Posts with tag: tenants

Rental prices fall as market floods

Published On: June 20, 2016 at 9:53 am

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Latest figures have indicated that rents in the UK have started to dip, with landlords who had rushed to buy property before the Stamp Duty changes beginning to rent them out.

In turn, this has provided tenants with a larger selection of properties to choose from, according to the buy-to-let index from Your Move and Reeds Rains.

Rental falls

Rents for residential properties available to be let across England and Wales have fallen by an average of 0.2% during May, in comparison to April. Typical rents now stand at £792 per month.

Annually, rents are 1.8% greater than in May 2015, half of the 3.6% annual rate of rental growth recorded four months ago.

Adrian Gill, director of letting agents Your Move and Reeds Rains, notes that the number of properties coming onto the market has narrowed the supply-demand imbalance.

Gill said, ‘this is the equivalent of a flash food for the market. Just a month ago rents were heating up and spring was in the air-but this has been put on hold as a tide of new properties to let has disrupted the normal dynamics of supply and demand.’[1]

Slows

Further analysis of the data shows that rental increases in the capital fell to just 1% in the year to May 2016. This was substantially lower than the peak of September 2015, when London rents were up by 11.6% year-on-year.

In contrast, the East Midlands saw rents rise by 7.3% in the year, followed by the West Midlands, where a 5.5% rental increase was recorded in the year.

All 10 regions of England and Wales experienced a rental rise during May, in comparison to the same month of last year.

Despite monthly rents falling as a whole, rental yields are seemingly resilient, due to a similar dip in property prices on a month-on-month basis. Gross yields on typical rental property, pre account factors such as void periods, stand at 4.9%, the same as in April.

Rental prices fall as market floods

Rental prices fall as market floods

Rising returns

When rental income and capital growth are taken into account, before property-specific costs such as maintenance, the average landlord in England and Wales saw returns of 10.2% in the year to May.

This was slightly lower than the 10.7% recorded on month previously, which reflects the slowdown in house price growth.

However, in comparison to the year ending May 2015, this stood at 9.4%, showing that landlords have seen stronger returns over the last 12 months.

In absolute terms, this means that the typical landlord in England and Wales has seen gross returns of £8,712 in the last year.

Mr Gill concluded by saying, ‘Landlords are vital in matching an escalating demand for homes from tenants. Such a scale of demand doesn’t look set to change dramatically just because of a few tax tweaks – so professional and accidental landlords will always be an essential part of the solution. Financial rewards for investing in property, taking on risk and maintaining homes will have to reflect the importance of landlords for our economy and our society.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/6/rents-fall-as-landlords-flood-rental-market

Tenant Loses Case in Supreme Court that Could Have Prevented Evictions

Published On: June 16, 2016 at 9:27 am

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Unlicensed HMO landlord ordered to refund £84,877 to tenants

A private tenant has lost a case in the Supreme Court that could have prevented evictions in the future.

The Supreme Court rejected an appeal by a tenant who claimed a possession order on her home was a breach of her human rights.

Lawyers say that the ruling will be welcome news to private landlords and their mortgage providers.

Tenant Loses Case in Supreme Court that Could Have Prevented Evictions

Tenant Loses Case in Supreme Court that Could Have Prevented Evictions

Had the court ruled in the tenant’s favour, the case could have prevented both landlords and lenders from securing possession of their properties through the courts.

The landmark case, McDonald v McDonald, involved a tenant on an Assured Shorthold Tenancy who had mental health problems and rented the property from her parents.

When her parents fell into arrears on their mortgage, receivers appointed by the lender issued a possession order.

The tenant opposed the possession order on the grounds that it breached her right to respect of her home under Article 8 of the European Convention on Human Rights.

She also claimed that the receivers had not been entitled to serve notice on her in their own names.

The Supreme Court heard the case in March, after initial hearings at Oxford County Court and the Court of Appeal.

Yesterday, five Supreme Court judges ruled unanimously that the tenant’s rights under Article 8 were not infringed by the possession order.

The Residential Landlords Association (RLA) formally intervened in the case to ensure that the rights of landlords and lenders to reclaim possession at the end of a tenancy or lending period remained.

The Policy Director of the RLA, David Smith, says: “It is sad that it has taken this particular case to clarify this important point of law, but if the appeal had been allowed, it would have completely undermined the ability of landlords to reclaim possession of their property at the end of a tenancy.

“It could have opened the door to those tenants who might seek to make false accusations to remain in a property.”

Smith continues: “This would have severely damaged the confidence of landlords to let properties and lenders to provide the funds for the homes to rent the country needs.

