In the last quarter (Q4) of 2018, 40% of the UK housing
stock was private rental, increasing to 50% in cities such as Newcastle upon
Tyne and Manchester, according to a new report from TwentyCi.
The marketing consultancy’s Property & Homemover Report
for Q4 reveals a steady increase in the percentage of rental properties
available over the previous 12 months.
However, the study confirmed an overall property market
slowdown in 2018.
Despite a 4% rise in new instructions year-on-year in Q4,
there was a 1.2% decline in exchanges, with 20% of property sales falling
through, which might explain why rental stock has increased.
Overall, the data suggests that the north-south divide is
very much still in existence, despite higher salaries in the south. For example,
the 25% of highest earners in London will be spending between 40-60% of their
take-home pay on their mortgage to buy a home of equal standing with a 40%
deposit.
Meanwhile, the 25% of lowest earners in the capital would
not be able to afford to buy a property of equal standing, as it would mean
spending between 70-131% of their take-home earnings on their mortgages.
For the lowest earners, the cost of renting a property of
equal standing would be between 57-90% of their take-home pay.
However, the figures show that there are many locations in
the Midlands and north of England where the 25% of lowest earners can afford to
rent or buy.
In Nottingham, for instance, to rent a home of equal
standing would cost 35% of take-home pay, while buying with a mortgage would
eat up 37% of take-home earnings.
Colin Bradshaw, the Chief Customer Officer at TwentyCi, says: “Q1 2019 and the
outcome of the Brexit process will determine the outturn for the next 12 months.”
With such
a high proportion of private rental properties in the UK housing stock, demand
from tenants looks set to remain high.
Regardless of how favourable the market was when you purchased your buy-to-let property, it still represents a significant investment with the aim of providing you with a steady rental income and an increase in capital value over the long-term.
Having made that financial commitment, it is therefore highly likely that you want to do everything you can to protect your investment. Some of these risks may be more obvious than others.
Insurance
Adequate landlord insurance cover is essential to protect your rental property from major risks that could render it uninhabitable or, worst case scenario, require it to be rebuilt completely. Both would result in a loss of rental income. This could be fire, storm damage, flooding or vandalism.
Building insurance protects the structure and fabric of your property (the actual building) and the cover needs to be sufficient to replace the property if it was sufficiently damaged to require rebuilding. If you’re not sure if your buildings insurance provides high enough cover, carry out a valuation using the Royal Institution of Chartered Surveyors online cost calculator. Bear in mind that not all buildings insurance cover includes subsidence as standard, so you may want to add this to your policy.
Your tenants are responsible for arranging their own contents insurance cover, but you may also have some of your own possessions in the property, such as furnishings, fittings and equipment that are at risk of damage, loss or theft, which you may wish to protect against.
There are also other, less tangible, threats – such as compensation claims – which you may wish to insure yourself against, should tenants allege you have in some way failed in your duty of care as the landlord of the property. Landlords’ liability insurance is intended to indemnify you against any such claims.
If your property is going to be empty for any period of time, either due to inoccupation or renovation, then check you’re still covered by your insurance policy – many will stipulate certain conditions relating to required security measures, or the length of time the property is vacant, beyond which you may no longer be entitled to compensation.
Security
As important as landlord insurance is, there are a host of
ways in which you can look after your rental property and ensure it is well
looked after, to minimise the likelihood of having to make a claim.
Protecting your property against theft and intruders
requires constant vigilance – particularly when it comes to securing access and
maintaining alarms and locks.
Even if you have landlords insurance, as the insured party, you are responsible to minimising the risks to your investment property. If you don’t, then, in the event of an insurance claim, you may find yourself receiving a reduced – or worse, no – compensation payment as a result of your negligence.
Protecting your Investment Property, by SafeSite
Michael Knibbs, the Managing Director of SafeSite Security Solutions cautions: “If your property is unoccupied for any period of time, or undergoing renovation or building work, this may increase its vulnerability. You may want to consider more robust security measures, such as timber or steel hoardings for doors and windows, or security fencing if you have a larger perimeter to secure.
“Don’t forget about any outbuildings, such as garages or sheds. These also need to be kept secure, either with a sufficient locking system or with bolts and padlocks. Consider storing any valuable items off site if the property is standing vacant.”
Security cameras offer a dual benefit – they provide a visible deterrent and help you to monitor any suspicious activity, as well as providing the evidence should you need to seek a prosecution.
Indoor and outdoor lighting is one of the easiest ways to deter criminals. Keep hallways and stairwells lit, and replace any burnt out bulbs immediately. Motion activated lights illuminate driveways and gardens, and are a useful intruder deterrent, as burglars certainly don’t want to be caught in the spotlight.
Tenant checks
It may sound obvious, but your tenants are key to the success of protecting your investment property – not just in terms of ensuring you have carried out sufficient credit checks to guarantee your monthly rental payments, but also in terms of their personal responsibility in looking after the property while they are living there. As a landlord, you are entitled to expect that your tenants treat your property with due care and attention.
