Written By Em

Em Morley

London Tenants Spending 70% of Their Income on Rent and Bills

Published On: June 8, 2016 at 11:36 am

Tags: housing crisis,London,London tenants,rent prices,tenants

London tenants are now spending 70% of their average income on rent and essential bills, according to research by London estate agent Portico.

New data analysis by the firm shows that for three-and-a-half out of five working days, Londoners work solidly to pay their rent and other essential expenditure, such as taxes, housing costs and household bills.

The following table details how the typical London tenant’s working week is divided to pay for essential costs:

London Tenants Spending 70% of Their Income on Rent and Bills

Portico claims that it is not until 1pm on a Thursday that the average Londoner has earned enough to cover all of their essential expenses for the week. They are then left with around £201 of disposable income to be spent or saved as they like – although the firm notes that bills do not include food.

From 10am on a Tuesday until 4pm on Wednesday, Londoners are working to pay their rent, whereas all day on Monday, they work to pay their Income Tax and National Insurance.

Portico has also analysed the data on a borough-by-borough basis, adjusting the cost of rent, Council Tax and travel to zone 1 accordingly, but using the average London salary of £34,320 a year.

The agent found huge variations between boroughs; London tenants living in Bexley will have the greatest amount of disposable income left over after rent and essential bills, at £287 a week, while City of London workers have the least amount of disposable income, at £32. If tenants are looking to live in zone 1, Lambeth offers the highest amount of weekly disposable income, at £209.

The Managing Director of Portico, Robert Nichols, comments: “Londoners have to work increasingly later into the week before they start to spend some of their hard-earned money. Working for five hours alone to pay Income Tax, plus almost two days on rent, clearly shows how private rents in the capital have skyrocketed.

“But while rents are increasing, public transport is also improving significantly, so we’re seeing a huge number of tenants move further out to boroughs like Bexley, Barking and Dagenham, and Ealing to benefit from affordable rents, a quick commute – which will become even better with the arrival of Crossrail – and a good sum of disposable income in their pockets at the end of each week.”

Huge Jump in London Rents Prompts Calls for Rent Controls

Published On: June 8, 2016 at 11:16 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,London,London rents,rent controls,rent prices

A huge jump in London rents has prompted calls for rent controls and security of tenure by leading trade union GMB.

After recording a rent price rise of over 50% in one London borough, GMB called for New York-style rent controls and security of tenure for private tenants in the capital.

The GMB Congress in Bournemouth was told how families with children should face greater security in their rental properties, through rent caps and a crash programme for new social housing.

Huge Jump in London Rents Prompts Calls for Rent Controls

The study highlights the change in rents in the capital for one, two and three-bedroom properties between 2011-16. It found that the average cost of a one-bed home in Hounslow surged by 51.3% in the last five years – the highest increase in London.

In 2011, the average rent price in Hounslow for a one-bed property was £825 per month. It is now £1,248 – a rise of £423 a month.

The research found that in 11 London boroughs, rents have increased by 30% or more during the past five years.

For the capital as a whole, average rents for one-bed properties grew from £950 per month in 2011 to £1,250 in 2016 – up by £300 or 31.6%.

This huge leap in London rents compares to a Retail Price Index increase of 12.3% over the same period. It also compares to the average rent for a one-bed home in England in 2011 of £495 per month, which rose by £55 to £550 in 2016 – an increase of 11.1%.

Over the same period, the average rent for a two-bed property in London grew from £1,192 to £1,500 per month – up by £308 or 25.9%.

The average rent on a three-bed in the capital rose from £1,350 to £1,800 a month – up by £450 or 33.3%.

The Senior Officer at GMB, Warren Kenny, comments: “These figures show that the housing crisis in London is getting worse, as rents soar under a Tory Government. Rents in one borough for basic accommodation soared by over 50% at a time when wages are frozen or being cut.

“These soaring rents coincide with the explosion in the size of the private rented sector and the growth in the billions of taxpayers’ money paid in housing benefits to private landlords. Nationally, the figure has ballooned from £21.4 billion when Osborne came to power, to £24.3 billion four years later.”

He insists: “London boroughs and the Mayor have to set up a register of landlords to ensure that standards of accommodation are safe and fit for habitation. There is also a need for new legislation on security of tenure especially for families with children at school.

“Rent controls will have to be introduced as well as a crash programme for new social housing if we want to maintain essential services in the capital.”

He concludes: “There is a free-for-all in the London housing market at a time when wages for essential public sector workers are frozen. Some workers in the capital, like cab drivers, even face pay cuts. This position is not sustainable and new thinking is needed to deal with it.”

