. And given the overlap between the different schemes, each focused at similar parts of the market, it is possible that one scheme could simply replace the other rather than providing additional homes.’[1]

‘This analysis demonstrates that we still need to provide a substantial number of homes for rent. Government policy should focus on supporting the development of new homes to rent as well as to buy,’ she continued.[1]

[1] http://www.propertyreporter.co.uk/landlords/demand-for-rented-homes-to-swell-by-over-a-million.html

Residential Rents In UK Rise By 2.5% in 2015

Published On: February 1, 2016 at 12:51 pm

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The latest data released by the Office of National Statistics indicates that private rental prices paid by tenants in the UK increased by 2.5% in the year to December 2015.

Prices increased by 2.7% in England, 0.7% in Wales and in 0.9% in Scotland. In London, prices increased by 3.9%.

English Increase

More detailed figures from the report show that since January 2011, rental prices in England have risen more than those in both Wales and Scotland. Indeed, the annual rate changes recorded in Wales continue to be less than the average for Great Britain.

Since the start of 2012, English rental prices have shown yearly increases of between 1.4% and 3%. In the 12 months to December 2015, rental prices rose in each of the nine regions of England. Unsurprisingly, the largest rises were in London, followed by the East and South East with 2.8%. Rental prices in the capital have been stronger than those recorded in the rest of England since 2010.

Overall, the rental market in the country showed signs of continued strength in the final quarter of 2015, with prices increasing 2.5% in the year to December. However, this was a slowdown of 0.2% in comparison to figures released at the end of quarter three.

Residential Rents In UK Rise By 2.5% in 2015

Residential Rents In UK Rise By 2.5% in 2015

Slows

This slowdown can be attributed in part to Scotland, where prices increased just 0.9% in the year to December 2015, a fall of 0.7% compared to the annual growth rate in September.

Additionally, conditions in the housing market in general may have had an effect on the rental market. House price growth has typically been greater than rental rises for a number of years.

Demand however remains high, with statistics released by RICS indicating that those interested in renting accommodation rose again in the three months to December. However, new landlord instructions fell.

Scottish rents rise in December

Published On: January 27, 2016 at 10:08 am

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The most recent Scotland Buy-to-Let Index from Your Move indicates that there was a surprising end of year increase in Scottish rental growth.

Data from the report shows average residential rents north of the border rose by 0.4% in December-the highest monthly rent rise recorded since June. In addition, this was a more substantial rise than the 0.1% in November.

Rises

This increase brought the average monthly rent in Scotland to £548.

Annually, rental growth is also starting to show considerable rises. Year-on-year rental growth had been on the decline since June 2015, where they stood at 3.1%. December however marked an upturn in annual growth, with Scottish rents now on average 2.2% greater than one year ago, up from 1.4% in the twelve months to November.

‘On average, Scottish rents closed the year £12 higher per month than where they started,’ observed Brian Moran, lettings director at Your Move Scotland. He said, ‘that could stack up to a not inconsiderable £144 extra for some tenants over a twelve month contract. As we enter 2016, it’s encouraging news that the majority of Scottish tenants can afford higher rents-and that arrears have dropped for the second month in a row in December.’[1]

Scottish rents rise in December

Scottish rents rise in December

Reignited

Moran feels that, ‘Scottish rent rises have been ignited again recently by the improvement in wages and the gains made in the jobs market, while the supply shortage continues to fan the flames. Outside of the summer months, the New Year often sees the second biggest cycle of new tenancies and ushers in a busy time for the lettings market.’[1]

‘It’s the period where people typically take up fresh career opportunities and implement new life changes-and this wave is already evident in the uptick of rents over November and December, as savvy tenants act quickly to beat the January rush,’ he continued.[1]

Concluding, Moran noted that, ‘as the year progresses, other artificial factors will come into play. The Scottish Government decision to agree with George Osborne’s extra 3% of duty on the purchase of second homes is likely to distort the natural flow of the market, with any further buy-to-let investment likely to be front-loaded into the early months of the year. Once that deadline passes and if investment into the private rented sector becomes more hesitant, tenants’ rents may become much more exposed to the problem of supply.’[1]

[1] http://www.propertyreporter.co.uk/landlords/scottish-rents-see-end-of-year-surge.html

 

18% of landlords will leave sector due to tax changes

Published On: January 22, 2016 at 10:04 am

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A concerning new survey has indicated that the majority of landlords believe that the Government’s perceived assault on the buy-to-let sector will lead to serious market damage.

Research conducted by property management group Orchard and Shipman suggests 90% feel that the tax hikes will bring about higher rents. This was based on a survey of 500 landlords.

Leaving

Further results indicate that one quarter of landlords will sell their properties as a direct result of the changes, with 18% saying that would have to leave the sector altogether.

In addition, the research shows that over 90% of landlords think that they should be able to deduct legitimate costs from rents. This was found to be one of the main issues with the Government’s proposals to limit mortgage interest tax relief for the more higher-taxed landlords.

Committed

Over half of the landlords surveyed said that they would increase rents over the course of 2016, to cover the increased financing costs.

However, Orchard and Shipman thinks the Government’s ambition to thwart the buy-to-let sector may yet come up short.

18% of landlords will leave sector as result of tax changes

18% of landlords will leave sector as result of tax changes

‘Many landlords and property investors are committed and passionate and will do whatever it takes to protect their interests. Our research shows that the majority of landlords are looking at ways to recover the potential drop in revenue,’ noted Shane Spiers, chief executive of the firm.[1]

‘I believe that the buy-to-let market will pull together to ensure it continues to provide much needed accommodation to meet growing tenant demand,’ he added.[1]

[1] http://www.propertyreporter.co.uk/landlords/will-the-governments-tax-changes-discourage-btl-investment.html