Posts with tag: tenants

First Rent Price Rises Recorded Since September

Published On: March 18, 2016 at 1:43 pm

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In February, rent prices in the private rental sector increased on a monthly basis for the first time since September last year, according to the latest report from Your Move and Reeds Rains.

As the sector prepares itself for a host of new Government policies, the average rent price in England and Wales is now £791 per month.

The research found that average rent prices are now increasing on a monthly basis for the first time since September 2015, up by 0.1% between January and February.

The average rent of £791 a month is 3.3% higher than a year ago, equivalent to an extra £25 per month for tenants.

First Rent Price Rises Recorded Since September

First Rent Price Rises Recorded Since September

The report also found that the rate of rent arrears has also increased, as tenants struggle with their finances.

The Director of Your Move and Reeds Rains, Adrian Gill, says: “Spring is here for the rental market. Rents are rising and demand is growing. In a warming market, tenants are beginning to feel the heat when signing new tenancies.

“But this delicate ecosystem of soaring demand from tenants and steady investment from landlords is under threat. Rent rises could now accelerate further, and gentle spring warmth could start to feel less comfortable. If Government attacks on landlords bite – having worsened again in this week’s Budget – the flow of investment from landlords could wilt.”

He explains: “Landlords are increasingly deliberate in their actions and savvy in their business decisions. But all landlords investing steadily in new property to let are the heroes of the buy-to-let industry, not the villains. Thanks to the business acumen and persistence of landlords, Britain’s private rented sector has become home to millions of households and the only real backstop against the weakness of other tenures.

“All landlords, regardless of the number of properties they own, want to provide a quality service as part of earning a reliable return on their investment. For those with the right advice, this is part of operating a successful business model. Avoiding void periods and ensuring a good relationship with reliable tenants is essential. So it is hard to understand the logic behind restricting the flow of new investment, and the competition between existing landlords.”

Gill adds: “Additional taxes on the purchase of new buy-to-let properties will not support the stated aims of these policies – namely to improve homeownership. By attacking buy-to-let, the Government will only serve to push up market rents more quickly, stymieing the efforts of many tenants to raise a deposit to buy a home, while also boosting returns for existing landlords with the best advice to navigate new complications.”1 

In Wednesday’s Budget, the Chancellor announced that large-scale buy-to-let investors will be subject to the 3% Stamp Duty surcharge, which is set to be enforced on 1st April.

Regionally, the Midlands has led annual rent growth.

Those living in the East Midlands have seen their rent prices rise by 7% in the last 12 months. This is followed by increases of 6.3% in the West Midlands and 6.2% in the East of England.

These three regions are all ahead of London, with rent prices in the capital up 4.8% on February 2015. As recently as November, London consistently led rent rises in the UK.

Meanwhile, rents are down annually in three out of ten regions. The North East suffered the greatest decline, at 2.5%, followed by Wales at 1.5% and 0.1% in the South East.

On a monthly basis, rents have risen in five out of ten regions. The East of England recorded the highest price rise at 1.1%, with the South East and East Midlands coming in joint second, at 0.6%.

Contrastingly, rent prices in Wales and the North East are now lower than they were in January, down by 0.9% and 0.7% respectively.

After these monthly increases, rents in the West Midlands are now at a record high of £596 per month, with Yorkshire and the Humber also seeing an all-time high of £559 a month.

Despite recording the fastest annual rent rise, prices in the East Midlands are still £1 short of their record high of £610, seen in November 2015.

Unsurprisingly, Your Move and Reeds Rains’ data shows that landlords’ gross annual rental yields are now at a 17-month high.

1 http://www.propertyreporter.co.uk/landlords/anti-landlord-policies-fuel-first-rent-rises-since-autumn.html

Young Tenants Cannot Afford to Start a Family in Two-Thirds of the UK

Published On: March 15, 2016 at 3:14 pm

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New research from The Guardian has found that young tenants living in private rental accommodation cannot afford to start a family in two-thirds of the UK.

Those living in Birmingham, Edinburgh, Bristol and the whole of the South East would struggle financially to have children, as a large proportion of their income is spent on rent.

The Guardian, alongside tenant lobby group Generation Rent, used the average regional full-time wage for workers in their 20s and 30s and the cost of renting a two-bedroom home in the area to conduct the study.

They found that young couples would have to spend more than 30% of one full-time worker’s wage to keep a roof over their heads in 66% of the country.

There is no official definition of what affordable housing is in the UK. However, housing charity Shelter believes it amounts to 33% of income, while the National Housing Federation puts it at 25%.

In the USA, the Department of Housing states that affordable homes take up 30% of income.

The Guardian’s findings have renewed calls from MPs and campaigners for rent caps to be introduced, after being abolished more than 20 years ago.

