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Scottish Rental Sector Records Positive October

Published On: November 30, 2018 at 10:23 am

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The Scottish rental sector recorded a positive October, but this masks wide variations between the five Scottish regions, according to Your Move Scotland’s latest Rental Tracker.

Your Move Scotland found that the average rent price in the nation was £573 per month (seasonally adjusted) in October. On a non-seasonally adjusted basis, the average rent was £582.

The fastest rent price growth in October was seen in the Highlands and Islands, closely followed by the Glasgow and Clyde region. Meanwhile, declines were recorded in the East and South of Scotland regions.

Growth in Highlands and Islands

It was once again a divided picture for Scotland, with some regions recording strong growth, while others showed more modest growth or slight declines.

The Highlands and Islands was yet again the most expensive part of Scotland to rent a property, Your Move Scotland found, with the average property let for £698 per month in October. The new campus at the University of Highlands and Islands continues to attract people to the area. Similarly, Inverness Airport, where low-cost airlines operate, encourages travel both to and from the Highlands.

This region recorded the largest rent price growth of the 12 months to October, with the average property costing 14% more than it did in the same month of 2017. As such, there has been a noticeable increase in the number of English landlords buying in the area.

The next fastest growth was in the Glasgow and Clyde region. Prices here rose by 13% in the year to October, to hit an average of £613 a month. It is the third most expensive place to rent in Scotland.

Sandwiched between the two aforementioned areas is the Edinburgh and Lothians region. Prices here averaged £684 per month, following growth of 2.1% in the past year.

Each of the remaining regions saw their rent prices drop on an annual basis.

In the East of Scotland, rents fell by 1.7% year-on-year, to hit £529. The East is the cheapest region to rent in the country.

Scottish Rental Sector Records Positive October

Scottish Rental Sector Records Positive October

Finally, in the South of Scotland rents dropped by a huge 4.4%, taking the average price down to £535 per month.

When all regions are considered, the average rent price in Scotland rose by 0.2% in the year to October.

On a monthly basis, all regions were flat or saw rising average rent prices. The only region to buck this trend was the South of Scotland, where prices ticked down by 0.5%.

Letting Agent Code of Practice 

Landlords should be aware that new regulations affecting the way that letting agents in Scotland are able to conduct business on their behalf are now in place.

The Letting Agent Code of Practice was introduced on 31st January 2018, and all agencies were required to sign up to the new scheme by 30th September 2018 if they wished to continue operating in the sector.

Now, it is a criminal offence to conduct letting agency work if you aren’t on the register. Those breaking the rules could face a fine of up to £50,000 and up to six months’ imprisonment.

These rules are intended to increase professionalism in the sector, and make sure that agents are properly able to handle money received from both landlords and tenants.

Your Move Scotland encourages landlords to check that their agent is registered and is compliant with these new rules, given that they are now in place.

Rental yields are stable 

The average property investor in Scotland enjoyed a rental yield of 4.7% once again in October, according to the Rental Tracker. This is the same return as in September, but is slightly lower than the 4.8% recorded in October last year.

Despite the annual decrease, the returns enjoyed by landlords in Scotland continue to compare favourably to the yields achieved in England and Wales.

Across both nations, the average rental yield was 4.3% in October. The individual regions of England to post stronger returns than the Scottish average during the month were the North East (5.0%) and North West (4.8%).

Decline in tenant arrears

There was a small drop in the number of tenancies falling into rent arrears in October, Your Move Scotland reports.

10.4% of all tenancies faced financial difficulties of some kind last month, which is down on the 11.0% recorded in September.

On an absolute basis, the number of rental households in serious arrears – defined as two months’ or more – was 9,815 in October.

Brian Moran, the Lettings Director of Your Move Scotland, comments: “Perhaps it is the breathtaking scenery tempting people out of the city, but the demand for properties in the Highlands and Islands has grown strongly in recent times.

“Last month, it toppled Edinburgh and Lothians as the most expensive region and, in September, its excellent performance continued.”

He adds: “Landlords continue to enjoy strong returns on their investment, particularly when compared to investors south of the border. An average return of 4.7% is also strong when compared to other forms of investment.”

A No-Deal Brexit Could be Worse for Property than the Recession

Published On: November 30, 2018 at 9:53 am

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A no-deal Brexit could be worse for the UK property market than the recession of recent years, according to a warning by the Governor of the Bank of England (BoE), Mark Carney.

