Posts with tag: rents

Rents in UK just 3.5% up on 2008

Published On: November 25, 2015 at 10:16 am

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New figures from 211-office agency Belvoir indicates that average rents in the UK are better than before the pre-economic downturn in 2008, but only by a small amount.

The rental index from Belvoir is recorded and produced by property expert Kate Faulkner.

Trends

Belvoir’s index, ‘looks at national and regional trends,’ explains Dorian Gonsalves, director of commercial and franchising at the company. ‘The Q3 2015 index shows that almost six years post-recession, average rents in England, Scotland and Wales exceeded the Q3 2008-but only by 3.5%.[1]

‘A total of 14 Belvoir offices in counties that include Lancashire, Norfolk and Devon have yet to recover to levels reached in 2008. Clearly, the market is far from spiralling out of control in terms of rental increases, although this has repeatedly been suggested in media reports throughout the year. It is very clear that a shortage of good quality accommodation is strongly impacting on the market and the ability of agents to meet tenant demand,’ she continued.[1]

Rents in UK just 3.5% up on 2008

Rents in UK just 3.5% up on 2008

Shortage

A major factor determining the performance is the shortage of good quality rental accommodation to satisfy demand. Belvoir said that 14 of its offices in counties such as Lancashire, Norfolk and Devon have yet to reach levels seen in 2008.

These figures are backed up by another report from the Association of Residential Letting Agents (ARLA), which shows that just 25% of agents reported rent increases for tenants in October.

‘Fewer agents reporting rent increases should bring some relief to tenants before Christmas,’ noted David Cox, managing director of ARLA. ‘Although it’s trypical that demand dropped at this time of year, as there’s a seasonal lull in the run up to Christmas, we expect to pick up again in January.’[2]

‘Looking ahead to next year, we’d hope to see the number of tenants experiencing rent hikes remain low with supply and demand leveling out,’ he added.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/11/average-rents-in-britain-only-3-5-higher-than-in-late-2008

[2] http://www.home.co.uk/guides/news/story.htm?low_rental_supply_pushes_up_prices

 

Fewer tenants see rent increases

Published On: November 23, 2015 at 2:00 pm

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An encouraging new report has indicated that a lesser number of tenants are experiencing rent rises.

Data from the investigation from the Association of Residential Letting Agents (ARLA) shows the total number of letting agents reporting rent increases for tenants dipped to 25% in the last month, in comparison to 32% in September.

This represented the lowest number of monthly rent hikes during 2015.

Dropping demand

Demand for rental accommodation fell in October, as did supply of available accommodation. ARLA agents recorded 33 new tenants on average per branch during the month, the lowest of the year.

However, the rental market in the capital went against this trend. The report indicates that demand for privately rented accommodation rose in the capital during October, with an average of 42 new prospective tenants registered per branch, an 8% increase from September.

Supply for rented properties dropped in line with typical seasonal demand, falling from 182 properties per branch in September to 173 in October. Would-be renters in the East of England and in the South West have the best chance of securing a property, with agents in these regions managing 199 and 184 properties respectively.

Fewer tenants see rent increases

Fewer tenants see rent increases

Seasonal Relief

David Cox, managing director of ARLA, said that the findings, ‘should bring some relief to tenants before Christmas. It’s definitely a step in the right direction, however a quarter of tenants are unfortunately still seeing hikes.’[1]

‘Although it’s typical that demand dropped at this time of year, as there’s a seasonal lull in the run up to Christmas, we expect to pick up again in January. Looking ahead to next year, we’d hope to see the number of tenants experiencing rent hikes remain low with supply and demand leveling out. However, a lot is resting on the economic and political agenda,’ he continued.[1]

Cox went on to say that, ‘we’re still waiting for new houses, promised by the Prime Minister to be built. Whilst this will take pressure off the rental prices as supply rises, the changes to landlord tax proposed under the Finance Bill is likely to discourage new landlords from entering the market.’[1]

‘Further, it’s been a waiting game all year to see if Mark Carney will raise interest rates in the New Year-this will play a big part in determining whether renters looking to buy a home will be able to afford to. And when interest rates do rise, the goal of homeownership will be pushed further out of reach for many and of course put further pressure on the private rental sector,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-hold-off-on-rent-hikes.html

 

Rent gap between London and rest of UK grows

Published On: November 10, 2015 at 11:56 am

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The void between the pace of yearly rent rises in the capital and the rest of the UK has grown again, according to data from the latest HomeLet Rental Index.

After shortening during the summer months, the gap widened in the third quarter of 2015, with rents up annually by 7.5% year on year in London and 3.5% in the rest of Britain.

Capital gains

On average, tenants in London paid £1,560 per month, over £800 more than the rest of the UK. For the second consecutive month however, rents are rising most quickly in Scotland, where a 9% rise was recorded.

With the pace of rent rises slowing over the Autumn months, rent inflation has grown in nine of the twelve regions. The only exceptions were the North West of England, where rents were down by 4.9%, Northern Ireland (-2.1%) and East Anglia (-1.2%).

In addition, the October index shows new views from tenants about the rental market. Results show that a number of tenants are renting their home for the long-term and that value is placed on a good relationship with their landlord.

Rent gap between London and rest of UK grows

Rent gap between London and rest of UK grows

Trust

64% of respondents said that they wanted to continue renting for one year or more, with 90% saying that they were happy with their landlord. This said, 71% noted that they would prefer to own a home, with 66% believing that saving for a deposit is the greatest barrier preventing this.

