Posts with tag: tenants

Tenant demand increases for third straight month

Published On: March 9, 2017 at 12:29 pm

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The most recent report from the Residential Institute of Chartered Surveyors (RICS) reveals that new buyer enquires remained flat during February.

However, in the lettings market, tenant demand rose for the third consecutive month, with 15% more respondents to the RICS survey seeing an increase.

Increased Demand

However, this rise in demand is more modest than at the same period 12 months ago, when 29% respondents cited a rise.

New landlord instructions also fell, with a net balance of -10%. This is the slowest reading in over two years. This negative trend is likely to persist in the next couple of months, with changes to mortgage interest tax relief starting to take effect in April.

As a result, rental expectations remain positive, with 24% more people asked feeling good about the coming months. The survey reveals that respondents predict rents to rise by 2.7% in the next year.

During the next five years, this growth is expected to rise to 4.4% per year.

Tenant demand increases for third straight month

Tenant demand increases for third straight month

Challenges

Stephen Wasserman, Managing Director of West One Loans, noted: ‘The persistent supply vs. demand challenge plagues the property market, with landlords looking to capitalise on strong demand having to overcome sustained supply-side issues. The changes to buy-to-let taxation are likely encouraging some to put the brakes on their investments but, with many hungry renters, landlords shouldn’t walk away completely. Perseverance is likely to deliver results, and we’ve seen both in the BTL market and the linked bridging finance market a significant switch by professional landlords, to buying through limited companies and other methods to mitigate the tax changes.’[1]

‘The government and private sector are working to rectify the supply issue, but this will take time and there are opportunities for investors in the interim too. Indeed, at the end of last year we saw a significant recovery in the bridging loan market after stutters provoked by the summer’s economic storms. We anticipate this trend will continue as the housing supply is squeezed and investors are ever more likely to need quick and flexible financing options to enable them to move quickly and push deals across the line. The industry has to respond, there are opportunities out there and pace is key,’ Wasserman added.[1]

[1] http://www.propertyreporter.co.uk/property/tenant-demand-rises-for-third-consecutive-month.html

 

Tax Changes Restricting Access to Homes for Vulnerable Tenants

Published On: March 9, 2017 at 10:38 am

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Categories: Landlord News

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The Government’s tax changes for landlords are restricting access to rental homes for vulnerable tenants, warns new research.

Tax Changes Restricting Access to Homes for Vulnerable Tenants

Tax Changes Restricting Access to Homes for Vulnerable Tenants

Following yesterday’s Budget that failed to address the housing crisis, the Residential Landlords Association (RLA) is highlighting figures that show that surveyors believe private sector rents will rise by more than 20% over the next five years, severely restricting access to homes for vulnerable tenants.

The forecasts arrive just weeks before changes are introduced that will mean landlords are taxed on their turnover rather than profit, and mortgage interest tax relief will be reduced to the basic rate of Income Tax.

The new research confirms assertions by David Miles, a former member of the Bank of England’s Monetary Policy Committee, that rents will be pushed up by between 20-30% in order for landlords to offset the impact of the measures, alongside the Stamp Duty surcharge on the purchase of investment properties.

Research by both the Council of Mortgage Lenders and Paragon Mortgages has, in recent weeks, suggested that landlords are already raising rents. This echoes concerns first raised by the RLA in its own study conducted shortly after the tax changes were announced.

According to the research released by the Royal Institution of Chartered Surveyors, around one third of those who responded believe vulnerable tenants are finding it more difficult to access rental housing.

Last year, Dame Kate Barker, who authored an independent review of UK housing supply for the Government, issued a warning that the tax changes risked vulnerable tenants losing their homes, “because the buy-to-let landlord no longer finds the yield acceptable or can’t afford it”.

The Policy Director of the RLA, David Smith, responds: “Today’s survey is a reminder that it is tenants who will ultimately suffer as a result of the Government’s punitive tax changes.

“We need a tax system that supports rather than hinders housing growth, but yesterday’s Budget did nothing to achieve this, despite repeated warnings from the RLA and others over the last 18 months that these changes would have negative effects on landlords and tenants.”

He adds: “Even at this late stage, we call on all sides to work with the RLA as it develops its own blueprint for a sector that provides the homes to rent we so desperately need.”

What Generation Rent Most Feels it’s Missing Out on

Published On: March 8, 2017 at 11:08 am

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It’s not exactly news that homeownership is at a record low. In fact, the private tenant population hit the highest level seen since 1961 last year. While renting may be a flexible and appealing option to some, generation rent still feels like it’s missing out on certain aspects of a comfortable home life.

