In around a third of councils in England, between 20-39% of
all housing is private rental, according to new figures from the Office for
National Statistics (ONS).
The ONS’s Subnational
dwelling stock by tenure estimates, England: 2012 to 2017 details the
number of private rental versus owner-occupied homes across English local
authorities.
It found that, in 2017, the percentage of homes in England
that were owner-occupied ranged from just 24.5% in Tower Hamlets, London to 84.5%
in Ribble Valley, North West.
Within the English regions, the percentage of owner-occupied
dwellings in most local authorities followed a similar trend to the region as a
whole in 2017. However, Newcastle upon Tyne, Manchester and Kingston upon Hull
were the only local authorities that had a significantly lower proportion of
owner-occupied homes than any other in their respective regions.
Purbeck, South West recorded the greatest decline in the
percentage of owner-occupied homes between 2012-17, while Hertsmere, East of
England had the largest proportionate increase in private rental housing.
The local authorities that had the greatest percentage of
private rental housing in 2017 were typically in London and the surrounding
areas, whereas the councils that had the highest proportions of owner-occupied
dwellings were distributed across the English regions, excluding London and the
North East.
In 2017, the percentage of private rental housing ranged
from 6.5% in East Hampshire to 44.1% in Westminster.
Dan Wilson Craw, the Director of tenant lobby group
Generation Rent, comments on the figures: “With homeownership unaffordable and social housing
unavailable, more of us are forced to live in the private rented sector, where
the threat of eviction with no reason given and unpredictable rent increases
make it impossible to enjoy a stable life.
“These
figures show how many more people are now being failed by the housing market in
different parts of the country, which should remind local MPs and councils of
the urgency for reform. Renters need secure tenancies, regulated rents and more
genuinely affordable homes.”
December appeared to be the calm before the storm for
private tenants in the UK, as they’re in for a rough ride in 2019, according to
ARLA Propertymark (the Association of Residential Letting Agents).
The organisation’s latest Private Rented Sector Report,
covering December 2018, reveals that tenants ended last year in the driving
seat, but are set to experience a rocky ride this year.
Rent prices
The number of tenants experiencing rent price increases fell
for the fourth consecutive month in December, with 18% of ARLA Propertymark
member agents reporting that landlords put their rents up.
This is the lowest figure recorded since December 2017, when
the amount of tenants experiencing rent rises stood at 16%.
Since rent increases hit a peak in August 2018 (40%), the
number of tenants seeing their prices go up has fallen.
Rental supply
The supply of properties available to let rose to an average
of 193 per ARLA Propertymark member branch in December, from 183 in the
previous month.
Annually, this level has dropped by 4%, from 200 in December
2017.
Tenant demand
Demand for homes from prospective tenants declined in
December, with the number of home hunters registered per branch down to an
average of 50, from 55 in November.
Demand is also down year-on-year, as 59 potential tenants
were registered on average in December of the previous year.
David Cox, the Chief Executive of ARLA Propertymark,
comments: “Although December’s figures indicate that tenants
finished the year in the driving seat, they’re in for a rocky ride this year.
With the Tenant Fees Bill passing its final hurdle in Parliament last week, it is now waiting to receive royal assent before being
passed into law and implemented on 1st June. This means it’s only a
matter of time until we could see rent prices starting to creep up again.
“As we’ve said repeatedly, landlords have
faced continued regulatory change and increasing costs over the last few years,
and the tenant fees ban will only add to this burden, meaning many will either
have to start increasing rents for tenants or exit the market.”
The Government is set to outline the details of its new
electrical safety rules for the private rental sector.
Following a consultation on new electrical safety rules for
private landlords, the Government has committed to introduce mandatory electrical
safety checks in private rental homes every five years.
No date has been set for the implementation of the new
electrical safety rules, however, the consultation response states that the
standards “will be introduced as soon as Parliamentary time allows”.
The new electrical safety rules, which form part of the
Government’s commitment to improve standards in the private rental sector, will
require landlords to ensure that the inspectors that they hire to conduct
checks have the necessary competence and qualifications to do so, with tough
financial penalties for those that fail to comply.
The Government will publish new guidance, which details the
minimum level of competence and qualifications required for those carrying out
these inspections.
The Minister for Housing and Homelessness, Heather Wheeler MP, says: “Everyone has the right to feel safe
and secure in their own home. While measures are already in place to crack down
on the small minority of landlords who rent out unsafe properties, we need to
do more to protect tenants.
