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Em Morley

Young Brits are Leaving London Faster Than Ever

Published On: February 19, 2020 at 10:43 am

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Categories: Tenant News

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Young Brits are Leaving London Faster Than Ever

London is becoming decreasingly popular with young adults, mainly due to ever-ballooning house prices and rents.

The capital sees house prices averaging around £540,000, more than double the national average of £258,270, and as a result, each borough in London now sees the number of 18-34-year-olds decrease each year.

On average, London boroughs have seen a decrease of 2.75% or 2,000 18-34 year-olds in the last seven years. Hammersmith and Fulham has seen the biggest effect of this young people exodus, with a 5.39% decrease since 2012.

9 of the top 10 areas across the whole country to see population decreases in under 35s are in London, with the tenth being Slough, just 20 miles from the capital. 

With London’s young people bust, comes a boom for many other cities. Research by Good Move, using ONS data has revealed that Coventry is coming out on top, with a 3.65% increase in under 35s since 2012, now representing 32% of the city’s population.

Coventry’s popularity has been put down to lower than average house and rental prices, and excellent broadband and 4G speeds, which tends to draw in young professionals. 

Good Move’s online interactive tool First Home Hot Spots, which helps young people and first-time buyers see the locations which are growing in popularity with their generation. The tool shows where populations of 18-34-year-olds are increasing, alongside other useful statistics, such as average house prices, the number of jobs available and average salary.

The top 10 UK hotspots for young people that are seeing the largest relative increases in their population of 18-34-year-olds are:

1)    Coventry – 3.65%

2)    Bath and Somerset – 2.72%

3)    Exeter – 2.4%

4)    Canterbury – 2.24%

5)    West Lancashire – 2.04%

6)    Runnymede – 1.97%

7)    Guildford – 1.79%

8)    Newcastle-under-Lyme – 1.74%

9)    Bristol – 1.69%

10) Welwyn Hatfield – 1.61%

Ross Counsell, director at Good Move, said: “Young people bring money, innovation and life to a city and our research has highlighted the places currently benefiting from their interest.

“Buying your first home is a huge deal, with so many factors to consider. This is why we created our new online tool, as it clearly shows how different regions compare in the areas most important to young people.”

Two-Year Fixed Rates Popular Among BTL Landlords

Published On: February 18, 2020 at 10:41 am

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Two-Year Fixed Rates Popular Among BTL Landlords

Buy-to-let (BTL) landlords are increasingly choosing to go with shorter-term mortgages when compared to previous years according to Mortgages for Business.

When compared to the last quarter of 2018, more landlords than ever have chosen shorter-term mortgages in the past 12 months, with 26% now opting for two-year fixed term products in Q4 2019, compared to just 8% in the same period in 2018.

This increase in demand for shorter terms may be fuelled by shorter Early Repayment Charge (ERC) periods, which allow landlords to refinance sooner without incurring a penalty- something that was seen as particularly useful in the politically turbulent time we saw last year. 

Despite the increase, five-year fixed rate mortgages remain the most popular option, with 68% of landlords going in this direction. This is because two-year fixed rates include a higher standard of stress-testing to qualify, meaning that effectively, landlords can borrow more if they opt for longer-term products. 

It is also worth noting that tracker mortgages have seen a slight increase in interest, up from 2% in Q3 2019 to 4% in Q4 of the same year, as landlords speculate that interest rates could be cut in the near future. 

Commenting on the findings, Steve Olejnik, managing director of Mortgages for Business said: 

“Recent political uncertainty has led more landlords to opt for 2-year fixed rates over longer-term fixed rate products. Landlords are drawn to the shorter Early Repayment Charge periods associated with these types of products, which provide greater flexibility. Given we now have more certainty in the political system, we forecast that landlords may start to look at longer term fixes again in the future.”  

Landlords are also finding that on average, they can borrow 0.7% more through a limited company than when they borrow personally.

“More landlords are expanding their portfolios through a limited company which has proven to be a more effective borrowing vehicle both from a tax perspective and financially. Lenders have responded to that and demand has fuelled an increase in the number of products available.”

The number of buy-to-let mortgage products available increased by 72 to 1,981 in Q4 2019 up from 1,909 in the previous quarter. In addition, the number of buy-to-let products available to limited companies increased by 51 to 738 up from 687 in Q3 2019.