Making sure you choose the right tenants from the outset
using the best checking mechanisms – whether you’re doing this yourself or
through a letting agency – is an important part in ensuring your investment
property is in the right hands.
This includes seeking and securing financial and personal references, as well as proof of identification, and legal right to rent checks. Depending on how the tenant is intending to cover their rent, you may also want to see proof of employment or confirmation from the agency providing benefits.
Following these measures will help ensure your tenants enjoy their new home, and give you peace of mind that your property is safe, secure and in good hands.
London house prices are set to begin a recovery this year,
due to booming rental yields in some boroughs, according to analysis by Home.co.uk.
The property website expects the slump in the capital’s
housing market to come to an end in 2020, thanks to improving rental yields
making property more attractive to investors.
Home’s data suggests that this recovery is likely to begin
in Newham, where, in December 2018, the average rental yield was 4.9%, compared
to 3.6% in the same month of 2017. This 1.3% increase is the greatest rise in
any London borough, apart from the City of London, where a 1.5% increase was
observed.
The average rent price is Newham was £1,671 at the end of
last year, which is up by 7.6% on December 2017.
The next hotspot for investors is set to be Hammersmith
& Fulham, where the average rental yield rose by 1.2% over the year to
December, from 3.9% to 5.1%. This promising increase comes amid growth of 6.2%
in rent prices in this west London borough over the same period.
Other emerging areas for investors include Hackney and
Southwark, where yields increased by 0.7% between 2017-18.
Outside of the City of London, Southwark recorded the
greatest uplift in rents over 2018, at an average of 20.2%. A typical monthly
rent price in this borough was £2,532 in December.
A 0.6% rise in yields was recorded in the City of
Westminster and Tower Hamlets in the year to December last year.
Rents in Westminster increased by an average of 12.1% in the
12 months to December, taking the typical monthly price to £5,505, while rent
prices in Tower Hamlets grew by 10.1%, to £2,350 per month.
Housing market recovery is set to take longer in many outer
London boroughs, according to Home.
In Hounslow, Hillingdon, Harrow, Croydon, Waltham Forest,
Richmond upon Thames, and Barking and Dagenham, rental yields remained
unchanged between 2017-18.
Enfield, in north London, was the only borough to experience
a decline in rental yields over the same period, of 0.2%.
The Director of Home, Doug Shephard, says: “You just can’t
ignore the London property market’s remarkable ability to bounce back. History
has shown us time and time again how the UK’s leading property market can burst
back into growth after a period of correcting prices. The rate of rental yield
rises is surely the best analytical tool to pinpoint where the first green
shoots will emerge.
“Whilst it is encouraging that 32 out of 33 London boroughs are showing
increased yield year-on-year, it is where they are growing most quickly that is
of keen interest to investors. When they approach 6% in 16 or more boroughs,
demand in the London sales market will reignite.”
Are you more inclined to invest in the London property
market, now that it is due to recover?
Landlords across the country are being warned about failing
to comply with both selective and statutory licensing schemes.
There is growing concern in Reading that thousands of
landlords could soon face enforcement action if they do not sign up to a new
statutory licence, with the deadline less than two weeks away.
Under the new rules, mandatory HMO licensing has been
extended to almost all HMOs that are occupied by five or more people, where
there is sharing of some facilities. It is expected to affect more than 160,000
properties.
The licensing scheme was previously restricted to properties
that were three or more storeys high.
The change means that councils can now take further action
to clamp down on the small minority of landlords that let substandard or
overcrowded homes.
However, Reading Borough Council is concerned that many
landlords in the area are ignoring the new rules, with the deadline to apply
for a licence fast approaching.
The Council believes that just 135 of an estimated 3,000
landlords in Reading have signed up to the new licences.
Councillor John Ennis says: “Anecdotal evidence suggests that some landlords are reducing
the number of tenants in their property to avoid licensing.”
Reading
Borough Council rejected the Government’s decision to not allow a grace period,
giving landlords until 31st January 2019 to submit their
applications. Any landlord that fails to apply by the end of the month will be
subject to enforcement action.
At the same
time, Barnet Council is planning to introduce a stricter licensing scheme
designed to crack down on rogue landlords across the north London borough.
The Council
wants to replicate selective licensing schemes that are in force in other
areas, with prosecution or a civil penalty of up to £30,000 for those that fail
to comply with the scheme’s conditions.
Just over a
quarter (26%) of households in the borough were private tenants in 2016, which
is up from 17% in 2001. This is why Barnet is far more focused on stamping out
substandard housing and improving conditions in the borough.
Speaking at a meeting of
the Housing Committee last week, Chairman Councillor Gabriel Rozenberg, said: “In Barnet today,
the Conservatives are standing up for private renters. This new agenda
comprises stricter licensing controls and proposals for tougher enforcement. We
are putting tenants at the heart of our borough.”
It is
understood that the Council will hire additional members of staff to
investigate the viability of selective licensing in the borough, as well as
conduct extra housing enforcement and HMO licensing activities.
