Written By Em

Em

Em Morley

Buy-to-let investors looking North

Published On: July 12, 2016 at 10:44 am

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A new report has revealed that buy-to-let investors’ rush to beat the Stamp Duty deadline saw property prices in Britain’s largest 20 cities rise at the highest rate for 12 years.

During the opening quarter of 2016, house price growth in these UK cities reached 10.8%, which outstripped the 8.7% recorded in the rest of Britain.

City rises

Liverpool, Cardiff and Southampton saw some of the largest quarterly price rises, as investors searched for cheaper cities in which to invest. The largest house price rises during the quarter were recorded in Liverpool and London, where prices rose by 4.1%.

A typical home in Liverpool is valued at £113,100 and in London £468,100.

Cardiff saw the second largest rises at 3.5%, with Bristol and Southampton seeing increases of 3.3%. However, the smallest rises were recorded in Belfast and Newcastle, where prices rose by just 0.9%.

Savvy investors

Peter Armistead, of Armistead Property Ltd, believes that the most savvy investors will be looking to the North of England. Here, yields are a typically higher, with lower capital investment.

Armistead noted, ‘though London gives investors unparalled capital growth, it comes at a cost. Yields in the capital are not as good as many other cities and property prices are very high. Investors buying in the north can acquire two to three properties for the price of one in London. Landlords that are looking to invest, post the stamp duty rise, will be looking carefully at any investment, to ensure it maximises profits.’[1]

Manchester and Liverpool deliver some of the best rental yields in the UK, with Manchester recording average annual rental yields of 6.02% over five years, followed by Liverpool with 5.15% yields. An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000,’ he continued.[1]

Buy-to-let investors looking North

Buy-to-let investors looking North

Northern Stars

Mr Armistead went on to observe that, ‘A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation.  Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper.’[1]

In comparison, yields in London and the South-East are much lower – around an average of 4.86% in outer London and 4.71% in the City, according to LendInvest. House prices in London are about five times what they are in parts of the North West, but salaries are only 30% higher.’[1]

[1] http://www.propertyreporter.co.uk/landlords/btl-investment-driven-north-by-rising-city-prices.html

 

 

UK rents for new tenancies rise in Q2 of 2016

Published On: July 12, 2016 at 9:02 am

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New statistics released today indicate that rents on new tenancies continued to rise in the second quarter of 2016.

The latest HomeLet Rental Index shows that the price of a new tenancy in the UK, excluding Greater London, rose by an average of 3.5% during the last three months. Rents for new tenancies currently stand at £773 per month.

However, the figures represent a fall from the 4.4% annual rise noted in the three months to May.

Rental rises

Data from the Index shows that rental prices rose in 10 out of the 12 regions of the UK. This growth was led by East Anglia and the East Midlands, where rents were up by 8.2% year-on-year. Scotland came next, with rental gains of 7.4% over the same period.

In London, the average rent on a new tenancy is presently £1,575, up 3.9% year-on-year. This said, rental prices slowed from the 6.2% growth seen in the previous month.

Of all the UK regions, the North East and North West were the only ones to see a drop in yearly rents, which were down by 3.6% and 0.2% respectively.

Encouragement

The data from the HomeLet Rental Index will give encouragement to both landlords and tenants alike. This follows the increase of rental stock, following the surge to purchase properties ahead of the higher stamp duty rate, which came into force on April 1st.

Martin Totty, chief executive of Barbon Insurance Group, parent company of HomeLet, noted, ‘the June HomeLet Rental Index shows that the rental market remains resilient in the face of the various economic and political headwinds the sector has faced recently. Landlords are continuing to secure rental growth whilst there are some early signs of affordability criteria beginning to bear on the rates of rental price growth.’[1]

UK rents for new tenancies rise in Q2 of 2016

UK rents for new tenancies rise in Q2 of 2016

Brexit uncertainty

‘The impact of the EU referendum vote will now play out over the months ahead: if, as expected, the result acts as a restraint on the supply of new housing, the gap between demand and supply in the private rental sector will remain market; all the more so if more people decide to rent while waiting to see what happens to house prices,’ Totty added.[1]

Concluding, he stated that, ‘landlords will be considering their position carefully, particularly in the light of further taxation changes to come next year, which could reduce net yields; with long-term drivers such as net population growth still in place, it is likely that rents will continue to rise, though affordability will continue to be crucial. The recent slowdown in rental growth rates may suggest an affordability ceiling is being approached.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/rents-continue-to-rise-across-the-uk

Buy-to-let purchases at six-year low

Published On: July 11, 2016 at 11:55 am

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A new report has suggested that in the three months from the additional 3% Stamp Duty surcharge, property purchases from landlords accounted for just 8% of total property sales. This represents the lowest proportion since 2010.

Further statistics from the report by Countrywide shows that the largest shift in activity was prominent in the North, Midlands and Wales.

