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The Most Unaffordable London Boroughs for Tenants Revealed

Published On: February 12, 2019 at 10:31 am

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Prime London Lettings Report is showing that demand is outstripping rental supply.

New research has identified the most unaffordable London boroughs for private tenants, based on the cost of living compared to the average wage of residents in each borough.

The study, by Ideal Flatmate, looked at the average earnings of residents compared with the typical rent on a one-bedroom property in each London borough, along with the varying costs of travel cards and Council Tax, and the average spend on food, energy bills, internet and phones across the capital. Other basic outgoings, such as clothes and leisure activities, were not factored into the calculations.

The research found that 12 of the 32 boroughs were completely unaffordable for tenants, with the basic cost of living accounting for or exceeding the average monthly earnings. A further 13 boroughs saw the cost of living account for 90% or more of the typical wage.

Unsurprisingly, London’s most expensive borough, Kensington and Chelsea, came out as the most unaffordable for tenants, with a basic cost of living of £2,452 per month, which accounts for 117% of the average monthly net pay in the borough.

Brent is not far behind, with the monthly cost of living making up 116% of the average wage of £1,587 per month.

Hackney, Hounslow, Enfield, Newham, Camden, Ealing, Haringey, Barnet, Waltham Forest, and Barking and Dagenham were also home to a cost of living that ate up all or more of the average monthly earnings of their residents.

But there is some hope for the capital’s tenants. The cost of living in Bromley was £1,597, which is 80% of the average monthly net income of £2,002, making it the most affordable borough to rent in in London.

Wandsworth, Bexley, Havering, Croydon, Richmond and, perhaps surprisingly, Hammersmith & Fulham, all had a cost of living that sat below 90% of the average monthly wage for residents.

Tom Gatzen, the Co-Founder of Ideal Flatmate, says: “While Brexit uncertainty has seen a slow in the sales market, we’ve continued to see the level of London rents climb by nearly 5% on an annual basis.

“Although unemployment has been falling and wage growth has been on the up, this research demonstrates how vast the reality gap still is between the money available and the cost of living in London. We’ve only looked at the very basics, and this research hasn’t factored in things like clothing and leisure, but, of course, the main outgoing driving this unaffordability is the price of rents.”

He continues: “With such high levels of unaffordability across the capital, it’s no wonder we’ve seen such a surge in demand for room shares. The reality for those looking to rent in London is to pay through the nose, share with a friend or partner, or to move in with people in the same situation.

“Luckily, the latter has changed drastically in a few short years and it is no longer the daunting experience it once was, thanks to greater compatibility checks ensuring that it isn’t just the property that is right for a tenant, but the people they’re sharing with as well.”

The Let Property Campaign: What Landlords Need to Know in 2019

Published On: February 12, 2019 at 10:02 am

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You will have probably heard of the Let Property Campaign, but may be in doubt as to whether it applies to you. 

The Let Property Campaignby HM Revenue & Customs (HMRC) provides property landlords who haven’t disclosed the money they make from rentals with an opportunity to get their tax up to date, without incurring a penalty.

Although the Let Property Campaign began in 2013 and was originally set to run for just 18 months, it is showing no signs of stopping in 2019, due to its huge success. 

The campaign was started to help landlords who let residential property in the UK or abroad and haven’t declared their income, so still owe HMRC tax. The Let Property Campaign assists landlords, providing an opportunity to declare the rental income and pay what they owe. 

The incentive for doing so includes peace of mind in settling the matter, with the bonus of a financial advantage. As a landlord disclosing the rental income, you will be rewarded by getting your tax in order quickly and simply – and you won’t incur a severe penalty.

Can I benefit from it? 

All rental income needs to be declared – whether you are making a profit or not. To do this, you will have needed to register and declare the profit or loss on your tax return. 

There are many reasons why rental income may not have been declared. Often, the expenses and mortgage payments on the property are higher than the rental income collected, so landlords don’t consider it to be a profit. In fact, you only get tax relief for the mortgage interest – not the capital repayment.

If you are a landlord with undeclared rental income, you will eventually receive a letter about it from HMRC, so it makes sense to get ahead and use the Let Property Campaign. 