Property investment platform British Pearl believes that house prices in London’s commuter belt will be hardest hit in the event of a no-deal Brexit, as it is home to some of the most polarised property markets in the country.

Places like Stevenage, Watford and Hastings are braced to feel the full brunt of a no-deal Brexit, because the price gap between flats and houses are among the greatest in Britain, and have widened the fastest, the research shows.

A No-Deal Brexit Could be Worse for Property than the Recession

A No-Deal Brexit Could be Worse for Property than the Recession

Landlords and buyers are always keen to avoid speculative bubbles and over-heating local housing markets, due to the obvious risk that house prices can collapse further and faster in a price correction.

British Pearl found that the average detached house in Stevenage cost 197% more than the average flat (£553,697 versus £186,422). This was the fifth largest gap of anywhere in the UK and has grown by 68.2% in five years.

The combination of these two measures makes the Hertfordshire town the most polarised property market in Britain, followed by Watford, Bedfordshire and Hastings, East Sussex.

The price gap between flats and houses in Watford has grown by 53.2% over the same period, to 201.4%, while, in Hastings, it has widened by 63%, to 184.7%.

The warning comes after BoE Governor Mark Carney warned that a no-deal Brexit could send the pound plunging and trigger a worse recession than the financial crisis.

The prospects for rapid depreciation in Britain vary massively between areas. British Pearl used the two measures used above to rank the UK’s towns and cities, to identify where investors and buyers would be more likely to see a market cooling result in prices falling back down to earth more rapidly.

The findings will serve as a warning to landlords, homeowners, first time buyers and property investors, who won’t want to risk placing big bets on markets where the gaps between different steps on the housing ladder have grown most dramatically ahead of Brexit.

The average difference in price across the UK is currently 50.6%, which has grown by 24.2% in the last five years.

At the other end of the spectrum was Doncaster, where the average price of a detached house was 140.6% more than the average flat, while the gap between prices over the past five years rose by just 18.4%.

Doncaster was followed by Stoke-on-Trent, with a price gap of 131.2%, which has grown by 26.9%, and Blackpool, where prices were 153.9% apart, after widening by 12.3% in five years.

James Newbery, the Investment Manager at British Pearl, says: “Parts of the UK property market have made considerable gains, and the relative value of homes in different price bands now poses a serious risk to homeowners and investors in the run-up to March 2019.

“The fallout from no-deal is most likely to be felt hardest in the capital’s commuter belt, where markets have moved too far and too fast. That is bad news for both ordinary investors and homeowners, particularly those who have borrowed to make their purchase.”

He adds: “However, the study also shows being diligent about the area you buy in can help you avoid these increased risks, with huge variations being seen in this polarisation measure across the country.”

Record Number of Tenants Negotiating Rent Reductions

Published On: November 30, 2018 at 9:01 am

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A record number of private tenants negotiated rent reductions from their landlords in October, according to the latest Private Rented Sector Report from ARLA Propertymark (the Association of Residential Letting Agents).

Rent reductions

The amount of private tenants successfully negotiating rent reductions jumped from just 2% in September to 3.7% in October, the study found. This is the highest figure seen since ARLA Propertymark’s records began in January 2015.

In line with this, the number of tenants experiencing rent increases from their landlords fell for the second consecutive month in October, with 24% of ARLA Propertymark member agents reporting that landlords put their rent prices up, compared to 31% in September and a huge 40% in August.

Rental stock

The supply of available properties to let rose from an average of 194 per member branch in September to 198 in October.

This is the highest figure recorded since December 2017, when supply stood at 200 properties per branch, and is up by 9% on an annual basis.

Tenant demand

Demand for properties from prospective tenants increased in October, with the number of home hunters registered per ARLA Propertymark member branch rising to an average of 71, compared to 63 in September.

David Cox, the Chief Executive of ARLA Propertymark, says: “Last month’s findings indicate that power in the rental market could be shifting towards tenants, with a record number negotiating rent reductions, and fewer landlords hiking rent costs. However, it’s more likely that this is indicative of the time of year and, come the New Year, we’ll see rent prices starting to creep up again.

“There’s no real way of avoiding it, unfortunately – with landlords facing continued regulatory change, increasing costs will be passed on to tenants. Those who don’t pass the costs on will eventually have to exit the market, which will increase competition and boost prices. It’s the ultimate lose-lose situation.”

