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Em Morley

First Drop in London Rents for Six Years, Reports Countrywide

Published On: August 15, 2016 at 9:25 am

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Rent price growth has slowed in every region of the UK, with the first drop in London rents for six years recorded in July, according to the latest Countrywide Lettings Index.

First Drop in London Rents for Six Years, Reports Countrywide

First Drop in London Rents for Six Years, Reports Countrywide

Rents in the capital dropped by 0.5% over the last 12 months, making the average London rent £7 cheaper per month than in 2015. Countrywide found that the last time rents in the capital dropped annually was in November 2010, when the average monthly rent in London was £923 – 39% less than today.

Across the UK, rents rose by just 1.5% in the year to July, marking the slowest rate of growth since 2012.

Although tenant demand has increased nationally, the number of rental homes coming onto the market has slowed, or in some cases, reversed price growth. In July, there were 23% more homes available to rent in the UK than in July 2015, while the capital recorded a 33% increase.

Countrywide believes that part of this rise was driven by landlords rushing to beat the Stamp Duty deadline in April, however, it adds that the number of homes available to rent has continuously risen in recent months, particularly in London and the South East.

The report concludes that an increase in the number of homes on the market has meant that fewer deals were agreed above the asking rent. In July last year, 16% of tenants paid more than the asking price to secure a home, compared to 7% in July 2016. In London, the fall was greater – down from 32% last year to 11% this year.

Last month, the average rent price in the UK was £951 per month, up by 1.5% over the year, but rising half as fast as in July 2015.

Rents in London (-0.5%), the South East (-1.1%), Wales (-2.0%) and Scotland (-1.0%), are all down on last year.

Contrastingly, the rate of rent price growth across the north of England and the Midlands reached the highest level for two years.

Average rents across the UK

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The Director of Research at Countrywide, Johnny Morris, comments: “The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual, due to investors bringing forward purchases in the rush to beat the Stamp Duty deadline in April. Added to that, uncertainty in the sales market in the run up to and after the EU referendum has caused more discretionary sellers to turn to the rental market.

“While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants, we will see the number of households renting increase in 2016.”

Stamp Duty will impact PCL market more than Brexit

Published On: August 15, 2016 at 9:06 am

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An interesting new investigation has looked at the impact of both Stamp Duty changes and Brexit on the prime central London housing market.

The research from Knight Frank suggests that additional Stamp Duty charges brought in on April 1st is more of an issue for the prime London market than leaving the EU.

However, the Brexit vote has moved to create a short-term period of uncertainty, which as a result is affecting behaviour in the region.

Falls

House price values fell by 1.5% in comparison to one year ago, with the number of new buyers slipping by 6.2% in the same period. In addition, the number of exchanges were down by 10.5% during the first six-months of the year, but viewings rose by a substantial 40.8% compared to 2015.

The below £1m market saw annual price growth of 1.1%.

Tom Bill, head of London residential research, suggests that early indications are that the Brexit vote will reinforce price trends.

During June 2014, yearly price growth in prime central London was 8.1%, the last peak for prices in recent times. Growth then fell steadily to -1.5% in July 2016.

Bill notes, ‘this slowdown was a natural consequence of strong price rises between 2009 and 2013, however the process was accelerated by two stamp duty increases and a series of other tax measures.’[1]

Stamp Duty will impact PCL market more than Brexit

Stamp Duty will impact PCL market more than Brexit

Impact

Continuing, Bill said, ‘despite the widespread media coverage devoted to the EU referendum and its potential impact on house prices, the primary factor curbing demand in prime central London remains stamp duty. The result of this two year slowdown is that vendors had already begun to adapt to the new pricing environment and in many cases Brexit has been a trigger to make overdue reductions to asking prices.’[1]

‘Indeed, had the result of the referendum been a victory for Remain, it is likely there would have been a similar mismatch between expectations and reality that followed the 2015 general election. Following the formation of a majority Conservative Party government, high stamp duty costs acted as a brake on demand that was widely expected to surge. Since the vote, a number of buyers have requested discounts due to the climate of political and economic uncertainty,’ he added.[1]

Mr Bill also said, ‘however, where the asking price was set an appropriate level before the vote, deals are proceeding with no reductions. In other cases, the Brexit vote has encouraged vendors to show increased flexibility. It is too early to say whether the reductions are likely to trigger higher transaction levels.’[1]

[1] http://www.propertywire.com/news/europe/prime-central-london-sales-2016081112252.html

 

 

New Energy Efficiency Laws a Tax on Tenants, Says RLA

Published On: August 15, 2016 at 8:30 am

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New energy efficiency laws for the private rental sector will become a tax on tenants, warns the Residential Landlords Association (RLA).