You can benefit from this campaign if you:

✔are renting out one single property

✔are renting out multiple properties

✔rent out a holiday home – even if you use it yourself

✔let to professionals or students 

✔rent out a property in the UK, but live abroad for more than six months of the year

✔are renting out a single room in your home, with earnings over the threshold of the Rent a Room Scheme

The Let Property Campaign: What Landlords Need to Know in 2019

Unfortunately, if you are a trust or company renting out a residential property, then you can’t take advantage of this scheme.

If you still need to clarity, as you are unsure as to whether or not you can benefit from the campaign, then you can simply fill out the HMRC Let Property Questionnaire.

Quite often, the lack of tax payment is simply due to the landlord’s misunderstanding or a mistake and so, this, coupled with being proactive in seizing the opportunity provided by this campaign, means that HMRC will consider your application favourably. The key here is that your honesty will be rewarded.

If there is a serious case of deliberate tax evasion, HMRC can uncover and investigate up to 20 years of undisclosed taxes. In this case, you would need to be represented by an industry expert, who could support you with the proceedings. 

How does the Let Property Campaign work?

There are just four easy steps:

1. Tell HMRC that you want to use the Let Property Campaign

2. Tell HMRC all the financial information relating to the rental, including the income, any gains, tax and duties

3. Inform HMRC of your formal offer, which should total the sum of what you owe

4. Pay HMRC what you owe and don’t forget your tax payments going forward

HMRC will often agree to spread the cost of the payments if you can’t afford to pay the tax back all in one go.

Ideally, appoint an accountant to help guide you through the process smoothly. In fact, although you have to have undisclosed rental income to benefit from this scheme, you can also disclose any other income that HMRC was not aware of at the same time, such as income from being self-employed. In this way, you can sort out all your tax administration at once and correct any other mistakes.

The Let Property Campaign has not been given an end date, so it looks like it is going to be around for quite some time. However, the sooner you put your tax affairs in order, the better.

HMRC has the power to find out about undisclosed tax through letting agents and local authorities, and, once they have this information, they then write to the landlords asking them to take part in the Let Property Campaign. However, it is a good idea to take advantage of the scheme in 2019 – before you receive a letter – as it is a straightforward process, and HMRC will be supportive and helpful, especially when you have been proactive.

Total Rent Paid to Landlords Dropped for First Time in a Decade Last Year

Published On: February 12, 2019 at 9:00 am

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The total rent paid to landlords by private tenants dropped for the first time in a decade last year, according to research by Hamptons International.

The Countrywide estate agent brand estimated that the total rent paid by tenants in 2018 was £59.1 billion, which is down by £1.9 billion on 2017. The report claimed that this was fuelled by a decline in the number of households renting and rent price growth stagnating.

However, renters were still paying £29.9 billion more than they were ten years ago, while the number of households renting from a private landlord grew by 1.7m (52%) over the same period. Rent prices were up by an average of 12.4% over the decade. 

During 2018, nine out of 11 regions of Great Britain recorded a fall in their total rent bill. The East Midlands (£130m) and North East (£60m) were the only regions to see an increase.

London experienced the greatest decrease in the total rent paid by tenants, with renters in the capital paying £20.6 billion in rent in 2018, which is £620m less than in the previous year.

On ten years ago, however, the total rent paid in every region increased, led by growth in London, where the bill rose by £10.53 billion over the decade.

After the capital, tenants in the South East (£14.19 billion) and the East of England (£3.05 billion) saw their total rent increase the most.

Meanwhile, Wales saw the smallest rise, of £70m.

Hamptons International’s data also showed that rent prices started 2019 on an upward trend in most regions, although they rose at a slower rate than in 2018.

In January, the average rent price on a new let increased by 0.6% on an annual basis, compared to 2.4% in the same month of 2018, to £963 per month.

London led the slowdown over 2018, but rents in the capital have gradually started to increase again.

The average cost of a new let in the capital rose by 0.6% year-on-year in January. Meanwhile, the South East and South West both recorded an average decrease of 0.5%.

The greatest rise was recorded in the East of England, where the average rent increased by 2% to £943 per month.

Aneisha Beveridge, the Head of Research at Hamptons International, says: “The total amount of rent paid by tenants in Great Britain fell for the first time in over a decade last year. Despite average rents rising 0.4% in 2018, fewer people renting homes meant the total rent bill shrank by £1.9 billion since 2017.

