Posts with tag: tenants

Tenants Paying over Double what Homeowners Pay in Mortgage Interest

Published On: October 3, 2017 at 9:18 am

Tags: homeowners,mortgages,rent prices,tenants

Tenants Paying over Double what Homeowners Pay in Mortgage Interest

Tenants are paying more than double what homeowners pay in mortgage interest, according to the latest report from Savills.

The agent insists that this underlies the need for more rental stock across the UK.

Using a range of data from UK Finance and the Office for National Statistics (ONS), Savills worked out that, in the year to June 2017, tenants paid more than £54 billion in rent to private landlords, compared with £26.5 billion in mortgage interest payments from homeowners.

The total private rental bill for Great Britain has risen by £14 billion over the last five years – up by 35% – while the number of homes in the private rental sector has grown by just 21%.

In comparison, the amount of mortgage interest owed by homeowners has fallen by £6.4 billion – largely due to low interest rates, the agent reports.

Of course, Savills points out that some of the increase will be due to there being more people renting their homes, rather than simply the amount paid going up.

For example, private tenants in England made up 19% of housing tenure in 2015, increasing to 19.9% in 2016, while the proportion of owner-occupiers dropped from 63.3% to 62.9% in the same period.

Similarly, in Scotland, the proportion of rental households rose from 14% to 15% between 2015 and 2016, while the percentage of those owning their own homes has remained flat.

The Head of Residential Research at Savills, Lucian Cook, comments on the findings: “It is widely accepted that the solution to the affordability crisis in homeownership is to build many more homes.

“The same is true in the private rented sector. Savills’ analysis for the British Property Federation [BPF] shows that there are now almost 100,000 Build to Rent homes under construction or in planning across the UK, up from 48,000 last year.”

He adds: “This is real progress, but we need policy that encourages the rapid expansion of Build to Rent.”

Landlords Forced to Register with Ombudsman Scheme Under New Conservative Plans

Published On: October 2, 2017 at 9:34 am

Author: Em Morley

Categories: Landlord News

Tags: disputes,government,private rental sector,tenants

The Secretary of State for Communities and Local Government, Sajid Javid, pledged to offer private tenants greater rights by making it compulsory for landlords to register with an ombudsman scheme at the weekend’s Conservative Party conference.

Under the initiative, all private landlords would have to become members of an ombudsman scheme in a bid to improve the dispute resolution system for tenants. Javid also announced a consultation on a new housing court.

Landlords Forced to Register with Ombudsman Scheme Under New Conservative Plans

New incentives will also be revealed in the Autumn Budget to ensure that landlords offer tenancies of at least 12 months, Javid said.

The new Conservative plans also involve a proposal to ensure that all letting agents are registered, which would mean that agents would not be able to operate in the role without qualifications or professional oversight.

Javid said: “For too long, tenants have felt unable to resolve the issues they’ve faced, be it insecure tenure, unfair letting agents’ fees or poor treatment by their landlord with little to no means of redress. We’re going to change that.

“We will insist that all landlords are part of a redress scheme and we will regulate letting agents who want to operate. Everyone has a right to feel safe and secure in their own homes, and we will make sure they do.”

The CEO of ARLA Propertymark (the Association of Residential Letting Agents), David Cox, comments on the Conservatives’ pledge to regulate the private rental sector: “After 20 years of our campaigning falling on deaf ears, we’re very pleased the Government has taken the decision to regulate the private rented sector. This will be the single greatest step forward in a generation, in terms of consumer protection for private tenants, and will do more to clean up the image of the industry than the hundreds of smaller laws and pieces of legislation introduced over the last 20 years. However, regulation can take different forms, and we need to see the detail of proposal to be confident that it will be effective for tenants and landlords.”

The Policy Director of the Residential Landlords Association (RLA), David Smith, has welcomed the plans, which were included in its manifesto for the snap General Election in June. He responds to the announcement: “We called for housing courts to speed up and improve access to justice for good tenants and landlords, as well as for tax incentives to support good landlords. This is a welcome sign that the Government is ready to listen to practical proposals from the RLA to improve the working of the sector, and encourage the majority of responsible landlords and tenants who want to and are doing the right thing.”

From another perspective, the Director of tenant lobby group Generation Rent, Dan Wilson Craw, reacts to Conservative plans for further investment in the Help to Buy scheme: “Of all the responses the Government could have to the housing crisis, expanding Help to Buy should be near the bottom of the list. Nearly five million households live in private rented homes, but only 135,000 have bought through the scheme so far. Its biggest beneficiaries have been large property developers.

“The £10 billion being touted for Help to Buy could be invested much more effectively in new council housing, which could rehouse the 75,000 families who are currently stuck in temporary accommodation.”

He continues: “The Government is right to seek to improve life in the private rented sector too, and proper regulation of letting agents, along with a formal redress process for complaints against landlords, are much needed.

“But for tenants to have the confidence to take on a negligent landlord, they need assurance that they won’t simply be kicked out. The proposed incentives for landlords to offer 12-month tenancies would make barely any difference to the status quo.”

What are your thoughts on the new Conservative plans for the private rental sector, particularly proposals for landlords to register with an ombudsman scheme?