New Energy Efficiency Laws a Tax on Tenants, Says RLA

New Energy Efficiency Laws a Tax on Tenants, Says RLA

The Government’s new policy to improve the energy efficiency of private rental housing in the UK will inevitably increase rents for tenants, believes the landlord group.

From 2018, it will be illegal for private landlords to rent out property with an energy efficiency rating of F or G. However, the RLA says that having removed all support for landlords to fund this, landlords will have to raise rents for tenants.

Almost a third of private rental housing was constructed before 1919, making them some of the hardest properties to treat for energy efficiency improvements.

With fuel poverty a bigger problem in the private rental sector as a result, the RLA insists that it is careless of the Government to make no reference to the market in its consultation of the future of the Energy Company Obligation (ECO), which closes this week.

Although the ECO was designed to focus on fuel poverty, the consultation does propose extending the scheme to the already heavily subsidised social sector, which has newer housing stock and fewer tenants in fuel poverty.

Previously, the Government supported private landlords in improving energy efficiency with the Green Deal and a tax allowance. However, these have now ended and the RLA has been told that landlords could potentially have to pay up to £5,000 up front for improvements.

The RLA fears that, on top of recent tax hikes from the Government, the new energy efficiency costs will inevitably be passed on to tenants in the form of higher rents.

It is calling for a specific allocation under the ECO scheme to support improvements in the private rental sector and avoid the “tax on tenants”.

The Policy Consultant at the RLA, Richard Jones, says: “Whilst we all want to see improvements in the energy efficiency of homes to rent, that cannot come at the expense of driving up rents. The Government’s proposals will amount simply to another tax on tenants.”

Last week, an established property investor also insisted that the Government should be helping private landlords with the cost of improving their rental properties: /government-helping-landlords-energy-efficiency/

Looking After Your Home While on Holiday

Published On: August 13, 2016 at 8:32 am

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You might have heard horror stories about people who travelled for a holiday and came back to a home in a mess. Sometimes, there is news of a break-in. Sometimes there has been a fire, flood, or other incident when away.

Holidays should be about relaxing and recharging, not experiencing unnecessary headaches on your return. If you have plans to leave town for any amount of time, adopt these simple precautions to ensure that your home is safe and you have peace of mind.

It is always a good idea to turn all plug sockets off and turn the mains water off before you travel, as this can eliminate the cause of most water and fire issues. You main not be able to turn of the mains electricity at the circuit board if you are using timed lights.

Most break-ins occur because there are tell-tale signs that no one is home. The idea is to travel without making it obvious to likely perpetrators that your home is unguarded.

Do the following:

  1. Cancel your regular deliveries and services

Don’t forget to call in the newspaper, milk or grocery company and suspend delivery for the duration of your trip. If you don’t do this, your deliveries may well pile up in front of your home, letting people know that the house is empty.

The same goes for your mail – if you are going to be unavailable for an extended period, ask the post office to hold your mail.

  1. Talk to your trusted neighbours
Looking After Your Home While on Holiday

Looking After Your Home While on Holiday

You probably have neighbours with whom you maintain a good relationship. Ask them nicely to take out your rubbish bins (or do this before you leave), hold your mail or feed your pets.

Inform them about your trip, when you will be back, and how to reach you if there is an emergency at your property.

Of course, remember to bring a little something for them from your trip.

  1. Lock down the hatches

Make sure your back and side entrances are shut and properly locked, especially all windows. Set your alarm if you own one, or think about getting a false one – they give unwanted visitors the impression that your home is secure.

Don’t leave your spare set of keys where you usually hide them (under the flower pot or door ledge).

Switch on your sensor lights and take away ladders and gardening tools or anything else that will make it easier for a burglar to get in.

Take your valuables along with you or lock them away in a bolted down safe.

  1. Give the impression you are home

Switch on the timer lights, so that they automatically come on for a limited period in the evenings. If you aren’t travelling with your car, leave it in the driveway.

