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Em Morley

What are Tenants Really Looking for in their Rental Homes?

Published On: March 11, 2019 at 9:58 am

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Whether you are considering expanding your portfolio by investing in a new property, or are preparing to re-let any of your existing investments, it is important to understand what tenants are looking for in their rental homes.

Of course, different tenants have different needs, but property portal Zoopla has attempted to establish some common factors that appeal to all kinds of renters.

The research found that parking is the number one requirement for private tenants, while pet-friendly rental homes are growing in popularity, with the search term ‘pets’ ranking as the third most popular across Great Britain.

Zoopla analysed search data from its keyword property search tool, to reveal the nation’s most sought-after features in rental homes. Aside from ‘parking’, ‘garage’ and ‘furnished’ also ranked highly.

The findings come at a time when the average motorist in the UK spends 91 hours per year looking for a parking space, according to the British Parking Association (BPA).

Annabel Dixon, the Spokesperson for Zoopla, says: “Parking and garages were a consistent requirement for tenants across the nation. While this may not be the most exciting feature of a home, our research clearly shows that landlords can make their properties much more attractive by creating or enhancing existing parking. Whether they re-landscape their garden to include a driveway or apply to drop the kerb outside their house, these changes could pay dividends.”

What are Tenants Really Looking for in their Rental Homes?

Top ten keyword searches

  1. Parking
  2. Garage
  3. Pets
  4. Furnished
  5. Garden
  6. Student
  7. Bills included
  8. Balcony
  9. Bungalow
  10. Detached

On a regional level, tenants in London commonly searched for ‘gym’ and ‘ensuite’, yet these terms did not appear in the top ten requirements for renters in any other region of the country.

Meanwhile, those in Scotland have arguably less demanding requirements, with ‘dishwasher’ making it into the top ten.

In the North East and South West, tenants are after countryside dwellings, with ‘rural’ and ‘cottage’ featuring on tenants’ wish lists, while renters in the North West clearly enjoy the great outdoors, with ‘garden’ and ‘balcony’ making the top ten.

Zoopla also analysed viewings data to reveal the most viewed rental homes across the nation. Unsurprisingly, three-bedroom houses are the most frequently viewed properties on the portal. This was the case for every region, except London, where two-bed flats pipped them to the post.

Dixon adds: “From gyms to balconies, right through to dishwashers, it is fascinating to see how the requirements of renters differ across all regions of Great Britain. With Londoners paying a premium in rent, it makes sense that these tenants are focused on high quality amenities and luxury features, whilst renters in more rural locations are looking for properties that make the most of their countryside setting.

“Three-bedroom houses have come up trumps in our ranking of the most viewed properties by house hunters. These homes appeal to a wide range of buyers and tenants, including young families who are looking for space to grow, as well as downsizers who want a more manageable space that can still accommodate visitors.”

Landlords, use this data to ensure a successful let when putting your property onto the rental market! 

Over a Third of Landlords Looking to Cut their Annual Spending, Report Shows

Published On: March 11, 2019 at 9:00 am

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Over a third (36%) of landlords are looking to cut their annual spending, as rising property running costs and higher taxes hit their earnings, according to the new Tracking landlords’ costs and economic contributions report from Kent Reliance, which forms part of OneSavings Bank.

The survey found that the average landlord now spends £3,571 per property on annual running costs, before tax or mortgage interest. Investors spent the most on property maintenance, at £1,086, followed by letting agent fees, at £935. 

Respondents to the survey said that they would be reviewing all of their annual spending, with some hoping to achieve savings of 30%.

Property upkeep and maintenance was the most popular cost identified by 46% of landlords for cutting down on annual spending, followed by property improvements, at 38%. Some 29% hope to cut their outlay on mortgage interest payments, while almost a quarter (24%) of landlords want to save on letting agent fees.

However, the report warns that lettings charges may increase further when the tenant fees ban is introduced in June this year, adding that this could result in landlords either shopping around or self-managing their properties.

Over a Third of Landlords Looking to Cut their Annual Spending, Report Shows

It states: “Rather than see revenues fall, many letting agents may pass the costs onto landlords, who, in turn, will seek to recover their higher outlay from tenants in the form of higher rents, where demand allows.