Many tenants are struggling with escalating rents, while the situation is only expected to get worse as a result of the Government’s letting agent fee ban. And generation rent can forget saving for a deposit, what with the country’s rock bottom interest rates and unaffordable house prices.

Now this wouldn’t be as much of a problem if tenancies were more secure, rents were stable, and tenants could remain in their homes for as long as they want.

But, in the current system, generation rent feels denied to a whole range of experiences and choices. So what are these, and how can landlords help?

Decorating

With many landlords choosing to keep their properties neutral – to appeal to as wide a range of renters as possible – tenants feel that their homes don’t reflect them and are soulless. If tenants sign up for long-term contracts, it may be a good idea to allow them to paint certain rooms – you could even ask them to return the property to you in the same condition you let it to them, to avoid putting future tenants off.

Pets 

As lots of landlords try to avoid as much damage to their investments as possible, most will ban all pets as standard. But it’s important to remember that not all animals will cause significant damage. Simply asking your tenants if you can meet their pet before they move in and requiring a larger deposit will enable them to bring their cute companion to their new home and have some company.

What Generation Rent Most Feels it's Missing Out on

What Generation Rent Most Feels it’s Missing Out on

Adapting the property

When you buy your own home, you are left with pretty much free reign over what changes you can make. But generation rent doesn’t have the same freedom. Your tenants may feel like a loft conversion or open-plan kitchen/diner would work for them. It could be a great investment opportunity for you, as you may find that your tenants want to stay in the property longer, while future renters will be attracted to the space on offer.

Getting to know neighbours

Although your tenants may be happy where they live, they will likely feel that they can’t get too close to neighbours or as involved in the local community as they would like, as they don’t know when they’ll next have to move on. Longer-term tenancies will give them the stability they need to feel part of a secure neighbourhood for the foreseeable future.

Knowing where you’ll be in the future

Which leads on nicely to the next point. Although revenge evictions may now be illegal, they are still a threat to generation rent. Landlords may even just decide to issue notice to quit in order to seek higher rents from prospective tenants. Consider how valuable and reliable your tenants are to you before you simply decide to remove them from the property – your next tenants may not be so good.

Lifestyle choice

While it is vital that landlords or their letting agents conduct periodic inspections throughout a tenancy, renters may feel that they do not have the freedom or ability to relax in their homes if they are too frequent. When new tenants move into your property, aim to conduct periodic inspections every quarter, before moving to bi-yearly visits after sufficient evidence that your tenants are looking after the property.

Gardens

It is true that some tenants don’t take enough care of their gardens and leave them in a mess at the end of their tenancy, but some will want to get involved in gardening and plant some vegetables or flowers. While it is common for landlords to provide easy to maintain gardens, simply asking your tenants whether they would like to make some changes could actually increase the value of your property. But make sure they don’t do anything too extravagant – you want your future tenants to be able to maintain it!

Money

Owning your own home or investment properties allows you to enjoy accumulating equity on your assets. But tenants often feel that rent is lost money. Many won’t have the option to borrow on the back of their housing wealth, help their children buy their own homes or invest in more properties down the line. Although landlords alone cannot solve the housing crisis, it is important to keep your rents stable and secure the lives of your tenants where possible.

What are you doing to support generation rent?

Rental price inflation running below general inflation

Published On: March 3, 2017 at 9:43 am

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New figures indicate that rental price inflation is running below general inflation, as many landlords are coming to the conclusion that a number of tenants have, or are approaching, an affordability ceiling.

The HomeLet Rental Index shows that the annual rate of rental price growth reached 0.8% in February. This is below the general rate of inflation, which stands at 1.8%, according to statistics.

Rents

In addition, the figures show that the average UK rent for a new tenancy starting in February was £895pcm. This was a rise from £888 seen at the same period last year.

Annual rental price growth has slipped from a high point of 4.7% in June 2016. There has been a fall in pace of rental inflation in regions of the country where rents were previously rising most.

HomeLet’s research suggests that more than half of the 3,726 landlords questioned could have no alternative but to raise rents in the face of increasing pressures. These have been caused by upcoming tax changes, though almost a third said they will defer rent rises until 2018.

