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Property Market Picked Up Pace in January, Reports Agency Express

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

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The UK property market picked up pace throughout January, according to the latest Property Activity Index from Agency Express.

Across the country, the index recorded month-on-month growth in both new property listings (113.1%) and the number of properties sold (45.6%). On an annual basis, the figures recorded in January this year were also stronger than those seen in the same month of 2018.

This robust trend was witnessed in all 12 regions of the UK in January, with increases seen for new property listings and the amount of properties sold.

January’s top performing region was the East of England. Following three consecutive months of decline, new property listings bounced back from the previous month, with a rise of 156.7%. This was the greatest increase in new listings on record for the month of January in the region. The number of properties sold also remained true to trend, increasing by 59.8%.

A buoyant market was also witnessed in the South West, with new listings up by 124.5%. However, year-on-year figures indicate declines for property listings across the region.

Other regional hotspots in January included:

New property listings

  • London: +123.9%
  • East Midlands: +118.7%
  • Yorkshire and the Humber: +117.1%
  • West Midlands: +110.0%
  • North West: +102.8%

Properties sold

  • Scotland: +59.8%
  • East Midlands: +59.1%
  • Wales: +52.0%
  • North East: +51.7%
  • North West: +51.4%

Stephen Watson, the Managing Director of Agency Express, comments on the pick-up in pace: “January’s figures from the Agency Express Property Activity Index have reported favourably across the nation. Towards the end of 2018, the Property Activity Index highlighted the usual seasonal declines, but the figures remained comparatively robust. 

“Now, a month in to the New Year, activity has picked up, and this month’s figures have exceeded those recorded in 2018 and 2017.”

This is positive news for the UK property market, which we hope will continue as the year progresses. 

Bank of England Holds Base Rate at 0.75%

Published On: February 8, 2019 at 10:59 am

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Bank of England’s Decision to Hold Interest Rates at 0.5%

Yesterday (7th February 2019), the Bank of England decided to hold the base rate at 0.75%.

The Bank’s Monetary Policy Committee (MPC) voted unanimously to keep the base rate at 0.75%. It has stayed at this level since it was raised from 0.5% in early August last year.

In terms of the housing market, the MPC expects UK house prices to be broadly flat in the first quarter (Q1) of this year, in line with predictions from Nationwide and Rightmove.

Furthermore, the Committee forecasts that housing investment will fall within the same timeframe. 

Angus Stewart, the Chief Executive of Property Master, an online mortgage broker, comments on the announcement: “Today’s decision not to increase the base rate is hardly unexpected, given the current uncertainty around Brexit. You could say the Bank is kicking the can down the road, as it is likely base rates will need to move upwards at some point. Many current commentators are pencilling in a rise in May, with possibly another hike later in the year.

“Our latest Mortgage Trackerpublished earlier on this week, which follows rates and fees from 18 of the largest lenders in the buy-to-let market, revealed a mixed picture on the cost of fixed rate buy-to-let mortgages. The cost of three out of the six categories we track had increased compared to last month (January), but the remaining three categories had fallen in cost. There are some good deals to be had in the five-year fixed rate market, as long as a landlord is able to meet a lender’s specific criteria. Landlords shopping around also need to bear in mind there may be additional costs of remortgaging, such as product fees, which our research shows can average between £658 and £1,212.”

Nick Chadbourne, the Chief Executive of LMS conveyancing services, says: “Record low interest rates are encouraging borrowers to take advantage of the market and lock into longer, more affordable deals. LMS data is also showing a trend of remortgagers opting to take out five-year fixes, as they come off of two-year deals, giving them greater certainty for longer. 

“A stay in rate rises shouldn’t be taken for granted, however, and increasingly consumers are getting wise to this. Our research from January reveals that 60% of borrowers expect interest rates to increase within the next year.”

Rents Continued to Rise in Regions since Brexit Vote

Published On: February 8, 2019 at 10:28 am

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Rent prices across UK regions have continued to rise since the Brexit vote in 2016, but a slowdown is looming, according to the latest Landbay Rental Index.

Annual rent price growth in the UK (excluding London) is at its lowest point in almost six years, at an average of 1.16%, compared to 1.13% in February 2013, the report shows.