“It’s unlikely to make renting more affordable, simply turning an upfront cost into a higher ongoing monthly cost for many tenants.”

Collectively, buy-to-let landlords contribute £16.1 billion to the British economy through pre-tax annual spending, which is almost double the estimated £8.5 billion a decade ago, supporting thousands of jobs.

Adrian Moloney, the Sales Director of OneSavings Bank, says: “The political discourse around the private rented sector has been one-sided to say the least. Overlooked is the significant economic contribution landlords make, supporting thousands of jobs through their spending and housing a large portion of the country’s workforce. Instead, landlords have faced punitive tax and regulatory changes, at a time when running costs are climbing. 

“Policies that increase the cost and complexity of being a landlord don’t benefit tenants – quite the opposite. Property investors will seek to protect their businesses’ margins, whether cutting their spending on elements like property maintenance and improvement, or raising rents. The recent reforms are also deterring new investment, especially from amateur landlords. This does little to tackle the housing market’s chronic undersupply of property.”

He believes: “Further intervention could prove counterproductive, with many landlords still coming to terms with change. A heavy-handed version of rent control that prevents them from absorbing rising costs, for instance, could prove to be a tipping point leading to a dwindling supply of rental homes. However, there is a real opportunity to align longer-term tenancies to fixed term mortgage products. This would not only provide stability within the sector, but provide a platform for the private rental sector and the Government to work together to create a more positive outcome in the social housing debate.”

Inventory Reporting to Complement Redress Reform in PRS

Published On: March 8, 2019 at 10:31 am

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Independent inventory reporting of private rental properties will complement the Government’s plans to reform housing redress by introducing a Housing Complaints Resolution Service, claims No Letting Go.

The provider of inventory services says that a clearer, single route complaints system, which can be supported by impartial, evidence-based documents, such as independent inventories, will help to protect both landlords and tenants.

At the end of January, James Brokenshire MP, the Secretary of State for Housing, Communities and Local Government, announced an overhaul of the existing housing redress system.

As well as proposals for landlords to join a redress scheme and the introduction of a new homes ombudsman, plans for a Housing Complaints Resolution Service were also revealed.

The Government says that its aim is to create a “clearer” and “simpler” route to redress, through a “one-stop shop for housing complaints”, to “prevent anyone with a problem being turned away”. 

A redress reform working group will now develop the proposals, before they are introduced in the future.

Inventory Reporting to Complement Redress Reform in PRS

Nick Lyons, the CEO and Founder of No Letting Go, says: “We welcome the Government’s plans to reform housing redress and believe the new system will increase consumer confidence, by providing a straight-forward and accessible complaints procedure.”

He explains that a beefed up and clearer redress system will be complemented by independent inventory reporting, and that he supports making inventories mandatory and, preferably, independent.

“An impartial inventory and compliance report can be used as evidence by tenants making a complaint, or for protecting landlords and letting agents against unreasonable or unfounded tenant claims,” Lyons says. “It could give a complainant’s case more weight by showing and describing issues clearly.”

According to The Property Ombudsman’s annual report for 2017, the total amount of money awarded as a result of lettings complaints increased by 18% on 2016, to a total of £931,092 – almost treble the total handed out for sales complaints.

Furthermore, the average lettings award rose by 18%, while the number of resolved lettings cases grew by 11%. Management, and communication and record keeping were the most common causes of complaints.

The Property Redress Scheme has also found that poor inventory reporting is a major reason that letting agents are found culpable for not managing a property properly.

Lyons says: “As we can see, there is more activity in the lettings sector when it comes to complaints. This is why it’s so important that the new system is clear, and uses evidence and documentation effectively, much like the tenancy deposit protection industry.

“As is the case with deposit disputes, handled by tenancy deposit protection schemes, inventories can also prove truly valuable for landlords if they need to prove the condition of their property against an unfair or bogus complaint.”

He concludes: “Effective use of independent inventories could prove valuable to both landlords and tenants in the context of the new redress system, as well as for the organisations handling the complaints. This should contribute towards creating a clearer system, where a higher number of genuine complaints are handled with fair verdicts.”

