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Scottish Private Rental Sector Continues Upward Trend, Reports Citylets

Published On: November 7, 2018 at 9:57 am

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Categories: Lettings News

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The Scottish private rental sector recorded an average increase of 2.2% in rent prices, to reach £789 per month, in the 12 months to the third quarter (Q3) of the year.

Continued demand for properties of all sizes in the Scottish private rental sector pushed rent prices higher, with four-bedroom homes recording the steepest annual increase, at an average of 5.5% (as per the previous two quarters of 2018), reports Citylets.

The average time to let a property averaged one month (31 days) in Q3, which is one day quicker than in Q3 2017. A significant 61% of properties in the Scottish private rental sector are let within a month, reports the lettings portal.

Gillian Semmler, the Communications Manager at Citylets, comments: “Strong demand for rented accommodation in Scotland continued in Q3 2018, most notably in the central belt, where both Edinburgh and Glasgow experienced rental growth in excess of recent quarters. The continued shift in demographic towards families renting appears evident in the uplift in rents achieved for larger properties.”

Edinburgh

Once again, rent prices in Edinburgh rose again during Q3 (by 5.6%), bringing the market to another all-time high of £1,107 per month on average.

All property sizes recorded strong annual growth, with four-bed homes rising the fastest over the year, at an average of 10.8%, in part likely to reflect the continued strong demand for family rental housing.

Scottish Private Rental Sector Continues Upward Trend, Reports Citylets

Scottish Private Rental Sector Continues Upward Trend, Reports Citylets

Of concern to tenants will be the uptick in the rate of growth for rents in Edinburgh back to the 5-6% range, after sitting between 3-4% for around a year prior to Q2 2018. It is the 36th consecutive quarterly recording of annual rent price growth for the Scottish capital.

The time to let remains very low in Edinburgh, with 76% of all properties let within one month.

Glasgow

For so long the bastion of rental stability in Scotland, with consistent and low annual growth, Glasgow recorded an unexpected and sharp rise in rents, of an average of 4.9% in the year to Q3. A typical rental property in Glasgow now lets for £785 per month, in just 24 days.

Citylets notes that it is unclear why all markets saw high annual growth over and above what would usually be expected in the traditionally busiest period of the year. Consequently, the gap between Scotland’s largest and the granite cities has opened up, with a material gap now emerging between them.

Citylets is interested in viewing the figures for the end of Q4, to determine whether a new city dynamic has emerged.

Aberdeen

Aberdeen landlords can remain cautiously optimistic that their market may soon level off completely, and, as the price of oil has been on an upward trend for almost three full years, may well start to return to positive growth.

Rent price growth stood at an average of -3.6% in Q3, with one-bed homes recording -2.7% growth for the second consecutive quarter.

The average time to let has come down by four days, to an average of 45 days. 42% of rental properties in Aberdeen let within a month, which is up from 37% in Q3 2017.

Dundee/West Lothian/South Lanarkshire/Renfrewshire 

Dundee also experienced a rise in the annual growth rate for rent prices, at an average of 3.4%, taking typical rents to £604 per month. Strong demand for large family and student properties led increases, at 11.0% and 7.9% respectively.

Nearly half (48%) of properties in Dundee let within one month, which is up significantly on recent quarters.

The West Lothian lettings market has again recorded strong annual growth of 4.8%, to hit £697 a month, with a substantial decline in time to let of nine days.

Growth in South Lanarkshire continued for the fourth consecutive quarter, albeit easing to 1.9% from 3.8% in Q2.

Adrian Sangster, of estate agent Aberdein Considine, comments on the state of the Scottish private rental sector: “In the north of Scotland, we are continuing to experience a market where stock is not an issue, whilst, in the south, there is insufficient availability of properties to meet tenant demand. This is resulting in the almost evitable increase of rent values in the south, compared to the continued reduction in the north, albeit at a much slower pace.

“Whilst there are some encouraging sounds from the oil industry, with several new projects being announced, I do not anticipate it making too much of an impact in the north in the short to medium-term. However, whilst the country’s legislators seem hell bent on discouraging landlords to remain in the sector, I can only see the rental trends in the south continuing unabated.”

Calls for Incentives for Agents to Implement Fees Ban Ahead of Introduction

Published On: November 7, 2018 at 9:15 am

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Categories: Lettings News,Tenant Fees Ban

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Tenancy deposit cap saves average renter more than £100

The Government has suggested that it could incentivise letting agents to stop charging fees to tenants ahead of the introduction of the fees ban, which is expected in spring next year.