“Whilst welcoming the court judgement, it does act as a reminder that landlords should be clear that they can keep up with mortgage payments, even through difficult financial times.”

However, the tenant could still pursue her case… In the European Court of Human Rights.

Young Tenants Spend Half of Their Wages on Rent

Published On: June 15, 2016 at 11:20 am

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Young tenants in Britain are forced to spend around half of their wages on rent, a new report has claimed.

Young Tenants Spend Half of Their Wages on Rent

Young Tenants Spend Half of Their Wages on Rent

A single working tenant aged between 22-29 and renting a one-bedroom property spends an average of 48% of their taxed income on keeping a roof over their head, according to the study by Countrywide.

The property firm found that the amount of income that tenants spend on rent is up by 3% on 2007. However, in London, young tenants typically pay 57% of their earnings on rent, up by 16% over the same period.

The average cost of renting a one-bedroom home in Britain is £749 per month, while in the capital it soars to £1,133.

A spokesperson for Countrywide comments: “In London, rents have risen much faster than wages, stretching affordability. Many have adapted by moving to cheaper areas or sharing.”

However, away from the capital, the proportion of income taken up by rent is lower than it was in 2007 in many parts of the country, found Countrywide.

In the North East, the cost of a one-bedroom property accounts for 35% of a young tenant’s post-tax income, down from 42% in 2007.

Young renters in Scotland, Yorkshire and the Humber, the East Midlands, South East and South West have also experienced falls in the proportion of income being eaten up by rent.

Positively, new data also shows that the amount of tenants in serious rent arrears has dropped, as employment levels remain high. However, the private rental sector continues to grow, meaning that supply levels and the Government’s crackdown on buy-to-let could push rent prices higher.

Tenants may be facing some good news, however, as the proposed Renters’ Rights Bill was unopposed in the House of Lords on Friday. The bill plans to abolish letting agent fees charged to tenants, making the renting process cheaper.

Serious rent arrears down by 4% in Q1 of 2016

Published On: June 15, 2016 at 9:48 am

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Encouraging new data has revealed that 3,100 less households were in serious rent arrears in the first quarter of this year, in comparison to the final quarter of 2015.

This represented a fall of 4%, believed to be a direct result of the improving employment market.

Falling arrears

In absolute terms, 86,200 tenants in Britain are in excess of two months behind in paying their rent. This is in comparison to 89,300 in quarter four of last year.

Since 2008, there have been an average of 92,600 tenants in serious rental arrears during the first quarter of each year. This underlines the positivity of the most recent figures.

Adrian Gill, director of estate agents Your Move and Reeds Rains, noted, ‘fewer tenants in serious arrears reflect the health of the jobs market. With an extra 44,000 jobs created in the first quarter of this year, thousands of tenants have been able to get their finances back on track and pay down late rent. Serious rent arrears peaked in Q3 2012 when 124,800 households owed more than two months’ rent-and when unemployment in the UK stood at 7.9%. Since then a boom in employment has been responsible for lifting many of the most precarious tenant households out of serious rent arrears and onto a more sustainable course. The direction of travel looks very positive.’[1]

‘A reduced risk of serious rent arrears will be welcome news for existing landlords, facing so many artificial challenges posed by government meddling. But no-one should be complacent – managing a property is never simple.  Some landlords are being held back from buying property by the Stamp Duty Surcharge. If this stems the flow of new homes into the rental market, then shortages in some areas could push up rents – hitting affordability,’ Gill continued.[1]

Serious rent arrears down by 4% in Q1 of 2016

Serious rent arrears down by 4% in Q1 of 2016

 

Drops

The total number of tenants more than two months behind with their rent has dropped by 16% since just before the financial crash in Q2 of 2008. Then, the total number of tenants struggling with serious arrears stood at 102,900.

This is particularly encouraging when looking at how the sector has grown during the same period. In 2008, there were 3.6m households living in the private rental sector in Britain. After just 8 years, this has grown by 62% to hit 5.8m households.

Gill observed, ‘the massive growth in the number of homes available to rent – driven by both deliberate landlords and accidental landlords coming into the market – has ensured that rents have not outpaced the ability of tenants to pay. The affordability of renting and the number of tenants falling behind on rent also needs to be seen within the context of the rapid expansion of the private rented sector and the addition of millions of extra houses and flats to rent.’[1]

Eradicating evictions

More positivity came with the news that the number of eviction orders has dropped considerably. In Q1 2016, there were 26,230 court orders made for eviction as a result of possession claims by landlords, down from 26,964 in the final three months of 2015.