If you choose to compile an inventory yourself, we worked with No Letting Go to provide you with a helpful guide: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-inventories-and-avoiding-disputes/

House Prices Rise by 5.9% over the Past Month, Halifax Reports

Published On: March 8, 2019 at 10:01 am

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House prices across the UK rose by an average of 5.9% in the month to February, to reach £236,800, according to Halifax’s latest House Price Index.

On an annual basis, house prices in the three months to February were 2.8% higher on average than in the same three months of 2018, which is up from the 0.8% annual growth rate recorded in January.

In the latest quarter (December-February), house prices increased by an average of 1.8%, compared to the preceding three months (September-November).

Russell Galley, the Managing Director of Halifax, says: “House prices have grown on an annual, quarterly and monthly basis for the first time since October 2018, taking the average house price to £236,800. 

“The shortage of houses for sale will certainly be playing a role in supporting prices. House price growth is now at 1.8% – an increase from the 0.6% fall last month, and back at the rate we saw from July-September 2018.”

He continues: “Annual house price growth at 2.8% is within our expectations, but is fairly subdued compared to 2015 and 2016, when the average growth rate was 8.3%.

“People are still facing challenges in raising a deposit, which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five-year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident.”

As part of its index, Halifax looked at data from across the housing industry.

HM Revenue & Customs (HMRC) reported that 101,170 home sales were recorded in January (for which the latest data is available), which, as in December, was very close to the five-year average of 101,291. This is the fifth consecutive month where more than 100,000 homes were sold, leading to a 0.9% quarterly rise when comparing transactions in November-January to August-November. Home sales in January were 2% higher than the previous 12-month average.

House Prices Rise by 5.9% over the Past Month, Halifax Reports

Bank of England (BoE) figures show that the number of mortgages approved to finance a home purchase – a leading indicator of completed sales – increased by 3.6% to 66,766 in January. This rate is marginally above the five-year average monthly approval rate of 66,366 and is 1,635 higher than the previous 12-month average.

For the third month in a row, the Royal Institution of Chartered Surveyors (RICS) UK Residential Market Survey showed a drop on nearly every measure reviewed. New buyer enquiries, new instructions to sell and sales were all lower than they were in the previous month. The national sales to stock level dropped to 31.5%, which is the lowest rate it has been since September 2013.

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Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, responds to the data: “This market is rattling around like a ricocheting bullet. It’s an incredibly unusual shift, even for monthly prices, which are known to be more volatile. 

“At first glance, this monthly surge could be a bout of pre-Brexit confidence, but nothing has changed. We have as much certainty over Britain’s exit from the EU as we did a year ago. 

“The more likely answer is that, in key areas, low supply is squeezing those buyers who have a need, rather than just a desire, to move and just can’t put it off any longer. 

“The difference between the Halifax index and the Land Registry figures is crucially important here, too. These numbers are based only on mortgages agreed, so these buyers know they are going to be able to pull out of the deal if Brexit goes bad and the economic outlook rapidly deteriorates.”

Conor Murphy, the CEO of fintech mortgage platform Smartr365, also comments: “Moderate house price growth is inevitable, as political and economic uncertainty persist with only 22 days left until Brexit. Despite this, the mortgage market continues to perform well, as homeowners capitalise on near-record low interest rates. Earlier this week marked the tenth anniversary of the UK interest rate cutto 0.5%, which set the scene for a decade of historic low rates. With the base rate now at 0.75%, borrowers are locking into long-term fixed rate deals before possible future rate rises.”

Rental Income for Landlords Jumps 15% in a Year to hit £18.7bn

Published On: March 8, 2019 at 9:01 am

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"The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns"

The total rental income received by buy-to-let landlords in the 12 months from 2017-18 has jumped by 15% to hit £18.7 billion, which is up from £16.2 billion in 2015-16. 

This comes as rent prices continue to rise, in response to all of the extra costs that landlords have been hit with over the past few years, analysis of HM Revenue & Customs (HMRC) data by Ludlowthompson reveals.