However, since the vote to leave the European Union in June 2016, total rent price growth across the English regions has been seven times that of London, at an average of 3.69%, compared to the capital’s 0.52%. Including London, England’s rent price growth stood at 2.5%.

London’s property market, which has suffered disproportionately from Brexit uncertainty, saw annual rent price growth drop from an average of 1.26% in June 2016 to a low of -0.31% in June 2017, before starting a slow recovery to 0.67% in January 2019. In total, cumulative rent price growth in the capital since the Brexit vote has been just 0.52%.

The only other region to see cumulative rent price growth since the Brexit vote below 1% is the North East, which saw rents increase by an average of 0.71%.

Rents Continued to Rise in Regions since Brexit Vote

In contrast, the East Midlands leads the way, with significant growth of 6.28% since June 2016, followed by the West Midlands, at 4.75%. 

However, rent price growth is slowing. England (excluding London) has recorded the lowest annual growth in six years (1.11% in January 2019 compared to 1.07% in January 2013). Wales is currently at its lowest since April 2014 (1.39%), while Northern Ireland’s growth of 0.54% is the slowest since Landbay’s first Rental Index in January 2012.

Scotland, on the other hand, recorded annual rent price growth of 1.66%, having steadily grown over the last six months. The average rent price north of the border is now £746 per month, which is higher than Northern Ireland (£573) and Wales (£656), and is creeping up to the English average (excluding London), of £776. 

This Scottish growth is led by high annual growth in Edinburgh City (5.88%), Inverclyde (3.56%), and Glasgow City (2.49%), while Aberdeen City (-6.62%) and Aberdeenshire (-5.42%) are weighing down on faster national average growth.

John Goodall, the CEO and Founder of Landbay, comments: “Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown. This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.

“Without a radical housebuilding plan for both first time buyers and purpose-built rental properties, there is no way supply will ever be able to catch up with demand. The Government needs to take action fast, especially in times of economic and political uncertainty, the private rental sector is more important than ever.”

He continues: “Rental growth may be slowing, but the pace of change varies wildly between regions. Landlords and brokers alike need to be tuned into these variations, in order to maximise their profits, using variations in rental growth and yields over the past year to pick out some of the most promising regions for buy-to-let. Consistent rental demand will obviously drive returns in the long-term, but by selecting the right location yields will be even greater.”

Selective Licensing Schemes to be Extended in Burnley

Published On: February 8, 2019 at 10:00 am

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Councillors in Burnley are expected to extend the existing selective licensing schemes in Trinity, Gannow and Queensgate, as well as introduce a new scheme in Daneshouse with Stoneyholme.

Following a 12-week public consultation, Burnley Borough Council’s executive is expected to renew the existing selective licensing schemes in Trinity, Gannow and Queensgate, which are due to expire this year, while also making Daneshouse with Stoneyholme a selective licensing area for the next five years.

The consultation, which included resident and landlord questionnaires, a public event, and leaflet distribution, ran from early September 2018. Having considered the results, Burnley Borough Council is of the opinion that selective licensing schemes encourage landlords and residents to work together with the Council and other partners, to improve areas by tackling anti-social behaviour and crime.

Councillor John Harbour, the Council’s Executive Member for Housing and Environment, comments on the decision: “The current schemes in Trinity, Gannow and Queensgate have been successful, with moderate rises in house prices, reducing empty properties and anti-social behaviour, such as flytipping, showing a downward trend.

“We want to see that success continue, which is why we’re considering building on the success of selective licensing in those areas and looking at proposals to introduce a new scheme in Daneshouse and Stoneyholme, so people there can also see the benefits of closer partnership working between the Council, private landlords and agents.”

If you’re a landlord with properties in any of these areas, please be aware of the new and existing selective licensing schemes operating throughout Burnley. 

We will continue to keep landlords up to date with all changes to the mandatory and selective licensing schemes in operation throughout the country. 

Last year, changes were made to the licensing of Houses in Multiple Occupation across the country – if you’re unaware of the new rules, read up on them here: https://www.landlordnews.co.uk/hmo-licensing/

Landlords Face Legal Risks when Taking on Energy Provider Role

Published On: February 8, 2019 at 9:00 am

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Landlords and property developers, who are increasingly taking on the role of energy providers as part of packaged services for their tenants, run the risk of falling foul of the law, experts are warning.