The study found that the only areas still affordable for young families are the North West, North East and Yorkshire and the Humber. Northern Ireland is also affordable when measured against the average income for all age groups; there are no separate figures for young workers in Northern Ireland.

The most expensive place for those hoping to start a family is London, where a two-bed rental property costs 60% of the average income for someone in their 20s and 44% for those in their 30s. The capital is followed by the South East, South West and the East of England for unaffordability.

The Director of Generation Rent, Betsy Dillner, says: “For people on modest incomes, having a child will normally involve one parent staying at home while the other works full time, for a period longer than parental leave normally covers.

Young Tenants Cannot Afford to Start a Family in Two-Thirds of the UK

Young Tenants Cannot Afford to Start a Family in Two-Thirds of the UK

“That means a typical new family will rely on one full-time salary to make ends meet. If the rent is too high, that makes the arrangement unviable.”

For those on lower incomes, Dillner explains: “The situation is even worse, with constant anxiety over how to put food on the table, and nothing left at the end of the month to put aside for the future.

“Not only do young adults face renting for a longer period at a higher cost than their parents, and may never actually buy a home, they are less likely to start a family – a prospect that ought to terrify older generations and policymakers alike.”

She believes that if local leaders don’t want to see their communities destroyed by the housing crisis, they must start building homes on the “uglier parts of the green belt”1 and introduce rent controls.

The call for building on the green belt and rent caps was supported by Labour MP Frank Field, the Chair of the House of Commons Work and Pensions Committee, which recently set up an enquiry into intergenerational fairness.

He claims that “one emergency option” to solve the housing crisis “would be to consider capping rents at an affordable rate for young families seeking their first home”.

A further study by Ipsos Mori reveals the extent of the huge generational shift in UK housing tenures in the last 15 years.

Millions more millennials – today’s adults born after 1980, also known as Generation Y – are being forced into private renting than the generation before them, it found.

Analysing decades of data from the British Social Attitudes survey, Ipsos Mori discovered that in 1998 – when the average member of Generation X (those born between 1965-1979) reached 27-years-old – 55% of them were homeowners, while just 24% rented from private landlords.

In 2014, when the average millennial was the same age, only 32% were homeowners and 45% rented privately.

There has also been a surge in the number of millennials living with their parents. The Ipsos Mori research found that this shift is underlined by educational disadvantage – millennials living with their parents are half as likely to have a degree, a correlation that was not evident among Generation X.

Although income growth for young adults in the UK has fared well over the last 30 years by international comparison, the cost of housing – particularly in the private rental sector – is putting huge financial strain on young tenants looking to start a family.

Field insists: “The only sustainable way to improve those families’ chances of gaining suitable accommodation, and prevent their children growing up in an overcrowded home, is to increase the supply of houses that are genuinely affordable.

“This programme will necessarily need to encroach onto some of the grubbier parts of the green belt and, for it to be effective, will have to be accompanied by a renewed effort to control our borders. Failure to act on any of these fronts could cast a whole generation adrift from the housing market.”1

In response to The Guardian’s findings, the Chief Executive of the National Landlords Association (NLA), Richard Lambert, says: “The cost of housing is high for everyone at the moment, whether you rent or have a mortgage, so frustration about affordability is understandable. However, rents alone are not to blame. They have risen broadly in line with inflation over the past decade.

“Affordability is being eroded largely because the demand for housing greatly outstrips supply, and because salaries aren’t rising in line with inflation.”

He adds that the long-term solution is to build more homes, especially in the social sector.

“Instead, the Government is preoccupied with championing homeownership, leaving those genuinely in need of affordable rented housing left clinging to tired political rhetoric like rent controls.”1

Yesterday, we revealed that the average rental property achieves 99.9% of its asking price, indicating how strong demand is when compared with supply.

A spokesperson for the Department for Communities and Local Government states: “We’re determined to create a bigger, better private rented sector – attracting billions of pounds of investment to build homes specifically for private rent – increasing choice for tenants.

“We’ve also doubled the housing budget to support the boldest housing programme by any government since the 1970s, with £8 billion committed to build 400,000 affordable homes over this Parliament.

“We are doing all of this without the need for excessive state regulation that would destroy investment in new housing, push up prices and make it harder for people to find a flat or house to rent.”1 

For all of your responsibilities and information for landlords, remember to check LandlordNews.co.uk daily. 

1 http://www.theguardian.com/world/2016/mar/14/young-families-priced-out-rental-markets-in-two-thirds-uk

Less single renters taking on new tenancies

Published On: March 15, 2016 at 10:47 am

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The latest HomeLet Rental Index indicates that new tenancies taken on by single renters dropped over the last year. Instead, there has been a rise in families and people sharing rental accommodation.