The Labour Party has already outlined its proposals, including plans for rent controls. Read more here: https://www.justlandlords.co.uk/news/jeremy-corbyn-pledges-rent-controls/

More People will Rent than Own their Homes in 8 Years, Economist Believes

Published On: September 22, 2017 at 9:03 am

Author: Em Morley

Categories: Property News

Tags: homeownership,housing crisis,renting,tenants

More people will rent properties than own their own homes in just eight years’ time, according to one economist.

More People will Rent than Own their Homes in 8 Years, Economist Believes

Sebastian Burnside, a Senior Economist at NatWest, believes that a major cultural shift in homeownership is on the horizon, with more private tenants than mortgaged homeowners in just a few years.

By 2025, Burnside claims that the number of mortgaged households will be just under six million, while the amount of households in private rental accommodation will be slightly more, at six million. This crossover is expected to happen in late 2024.

Burnside says: “We think it’s a fairly comfortable bet that, by 2025, we will have more households renting privately than owning their homes with a mortgage, which is a big cultural shift for a country like the UK and something that’s being driven by those underlying demographics.”

There are already more people owning their homes outright than people buying with a mortgage, and the number of outright homeowners is expected to continue climbing.

Since 2013, outright homeownership has been the largest form of housing tenure in the UK. By 2024, Burnside says that around nine million households will own their homes outright.

The amount of households in social rental housing is forecast to edge downwards, from four million today to just under that figure.

Burnside reports that fewer people are taking out mortgages because of the differences between their incomes and house prices. However, baby boomers are increasingly able to pay off their mortgages.

He insists that, as the private rental sector grows, lenders need to rethink their repossession strategies.

At present, lenders tend to treat homeowners who fall into mortgage arrears with more leniency than buy-to-let landlords; defaulting landlords typically have their properties possessed within months.

However, Burnside notes that possessing landlords’ properties quickly is problematic to their tenants, who often develop ties to the area they’re living in.

How quickly do you expect renting to overtake homeownership?

Landlords are Helping to Fill Social Housing Sector Gaps, Insists RLA

Published On: September 20, 2017 at 9:10 am

Author: Em Morley

Categories: Landlord News

Tags: benefits,social housing,tenants

Landlords are Helping to Fill Social Housing Sector Gaps, Insists RLA

Landlords are helping to fill gaps in the social housing sector, insists the Residential Landlords Association (RLA) in response to a controversial call made by the National Housing Federation (NHF).

The Chief Executive of the NHF, David Orr, has called for money paid in housing benefit to tenants in the private rental sector to be diverted to social housing providers.

But the Policy Director of the RLA has hit back, insisting that landlords are helping to fill the gaps in the social housing sector.

He said: “The private rented sector plays an increasingly important role in housing some of the poorest and most vulnerable tenants, many of whom have already been let down by social housing providers. Local authorities are now dependent on the private rental sector to meet their homelessness obligations.

“It is also wrong to claim that private landlords do not invest in new housing. Off-plan purchases by private landlords are key to unlocking new developments, providing badly needed finance for new homes, up-front.”

He continued: “The RLA has long argued that we need more homes to be built, across all tenures, but recent Government policies have stalled the housing market. Instead of seeking to split the housing sector, the NHF should be working in partnership across the housing sector, to press the Government to adopt investment-friendly policies that will kick-start housing growth.”

Do you house tenants that were once reliant on the social housing sector?

We remind all landlords with tenants on housing benefit to get up to date with the new Universal Credit scheme, which will continue to be rolled out across the UK over the end of this year and next year.

We have a comprehensive guide to the Government’s new welfare system to help you understand what it will mean for you and your tenants: https://www.justlandlords.co.uk/news/landlords-guide-universal-credit/

Parliament to debate rental payment credit rating plan

Published On: September 19, 2017 at 8:54 am

Author: Em Morley

Categories: Property News

Tags: credit score,Parliament,rental payments,tenants

Private tenants who are prompt with their rental payments may soon see their credit score boosted, which in turn could make it easier for them to get a foot on the housing ladder.

This comes after the news Parliament is to debate the idea of taking rental payments into account when people make an application for a mortgage.

Debate

The debate will take place following a petition on the issue raised by Plymouth construction worker Jamie Pogson attracted 147,307 signatures. This was substantially more than the 100,000 required to force a debate in Parliament.

Typically, credit rating agencies do not routinely include rental payments when calculating credit scores. This means a tenant could find it difficult to access a mortgage, even if they have a long history of prompt and full rental payments.

However, a recent survey of nearly 3,000 buy-to-let landlords carried out by the RLA discovered that 61% of landlords would support rental payments being added to credit histories, just in the same way as mortgage payments.

Parliament to debate rental payment credit rating plan

In addition, the RLA believes that including rent payments in this way will make it easier for landlords to ascertain a more accurate assessment of a prospective tenants’ credit and rental payment history.

Checks

RLA Chairman Alan Ward observed: ‘With many tenants wanting to buy a house of their own, it is absurd rent payment is not routinely included when undertaking credit checks for mortgage applications.’

‘Moving to such a scheme would help not just tenants, but also landlords by giving them a clearer sense of whether a prospective tenant has historically paid their rent in full and on time.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/9/parliament-to-debate-rent-payments-being-added-to-tenants-credit-score

Rents rose by 2.4% during August

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

Author: Em Morley

Categories: Property News

Tags: landlords,rental rises,rents,tenants

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

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