On Monday, it rejected calls for extra regulations to enforce the ban, but did say that it would consider proposals that would prevent agents and landlords from possessing multiple holding deposits from different sets of tenants for the same rental property.

Speaking during the committee stage of the reading of the Tenant Fees Bill in the House of Lords, the Government’s housing spokesperson, Lord Bourne, said that advice was being taken on the legality of agents and landlords taking multiple deposits. He believes that this isn’t fair and could be a breach of contract.

Peers called for regulations, rather than guidance, on the use of holding deposits, to make it clear when they could be retained and to define what a default fee is.

Baroness Grender highlighted the case of a Bristol-based letting agent, Be Streets Ahead, which she said had refused to refund a holding deposit to a group of friends who had withdrawn their application, as one of them had a brain tumour.

She insisted that regulations should allow exemptions for health issues, so that a holding deposit could be returned.

She also warned that agents are becoming “more aggressive” on administration fees, and called for incentives for firms to start implementing the fees ban before its official introduction.

Lord Bourne said that the Government is keen to avoid regulations, and rejected suggestions from Lord Best that a delay in implementation, so that clear regulations could be agreed, may be “a price worth paying”.

Instead, peers agreed to be more closely involved in developing guidance.

Lord Bourne also revealed that the Government was engaging with Zoopla, Rightmove and Purplebricks to raise consumer awareness of the fees ban.

Meanwhile, Baroness Hayter took the debate as an opportunity to criticise the Government for increasing the coverage needed for Client Money Protection providers to £200m, with no cap on liabilities.

She noted that this excluded the Royal Institution of Chartered Surveyors and Propertymark, as their limit is £5m.

RLA Threatens Council with Judicial Review Over ‘Unlawful’ Licensing Plan

Published On: November 6, 2018 at 10:49 am

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The Great Yarmouth Borough Council has been threatened with a judicial review by the Residential Landlords Association (RLA).

The Great Yarmouth Borough Council has been threatened with a judicial review by the Residential Landlords Association (RLA). The letter to the Borough Council details serious concerns over its plans for selective licensing schemes across Great Yarmouth.

The authority is proposing to bring rented homes in parts of the Nelson electoral ward into the scope of selective licensing. However, the RLA believes that one of the conditions in particular is unlawful, and has written to the council for urgent clarification on the matter.

The RLA believes that the authority’s plans for all landlords to join a ‘landlord support service’ run by a third-party delivery partner, are unlawful.

What would the cost be to landlords?

Under current plans, the licensing scheme is due to be introduced with fees set at more than £500 per property for the five-year licensing period. The landlord would also have to contribute £9.50 a month to the landlord support scheme. This is also 20% more expensive for the landlord too, as VAT is payable to the chosen delivery partner.

The RLA believes the council has no power to impose such a condition, which it pointed out in its official response to the licensing consultation earlier this year: ‘A local authority may only charge one fee – for a licence application. The scheme proposed by Great Yarmouth appears to both charge two fees and allow a third party to retain 80% of the fees charged. Again, this is unlawful.

‘Should a landlord be rejected by the scheme, there appears to be no route to obtain a licence. Nor does there appear to be an appeal process. Should a local authority refuse a licence, then the landlord can appeal to tribunal. It is not clear if a tribunal could hear an appeal from landlords refused membership of a third party scheme, even though this effectively denies them a licence.’

David Smith, RLA policy director, said: “We are asking for immediate clarification on the council’s position.

“If our understanding is correct, we want the council to reconsider this aspect of the scheme and come up with a lawful alternative.

“If it will not, we will move ahead and issue a claim for a judicial review on this basis.”

Great Yarmouth Borough Council is not the first to come up against opposition to proposals for selective licensing schemes. Brighton and Hove City Council recently lost permission to introduce a selective licensing scheme that was due to go live in February.

North-South Property Price Divide Expected to Shrink

Published On: November 6, 2018 at 10:03 am

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North South divide could shrink if property prices rise in the North quicker than in the South.

Over the next five years, the price divide between the North and South of the UK is expected to shrink, according to new research.

Savills estate agents are predicting an average property price rise of 14.8% in England and Wales over the next five years.

The highest expected increase in prices looks to be in the North West, growing at a predicted rate of 21.6%. This comes at a contrast to values in the South East, which are expected to rise by 9.3%.

Areas outside London and the South of the country are expected to see stronger growth, due to the prices being much more affordable as they currently stand, leading to a shrinking North-South divide.

In terms of rental growth, however, the opposite is expected – with Savills predicting rental growth of 13.7% countrywide, and in London at 15.9%.

London market

For the capital, Savills expects London house prices to rise by just 4.5%. However, Savills predicts that the top end of the market in London would increase significantly more than this, due to it being much less dependent on securing a mortgage to buy property.

