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Private Rental Sector growth continues, says TDS

Published On: September 14, 2016 at 9:53 am

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New figures released from the Tenancy Deposit Scheme indicate that there has been a substantial rise in the number of deposits taken on assured shorthold tenancies in England and Wales.

This underlines the increasing popularity of buy-to-let as an investment opportunity, the firm claims.

Increasing investment

Data from the TDS report shows that at the end of March 2016, there were around 3.42 million deposits protected in England and Wales. This is a rise of over 360,000 over the course of the year.

The total value of deposits protected now stands at £3.56bn, which is an increase of £379 since last year.

Steve Harriott, chief executive of the Tenancy Deposit Scheme, noted: ‘these figures demonstrate the continuing growth of the private rented sector, which is now larger than the social housing sector in England and Wales.’[1]

However, the average value of deposits protected stayed fairly consistent. On the 31st March 2016, the average deposit was £1,041. Four years, this figure stood at £979.

Mr Harriot went on to say, ‘the huge number of deposits being paid by tenants at a value of some £3.5bn demonstrates the need for tenancy deposit schemes to ensure that deposits are protected for tenants.’[1]

Private Rental Sector growth continues, says TDS

Private Rental Sector growth continues, says TDS

Cooling

These figures from the Tenancy Deposit Scheme come just days after a report from Countrywide which suggests rents on new tenancies cooled in August.

The most prominent rental declines were noticeable in central London, the South East, South West, Midlands and Wales.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/private-rental-sector-continues-to-grow-says-tds

10 Ways to Keep On Top of Your Household Budget

Published On: September 14, 2016 at 9:38 am

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Originally posted on HomeOwners Alliance.

Have you spent a bit too much this month? Or maybe you’re looking to keep track of your spending as Christmas approaches? Whatever your circumstances, it is always a good idea to stay on top of your household budget.

The HomeOwners Alliance has put together ten top tips for homeowners, landlords and tenants alike, which will help you manage and cut back on your spending.

So where should you begin?

  1. Admit that you need to budget

Budgeting may not be fun or glamorous, but most of us need to do it. Setting a budget will avoid the sinking feeling at the end of the month when you realise that you don’t have any money left. Sit down, keep reading, and make a start.

  1. Find a good budgeting app

If you know what you are spending your money on, then you can decide what changes you need to make. Finding a good budgeting app for your smartphone or tablet will allow you to easily record where your money is going. Here are some of the HomeOwners Alliance’s favourites:

  • Mint – A free app that allows you to review all of your accounts in one place, categorises where your spending is occurring and stays up to date with recent transactions. Additionally, it is smart watch compatible.
  • Fudget – A budget planner, personal finance and expenditure ledger that creates lists of incomings and expenses, so that you can keep track of your balance.
  • Pocket Expense Personal Finance – A free account tracker, budget planner and bills manager.
  1. 10 Ways to Keep On Top of Your Household Budget

    10 Ways to Keep On Top of Your Household Budget

    Use your bank app

All banks offer a free app that will help you manage your money, make payments and review your spending. Check it regularly and find out what tools your bank’s app offers to notify you of your balance on a regular basis and warn you when you are about to become overdrawn.

  1. Shop around 

Whether you’re buying a product or a service, always shop around online and research your purchase to make sure that you’re not paying over the odds. If you’re buying something in a shop that you don’t need on that day, you may be able to find it cheaper online and have it delivered.

Although it is important to support local businesses, you shouldn’t do it at your expense. Use Google to check prices, but don’t forget to account for the delivery charge.

  1. Save on your bills 

Don’t pay more for your energy or internet if you don’t need to – shop around and switch your accounts.