“These new measures will
reduce the risk of faulty electrical equipment, giving people peace of mind and
helping to keep them safe in their homes.”
She continues: “It will
also provide clear guidance to landlords on who they should be hiring to carry
out these important electrical safety checks.
“The new guidance will
provide clear accountability at each stage of the inspection process – of what is
required and whose responsibility it is – but without placing excessive cost
and time burdens on landlords.”
We will continue to keep
landlords up to date with announcements on the new law.
Some property values across the country are falling faster
than the well-documented decline in Bitcoin, according to research from
AnyVan.com.
Over the past 12 months, Bitcoin’s value has dropped by 65%,
with a 40% decrease recorded since the summer heatwave of 2018 alone.
Demand in the housing market also has a winter chill, with
property values falling as Brexit uncertainty deters buyers.
The removal company found huge discounts being applied to
property values across the UK. London was the most commonly affected, with
prime central London hit the hardest.
AnyVan.com highlighted a number of properties that have seen
their values crash by a half within two months, which is more than the fall in
Bitcoin’s value.
Bitcoin’s price is currently around £2,745, following a 45%
decline since November 2018, which is a long way off its record value of
£14,759 in December 2017.
However, AnyVan.com found that property values are also
falling at drastic rates. A two-bedroom flat in Haringey, for example, is now
50% cheaper than it was when it was listed at the start of December last year.
Another flat in Norwood Junction has seen its price drop by
47%, while a two-bed apartment in Canary Wharf has declined by more than 45%
compared to its original listing price.
A three-bed house in Stamford Brook, west London is now
listed for 38% less than its original £1.6m listing price. Bitcoin has seen
similar drops since autumn 2018.
It’s not just in the capital where property values are
plummeting. AnyVan.com found that homes up and down the country are being
affected. Scotland, Wales, Cornwall, Birmingham, Manchester and Norfolk have
all seen greater declines than the Bitcoin crash.
The research indicates that large properties are more likely
to face the drop.
A five-bed home in Trowbridge, listed for £1.9m by its
estate agent, has now had half its price slashed off in just three months. A
six-bed in Norfolk, which hasn’t sold since being put up for sale ten months
ago, has seen half a million pounds taken off its value.
Another example in Grimsby, an area where the average house
price is just £147,518, has had £550,000 taken off its original asking price.
In Cornwall, a renovation project to a 16-bed bungalow has dropped in value by
40%, to just £225,000, since it was listed back in June 2018.
Angus Elphinstone, the CEO of AnyVan.com, says: “Our latest
research shows just how bad the property market currently is for some. Unable
to sell their home to move, they’re forced to dramatically drop their price to
attract hard-to-find buyers.
“The last year was certainly a brutal year for the majority of
Bitcoin investors, but it’s frightening to see the value of peoples homes fall
by such levels in a quick period.”
Property transactions were down across the whole of London, as well as England and Wales, in 2018, according to the latest Residential Index from London Central Portfolio (LCP).
The investment firm broke down the property markets across the country, into prime central London, Greater London, and England and Wales (excluding Greater London), looking at their performance during December 2018.
Prime central London
The average house price in prime central London (excluding new builds) in December was £1,844,031, following a month-on-month decline of 6.0%. On a quarterly basis, prices were down by an average of 10.2%.
Property transactions fell by 16.4% in the year to December, to a total of 3,514 – the lowest level recorded and a drop of over 46% on 2014.
The average new build house price in prime central London was £4,461,072 in December, representing a premium of 74.3% over existing stock. In the fourth quarter (Q4) of 2018, new build sales fell by 75.1%, to just 57.
Naomi Heaton, the CEO of LCP, says: “Whilst prices have increased marginally over the year, this is not a cause for optimism. It is attributable to greater activity at the higher priced end of the market, where the most significant discounts are available. This skews average prices upwards, but even this high-end effect is tapering off as activity stalls.
“There were just 3,514 recorded transactions in 2018, fewer than 68 sales a week. This represents a fall of 16.4% over the year, and sales are now below the previous all-time low seen during the global financial crisis (GFC). There were just 57 new build transactions in the last recorded quarter.
“The political turmoil the UK is currently weathering is being acutely felt throughout the country, but nowhere more so than in prime central London. With the Prime Minister’s deal being voted down and no clear cross party consensus, it appears we are now even further away from a post-Brexit road map. This continues to dampen investor sentiment.
