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Em Morley

Rental Decline Slowing Down in Prime London

Published On: February 19, 2019 at 10:57 am

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Categories: Lettings News

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Rental Decline is Slowing Down in Prime London

Rental values in prime locations across London have seen some signs of a slowdown in decline, as initial signs of a bottoming out have appeared.

International property consultants, Savills, have reported that rental prices in London have declined by 0.8% in 2018, with cheaper properties significantly outperforming more expensive ones.

Properties with rental prices of up to £500 per week have seen a five-year price growth of 6.6%, but properties with rents of up to £3,000 have dropped by 19.5%.

What are the predictions for rental prices over the next few years?

Savills predicts that rents will rise going forward, over the next five years they predict an increase of 11.5% on average, with a 12.6% increase in the prime commuter zone. However, growth is expected to be slow or non-existent in the short term, as the political and economic uncertainty surrounding Brexit continues. Rents fell by an average of 9.6% across London’s prime areas since the referendum in June 2016.

What’s the demand for properties likely to be?

London’s commuter belt, the prime rental market of London, has seen a steady demand for smaller properties. This matches the need of younger tenants commuting to the city for work, and rents for one or two bedroom properties have seen double digit growth over the past five years.

The outlook for rental prices seems to be largely reliant on stock levels, and if the sales market improves, it could see many accidental landlords exiting the private rental sector. Similarly with recent restricted tax relief on interest payments and other changes recently, such as the stamp duty levy on buy-to-let properties, there are uncertainties regarding the availability of rental properties.

Head of Residential Research at Savills, Lucian Cook, said: “We are seeing footloose, cost-conscious tenants drawn to prime areas that offer greater value, rather than confining their search to premium addresses, and there’s a deeper seam of demand for smaller properties driven by needs-based younger tenants.

“But that doesn’t mean we can anticipate falling rental supply. Instead, we expect cash investors to become increasingly dominant, especially in central London, while history suggests international investors will become more active as uncertainty clears, particularly if they can play the currency card. Stock levels also look set to rise as the number of new build homes completing increases.”

‘Greedy’ Landlord Caught with Forged Documents, after Attempting to Evade HMO Enforcement

Published On: February 19, 2019 at 10:20 am

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An Ilford landlord has been fined for converting a property to a House in Multiple Occupation (HMO), without the required permission.

An investigation into the property in Barking, owned by a landlord from Ilford, has revealed that the three-bedroom property, which he purchased in 2015, is being used as a HMO let, without the correct HMO documents.

After building work began on the property, despite landlord and homeowner Siddarth Mahajan not having planning permission, officers from Barking and Dagenham Council became suspicious.

Cllr Margaret Mullane, cabinet member for environment and community safety, said: “This dishonest landlord repeatedly refused to comply with the law and we pursued all the legal avenues that were available to us to ensure that he was brought to justice.

“We will continue to crack down on rogue landlords to improve standards and to ensure tenants have a decent home.”

Mahajan tried to claim that he was exempt from enforcement action, as he had proof that the property had already been a HMO for longer than ten years. The documents he presented appeared to show that its HMO status went as far back as 2008, but the council’s investigation team revealed it all to be a forgery.

At a later date, it was then discovered that Mahajan had also converted two more properties in the Barking area, also without planning permission. Again, the documents that claimed that the properties had already been in use as HMOs for many years, were in fact forgeries.

Overall, Mahajan has been found guilty on two counts of perverting the course of justice and three counts of using copies of forged documents. This has resulted in a sentence of 8 months imprisonment.

Further information on HMOs and the licensing required can be found in this guide by Just Landlords, the Landlord Insurance provider. If you are unsure about whether or not your let requires a HMO licence, you should check with your local council.

Are You One of the 57% who has Experienced Pest Problems at Home?

Published On: February 19, 2019 at 9:20 am

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A new study has revealed that the majority of homes that have experienced pest problems are let as rented accommodation. 

Hillarys, the manufacturer and retailer of blinds, shutters, carpets and curtains, has found that 64% of Brits who have experienced pest problems in their property were renting at the time. The remaining 36% were homeowners.

Overall, 57% of the 2,000 people surveyed responded that they have had a problem with pests at some point within their home. 6% admitted to moving house, in order to escape an infestation.