Stamp Duty slowdown

The slowdown came after a surge in transactions during the first quarter of the year, when landlords made up 18% of the total number of home buyers in the country, the highest level seen since 2010.

In the North East, 29% of homes sold were purchased by buy-to-let landlords during the first quarter of the year. However, this figure dropped to 9% in the second quarter.

Wales saw a drop from 19% to 3% and the East Midlands 22% to 8%.

Increased purchasing activity from buy-to-let landlords at the beginning of 2016 has led to the number of homes available to rent rising by 22% in June in comparison to June last year.

London and the South West have seen the largest increase in homes available to rent, which numbers in these regions rising by 33% and 55% respectively.

Buy-to-let purchases at six-year low

Buy-to-let purchases at six-year low

Slower growth

Rising supply, coupled with affordability issues, has cut the annual rate of rental growth. The majority of British regions have seen slower growth rates in the course of the year.

Typical rents in Britain rose to £960 during June, 3.6% greater than at the same time last year.

Johnny Morris, research director at Countrywide, noted, ‘the lull in landlord activity is mostly due to investors bringing forward purchases in the first three months of the year but upcoming changes to mortgage tax relief and the prospect of heightened uncertainty in economy during the lead up to the referendum, will also have made investors warier of entering the market.’[1]

‘Those extra homes bought by landlords at the start of the year are still making their way to market. Despite tenant numbers still growing, the increased supply is slowing rental growth,’ he added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/7/countrywide-says-buy-to-let-purchases-now-at-a-six-year-low

 

Landlords told to sign up for Rent Smart Wales

Published On: July 11, 2016 at 10:55 am

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Carl Sargeant, Cabinet Secretary for Communities and Children, will today visit the Rent Smart Wales call centre in Cardiff. His visit is to assess how the task to ensure all private sector landlords to sign up for the mandatory scheme is progressing.

Registration

The Housing Act (Wales) 2014 made it a legal obligation for all private landlords in Wales to register themselves and their property with Rent Smart Wales by November 23rd 2016. Landlords who are still involved in letting and management activities will have to undertake further training.

Rent Smart Wales aims to improve standards in the sector. The call centre in Cardiff deals with queries from landlords and agents, helping them to register for their required licence.

In addition, the Cabinet Secretary also launched the next phase of the campaign in the run-up to the deadline. This was in order to inform landlords of their legal requirement to register, alongside giving tenants their right to have a property registered by a licensed landlord or letting agent.

Landlords told to sign up for Rent Smart Wales

Landlords told to sign up for Rent Smart Wales

Standards

Mr Sargeant observed, ‘Rent Smart Wales is a landmark scheme that will drive up standards in the private rented sector by requiring managing landlords and agents to undertake training to ensure they are clear on their responsibilities. It will help prevent the involvement of rogue and even criminal, landlords and agents in the management and letting of properties.’[1]

‘The scheme will help to protect tenants in the private rented sector, and will support good landlords and agents by helping them keep abreast of their responsibilities and legal obligations, raising the reputation of the sector as a whole. The deadline for registration is now less than five months away.   I would urge those who have not yet done so to discharge their legal responsibilities to register as soon as possible because, whilst registration can be completed simply and quickly on-line, the licensing process can take up to eight weeks to complete,’ he continued.[1]

City of Cardiff Council Cabinet Member Bob Derbyshire, added, ‘landlords and agents will have had a full year to ensure they register, get trained and become licensed under the new scheme. Although November 23 is the deadline for compliance and to many people, that may seem distant, we are keen to stress the importance of becoming licensed sooner, rather than later.’[1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-urged-to-sign-up-for-rent-smart-wales.html

PCL rents in check despite rising demand

Published On: July 11, 2016 at 9:26 am

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Yearly rental value growth in prime central London was down again during June, according to a new report.

The investigation by Knight Frank revealed that annual rents were down by 3%, despite an increase in rental demand for properties in the capital. Large stock levels and uncertainty in the financial market is keeping this growth steady.

Economic and financial uncertainty

The report indicates that the rise in rental stock is partly down to the ongoing uncertainty in the sales market. Early figures are suggesting that some vendors are holding fire on letting their property until further clarity over Brexit is established.

However, demand remains strong and the number of new prospective tenants registered in June was the largest seen since September 2015. Meanwhile, the number of new tenancies agreed in June of this year was nearly the same as in May.

Tom Bill, head of the capital’s residential research at Knight Frank, said, ‘for investors able to see through the current bout of political uncertainty, there are also grounds for longer-term positivity.’[1]

Yearly yields

Gross yields in June stood at 3.1%, substantially greater than the current record-low yield on ten-year Government bond of around 0.8%. Bill notes that financial indecision has been heightened since before the Brexit vote, something he feels will cause tenants to rent for longer.