Get a friend to mow your lawn or house sit on the occasional night. Some people even hang some clothes on the line, so it looks like they are still home.

  1. Halt work on your property

Try not to make a trip if you have some major renovation projects at your home.

  1. Be careful about broadcasting your travel plans

Social media is a fun place to share regular updates, however, it can also backfire. Refrain from telling everybody about the details of your trip. Don’t tell people you don’t know that you are going away – they may take the opportunity to arrange a burglary; exercise a little caution.

Finally, update your insurance to cover your home while you are away.

Then… Enjoy your trip!

Tips from The House Shop

Lack of family homes in lettings market

Published On: August 12, 2016 at 12:52 pm

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Agency network Belvoir has moved to report that a number of franchise owners in its 170-strong network are worried about a lack of family housing. It is feared this could become a defining factor of the lettings market.

Lack of supply

Dorian Gonsalves, managing director of Belvoir, noted, ‘tenant demand for two to three bedroom semi and detached homes remains very high but our franchise owners report this type of accommodation is in short supply. Almost 75% report a shortage of three-bed semis and terraced houses and there is a similar shortage of two bedroom homes.’[1]

‘This is confirmation of the pressure that the private rental sector is currently under and we are yet to witness the full repercussions of anti-landlord initiatives that were introduced by former Chancellor George Osborne at the last budget,’ he added.[1]

During the last quarter, 45% of Belvoir offices saw up to three landlords invest in additional rental properties. 32% saw four or more, which suggests that the increased stamp duty has not deterred more seasoned investors.

Rental lengths

Gonsalves continued by saying, ‘just over half of tenants rented for periods of 13 to 18 months, while over 40% rented for 19 months or longer, suggesting that when tenants let quality properties from a professional, legally compliant agent, they are actually renting for longer than some reports suggest.’[1]

Lack of family homes in lettings market

Lack of family homes in lettings market

In terms of void periods, 47% of franchise owners said that the average time was up to one week. 40% said this period was 2 weeks.

Gonsalves noted, ‘for existing Belvoir offices In England, Scotland and Wales, our statistics reveal a 6.75 per cent year on year increase in rents, from £712 in Q2 2015 to £760 in Q2 2016. When comparing Q2 2016 to the 2015 annual average rent of £722, this shows an increase of 5.25 per cent.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/8/agency-network-reports-lack-of-family-housing-stock-across-lettings-market

Billion-Pound Property Portfolio Bequeathed to 25-Year-Old

Published On: August 12, 2016 at 10:56 am

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A multi billion-pound property portfolio and a £9 billion fortune has been bequeathed to the Duke of Westminster’s 25-year-old son after he died suddenly on Tuesday.

Billion-Pound Property Portfolio Bequeathed to 25-Year-Old

Billion-Pound Property Portfolio Bequeathed to 25-Year-Old

Hugh Grosvenor has now become the third wealthiest landowner in Britain and the 68th wealthiest person in the world, according to Forbes magazine.

Grosvenor, the only son of the late Duke of Westminster, has become the 7th Duke of Westminster and the owner of a significant share of the most exclusive parts of London. Added to his CV is the fact that he’s also the godfather to Prince George.

The Grosvenor property firm, which was formed in the 17th-century, runs a huge portfolio of properties across the capital’s West End and is almost certainly the largest property management company in the UK by value.

The privately owned property business has £11.8 billion in assets under management. At its heart is the 300-year-old Grosvenor estate in London, which began in 1677 as 500 acres of land, including Mayfair and Belgravia.

Its holdings range from high-tech office space in Silicon Valley and a science park in Edinburgh, to the freehold on the current US embassy in Grosvenor Square. The jewel in the crown is Eaton Square, built close to Buckingham Palace and the Houses of Parliament during the housing boom that followed the Napoleonic wars.

Run as a separate legal entity with its own chief executive, Grosvenor Group paid a huge £58m in tax on profits of £527m in 2015 and boasts 520 employees. Its holdings are largely expected to qualify for relief from inheritance tax periodic charges.

Had the Grosvenor estate inherited by the new Duke of Westminster been liable for 40% inheritance tax, the amount owed to the Treasury would have come close to the Government’s entire death duty take for the last financial year.

However, Hugh Grosvenor avoids a significant cut to his £9 billion inheritance, as the estate is held in a trust.