“However, from a buyer’s perspective, this period of low competition and suppressed prices is an excellent opportunity. The fundamentals that underpin the desirability of prime central London as a global destination have not changed.
“Those who still believe in these fundamentals are able to acquire properties at material discounts, with the potential for significant uplift in the medium to long-term.”
Greater London
The average property value in Greater London ended 2018 at £619,888, following a quarterly drop of 1.1%. However, on an annual basis, prices were up by an average of 1.3%.
Year-on-year, property transactions were down by 7.1%, to just 86,869 – the fourth consecutive decline.
New build property transactions recorded greater decreases, of 19.1% over the year. The average new build house price was £698,485 in December – a 20.8% premium over existing stock.
Heaton comments: “Average prices for Greater London in December 2018 were £619,888, falling by 1.1% over the final quarter. This is lower than the average price seen in June 2017, when the Prime Minster held a snap general election. At the time, she declared that it was “the only way to guarantee certainty and security for the years ahead”. With the benefit of hindsight, this has not been the case.
“The average price for the last 12 months to December was £615,625, representing annual growth of just 1.3% for 2018, the lowest level since the GFC.
“Transactions for 2018 amounted to 86,869, a drop of 7.1% over the year. Sales in the capital have now declined for four consecutive years, amounting to a fall of 27%.
“This decline coincided with the introduction of graduated SDLT [Stamp Duty Land Tax] and the Mortgage Market Review, which had a disproportionately negative impact in Greater London, where average house prices are significantly higher than the UK as a whole.
“More recent political and economic events have added more fuel to the fire, and there are very few signs that this is likely to change. With Brexit looming, the property market is desperate for some positive news to restore confidence.”
England and Wales (excluding Greater London)
Across England and Wales, the average house price in December stood at £262,126. This followed a monthly increase of 1.3%, but a quarterly decline of 0.7%. Year-on-year, the average property value was up by 2.8% – the lowest level of growth since 2013.
Annually, property transactions decreased by 3.7%, which marks the greatest drop since 2008, to hit 783,913.
New build sales stood at 93,619 in December, following a yearly rise of 3.6%. The average new build house price ended the year at £299,617, representing a 14.8% premium over existing stock.
Heaton says: “Transactions for 2018 stood at 783,913, a drop of 3.7% over the year. This is the largest annual fall since the GFC as a wait-and-see attitude towards moving house or investing becomes ever more prevalent.
“Whilst transaction levels have fallen ever since the introduction of additional rate Stamp Dutyin 2016, undoubtedly the uncertainty around Brexit is having a far more punitive effect than increased buying costs. This negative sentiment has also spilled into the new build market, where growth in annual transactions is just 3.6%.
“With no positive news of late, coupled with the infighting within the parties and Government, it is difficult to foresee any significant changes to current market sentiment. Unity and clarity would now go some way to restoring confidence, not only to the property market, but to all facets of UK enterprise.”
Despite Government restrictions, buy-to-let landlords in the
UK claimed £17.7 billion in tax relief last year, which is up from £17.4
billion in 2017, according to a study by ludlowthompson.
The estate agent suggests that, even once all of the Government’s
planned restrictions to buy-to-let tax relief are fully implemented
(by 2020), landlords will still be able to offset a total of £16.7 billion of
their finance costs against their rental income.
However, landlords were able to claim £7 billion in tax
relief on their mortgage interest and other finance costs last year. A further
£4.1 billion was claimed for property repairs and maintenance.
Landlords are still able to claim tax relief when purchasing
furniture for a rental property, under the Wear and Tear Allowance.
Stephen Ludlow, the Chairman of ludlowthompson, says: “The tax grab on buy-to-let investment is
unwelcome, but it has not undermined the attractions of buy-to-let, especially
when compared to the volatile stock market.
“You’re still able to offset the vast majority
of your costs – ensuring landlords will still benefit from tax relief on a high
proportion of their rental income.”
He believes: “Tax reliefs are one way that can
incentivise landlords to continue investing in their rental properties, thereby
improving the quality of rental stock across the UK. If landlords are not
allowed to offset their costs, they may be disincentivised from investing in
buy-to-let – and that would impact the supply and quality of rental property as
a whole.
“Policymakers need to ensure they still
encourage landlords to invest in buy-to-let. They are essential for ensuring a
strong supply of high-quality rental property. This helps improve labour
mobility, particularly in large economic hubs, such as London. The Government
should look to keep further intervention in the sector to a minimum.”