Bill observed, ‘more broadly, uncertainty over the result of the referendum has been replaced by uncertainty over the more nuanced question of the UK’s relationship with Europe and demand will strengthen further as clarity emerges surrounding key negotiating positions. As this process unfolds, it should be remembered that no candidate for prime minister has indicated any willingness to relinquish London’s role as Europe’s leading financial centre during negotiations with the EU.’[1]

PCL rents in check despite rising demand

PCL rents in check despite rising demand

Tax cuts

Chancellor George Osborne has suggested that he may move to cut corporation tax, meaning London will strive to stay competitive in comparison to other European cities.

Mr Bill feels that the possibility of an interest rate cut in Britain is likely to push activity up. He noted that the likelihood of further cuts by central banks in other countries will lead to overseas investors to look for higher returns on offer from rental property in London.

Concluding, Bill said, ‘this search for yield will be allied to a favourable currency play due to the current weakness of Sterling. Meanwhile, other fundamentals that remain unchanged after the referendum include the supply shortfall and projected population growth over the next decade in London, factors that will continue to underpin demand for rental property.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/prime-central-london-rents-remain-in-check-despite-greater-tenant-demand

A Landlord’s Guide to Condensation Control

Published On: July 10, 2016 at 8:00 am

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Condensation damp is one of the biggest problems for landlords and is an increasing issue. If condensation isn’t addressed, it can lead to black mould growth on decorated finish, clothes, shoes and linen, which can be difficult to remove and is proven to exacerbate health issues for tenants, especially in those that are already prone to repertory problems.

If you have a rental property, ensure that both you and your tenants know how to prevent condensation build up with this helpful guide from Alliance Remedial Supplies.

What is condensation?

Condensation occurs when water vapour generated throughout the day is no longer held in the air by the heating and forms as water on windows, walls and cold surfaces.

The internal temperature at which water vapour turns to condensation is called dew point temperature; this is not a specific temperature, but one that varies from property-to-property and even room-to-room.

A Landlord's Guide to Condensation Control

A Landlord’s Guide to Condensation Control

Water vapour can build up throughout the day in various ways. In a household of just two tenants, up to 15 pints of water are held in the air from the following activities:

A useful example that helps explain the process is when we remove a cold can of drink out of the fridge, pour it into a glass and add some ice. In a short time, the glass will form condensation on the outside. Although this mostly occurs in the summer months, it is exactly what happens inside your property during the cold months.

In a house of five or six people, carrying out normal daily activities can easily generate 25-30 pints of water.

Preventing mould

Mould spores, which are in our environment all the time, develop and proliferate when their food source – condensation – forms on a regular basis in significant volumes. So how do you stop this much water vapour being generated or ending up as condensation?

Often, the advice given is to turn up the heating and keep it on for longer. While it is true that warm air holds water as vapour, provided the temperature doesn’t drop below dew point temperature, not everyone has the funds to keep their heating on for long periods of time.

The best solution is to control the internal levels of humidity. Humidity is the measurement of water vapour held in the air. If humidity exceeds 70% on a consistent basis, condensation will form, leading to black mould growth.

Properties should be maintained at a humidity level of between 40-60%.

Controlling humidity

Controlling internal humidity is a balance of measures. First and foremost, where possible, ventilate the property by opening windows from front to back, side to side, on all floors. What you are trying to achieve is a change of internal air quality on a regular basis.

Ideally, a residential property should achieve a complete air change at an absolute minimum of once every hour. This is when the existing internal air conditions are refreshed by fresh air. In basic terms, when windows are open, fresh air will come in through one elevation or direction of the property and push stale air out through windows on another side of the property. At the very least, fresh air will mix with stale air, reducing the level of humidity – of course, this is subject to external humidity conditions, which, on occasion, can be quite high.

However, be aware that this isn’t always the best thing to do in the winter, as letting in cold air will lose a lot of heat.

These tips will help you keep humidity levels steady in your rental property:

  • If you don’t already, it is advised that you install extractor fans in the bathroom, kitchen and utility room. Tenants should be educated on the benefits that extractor fans provide and how they are to be operated. At the very minimum, extractor fans should run for at least 15 minutes after tenants have finished cooking, showering or bathing.
  • Additionally, remind tenants to keep doors to kitchens, bathrooms and utility rooms closed.
  • Ensure that tumble dryers do not ventilate inside the property.
  • Keep lids on fish tanks and saucepans.
  • Do not dry towels and cloths directly on radiators if possible.
  • Do not run paraffin fuel burners.

If you are looking for a useful investment, purchase a LCD display hygrometer. Place this in a central part of the property or badly affected rooms to provide you with a current reading of the level of humidity inside. This can encourage a tenant to open windows, which will keep the internal humidity at acceptable levels.

Another measure to make cold, external walls less prone to condensation is by way of insulation. Insulating condensation paint technology is providing excellent results among other insulating systems. Although this will help with overall energy efficiency, the cure for condensation is ultimately to ventilate as much as possible.

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