If you want to keep track of your energy usage, give regular meter readings to your provider, so that they keep your bills as accurate as possible. The HomeOwners Alliance also suggests using an app:

  • Meter Readings – This app allows you to monitor up to nine separate household utility meters. Once you enter the readings, your usage, costs and savings are calculated and displayed in graphs.
  1. Shop for groceries online 

One in ten of us now do our grocery shopping online. It is a great way to manage your costs and avoid you being tempted to spend over your budget. Additionally, supermarkets often offer discounts for new online customers.

If you like to look before you buy, then create a meal plan for the week and write a shopping list before you head to the supermarket. If you spot non-perishable items on offer, such as shampoo, then it makes sense to buy in bulk.

If you find that you are still overspending, you need to find out what the problem area is. Keep all receipts and write down everything that you buy, before putting each item into categories. These apps will help:

  • Shopitize – Gives you cashback on your grocery shopping when you purchase certain items.
  • Any List – Create grocery shopping lists, recipes and meal plans.
  1. Use cash 

With contactless payments available on most bank cards today, it is very easy to overspend. If you are trying to stick to a budget, then using cash when you can will help you stay in control.

  1. Cut back on subscriptions

With so many great offers available for TV packages, the gym and magazines, it is easy to forget that small costs all add up. If you want to cut back on your monthly outgoings, review all of your annual and monthly subscriptions, particularly direct debts and those that auto renew.

  1. Remortgage 

If you own your own home, then your greatest outgoing will likely be your mortgage. Therefore, remortgaging should be top of your list if you’re trying to keep on top of your household budget. With interest rates now at an all-time low, there is no better time to remortgage.

  1. Ask yourself these questions

Now that you have the tools to manage your household budget, you must remember to ask yourself these questions before you buy anything: Do I really need it? Will I use it? Is it good value for money?

Typical tenants expect to rent for the next decade

Published On: September 14, 2016 at 8:57 am

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A new survey has suggested that the typical UK tenant expects to stay part of the Private Rented Sector for the next ten years.

Research conducted by AXA indicates that despite this, fewer tenants say they are renting as they cannot afford to buy a property.

Altering attitudes

In 2013, 67% of tenants questioned said that they rent property as they cannot afford to buy. This year, this figure has dropped to 44%, indicating that people’s attitudes towards renting are changing.

One third of those questioned said that their main reason for renting was due to the ‘freedom and lifestyle benefits’ it brings.

Additionally, AXA says that tenants in the UK are experiencing something of a surge in financial confidence. In 2013, only 13% of those surveyed said they were saving up for a deposit. This figure has nearly doubled this year to hit 25%.

Relocation, relocation, relocation

The survey also shows that tenants are beginning to favour more frequent relocation, believing they will stay in a rental property for an average of two years.

61% of the 1,000 surveyed said that they are in favour of short-term contracts of six months to a year. Just 18% said that they would benefit from five or ten year leases.

In the next five years, nearly two-thirds of those asked said that they plan to relocate to a different part of the UK. 10% said they plan to emigrate.

Topping the list of so-called stepping stone towns were London, Bristol and Edinburgh, where tenants tend to stay for the shortest period.

Typical tenants expect to rent for the next decade

Typical tenants expect to rent for the next decade

Worries

AXA’s survey also reveals that landlords’ biggest concern is a high turnover or tenants. Only a minority said that they know their tenants personally, with a huge 70% saying they see their renters once a year or less!

Darrell Sansom, managing director at AXA Business Insurance, said, ‘rental culture is not as well embedded in British society as in other European countries. Short-term tenancies prevail here and while bringing benefits to some, this means that both landlords and tenants can feel as if the ground is constantly shifting under their feet.’[1]

‘With such a mobile tenant population, landlords need to work that bit harder to encourage longer stays. Few tenants are interested in being locked in to a long lease, but little compromises on things like pets, freebies like broadband or cleaning services, offering to redecorate-can build precious loyalty,’ he concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/9/average-tenant-expects-to-rent-for-ten-more-years

Britain’s Biggest Landlord Sells Half of His Buy-to-Let Portfolio

Published On: September 14, 2016 at 8:31 am

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Britain’s biggest landlord has sold around half of his buy-to-let portfolio in the past year, claiming that the age of the amateur landlord is coming to its end.