The table below shows how rents have risen month-on-month and year-on-year in twelve regions surveyed:

Region Average rent in February 2017 Average rent in January 2017 Average rent in February 2016 Monthly variation Annual variation
Yorkshire & Humberside £623 £615 £604 1.3% 3.0%
Northern Ireland £604 £602 £589 0.3% 2.5%
North West £677 £673 £661 0.7% 2.5%
Wales £602 £606 £589 -0.6% 2.1%
East Midlands £596 £583 £586 2.3% 1.8%
West Midlands £660 £658 £650 0.2% 1.5%
East of England £896 £893 £885 0.3% 1.2%
Greater London £1,520 £1,497 £1,514 1.6% 0.4%
North East £524 £527 £524 -0.7% 0.0%
South West £791 £791 £791 0.0% 0.0%
South East £992 £989 £994 0.3% -0.2%
Scotland £597 £606 £603 -1.5% -0.8%
           

 

Rental price inflation running below general inflation

Rental price inflation running below general inflation

Affordability

What’s more, the survey found that landlords appear to be sympathetic to ensuring that rents are affordable for tenants. Pleasingly, 96% of landlords said that they are happy with their existing tenants.

Martin Totty, Chief Executive of Barbon Insurance Group, parent company of HomeLet, said: ‘Our research again demonstrates that the vast majority of landlords have positive working relationships with their tenants.’[1]

‘In recent months, we have seen landlords treading very carefully with rental price rises, amid concerns about tenants’ ability to pay. With more than one in five landlords blaming an increase in their tax liability for raising rents, it remains to be seen if this can sustain. Landlords will hope the Chancellor does not make it harder for them to continue supporting their tenants in this way, with further changes to the tax system or legislation, as he prepares to unveil his Budget on the 8th March,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/private-sector-rents-rise-below-inflation

Private Tenant Population Highest Since 1961

Published On: March 3, 2017 at 9:23 am

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Yesterday’s English Housing Survey revealed that the private tenant population in the country is now at the highest level since 1961.

Private Tenant Population Highest Since 1961

Private Tenant Population Highest Since 1961

The Headline Report, which can be found here, shows that the private tenant population in England now stands at 4.5m, including 1.6m families with dependant children and 1.5m households whose head is aged 45 or over.

According to the Department for Communities and Local Government (DCLG) Live Table 104 on Tenure in England, there were 4.377m private rental households in 1961. However, the tenure was larger at the start of the 20th Century.

Responding to the report that shows that the private tenant population has now hit 4.5m, the Director of tenant lobby group Generation Rent, Dan Wilson Craw, says: “Runaway house price inflation and the difficulty of saving a deposit have trapped millions in private rented housing – even more than in the day of slum landlords like Rachman in the early 1960s.

“Private tenants have few protections from landlords who want to raise the rent or evict them without a reason. People can’t enjoy a good quality of life with no certainty over their home – and it is especially difficult for the growing number of families and older people renting from private landlords.”

He adds: “The Government knows that the housing market is broken, but it is failing to do enough to fix it. Ministers need to expand their ambitions to build homes, while reforming the law to provide stability for the millions who will be unable to buy in the foreseeable future.”

In its Housing White Paper last month, the Government shifted its long-standing focus on homeownership to the private tenant population.

Some of the measures announced in the crucial document include longer-term tenancies for private renters. However, ARLA Propertymark believes that only a minority of tenants want longer-term tenancies.

What are you doing to help the private tenant population feel more secure in their homes?

Report reveals tenants’ lack of knowledge of rental market

Published On: March 1, 2017 at 10:50 am

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A new survey of 1,000 tenants and landlords has provided a bleak account of the state of the private rental sector.

The report suggests that the growing complexity of the sector is providing many tenants and landlords with real challenges.

Legislation Changes

Just under half of tenants said they had never heard of fake landlord scams before, despite them receiving extensive media coverage in the last year.

During 2015, cases of rental fraud reported to Government body Action Fraud increased by 44% year-on-year. The Local Government Association suggests however that this represents just 5% of the true number of victims, as the majority of cases go unreported.

Worryingly, the Government says that fake landlord scams lead to £63m being lost by tenants in the last year.

Report reveals tenants' lack of knowledge of rental market

Report reveals tenants’ lack of knowledge of rental market

Awareness

In addition, the survey revealed a lack of awareness concerning Government-backed initiatives such as mandatory membership of agents in one of the redress schemes, alongside those for landlord licensing and accreditation.

Andrew Goodacre, Chief Executive of the RLA, observed: ‘While the vast majority of private rental sector landlords are providing safe and secure homes for renters across the country we are aware the criminal minority are out there. The Residential Landlords’ Association has always promoted tenant and landlord education to encourage a greater awareness of responsibilities among both landlords and tenants, which in turn improves standards in the sector.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/survey-reveals-tenants-shocking-lack-of-knowledge-about-renting