Single slide

In the last year, tenants living in privately rented accommodation alone made up 33% of new tenancies, down from the 67% recorded in 2008. However, the number of new tenancies signed by two tenants rose from 28% to 52% over the same timeframe.

What’s more, HomeLet’s figures show that the number of new tenancies agreed by three or more tenants increased from 5% to 15% between 2008 and 2015.

HomeLet suggests that its figures could well reflect the trend of more families entering the private rental sector, with high house prices preventing them from getting a foot on the property ladder.

Family ties

More recently released data, from the English Housing Survey, shows that number of privately rented properties let to renters with dependent children increased from 30% to 37% in the last decade.

In addition, the Index shows that the typical rental agreement signed for properties signed in Britain outside of London was 4.8% greater in the three months to February 2016 in comparison to the same time last year.

This however does represent a fall in comparison to last month’s Index, which reported that typical rents in the three months to January was 5.5% greater than in 2015.

According to the data, HomeLet reports the average rent in Britain-with the exception of the UK, is now £744 per month. In the capital, the average monthly rent stands at £1,521.

Less single renters taking on new tenancies

Less single renters taking on new tenancies

Quicker than inflation

Martin Totty, chief executive of Barbon Insurance Group, parent company of HomeLet, said, ‘average rents are still rising and while we are not seeing the double-digit increases recorded in some areas of the country during the summer of last year, the cost of a new tenancy continues to rise more quickly than general inflation.’[1]

‘Landlords are letting out homes to many more families, with rental property representing an increasingly important alternative to owner occupation; we’re also seeing people manage with higher rents by meeting the costs as joint tenants,’ Totty added. [1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/number-of-single-tenants-falling-as-families-and-sharers-enter-prs

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

Published On: March 15, 2016 at 9:41 am

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The Royal Institution of Chartered Surveyors (RICS) has called upon the Chancellor ahead of tomorrow’s Budget to exempt residential landlords from Capital Gains Tax (CGT) if they sell their rental properties to tenants.

The RICS Property Tax Report states that the Chancellor should use his Budget to deliver a clear property tax policy, which will give private tenants, homebuyers and buy-to-let landlords the “clarity, certainty and predictability they need for future stability and growth”.

It believes the measure could allow 100,000 private tenants to own their own homes.

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

Buy-to-let landlords are liable for CGT whenever they sell a rental property, which is often considered a barrier to the release of housing stock onto the market.

The RICS says that the current tax system is a disincentive for landlords to sell.

“By removing CGT for landlords, the Government could find a solution to the housing crisis that it has been so keen to address,” reads the report. “Houses could be released to private tenants with the funds reinvested in more homes.”

The call from the RICS follows research from the Residential Landlords Association (RLA), which shows that 77% of private landlords would consider selling their properties to tenants if liability for CGT was removed.

The report continues: “Given the Government’s focus on homeownership, we recommend one way that homes could be delivered is if the UK’s 3.84m private landlords were incentivised to sell to existing tenants. If just a fraction were encouraged to sell at affordable rates, thousands of new homes could potentially be released onto the market. Further incentives could then be provided to encourage the seller to invest in further rental properties.”

The RICS hopes that tomorrow’s Budget provides stability for the property market.

The Policy Director at the RICS, Jeremy Blackburn, comments: “The Government has changed its policies around property taxes more often than the Chancellor has been pictured in a hard hat. That has resulted in uncertainty in the property market.

“What we need is a period of stability, and we call on the Government to set a course and see it through.”1

Throughout the Budget and the aftermath, we will provide you with the latest landlord updates and advice. Yesterday, we revealed that 70% of private landlords expect their investments to be affected by tomorrow’s Budget.

1 http://www.rics.org/uk/news/news-insight/press-releases/property-tax-reform-could-encourage-landlords-to-sell-to-private-tenants/

 

Buy-to-let investors not put off by stamp duty rise

Published On: March 14, 2016 at 12:31 pm

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Another new piece of analysis has found that the upcoming changes in stamp duty will fail to deter buy-to-let investors as initially planned.

Analysis from Jackson-Stops & Staff suggests that after the buy-to-let rush to beat the surcharge passes, investors will be assisted by property price inflation. The firm suggests that house price rises over the next year will more or less compensate for the increased stamp duty bill.

Losers

Worryingly, the research predicts that the largest losers as a result of the changes will be tenants, as landlords put rents up to deal with increases in tax.

For example, should property prices carry on growing at their present rate in the South East, the capital gain on an average property will be £28,412 per year. Total stamp duty on purchases of an average home will be £11,328.