Olejnik said: “The increase in the number of products available to limited companies gives landlords more choice. Since Brexit was assured by the clear General Election result in December, British house prices have risen at their fastest rate since 2002, according to Rightmove. Houses in Multiple Occupation (HMOs) continued to produce the most substantial yields for landlords handling more complex portfolios, in at 9.2% Q4 2019.”

Government should listen to suggestions of how to halt decline in rental housing

Published On: February 18, 2020 at 9:19 am

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Categories: Landlord News

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rental housing supply

The decline in the supply of rental housing remains an issue in the UK, and landlords say the Chancellor needs to use his first Budget to take immediate action.

More properties are being sold by landlords than purchased, and others are making the decision to switch to short-term holiday lets for tax reasons. Therefore, unless action is taken, tenants are going to find it increasingly hard to find the home they want.

Investment in new rental properties has been slowed by the introduction of measures such as the 2016 3% Stamp Duty levy, knocking the confidence of landlords across the country.

The drain in rental accommodation is only made worse by an incentivisation from the tax system for landlords to switch their properties to short-term lets. As a result, ARLA Propertymark is warning that almost half a million homes could be made unavailable for tents in need of long-term homes to rent.

In their submission for the Budget, the Residential Landlords Association (RLA) and the National Landlords Association (NLA) argue that the tax system entirely contradicts the Government’s housing objectives.

The RLA and the NLA are calling for a fundamental review of the way rented housing is taxed to ensure that tax policy supports, rather than contradicts, government objectives. Their proposal is for the Stamp Duty levy to be dropped where landlords add to the net supply of housing through developing new properties. This includes bringing empty homes back into use or converting large properties into smaller, more affordable units of accommodation.

The associations also propose that tenants are supported into homeownership by introducing a Capital Gains Tax exemption for when landlords sell a property to a sitting tenant.

In addition, they are calling for tax relief for landlords investing in measures to improve the energy efficiency of a rented property or those who let adapted properties long-term to tenants with accessibility needs.

David Smith, Policy Director for the RLA, comments: “The tax system for rented housing is failing. It encourages the provision of holiday homes over long-term properties to rent, it deters investment in new housing and provides no support to those wanting to make energy efficiency improvements. 

“For the sake of those living in rented housing or who are looking for accommodation, Ministers need to use the Budget to urgently change course to ensure that their tax policies are positively aligned with their wider housing objectives to encourage good landlords to provide long-term affordable housing.”

Chris Norris, Director of Policy and Practice at the NLA, said: “The tax system with which landlords must contend is no-longer fit for purpose. HM Treasury has constructed a series of barriers to investment, which make running an efficient and successful lettings business borderline impossible.

“As he prepares his first Budget, we hope that the Chancellor will take the opportunity to use taxation to encourage investment in new and existing homes alike. Mr Sunak must recognise that housing costs can only be reduced by making it easier, not harder, to provide good quality rented homes.  

“The emphasis must be on finding solutions and encouraging investment across tenures amongst a diverse range of providers.”

New Research Suggests Majority of Landlords Looking to Invest During 2020

Published On: February 17, 2020 at 10:17 am

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New Research Suggests The Majority of Landlords Looking to Invest During 2020

Despite having a rough time for the past 18 months, it would appear that the buy-to-let market is heading in a positive direction finally.

The industry has had a turbulent 18 months, due to political and financial uncertainty, but new research from The National Landlord Investment Show has revealed that UK landlords are looking forward to this year, with a positive outlook on the future of the buy-to-let market.

The research found that 60% of landlords and investors that attended the show are intending to invest in property in 2020.

This goes against the overarching narrative presented by many other sources in the industry, they tend to dwell on high regulations in the private rental sector (PRS) and uncertainties around the UK PRS in a post-Brexit context. 

However, there seems to be a growing sense of optimism. Over half (54%) of those surveyed said they are making an investment in property to pay for their retirement, whilst 27% say they are doing so to build for their childrens’ future.

Of those planning to invest in 2020, 70% said they would prefer to invest in residential property, which bodes well for those in the industry concerned by a landlord exodus. However, there has been an increase in the number of commercial landlords, with 23% now confirming that commercial properties make up part or all of their portfolios.

Tracey Hanbury, Director and Co-Founder of The National Landlord Investment Show shares her thoughts on the research findings: 

“What this research has shown is that contrary to other opinions within the industry there are exciting times ahead for UK landlords and property professionals. There is no better time than now to engage and stay up to date with the UK’s buy-to-let market at our Landlord Investment Show”.