Pros and Cons of Long-Term Tenancies

Published On: November 29, 2018 at 10:59 am

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By Marc Trup, the Founder and CEO of Arthur Online

Ever since the Government proposed to enforce a minimum three-year contract for tenants, long-term tenancies have been a hot topic amongst landlords. For those considering longer tenancies, we’ve put together a list of things you may want to think about.

Long-term tenancies have had a generally positive reception; research by Shelter shows that around a third of landlords like the idea of three to five-year tenancies with a break clause. A further third of landlords say they are open to the idea of long-term tenancies.

Longer contracts eliminate void periods, and reduce the stress and fees of finding new tenants. The predicable nature of these tenancies also means easier financial planning.

Marc Trup, the Founder and CEO of Arthur Online

Marc Trup, the Founder and CEO of Arthur Online

For the most part, it makes good business sense. By their nature, long-term tenants are more vested in the property and are therefore likely to treat it better, lowering repair costs. Tenants may also insist on unfurnished lets, as they often like to add a personal touch to make it feel more like home, meaning you have even less to worry about. Perfect for the part-time landlord.

As house prices soar, while incomes remain flat, long-term tenancies are becoming a popular way for those unable to buy to lay down roots. It’s no surprise that there’s generally a greater sense of community in areas where people stay for years on end. While homeownership often remains the goal, longer tenancies allow people to feel a sense of belonging in the meantime.

Critics have argued that homeownership should be encouraged to create communities and preserve the rental market for those who really need it.

Landlords have also fought back; it’s often hard to judge whether a prospective tenant will be a good tenant. Unlike with normal Assured Shorthold Tenancies (ASTs), bad decisions at the outset of long-term tenancies could have ramifications for several years. It’s no surprise that landlords value existing ASTs, which have the flexibility to mitigate some of this risk.

Long-term tenants are more likely to see the property as a home and may be fussier than short-term tenants. While this encourages care for the property, it could also mean they are more demanding when it comes to furniture or the layout of the property.

Void periods aren’t always a bad thing; many landlords use these as an opportunity to carry out major works, which can often be worthwhile investments that justify higher rents.

Rent reviews are also a concern. There are strict limitations on rent increases during a tenancy, whereas you are free to charge new tenants what you want.

These strategies are greatly valued by active property managers, as they can have a big impact on overall returns; longer contracts stifle that potential.

It’s also worth noting that some banks and building societies prefer short-term tenancies, as long-term contracts complicate repossession in the case of mortgage defaults.

Letting agents may also be averse to the idea, as most of their fee is earned through finding and placing tenants. The less turnaround, the lower their fee and they may be less inclined to work with you (but I wouldn’t worry about paying less fees!).

Marc Trup is the Founder and CEO of Arthur Online

After selling his business to BUPA in 1998, Marc started investing in rental properties in London. Over the next 15 years, Marc grew his portfolio to over 85 properties. While successful, self-managing his portfolio became increasingly difficult. With technological advances and greater connectivity, he assumed there was software available that would allow him to manage his business from his smartphone, while sipping espresso at the local coffee shop. Following a long search, he found that nothing quite cut the mustard. So, being an entrepreneur, he started Arthur Online to make not only his life easier, but also that of other property managers.

Arthur Online is a cloud-based platform that enables property managers to respond instantly and solve problems fast from anywhere in the world, be it with tenants, contractors, property owners or letting agents. Since launching in 2015, it has helped thousands of property managers like Marc run their portfolios in the cheapest, most efficient way possible, by using the full potential of new technology and cloud computing. Start your free trial today by going to https://www.arthuronline.co.uk/private-rental/?utm_source=Landlord%20News&utm_medium=article

National Housing Summit to Take Place on 8th December

Published On: November 29, 2018 at 10:32 am

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The National Housing Summit: Safe, Secure Homes for All, which has been organised by lobby groups from across the country, will take place on Saturday 8th December 2018.

In the shadow of the Grenfell Tower tragedy and a national housing crisis, politicians still seem unable to act decisively. Campaigners are now coming together to work out the next steps for achieving safe homes for everyone.

The event is backed by: Generation Rent, Defend Council Housing, housing association tenant groups, private sector renters unions, Disabled People Against Cuts, Salford and other tenant groups with at-risk cladding, and the Fuel Poverty and Hazards campaign.

With many workers across the country renting their homes from private landlords, as well as workplaces also being at risk, trade unions are linking up for the event. Supporters include: the national Unison union, Fire Brigades Union, TUC London East & Southeast, NEU teachers, and Unite housing workers.