Concluding, Gill said, ‘the evidence is clear – landlords’ finances are the healthiest they’ve been for nearly a decade. Back in 2009, with a distressed purchase market, many owners didn’t want to sell their properties if they inherited or no longer wished to live in their old home – which led to more accidental, DIY landlords. As a result of this, and with more tenants in financial difficulties, buy-to-let mortgage arrears were far higher.’[1]

‘Since then the private rented sector has changed. Now, with the rise of deliberate landlords with a professional attitude to their investment, the average property investor is more likely to have a business plan and a more professional approach to letting their property.’[1]

[1] http://www.propertyreporter.co.uk/landlords/serious-tenant-arrears-fall-4.html

Tenancy Deposits in Scotland £100 Cheaper than England and Wales

Published On: June 14, 2016 at 8:37 am

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The average tenancy deposit in Scotland is around £100 cheaper than in England and Wales, according to the Letting Protection Service Scotland (LPSS).

New tenants in Scotland paid almost £800 on average to their landlord in deposits over the last year, found the research.

When private tenants move into a new rental property, they typically pay their landlord a deposit to insure against damage or other costs incurred during the tenancy. By law, all landlords must protect tenancy deposits in a Government-approved scheme.

Tenancy Deposits in Scotland £100 Cheaper than England and Wales

Tenancy Deposits in Scotland £100 Cheaper than England and Wales

Between June 2015 and May 2016, the average deposit in Scotland was £794.11 – £102.89 (11.5%) cheaper than the average for rental properties in England and Wales over the same period, of £897.00.

The Managing Director of the LPSS, Julian Foster, comments: “Tenancy deposits give landlords peace of mind when they rent out a property, but they are usually large sums and are often the most financially demanding aspect of moving house.

“Nevertheless, when landlords protect the money with the LPSS, renters can also be assured that their money is safe throughout their tenancy, and that they’ll have recourse to free, impartial adjudication if there is a dispute when they move out.

“Both landlords and tenants need a deposit protection service that is fast, efficient, clear and communicative, and the LPSS has been entrusted with thousands of deposits since we launched in 2012.”

The LPSS data found that Edinburgh’s EH postcode has the most expensive tenancy deposits in Scotland, at an average of £908.44 – more than double the average for properties in Kirkwall’s KW zone, which is Scotland’s cheapest area, at £441.67.

Deposits for properties in Aberdeen, at £860.39, Kirkcaldy, at £794.11, and Falkirk, at £744.21, all average over £700, with the average in the Outer Hebrides, £464.00, and Dumfries and Galloway, £499.35, both below £500.

The most expensive tenancy deposits in the UK are found in Kingston-upon-Thames’ KT postcode, where tenants pay £1,715.25 – more than double the average for Scotland and almost four times the average deposit in Kirkwall.

The cheapest average deposit in England and Wales is in Liverpool, at £445.00, which is just £3.33 more expensive than Kirkwall’s.

Yesterday, a leading property expert called for the Government to abolish tenancy deposits altogether.

Letting agency prosecuted for ‘ghost-letting’

Published On: June 13, 2016 at 1:59 pm

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A letting agency has been prosecuted following so-called ‘ghost listing’ on Zoopla flats that were actually not able to be let.

Down2Town Ltd of Islington and director Ilshad Ali Sumum, were fined £6,600 after being found guilty at Highbury Corner Magistrates Court.

Trading standards

Islington council’s trading standards team was notified last year, after a resident saw that their home was listed for rent on the Zoopla website. This was despite the property not actually been available to be let.

Further investigations revealed that the letting agent had an unwritten agreement with a landlord to let a separate property in the same block, near to Holloway Road.

However, the letting agent proceeded to wrong list other flats in the block as being available to let-including the property that the concerned resident was living in.

As a result of the fraudulent listings, the block of flats was kept near the top of the search results on the Zoopla website.

Letting agency prosecuted for 'ghost-letting'

Letting agency prosecuted for ‘ghost-letting’

Guilty

At Highbury Corner Magistrates Court, Mr Sumum pleaded guilty to a brace of offences under the Consumer Protection from Unfair Trading Regulations 2008.

Both Sumum and Down2Town Ltd were each fined £2,000, ordered to pay costs of £1,250 and a victim surcharge of £100.

A council spokesman noted, ‘flats were falsely being advertised for sale, a practice sometimes also known as ghost-listing. This not only misled those looking for homes to rent, but also caused understandable distress among the residents who discovered their homes were being marketed without their knowledge or consent.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/6/agency-fined-by-council-for-ghost-listing-flats-to-let-on-zoopla