‘Boris bounce’ took hold in January as landlords flooded the market

Published On: February 17, 2020 at 9:25 am

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Following the General Election in December, The ValPal Network has noticed a renewed confidence in the property market.

It says the ‘Boris bounce’, combined with the traditional New Year upsurge in activity, created a very fruitful January for estate and letting agents up and down the country.

Fresh data has been gathered from the network of agents, representing over 800 brands with more than 4,000 offices. It shows that it wasn’t just buyers and tenants buoyed by increased market certainty, as there was an increase in prospective sellers and landlords also contacting agents last month.

The figures show that a total of 83,158 leads were generated by agent members from prospective sellers and landlords requesting instant online valuations during January.

This is a massive increase from the 37,400 online valuations leads generated during December.

January’s total is the highest monthly number of online valuation sales leads generated by agents since October 2018 when the figure peaked at 102,999. 

The number of generated leads hovered between 40,000 and 60,000 throughout 2019, demonstrating the significance of January’s figure of almost 85,000.

On an annual basis, last month’s performance was also notably strong, up from 45,565 leads in January 2019, 60,051 in January 2018 and 44,481 in January 2017. 

The announcement from The ValPal Network follows the news that both Rightmove and OnTheMarket received record numbers of website visits in January.

Craig Vile, The ValPal Network Director, says: “Despite reports of increased confidence immediately after the election, it’s clear that January was when the market resurgence really took off with huge numbers of sellers and landlords requesting instant online valuations from our agents.

“The election came less than two weeks before Christmas, so it’s likely many consumers waited until the New Year kicked off before acting on their interest – in many cases after a period of planning and discussion over the holidays.

“This increase in activity from prospective sellers and landlords paired with the rise in visits to the major portals shows people are more confident about market conditions and subsequently more committed to taking action in 2020.”

Vile highlights that for agents to take advantage of this increased activity from the ‘Boris bounce’, they need to have marketing tools in place to keep brands ‘front of mind’ with consumers.

He adds: “Increased demand for agents’ services is undeniably positive news. However, it means competition between agents will intensify this year.

“Therefore, agencies need to make sure they’re doing all they can to get their brand in front of as many potential clients as possible through a combination of prospecting, canvassing, social media and pay per click advertising, content marketing and PR.

“Promoting an online valuation tool through a holistic marketing strategy will help agents to generate more leads and benefit from a resurgent market.”

How Can Agents Reduce Their Dependence on Major Portals?

Published On: February 14, 2020 at 11:08 am

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How Can Estate Agents Reduce Their Dependence on Major Portals?

Major property portals now dominate the market, leading to property agents becoming dependent on their services, according to a rival portal.

Why are the major portals so dominant?

Established property portals such as Zoopla and Rightmove have grown massively in the last decade, partly due to estate agents providing them with more and more content to host. This in turn drives traffic to those websites, allowing them to charge higher rates to agents.

Consumers now expect to find all property listings on the major portals, further increasing their dominance of the market. 

“This scenario has led portals to increase their listing costs, meaning agents are now spending more than ever before on the same listing service,” says Babek Ismayil, Founder and CEO of OneDome.

“Portal costs for agents are also rising due to a lack of competition in the marketplace.

“There is a lack of new listings websites for several reasons, including agents being protective of stock which results in a high start-up cost for a new business,” he continues.

“By being protective of their listings, estate agents inadvertently make it more difficult for new businesses to enter the market and compete against the larger portals.

“Instead they further empower established portals and help cement their market monopoly, which then allows those portals to charge agents more,” says Ismayil.

How can agents reduce their reliance on big portals?

Ismayil says that agents should reduce their dependence on major portals by supporting competing smaller brands and embracing other marketing alternatives. 

“More competition between portals can help to reduce the dominance of the established sites, while providing agents with more channels to promote their clients’ properties,” he says. 

“If the major portals no longer have the monopoly on listings their influence over consumers will diminish and therefore their stranglehold on agents and their ability to keep increasing costs will also suffer.

“What’s more, agents can benefit by being more proactive in using alternative marketing solutions such as social media to generate exposure for listings,” Ismayil continues.

“The influence of social media continues to grow, with more consumers using platforms like Facebook as a place to buy and sell things and property will be no different.

“Agents should consider getting ahead of the curve now and advertising properties through social media while it is still a differentiator.”

He adds that agents can also benefit from focusing on improving their own websites. 

“If agents’ websites had a better customer experience, consumers may start to see them as a viable route to search for properties instead of solely using the portals,” concludes Ismayil.