Separate data from the Association of Residential Letting Agents (ARLA) shows that the majority of landlords keep hold of their investment property for more than one year. Data from the ARLA report shows that 33% of landlords keep their property for 11-20 years and for an average of 20.3 years. This suggests that the majority of landlords will benefit from the positive impact of house price growth in the long term.

Positive outlook

Nick Leeming, Chairman at Jack-Stops & Staff, noted, ‘the Government, through its new stamp duty surcharge, is trying to make the playing field more even between property investors and first-time buyers by eating into landlords’ profits.’ Leeming said that his advice for landlords was, ‘when you do the sums and look at the direction of house prices, placing money in bricks and mortar is still by far the best investment vehicle.’[1]

‘If property prices continue on their current trajectory, within a year or less of buying their investment property the vast majority of landlords would have earned back all the money given through stamp duty, even with the new 3% surcharge, by doing nothing at all. Therefore, the idea that the stamp duty tax will act as a deterrent is a fiction, as for most landlords, it won’t amount to a significant figure,’ Leeming continued.[1]

Leeming feels that, ‘the only losers will be tenants as landlords as likely to pass on any additional costs they might not want to shoulder to their tenants by increasing rents.’ He fears, ‘this could mean that those currently in rented accommodation who are saving for a deposit to buy a home, take even longer to pull this money together.’[1]

Buy-to-let investors not put off by stamp duty rise

Buy-to-let investors not put off by stamp duty rise

Regional concern

It is estimated that in eight out of ten regions, buy-to-let investors will find capital gain will negate all stamp duty costs. However, this is not the case in the North East and North West of Britain.

Leeming noted, ‘the North East and North West regions of the UK, where house price growth is more restrained at present, are the only regions where landlords will find capital growth in the first year does not eclipse the new stamp duty they would have to pay. These two regions are also the only two where home owners currently pay no stamp duty on the average home as the average property price still remains under £125,000, the price level where stamp duty first bites.’[1]

Concluding, Mr Leeming said, ‘tenants here are more likely to see landlords in future pass on this additional cost via rent and we also anticipate investors to be more assertive when they negotiate on buying a home, which will be reflected in lower offers.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investors-undeterred-by-stamp-duty-changes-claims-new-analysis.html

Universal Credit Rollout Continues

Published On: March 14, 2016 at 12:14 pm

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If you have tenants on housing benefit, it is vital that you keep up-to-date with their financial circumstances and the changes to the welfare system.

As of today, many more places will be subject to Universal Credit, the Government’s new benefits scheme, which sees six payments rolled into one monthly payout.

Universal Credit Rollout Continues

Universal Credit Rollout Continues

Those in receipt of housing benefit will now receive the allowance directly, rather than having the payment sent to their landlord.

If your tenants claim housing benefit, be aware that if they live in the areas below – or any of the previous areas where the system has rolled out to – you will no longer be paid their rent directly.

Instead, the tenants will be responsible for paying their rent each week or month.

It is important to understand that their finances will be changing and there have been reports of long waiting times between payouts as the system changes over, pushing some tenants into long-term debt.

If you are worried about your tenants missing rent payments, protect your income with rent guarantee insurance – the best way to ensure you still get paid.

From today, Universal Credit will be implemented in the following postcode areas:

  • CB6 1 and CB6 2 of Cambridge.
  • EC1M 3, EC1N, EC1R 4 and EC1R 5 in Eastern Central London.
  • IP26 and IP27 9 of Ipswich.
  • N1C, N1 0, N1 9, N2 0, N2 9, N6, N7 0, N7 9, N8, N10, N11 2, N13 6, N15 3, N15 4, N15 5, N17, N19 5 and N22 in North London.
  • NR21 9, NR22 and NR23 of Norwich.
  • NW1, NW2 2, NW2 3, NW3, NW5, NW6 1, NW6 2, NW6 3, NW6 4, NW6 5, NW8 0, NW8 6 and NW8 7 in northwest London.
  • PE7 1, PE7 2, PE12 0, PE13, PE14, PE15, PE16, PE26 2, PE28 3, PE30, PE31, PE32, PE33, PE34, PE35, PE36 and PE38 in Peterborough.
  • TS6, TS7 0, TS7 9, TS9 6, TS10, TS11, TS12, TS13, TS15 and TS29 in Cleveland.
  • W1T 1, W1T 2, W1T 4, W1T 5, W1T 6, W1T 7, W9 1 and W9 3 of west London.
  • WC1A, WC1B, WC1E, WC1H, WC1N, WC1R, WC1V, WC1X, WC2A, WC2B, WC2H 0, WC2H 8 and WC2H 9 in central London.

We will continue keeping you informed of the latest areas to move onto Universal Credit with landlord updates at LandlordNews.co.uk.