Grassroots tenants will speak at the summit, alongside Matt Wrack of FBU, Sian Berry from the Green Party, Kevin Courtney, the General Secretary of the National Education Union, and Justice4Grenfell’s Moyra Samuels.

Workshops will debate critical issues, including fire and construction safety, Universal Credit arrears and evictions, the role of housing associations, private tenant organisation, estate demolitions, and investing in council housing.

Eileen Short, of Defend Council Housing and the Homes for All alliance, says: “Ministers talk, but do nothing about the housing crisis. So hidden, temporary and street homelessness blight more lives.

“We’re joining forces to learn, be more effective, and step up action and pressure. A united, national housing campaign can force political change.”

She continues: “We have killed off most of the disastrous Housing and Planning Act 2016, and the Prime Minister is now being forced to lift the cap on more council housing. Now we need fundamental policy change for rent controls, and rights for private renters and the homeless, and more and better council homes.”

The National Housing Summit: Safe, Secure Homes for All will be held from 11am-5pm on Saturday 8th December, at Hamilton House, Mabledon Place, London, WC1H 9BD.

Tenants Could Save £64 for Each Extra Commuting Minute by Moving out of London

Published On: November 29, 2018 at 9:56 am

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Families renting homes in London could save up to £64 for each extra commuting minute by moving out of the capital, according to research by AnyVan.com.

The study has used the average price of renting a three-bedroom family home in the capital, against a similar property in a commuter town.

The cost of renting in London is particularly high, especially for families. For those who work in central London, adding just a few minutes to a commute can save hundreds of pounds each month.

So, where could you move to that gives you a similar commute time, plus a similar sized home?

Tenants Could Save £64 for Each Extra Commuting Minute by Moving out of London

Tenants Could Save £64 for Each Extra Commuting Minute by Moving out of London

Woking offered the greatest saving per minute. There are a number of rental properties close to Woking station and, with its quick train link to Waterloo, the commute time from your front door could be as little as 28 minutes. There are decent savings to be made – roughly £191 per month in comparison to living in Colliers Wood, which can have a 25-minute journey into Zone 1. This means a saving of £64 for each minute added to the commute time.

St Albans is another known commuter hotspot, with a non-stop service into the capital. Commuting from a property close to the main station to Kings Cross takes just 23 minutes, which is actually only five minutes more than if you lived up the Victoria Line in Walthamstow. This switch could see tenants save £31 per minute, with a monthly saving of £157.

The highest potential monthly saving was £589, found by moving from South Clapham to Berkhamsted. A similar saving could be gained by switching homes in southwest London, such as Gunnersbury, to Reading. If you’re looking at Reading, be sure to check out Caversham, which offers a village feel, but is just a few minutes’ walk from central Reading and the mainline station. A short walk and direct train into London will take just 31 minutes, and could save commuters £39 a minute, or £545 per month.

A lesser-known option is Haddenham, a small village close to Thame on the border of Oxfordshire and Buckinghamshire. Haddenham offers a direct fast train service, which gets you into Marylebone in less than 40 minutes. This commute would add just seven minutes to your journey when compared to travelling in via the Bakerloo Line from Kenton. This switch would save £45 per minute, or £315 a month.

Other locations highlighted in the research include Bedford, against Edgware, which had a saving of £45 per minute. Seven Oaks was just four minutes longer than Tooting Bec, with a saving of £39 a minute. Kings Langley offers a commute of 29 minutes into Euston, versus West Finchley, at 22 minutes. This seven-minute difference could save tenants £41 per minute.

Angus Elphinstone, the CEO of AnyVan.com, says: “Our research highlights just how much money families who are renting in London could save by moving to a commuter town. Locations like Reading, St Albans and Woking offer rapid direct train links, and give movers an option to save money by adding just a couple of minutes to their journey time, in comparison to living in Zone 3 or 4.

“Commuter train tickets can cost upwards of £500, which might seem a bit steep for some, but, even with the additional travel costs, families can easily save £500 a month by switching London to a commuting hub.”

He adds: “Our advice before you move anywhere is: always do your homework and research the area. We’ve selected areas with available rental properties within a few minutes’ walk to the train station, as using a car park could add a further £100 per month to a commute.“

Landlords, you can use this research to inform your decisions when looking at property investments outside of the capital.