“Over the past 12 months, rental growth in Great Britain has slowed. Rental growth has fallen from 2.4% in January 2018 to 0.6% last month. The slowdown over the past year was mainly driven by London, but rents are now gradually starting to rise again in the capital. Meanwhile, the South East and South West both recorded falling rents last month.”

A Quarter of Young Adults Live with their Parents, Study Reveals

Published On: February 11, 2019 at 10:58 am

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A quarter of young adults in the UK are still living at home with their parents, according to a study by Civitas. 

The think tank found that a million more young adults in the UK are living with their parents than were two decades ago, with a quarter of 20-34-year-olds unable to buy their own homes.

This rises to 41% in London, where housing is the most expensive, but falls where homes are the cheapest – in the North East (14%), and Yorkshire and the Humber (17%).

As for 23-year-olds in the UK, the proportion living with their parents has soared from 37% in 1998 to half (49%) in 2017.

The Editorial Director of Civitas, Daniel Bentley, says: “As owner-occupation and social housing have each become more difficult to enter, hundreds of thousands of young adults have taken one look at the high rents in the private rented sector and decided to stay with their parents a bit longer instead.”

He adds that it is essential for the Government to take this into account when forecasting future housing need.

The study also suggests that young adults who do move out of their parents’ homes are much less likely to live on their own than they were in the late 1990s.

Single-person households have dropped to 30% in recent years, it found.

This is in stark contrast to most of northern and western Europe, where single-person living has been increasing rapidly.

In France and the Netherlands, for example, 35% of households are single-person, while this rises to over 40% in Germany and Denmark.

While the report highlights the difficulty in getting onto the housing ladder, it also indicates that even renting from a private landlord is too expensive for young adults today.

Have you experienced an adult child living at home due to high rent and house prices? 

Half of Children in the Private Rental Sector are Living in Poverty

Published On: February 11, 2019 at 10:26 am

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Almost half of the children in private rental sector homes in England are living in poverty, according to a new report by the National Housing Federation (NHF).

The study found that around 1.3m children living in the private rental sector fall below the poverty line, which marks a whopping 69% (537,325) increase since 2008.

The report blames unaffordable house prices and insufficient social housing for the boom in families, who have already been hit by tax credit cuts and the Universal Credit rollout, staying in private rentals.

Despite such high poverty rates, seven in ten families are in work. The NHF is demanding that the Government creates more social housing, to help pull low income families out of homes that they cannot afford and out of poverty.

Kate Henderson, the Chief Executive of the NHF, insists: “It is a disgrace that, in one of the wealthiest countries in the world, we cannot provide our children with a secure and affordable home.

“The critical lack of social housing is pushing more and more families into poverty, by forcing them into insecure privately rented homes they cannot afford.”

She continues: “It’s so obvious that we need to be building more social housing, and the Government has a duty to our children to invest in this. This means increasing funding for social housing and urgently reforming the way that land is sold in this country.

“We will only be able to build desperately-needed social homes for children living in poverty if housing associations have access to land, instead of the current situation, where they are forced to bid directly against private developers, who make millions from luxury properties.”

Over the past ten years, the number of low income families renting privately has risen by more than three quarters, which was faster than couples and single people.

The NHF also found that almost 250,000 of those children would not be living in poverty if their families could access social housing.

Darren Baxter, the Housing Policy and Partnerships Manager for the Joseph Rowntree Foundation, also comments on the report: “It is not right that any child should be swept into poverty, or live in a family which struggles to keep food on the table or a roof over their head. But this is the reality for more than four million children in the UK – and it doesn’t have to be this way.

Half of Children in the Private Rental Sector are Living in Poverty

“Many families are now unable to access low-cost rented homes, and this means they can be stuck in expensive or unsuitable accommodation, despite the fact that more people are in work than ever.”

He explains: “Working families are increasingly being swept into poverty by their essential costs, such as housing, and we need to see decisive action to tackle this. As well as making sure that work is a route out of poverty, we need to see a step change in the number of low-cost rented homes being built and made available for those who need them.

“That’s why we are calling on Government to set out a plan to increase the supply of social housing at rent levels that ensure affordability for families on low incomes.”

Last year, the NHF and housing charity Crisis announced that 90,000 new social homes would need to be built in England every year to meet demand. In 2018, however, just 6,463 were completed.