The Financial Times reports that Fergus Wilson and his wife Judith, who are both former maths teachers, have sold about 400 of their 900 buy-to-let properties in Kent, with most sold to overseas buyers and around 50 to their tenants.

When the buy-to-let mortgage launched in the mid-1990s, the Wilsons were able to expand their portfolio, as high loan-to-value (LTV), interest-only loans were incredibly easy to acquire.

Britain's Biggest Landlord Sells Half of His Buy-to-Let Portfolio

Britain’s Biggest Landlord Sells Half of His Buy-to-Let Portfolio

However, the notorious property investor believes the age of the amateur landlord is “over”, as lending criteria has become tougher.

“If you were an amateur landlord in those days, as long as you could spell your name, you would get a mortgage,” he explains. “No one appeared to check anything. I wouldn’t say it is impossible, but it is much tougher. Some [banks] are offering LTV of only 60%.”

He adds: “Is it the wrong time to be an amateur landlord? Yes. Some people will succeed, but on the whole, too many amateurs walk into pitfalls… The day of the amateur landlord is over.”

Over the past few months, a number of banks have tightened their buy-to-let lending criteria.

OneSavings Bank, for example, has put its focus on professional buy-to-let investors following the Brexit vote, as they are “better positioned to withstand market volatility”. The Kent-based bank has also tightened conditions for smaller landlords.

Ray Boulger, of mortgage broker John Charcol, agrees that it has become much harder for amateur landlords to operate, following changes to the tax system and regulations.

He comments: “For lower yielding parts of the country with higher prices, like London and the South East, it will become impossible to get a high LTV mortgage, unless properties are put into a limited company. LTV will be limited to about 55-60%. New landlords will have to save a bigger deposit.”

Mr. Wilson, 68, who announced his plans to sell his £250m buy-to-let portfolio in 2015, says he is still waiting for a number of sales to complete.

Last year, he revealed that he needed to repay around £45m to 14 lenders, but he hopes to emerge with a £200m profit.

Wilson believes that June’s Brexit vote will ultimately boost the selling process: “I think foreign buyers are saying at the moment that Brexit helps, as it is cheaper [to buy UK property] in their money [following the fall in sterling]. Many are trophy hunters – they want to impress their friends with a photo of the house they own in Britain.”

Additionally, he claims that UK house prices will be supported by the shortage of housing in the long term: “All the time there is a shortage of houses, the prices will continue to go up. It is impossible for the developers to deliver the number of houses required for the next 15 years.”

However, the latest official house price figures show that the property market has cooled over recent months: /property-market-cools-wont-crash-claim-experts/

Increased supply sees rents cool across Britain

Published On: September 13, 2016 at 1:54 pm

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New data suggests that the level of rents achieved across Britain fell over the last month in more than half of all regions.

The latest monthly letting index from Countrywide shows that rents fell year-on-year in five of the nine regions assessed during August. However, for Great Britain as a whole, average rents on new lets actually increased by 1.5% to £960 per month.

Rises in new rents were driven by growth in Greater London, the East and North of England and Scotland.

Ups and downs

While overall rents rose, the estate agency group also reports that rents dropped in central London, the South East, South West, Midlands and in Wales. This reflects a substantial rise in the supply of housing coming onto the private rental market.