At the Heat is Changing Fast event – hosted by Guru Systems, which uses smart technology and data to improve heat networks, and specialist clean energy law firm Lux Nova Partners – it was highlighted that a number of challenges are facing landlords who own and manage buildings in the private rental sector.

The Managing Director of Guru Systems, Casey Cole, explained: “Heat networks are seen as a major part of the Government’s plans to de-carbonise the UK economy. They are now a common planning requirement for developers in most cities, and many new housing schemes in London must be on a heat network. That means more developers are adding the role of energy provider to their services.

“Developers are already trying to adapt practices to meet with new legislation in managing heat networks, and both the Competition and Markets Authority and Government feel the sector now needs to be regulated, to ensure sufficiently high technical standards and a quality experience for end users.”

Sandy Abrahams, a Partner at Lux Nova, outlined the impact of the current legislation, including the Heat Network (Metering and Billing) Regulations 2014, which require heat suppliers to install meters where possible and provide bills based on actual consumption, with clear billing information.

Landlords Face Legal Risks when Taking on Energy Provider Role

That means an end to bundling heat costs within service charges where heat meters are installed, a practice that has emerged on some schemes in the private rental sector, with the potential for civil and criminal penalties for those who fail to comply.

Some landlords have claimed that charging for heat based on metered consumption isn’t permitted under their existing leases, however, Abrahams warned that this may not be sufficient to excuse compliance with the regulations.

“If you have a lease that wraps up billing for heat within a service charge that doesn’t allow for separate billing based on actual consumption, then there is a question mark over whether your lease or the regulations will prevail,” she said. “It can be a criminal or civil offence not to comply with the regulations, so the safe approach is to assume that the regulations will apply, and that will mean making preparations for amending those leases.”

Gareth Jones, the Managing Director of heat network consultancy FairHeat, told delegates at the event that network design and performance was one of the key factors to consider for landlords operating schemes in the private rental sector; with well-designed heat networks delivering expenditure savings, heat costs for end users will be driven down and reputational risks reduced.

He added that good data on network performance was essential: “Heat networks can be exceptionally cost effective. However, they range widely in performance efficiency. Careful management and good data are required to make sure you end up with a well performing network.

“By using data intelligently when designing networks, developers and operators can lower build costs and comply with future regulations. It also means acceptance testing can be carried out on your developments, to ensure that they are performing as expected, before you take handover from your contractor. All this leads to happy residents and fewer complaints.”

However, Lux Nova’s David Short outlined the implications of controlling and processing more data on the heat usage of end users. 

New GDPR laws mean that clear processes must be put in place for handling data, he warned. 

We have a comprehensive guide to the new GDPR for landlords and letting agents: https://www.landlordnews.co.uk/landlords-handle-tenant-data-gdpr/

More Reform to Universal Credit Needed, as Tenants Fall into Arrears

Published On: February 7, 2019 at 2:26 pm

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More reform to Universal Credit is needed, as tenants are falling into rent arrears, insists the Residential Landlords Association (RLA).

The organisation is speaking out in response to a new report published by Citizens Advice yesterday (6thFebruary 2019), showing that 49% of those that it supports with Universal Credit are in arrears on their housing payments.

Chris Town, the Vice Chair of the RLA, says: “Today’s report demonstrates the need for more changes to be made to Universal Credit.

“One of the main drivers of rent arrears has been that tenants cannot routinely choose to have the housing element of Universal Credit paid directly to their landlord at the start of a claim. Many tenants prefer to have the assurance that their rent is paid and their right to do this should be introduced immediately.”

He adds: “This needs to be coupled with lifting the freeze on housing benefits and the housing element of Universal Credit. Housing cost support is simply not keeping up with the realities of rents in the private sector, despite them falling in real terms over the past year.”

The RLA’s most recent research found that, of those with tenants on Universal Credit, 61% of landlords experienced them going into rent arrears in the past 12 months. This is up from 38% in the previous year and 27% in 2016.

A report for the RLA by experts at Manchester Metropolitan University noted that caps on the Local Housing Allowance rate have been key drivers of homelessness from the private rental sector.

The Office for National Statistics has found that, in the UK, the average rent in the private rental sector increased by 1% in the year to December 2018, which is much lower than inflation. 

Landlords, do you have tenants on Universal Credit? If so, have you experienced issues with rent arrears?