Landlords,
remember to check whether the areas that your properties are in are subject to
licensing schemes.
The current housing market outlook for the next three months
is the worst for 20 years, according to the latest study from the Royal
Institution of Chartered Surveyors (RICS).
A net balance of 28% of RICS members expect property sales
to fall in the next three months.
This is the most downbeat reading since the records began in
October 1998, with the pessimism blamed on the lack of clarity around Brexit.
A lack of housing supply and affordability also continued to
affect the market.
Sales expectations for the coming three months are now
either flat, with no change predicted, or negative, indicating a decline in
sales, across all parts of the UK, the report states.
Increasing numbers of surveyors reported seeing house prices
fall rather than rise in December, with a net balance of 19% witnessing
declines, rather than growth.
This is up from a balance of 11% in November, and marked the
fourth consecutive month of negative house price readings.
New buyer inquiries dropped for the fifth month in a row last
month, too.
The drop-off in interest from buyers was matched by a
decline in fresh properties coming onto the market.
The supply of new properties has been dwindling for six
months, Simon Rubinsohn, the Chief Economist at the RICS, says.
“It is hardly a surprise, with ongoing uncertainty about
the path to Brexit dominating the news agenda, that, even allowing for the
normal patterns around the Christmas holidays, buyer interest in purchasing
property in December was subdued.
“This is also very clearly reflected in a worsening trend
in near-term sales expectations.”
The latest official Office for National Statistics (ONS) house
price data suggests that housing activity has been muted recently, due to
Brexit uncertainty.
Looking further ahead, surveyors were a little more hopeful in
their sales expectations for 12 months’ time.
Rubinsohn says: “Looking a little further out, there is
some comfort provided by the suggestion that transactions nationally should
stabilise as some of the fog lifts, but that moment feels a way off for many
respondents to the survey.
“Meanwhile, it is hard to see
developers stepping up the supply pipeline in this environment.”
He added that getting close to Government
housebuilding targets would “require significantly greater input from
other delivery channels, including local authorities”.
Students are overpaying for their accommodation in most UK
university cities, according to new data from Mojo, an online mortgage broker.
The study found that those in Exeter, Norwich and Newcastle
are the worst affected.
This January, university students will be looking to secure
their accommodation for the next academic year. For many students, it’s
important that they find the perfect property, in a prime location, for a
reasonable price.
However, students in some university cities could be forking
out a lot more money for their accommodation, simply because they used a
dedicated student letting agent.
Mojo compared the prices of rental homes listed on property
portals, such as Rightmove, Zoopla and Prime Location, to those by specific
student letting agencies.
Specifically, it looked at more than 30 four-bedroom, fully
furnished houses in the most populated student areas of 19 UK cities.
Generally, Mojo found that it was more expensive to use a student-specific
service.
Students in Exeter fared the worst, overpaying by an average
of £69 per person if they rented via a student letting agent. In close second
and third places were Norwich and Newcastle, where students could be shelling
out £62 and £59 more than they need to every month respectively.
Average cost per
student, per month
Students are Overpaying for Accommodation in most University Cities
In total, Mojo found that rents were at least £10 greater on
student letting agents’ websites than property portals in nine cities.
Houses on Rightmove in Bristol and Bournemouth, however,
were actually £40 and £28 more expensive that on student letting agents’
websites respectively. Nevertheless, these two cities seem to be anomalies,
with the majority of student letting agents charging higher rents than local
estate agents using Rightmove.
The broker also found the most expensive areas to rent a
student property in the UK.
Most expensive
student areas
Unsurprisingly, London came out on top, with students in the
capital paying £961 per month on average. Next in line was Durham, at £546 a
month. Oxford and Exeter were close behind, at an average of £519 and £507
respectively.
Belfast boasts the cheapest student houses, at less than
half the price of the top three – an average of £246 per month. Students in
Wales can also take advantage of affordable rent, with the average monthly
price in Cardiff sitting at £319, while Swansea’s is £324.
University or private
halls?
Mojo compared the price of living in halls owned by the
university, compared to those that are privately owned.
It found that most private halls of residence are more expensive than university-owned halls. In Reading, the average room in private accommodation will cost students £286 more on average than the university’s halls.
In fact, private accommodation costs up to three times more
than university halls in eight other cities. However, in some locations,
renting a room owned by the university will not be your cheapest option.
In Liverpool, Southampton and Cardiff, students can rent a
room in private accommodation for an average of £100 less per week than
university halls.
Top tips for student
accommodation
Mojo has put together some top tips for students, following the results of its findings:
Look for a property on a portal, as well as a
student letting agent, to find the best deal possible.
If you find a property that you like on an
agent’s website, then double-check whether it’s listed on a portal, as you can
sometimes find the same property for less.
If you find your perfect property through a
letting agent, take note of its features and run those through a portal’s
search feature – you could find a cheaper property with the same
specifications.
If you want to stay in halls, make sure to
compare the price of private and university accommodation, as the price varies
greatly depending on what kind of room you’re looking for.