Those residing in London, the South East and in Scotland are the most likely to have encountered issues with unwanted creatures such insects and rodents.

A breakdown of the responses that Hillarys received has been provided, stating which regions have had the highest level of pest problems: 

London – 69% (of respondents from this region had a pest control issue in their home)

South East – 66%

Scotland – 64%

East Midlands – 61%

North East – 58%

Northern Ireland – 57%

West Midlands – 55%

Yorkshire and Humberside – 51%

North West – 46%

East of England – 42%

Wales – 41%

South West – 39%

Would a pest infestation cause you to move home, or would you call in pest control, and wait it out? According to the results of this survey, 64% confessed that they would move away, with a further 6% confirming that they had already done so, for this very reason.

The top five pest issues that have caused these respondents to either move or consider moving are the following:

Rats – 26%

Spiders – 16%

Wasps – 14%

Mice – 11%

Ants – 9%

Tara Hall, spokesperson for Hillarys, has commented: “We’ve all encountered the odd creepy crawly in our home, but dealing with a recurring infestation can be expensive and stressful. This survey, alongside our infographic, highlights the different experiences with this issue across the UK.”

For help on how to prevent pest infestations, as well as how to deal with them, check out these useful tips by Just Landlords, the provider of Landlord Insurance in the UK.

Highest Level of Homes Bought by International Buyers in PCL in 6 Years

Published On: February 18, 2019 at 10:38 am

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International buyers have been purchasing a high proportion of London property in PCL

International buyers purchased 57% of homes in prime central London in the second half (H2) of 2018, which is the highest level in six years, according to the latest International Buyer and Seller Survey from Hamptons International.

The estate agent found that the number of homes bought by international buyers in prime central London reached the highest level since H2 2012 (58%) in H2 2018.

The survey, which began in 2011, is completed by prime Countrywide branches across London and its neighbouring commuting counties.

Prime central London

The proportion of international buyers in prime central London rose from 55% in H2 2017 and 39% in H2 2016, following the EU referendum. Pre-EU referendum, international buyers purchased 40% of homes in prime central London (H2 2015).

The pick-up in H2 2018 was due to a decline in UK buyers, combined with an increase in EU buyers, Hamptons reports. EU buyers have regained their place as the biggest group of foreign buyers in prime central London, purchasing one in five (19%) homes in H2 2018, which is up from 10% in H2 2017.

The amount of homes bought by Middle Eastern buyers in prime central London has almost halved over the past year, from 15% in H2 2017 to just 8% in H2 2018.

Greater London

Meanwhile, in Greater London, the proportion of homes bought by international buyers also rose to the highest level in six years. In H2 2018, international buyers purchased 36% of homes, which is up from 31% in H2 2017. This number is 15% higher than in H2 2015 (pre-EU referendum), when international buyers bought 21% of homes.

This pick-up was also caused by a rise in EU buyers in Greater London. EU buyers purchased 14% of homes in Greater London in H2 2018, which is up from 8% in H2 2017 and 10% in H2 2015.

Over the last year, the proportion of homes purchased by buyers from India (+3%), Russia (+1%) and Hong Kong (+1%) has also increased.

Aneisha Beveridge, the Head of Research at Hamptons International, comments: “The proportion of homes bought by international buyers in London hit the highest level in six years. In H2 2018, 57% of homes in prime central London were purchased by a foreign buyer. The increase was caused by a drop off in UK buyers and a 9% year-on-year rise in EU buyers.

“Sterling’s weakness, making it cheaper for many international buyers, seems to be outweighing Brexit uncertainty when it comes to foreign buyers making a decision on where to buy a home. A property that would have cost an EU buyer £1m in H1 2016 effectively cost £124,000 less in H2 2018, due to sterling’s depreciation.”

Bristol Named the Best City in the UK for House Shares

Published On: February 18, 2019 at 8:59 am

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Bristol has been named the best city in the UK for house shares, according to new research by broadband and utilities provider Glide.

The study looked to identify the best house share hotspots across the country for students and young professionals.

Glide ranked the biggest UK cities on a range of measures, including the number of house shares in the city, amount of job opportunities advertised, the cost of rent, university rankings, and broadband speed, resulting in a top ten for those studying or looking to start their careers.