Johnny Morris, research director at Countrywide, noted: ‘in London and the South East, recent increases in the number of homes available to rent, outpacing the growth in tenants looking for a home, has meant that bargaining power is shifting towards tenants from landlords. This is slowing rental growth.’[1]

‘Overall slightly more tenants are offering above asking price than last year. The majority continue to pay asking prices. Unlike the sales market rental prices adapt very quickly to changes in market conditions, meaning asking prices are finely tuned to tenant demand.’[1]

Above asking prices

The information shown below indicates the proportion of homes let above their asking price in different regions of the UK during August:

Region Aug-15 Aug-16 change
Greater London 17% 13% -3.7%
Central London 17% 8% -8.9%
East of England 13% 15% 2.3%
South East 14% 14% 0.1%
South West 12% 15% 3.1%
Midlands 10% 11% 0.9%
North 10% 10% -0.3%
Wales 11% 8% -2.7%

GB             12%     12%     0.2%

[1]

Increased supply sees rents cool across Britain

Increased supply sees rents cool across Britain

Rental prices (per month) for New Lets

Region Ave Rent Aug-16 Ave Rent Jul-16 Ave Rent Aug-15 August Rent YOY
Greater London £1,299 £1,280 £1,288 0.9%
Central London £2,434 £2,638 £2,484 -2.0%
East of England £977 £963 £912 7.1%
South East £1,188 £1,173 £1,205 -1.4%
South West £862 £856 £853 -1.1%
Midlands £705 £703 £708 -0.4%
North £697 £694 £676 3.1%
Scotland £726 £689 £696 4.3%
Wales £669 £671 £672 -0.4%
GB £960 £951 £946 1.5%

[1] https://www.landlordtoday.co.uk/breaking-news/2016/9/rents-cool-across-half-of-britain-as-supply-increases

 

Buy-to-Let Lending Up by Almost 40% Over the Past Year

Published On: September 13, 2016 at 1:36 pm

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Categories: Finance News

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Buy-to-let lending has risen by almost 40% over the past year, defying new Government measures to curb investment in the private rental sector.

Buy-to-Let Lending Up by Almost 40% Over the Past Year

Buy-to-Let Lending Up by Almost 40% Over the Past Year

According to the latest figures from the National Association of Commercial Finance Brokers (NACFB), buy-to-let has had a very strong year, despite the various tax changes that have been announced over the past 18 months.

The organisation found that landlord borrowing has not been materially affected by April’s Stamp Duty hike, when the 3% surcharge for buy-to-let investors and second homebuyers was introduced.

Almost £5 billion worth of business was written by NACFB for buy-to-let landlords in the year from July to June, marking a 39.1% increase on the previous 12 months.

Alongside the Stamp Duty surcharge, landlords have been faced with the 10% Wear and Tear Allowance cut and forthcoming restrictions to mortgage interest tax relief.

The body also reports that small business lending has hit an all-time high over the past 12 months, despite a backdrop of political and economic uncertainty surrounding the EU referendum. Lending has risen by almost 30% to reach £20.7 billion.

However, while traditional forms of lending – such as commercial mortgages – have had an impressive 12 months, lending in the alternative finance space, which includes peer-to-peer and crowdfunding, has slowed. Business written by NACFB brokers over the last year has dropped by 14.4%, down from £848m to £725m.

Despite this, other areas have also experienced strong growth, including invoice finance (22.8%), leasing and equipment finance (10.5%), development finance (49.8%) and bridging finance (74.6%).

The organisation’s Adam Tyler comments: “It’s been a phenomenal and record breaking year across the commercial finance sector. With the UK’s SME community showing a real appetite for growth, despite the uncertainty of Brexit, we have seen small business lending at levels above even those registered before the financial crash.

“Interestingly, the figures show that there has been a significant switch by small businesses back to traditional forms of lending. The alternative finance sector has grown at such a pace that it was inevitable that rate of growth couldn’t be sustained. Peer-to-peer will always have its place, but alternative forms of funding are no longer the only future; they are just one of many forms of finance available to small and medium-sized businesses.

“There has never been a better time for businesses to secure finance, as the commercial finance sector continues to innovate and diversify. The challenge is to make sure the message reaches SMEs that there are many routes to funding.”

Landlords, have you continued to invest in buy-to-let this year, despite the tax changes you face?