Chris Town, the Vice Chair of the Residential Landlords Association (RLA), offers his thoughts on the findings: “The biggest driver of poverty in the private rented sector remains the Government’s freeze on Local Housing Allowance rates. Support for housing costs is simply failing to keep up with the realities of rented housing, and we call on the Government to use its spending review to drop the freeze.

“It is, though, disappointing that today’s report failed to note that the official data shows that the proportion of income spent on private sector rents is falling compared to the social sector, where it is increasingly. Data also shows that, over the last year, private sector rents fell in real terms.”

He adds: “In the end, the best way to ensure rents are affordable is to boost the supply of homes to rent, alongside all other tenures. This means the Government adopting a positive, pro-growth tax regime that supports and encourages the majority of good landlords to provide them.”

The latest English Housing Survey shows that, between 2010/11 and 2017/18, the proportion of household income (including housing benefit) that private tenants spent on rent dropped from 35% to 33%. In the same period, the amount spent on social rents rose from 27% to 28%.

The Office for National Statistics has reported that, in the year to December 2018, private sector rents in the UK increased by 1%, which is well below inflation.

A report for the RLA by Manchester Metropolitan University claims that Local Housing Allowance rates are the main drivers of tenancy failuresin the private rental sector.

Annual House Price Growth Slows to 0.8%, Halifax Reports

Published On: February 11, 2019 at 10:01 am

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Annual house price growth slowed to 0.8% in the three months to January, from 1.3% in December, according to Halifax’s latest House Price Index.

On a quarterly basis, house prices in the latest quarter (November-January) were down by an average of 0.6% on the preceding three months (August-October).

Month-on-month data also showed declines, at an average of 2.9% in January, following a 2.5% increase in the average house price in December. This took the typical property value in the UK to £223,691 in January.

Russell Galley, the Managing Director of Halifax, says: “Attention will no doubt be drawn towards the monthly fall of 2.9% from December to January – the second time in three years that we have seen a drop as a new year starts. However, the bigger picture is actually that house prices have seen next to no movement over the last year, with annual growth of just 0.8%.

“This could either be viewed as a story of resilience, as prices have held up well in the face of significant economic uncertainty, or as a continuation of the slow growth we’ve witnessed over recent years.”

Using HM Revenue & Customs data, Halifax also reports that 102,330 home sales were recorded in December (for which the latest data is available), which is very close to the five-year average of 101,515. This was the fourth consecutive month where over 100,000 homes were sold, while quarterly data shows a 2.7% rise, when comparing transactions in October-December to July-October. Annually, home sales in December were up by 3.2%.

Bank of England industry-wide figures show that the number of mortgages approved to finance a home purchase – a leading indicator of completed sales – saw a flat 0.2% rise to 63,793 in December. This is still not far below the 2018 average of 64,913, but is 2,694 lower than the average of the last five years.

Annual House Price Growth Slows to 0.8%, Halifax Reports

As in November, the December 2018 UK Residential Market Survey from the Royal Institution of Chartered Surveyors showed a drop on nearly every measure recorded. New buyer enquiries fell for a fifth month in a row, while stock levels of property to sell remained low, at an average of 42 per branch. Near-term sales expectations were either flat or negative across all parts of the UK, however, the sales projection for the 12-month outlook was positive for the first time since May 2018.

Galley comments on the data: “There’s no doubt that the next year will be important for the housing market, with much of the immediate focus on what impact Brexit may have. However, more fundamentally, it is key underlying factors of supply and demand that will ultimately shape the market.

“On the supply side, the most constraining factor to the health of the market is the shortage of stock for sale, although this does support price levels. On the demand side, we see very high employment levels, improving real wage growth, low inflation and low mortgage rates; all positive drivers tempered by the challenges of raising deposits. On balance, therefore, we expect price growth to remain subdued in the near-term.” 

Lucy Pendleton, the Founder Director of independent estate agent James Pendleton, also responds to the report: “This is a handbrake turn, as the monthly course of house prices reaches new heights of volatility.

“The rarified air of political uncertainty and low supply is sending the market into a bit of a spin.

“The long-term holding pattern in prices ahead of Brexit is abundantly clear and overall measures of consumer confidence have been scraping five-year lows. However, if the UK does enjoy a good EU exit, then a relief rally could be in store, given the plentiful Government support for buyers, cheap borrowing and rising wages, coupled with low supply.”