With demand from tenants increasing, at a time when the supply of much needed private rental stock is dwindling, rents are recording strong growth in some parts of the country, amid a shortage of homes.

The supply-demand imbalance has helped to ensure that buy-to-let remains one of the highest yielding mainstream investments in the UK, the estate agent believes.

The figures reveal that total rental income received by landlords has increased by 55% in the last five years. By contrast, income from savings and cash ISAs has continued to shrink, due to low interest rates.

Ludlowthompson claims that the data confirms that buy-to-let remains a relatively low-risk investment, which outperforms other asset classes over the long-term, including Government bonds, cash ISAs and shares.

It adds that buy-to-let landlords are also benefitting from downward pressure on interest rates on mortgages when adding to their portfolios, as a result of continued competition between banks for business.

Stephen Ludlow, the Chairman at Ludlowthompson, comments: “Buy-to-let property is now a key part of individuals’ investment portfolios and retirement income.

“Residential property not only offers investors a stable, regular monthly income, but also offers long-term capital growth. While house prices are not a one-way bet, property has historically been far less volatile than other asset classes, such as shares.”

He continues: “The fundamental supply-demand imbalance remains, with the pool of potential tenants getting larger each year. This is still the case in London, despite Brexit jitters.

“Some of the increase in rental income will also be from rental growth, which means that rents are largely growing with inflation. Additionally, wage inflation has been growing steadily already over the past few months, and, historically, rental increases track wage increases. Ultimately, these figures highlight the real-term growth in returns – the fundamental point behind any sound investment.”

No More No DSS in Housing Adverts?

Published On: March 7, 2019 at 11:01 am

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By Joanne Young, a Legal Director in the Property Litigation Team at leading law firm Ashfords LLP

On 1st March 2019, the Ministry of Housing, Communities and Local Government announced a number of measures aimed at further tackling homelessness, including funding to help potential new tenants with rental/first month rent payments. However, it was a different measure that dominated the headlines and could prove more controversial than intended.

The Government has set its sights on tackling landlords and letting agents who (in its words) “potentially discriminate” against tenants who are on benefits. The Government says just under 890,000 of the 4.5m private renting tenants are in receipt of benefit – a figure the Government is seemingly keen to increase. The proposal is that Government will meet with representatives from across the lettings spectrum to discuss “clamping down” on “blanket ban” adverts – with the potential of having a complete ban on no DSS adverts in the future.

No More No DSS in Housing Adverts?

The ideology that lies behind the proposal is hard to argue against. The rise of street homelessness is apparent in every town in the country – and hidden homelessness and sofa surfing has also increased. The far from smooth implementation of Universal Credit has been well publicised. Trying to encourage private landlords to accept tenants who are in receipt of benefits and give those individuals an opportunity to obtain a place they can call home is an entirely admirable aim. 

However, I cannot but help to sound a note of caution. I have attended numerous landlord events over the years where entirely well meaning and enthusiastic representatives from the Department for Work and Pensions try to sell the benefits system to private landlords. It is a tough gig! Many private landlords in England are small-scale; their lettings portfolio may only comprise one or two properties.  Letting is not their business and they do not have the time, resources, or, frankly, the inclination to spend time chasing tenants (or the benefits agencies) about unpaid rent. They want tenants who will pay rent in full and on time, with no risk that the rent they receive could be clawed back from them in some circumstances. They want tenants who seemingly have the financial means to be pursued in the event damage is caused to their property. Rightly or wrongly, this does therefore lead many private landlords to prefer tenants who will not be relying on benefits to pay the rent. 

For these reasons, I am of the view that the Government may therefore be wasting its well-meaning time in this venture. Even if there were a complete ban on landlords and their agents excluding benefit recipients when advertising for properties, I suspect that, once the potential tenant’s financial situation was made known, many landlords would refuse to proceed with the letting. All that a ban would do, therefore, is simply waste the time of both parties in cases where a landlord would not consider a let to a benefit recipient.  Only a complete ban on landlords being able to refuse tenants on benefits would tackle this problem – but, given many small scale private landlords are already leaving the market, such a ban would almost certainly see a larger exodus.

It will be interesting to see how this pans out.