Bristol came out on top of the ranking, score the best overall by just one point. The city ranked fifth for the number of house shares available, at 945, and, while rents were third highest on the list, the city boasts high university rankings, 229 jobs advertised per 10,000 people, and high wifi and broadband speed – an essential for any student or young professional – which allowed it to just climb into first place.

Nottingham’s consistency across the rankings meant that the city came in second, with its job opportunities, broadband speeds, and university rankings all scoring in the top ten. It was only let down by relatively high rental costs.

Birmingham made up the top three locations, with its comparably low rents helping it to score well, but was let down by having just 145 job opportunities currently advertised per 10,000 people.

The top ten house share hotspots

  1. Bristol
  2. Nottingham
  3. Birmingham
  4. Manchester
  5. Liverpool
  6. Derby
  7. Southampton
  8. Brighton and Hove
  9. Leicester
  10. Portsmouth

London was the best location for variety of house share opportunities, with over 19,000 rooms available. However, with the average monthly rent coming out at six times higher than the most affordable city to live in (£3,278, compared to £499 in Bradford), the capital ranked 17th.

London, Edinburgh and Manchester were the top three cities for university rankings, all boasting institutions in the top ten of the UK University Rankings 2019. 

When looking at available job opportunities, York, Coventry and Derby came out on top, with 470, 408 and 382 jobs available per 10,000 people.

James Villarreal, the Director of Glide, says: “With so many students and young professionals choosing to house share, we wanted to find the best cities across the UK to suit their needs. When looking for a new house share, there are some important considerations to think about before signing, including location compared to your university campus or workplace, transport links and monthly bills.”

Homeowner Possessions at Lowest Level since 1980

Published On: February 15, 2019 at 10:59 am

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Homeowner possessions in 2018 dropped to the lowest level seen since 1980, according to the latest Mortgage Arrears and Possessions data from UK Finance.

In 2018, 4,580 homeowner possessions were recorded, which is the lowest number since 1980, when there were 3,480 possessions. Over the same period, the number of outstanding homeowner mortgages increased, from 6.2m to nine million.

In the fourth quarter (Q4) of 2018, 77,610 homeowner mortgages were in arrears of 2.5% or more of the outstanding balance, which is down by 5% on the same quarter of the previous year.

4,690 buy-to-let mortgages were in arrears of 2.5% or more in Q4 2018, which is unchanged on Q4 2017.

During Q4, 1,130 homeowner possessions were recorded, which is 3% fewer than in the same quarter of the previous year. 

Buy-to-let possessions are also down over the same period, by 14%, with 540 recorded in Q4. 

Comments

Jackie Bennett, the Director of Mortgages at UK Finance, comments on the data: “Homeowner possessions reached their lowest level in almost 40 years in 2018, aided by a historically low interest rate environment and lenders showing continued flexibility when working with borrowers in financial difficulty. 

“Mortgage arrears also remain at historically low levels, with the majority of borrowers continuing to repay their mortgages in full and on time each month. 

“We would always encourage anyone with concerns about making their mortgage repayments to contact their lender to discuss the options and support available to them. Repossession is always a last resort.”

Shaun Church, the Director of mortgage broker Private Finance, also responds to the figures: “We may live in turbulent times, but homeownership is remarkably secure, with homeowner possessions at their lowest level in almost 40 years. A sustained period of low interest rates has made repaying a mortgage not only more affordable, but also more predictable. Lenders are also now duty bound to work with any borrowers struggling to repay their loan to put a realistic repayment plan in place. 

“Doomsayers will argue that trouble is brewing for when rates do start to rise again. But lenders have stringent tests in place that ensure borrowers can afford their loan if rates rise by a far higher percentage than is likely. This means that, assuming there are no dramatic changes in their circumstances, borrowers should be able to comfortably accommodate slightly higher repayments when rates to begin to creep up. 

“The incredibly low level of arrears and possessions makes the case for wider availability of high loan-to-value (LTV) products. Affordability tests are clearly working and, with a secure system in place, there is no reason why loans of 95% or above should present any danger. Saving for a deposit is one of the biggest financial hurdles many will face, and for some is unsurmountable. Better availability of high LTV mortgages would help to remove this barrier and put buyers’ homeownership prospects on a more equal footing.”