Head of residential research at Savills, Lucian Cook, comments: “Brexit angst is a major factor for market sentiment right now, particularly in London. But it’s the legacy of the global financial crisis – mortgage regulation in particular – combined with gradually rising interest rates that will really shape the market over the longer term.

“That legacy will limit house price growth, but it should also protect the market from a correction.”

Five-year forecasts should be treated with caution, as a variety of events can affect the property market and the economy, even down to a local level, such as the recent housing price drop in Salisbury. The past five years have seen many homeowners choosing to stay put, and relatively few properties being placed on the market.

HHIC Welcomes Higher Landlord Contribution For Energy Efficiency Measures

Published On: November 6, 2018 at 9:01 am

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The HHIC welcomes today’s announcement landlords must contribute up to £3,500 to upgrade their rental, but HHIC believes landlords could be doing more.

Should landlords have to take more responsibility for their rental properties’ insufficient energy efficiency measures?

The Heating and Hotwater Industry Council (HHIC) welcomes the announcement that landlords must contribute up to £3,500 to upgrade their inefficient rental. Although HHIC still believe that landlords could be doing more.

Previously, the funding cap was at £2,500, a figure put forward by the government after the HHIC proposed that the cap should be set to £5,000. HHIC predicted that the government’s plan to cap spending at £2,500 would only have helped 30% of houses reach an Energy Performance Certificate (EPC) band of E.

The HHIC predicts that a cap at £5,000 would help significantly more properties, and the government predicts that the cap at £3,500 will have an effect on around 290,000 properties.

Director of the HHIC, Stewart Clements, said: “When Government and industry – ‘those in the know’ – work together then the resulting outcomes are better. I am pleased that the government has recognised that legislation is required in the rental sector to improve EPC ratings. The figure of £3,500 improves upon the suggested £2,500 which would have only helped 30% of homes improve upon their EPC rating.

“Having said this, HHIC still believe £5,000 is the correct level for the cap, as it would help close to 60% of cold, inefficient (band F and G) homes reach the required EPC level.

“This is because, the cost of installing a new central heating system can amount to £4000, which is £500 above the new cap level. Insulation alone will not keep a home warm, you need an efficient heating system too. And gas central heating is the most obvious solution.

“Aside from the debate on the numbers, this decision does open up a wider debate on the duties landlords have to their tenants. The amount that tenants pay for rent is often their largest outgoing, yet is one of the least regulated markets in the UK. HHIC believe that like every business and service provider, landlords should be regulated by similar laws to every other market in the UK. This would prevent cold and damp homes from entering the rental market.”

Victory for Landlords as Government Withdraws Permission for Licensing Scheme

Published On: November 5, 2018 at 10:38 am

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Does Section 24 Mean You Should Sell Your Property?

Brighton and Hove City Council has lost permission to introduce a selective licensing scheme that was due to go live in February.

Previously, the Ministry of Housing, Communities and Local Government had approved a selective licensing scheme for the local authority in September, but this is now being reconsidered.

This comes from opposition from a South-East landlord association called iHowz. It encouraged landlords to write to Brighton and Hove city council, and some described the proposed selective licensing scheme as unlawful.

A statement released by iHowz said: “We took this action because we felt the decision to license some 27,000 rental properties was unlawful, unnecessary and not justified by the evidence provided, and would almost certainly lead to rent increases for many private sector tenants in Brighton.

“Licensing was brought in in 2006 to allow local councils to control a small area of rental properties being poorly managed and bringing that area into disrepute. We support licensing when used for that purpose.

“We cannot, and have never supported, the carte blanche licensing of large areas. We have previously offered to work with the council to help improve rental conditions for private sector tenants in the city, improve property conditions in a cost-effective manner where required, and most importantly identify the possibility of criminal landlords, and we repeat that offer.”

Brighton and Hove City Council is seeking clarification from the government regarding the removal of permission.

A council spokesperson said: “We’re extremely surprised and disappointed by this decision. As a matter of urgency we will be seeking further clarification from the Government as to why they have changed their position on this only weeks after approving our scheme.

“We consulted the Government throughout our work to introduce our private sector housing licensing scheme, and had been assured that we were proceeding correctly. We sent the Secretary of State all the information requested of us and believed we had made a strong case.

“We are therefore saddened that the decision the Secretary of State took in September has now been overturned by the same Secretary of State. The Government is still considering the case and we will of course assist them in any way we can.

“Our plans to extend our private sector housing licensing scheme are an important part of our strategy to control and reduce anti-social behaviour in the city.”