Martin Totty, chief executive of HomeLet parent company Barbon Insurance Group, said, ‘our survey showed that many tenants ultimately aspire to own their own home, but that just over half of them aren’t actively saving for a deposit yet. 66% of those questioned said that a deposit wasn’t affordable for them.’[1]

‘However, the positive news is that almost nine out of ten tenants told us that they were happy with the standard of their current rented property and the majority of tenants told us they were happy with the service provided by their landlord or letting agent. Whilst we are seeing upward pressure on the rental market it’s important that the sector continues to drive professional standards forwards for mutual benefit of tenants, landlords and letting agents,’ Totty added.[1]

[1] http://www.propertywire.com/news/europe/uk-rental-market-index-2015111011185.html

 

 

Rents to increase 16%-22% in 5 years

Published On: November 6, 2015 at 3:09 pm

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Savills has forecasted that UK rents will rise by an average of 16.5% by the end of 2020. What’s more, rents in London are expected to rise by 22.8% over the same period.

In its annual five-year forecast, the agent says that rental availability is already so stretched for many households, rental growth will in effect be held back by affordability.

Private-rented costs

The agency says that households in the private rented market already pay more of their income than those living in other sectors. Many are reliant on housing benefit to make the tenure more affordable, thus reducing the growth of rents if they are to remain affordable for tenants.

‘Rental markets that are heavily dependent on housing benefit tenants such as some of the seaside towns along the south cost and parts of the northern urban belt will come under renewed pressure due to government policy (our rental forecasts are for non-housing benefit dependent tenancies,’ said a Savills spokesperson.[1]

Savills predicts that the traditional rental demographic of sharers and young professionals looks set to continue to grow, as the cost of buying restricts the total number able to make the move into homeownership. However, these groups are likely to benefit from the predicted wage recovery, which will drive the majority of rental growth in the coming years.

Rents to increase 16%-22% in 5 years

Rents to increase 16%-22% in 5 years

Warning

This said, Savills warns that in some high demand/low supply markets, more people may live in larger household groups. As a result, larger properties could be in higher demand and produce more rental growth.

Like many other industry members, Savills is warning that a cap on mortgage interest payments will greatly reduce the profitability of buy-to-let investment a considerable number of landlords.

‘Over five years we expect the cash surplus [profit] on the average buy to let investment to fall from over £2,500 to under £950. This will cause some highly geared buy to let investors to rationalise their portfolios and limit the ability of a larger number of others to expand,’ says the agency.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/11/rents-to-rise-16-to-22-over-next-five-years–forecast

 

 

 

Rents to grow 3%-4.5% in 5 years

Published On: November 4, 2015 at 3:28 pm

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An agency has moved to suggest that average rents in the UK will increase by between 3% to 4.5% during the next five years.

JLL predicts that average rents across Britain will increase by 4.5% in 2016, followed by 4% in 2017. Further predictions suggest that rents will then rise by 3.5% in 2018 and 2019, before slowing to 3% in 2020.

Growth

‘Despite believing that demand will increase and available supply will remain constrained, we anticipate only moderate positive rental growth on a national basis over the next five years,’ noted Adam Challis, head of residential research at JLL. ‘The main limiters are that tenants will move to smaller properties or to cheaper areas in order to ensure their rental costs suit their financial aspirations,’ he added.[1]

Research from the agency’s report indicates that nearly half of all 25 to 34 year olds privately rent, with this proportion likely to rise further in the next 5 years.

Rents to grow 3%-4.5% in 5 years

Rents to grow 3%-4.5% in 5 years

Tax

JLL indicates that the majority of British buy to let landlords are higher-rate tax payers and will therefore be significantly affected by the recently proposed tax changes within the sector. However, it believes that there will not be a significant exodus of landlords from the industry.

Challis warns that, ‘there may be slightly less exuberant enthusiasm from new investors, which may have a longer-term impact on rental supply.’[1]

Mr Challis also said that the big potential growth area within the sector is Build to Let. With this said, he also believes this part of the private rental sector, ‘will always be dwarfed in volume terms by private landlords.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/11/rents-set-to-grow-3-0-to-4-5-over-each-of-next-five-years-says-agency

 

 

Tenant demand up across UK

Published On: October 27, 2015 at 10:03 am

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An encouraging new survey suggests that 40% of landlords reported an increase in tenant demand during the last three months.

Regional rises

A survey by the National Landlords Association indicates that the East of England saw the largest net growth in tenant demand, with a 48% increase. This was followed by the South West (45%), the South East (41%) and Outer London (40%) respectively.

In addition, research found that just 6% of landlords on average reported a decrease in tenant demand during the last three months.

Landlords in the North East reported the highest net decrease in demand in all regions, with a 15% fall. Wales and Yorkshire recorded a 12% drop, while the North West posted an 11% dip.[1]

Tenant demand up across UK

Tenant demand up across UK

Selling

Carolyn Uphill, chairman of the National Landlords Association, said, ‘our research indicates that 5% of landlords will sell up following the government’s plans to remove mortgage interest relief for landlords, which could affect some 600,000 tenancies.’[1]

‘The government’s planned changes, which will be phased over a period of years, gives landlords time to review their finances, but some will still be forced to sell or trade at a loss which is unsustainable and the projected impact will mean that ultimately renters will lose out as a dwindling stock drives up prices and competition for homes,’ Uphill added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2015/10/tenant-demand-up-across-most-of-uk-survey-reveals