Valuation activity strong before looming EU referendum

Published On: June 8, 2016 at 11:09 am

Author: Em Morley

Categories: Property News

Tags: Buy-to-Let,EU referendum,house buying,valuation activity

Fresh research from Connells Survey and Valuation indicates that the upcoming EU referendum did not deter valuation activity in May.

In fact, valuation activity rose by almost a fifth year-on-year, with the total number 18% greater than in May 2015. Month-on-month, activity slipped by just 1% in comparison to April of this year.

Valuation activity rises

Both remortgaging and first-time buyer sectors are continuing to be the biggest stand-out areas of activity.

First-time buyer valuation activity grew by 37% and remortgaging by 42% respectively, in comparison to the same period one year ago.

Month-on-month, May’s first-time buyer valuation activity slipped by 8% on April, with remortgaging activity falling by 3% over the same timescale.

John Bagshaw, corporate services director of Connells Survey and Valuation, noted, ‘compared to the gloomy picture painted by some, activity is looking remarkably resilient ahead of June’s housing market. Some month-on-month cooling could still be a result of stamp duty changes that came into effect at the start of April. However once that stamp duty-related instability has passed, there appears to be a steadier annual growth and a more positive outlook for the housing market. Even if the EU referendum does have a measurable impact, one thing is clear-any slump hasn’t happened yet.’[1]

Declines

The buy-to-let sector however saw the sharpest year-on-year decline, falling by 38%. In comparison to May 2015, the number of valuations for buy-to-let has seen the largest percentage growth in comparison to April, rising by 8%

Bagshaw continued by saying, ‘remortgagors are leading the market, underpinned by lenders offering a new set of favourable interest rates for existing homeowners. But first-time buyers are also on the up. Factors such as low inflation, rising wages and government schemes are all helping new owners onto the property ladder. Even for the much-downplayed buy-to-let industry, May was a good month. Valuations on behalf of landlords have been leading the housing market since April. Annual growth is likely to stay negative for buy-to-let activity, but the most recent signs are positive.’[1]

Valuation activity strong before looming EU referendum

Home movers

There has been a steady growth in activity amongst home movers. The total number of valuations for existing owner-occupiers looking to move home in the last month rose by 9% year-on-year.

Concluding, Mr Bagshaw said, ‘home movers have had a stable month and appear confident in the strength of the housing market and the value of their homes. Looking ahead to the EU referendum and how the outcome will have an effect on the property market, the feeling from home movers will be an important measure of confidence in a time of uncertainty. But of the time being that doesn’t seem to have stopped thousands of households from electing to sell their current homes and consider an upgrade or a change of location.’[1]

[1] http://www.propertyreporter.co.uk/finance/activity-in-the-housing-market-remains-strong-despite-referendum.html

Rent Price Growth Rate Slows in May

Published On: June 8, 2016 at 8:46 am

Author: Em Morley

Categories: Property News

Tags: average rent price,EU referendum,rent price growth,rent prices

The growth rate of the average rent price in the UK has slowed down in May, according to the latest HomeLet Rental Index.

Although rents on new tenancies increased in most parts of the UK over the three months to May, the pace of growth is down on previous months.

Rent Price Growth Rate Slows in May

Excluding Greater London, the average rent on a new tenancy in the UK rose by 4.4% in the three months to May, compared with the same period last year. Although this represents a decrease from the 5.1% growth seen in the three months to January, rents continue to rise at a much faster rate than inflation in most parts of the country.

According to the report, rent prices increased in almost every area of the country, with 11 out of 12 regions recording rises.

The growth was led by Scotland, where the average rent increased by 10.6% annually, followed by a rise of 8.3% in the East Midlands.

The average rent in London is now £1,563 per month, after rising by 6.2% in the three months to May.

The North West of England was the only region to record declines in rent prices, down 1.9% year-on-year.

The new data will provide some encouragement for both landlords and tenants.

Many private tenants will be pleased to see the rate of rent price growth slow down, while the figures suggest that landlords continue to enjoy healthy rental yields after costs, despite a rush in the supply of rental property in May following a flood of landlords looking to complete on buy-to-let property purchases before the 3% Stamp Duty surcharge was introduced on 1^st April.

The slowdown in rent price growth in May is likely to be part of a broader feeling of economic uncertainty ahead of this month’s EU referendum.

Recent research claims that property sales in the capital have halved as a result of uncertainty surrounding the vote on 23^rd June.

Regional rent price growth in May

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Project to provide more accurate energy estimates

Published On: June 7, 2016 at 2:05 pm

Author: Em Morley

Categories: Finance News

Tags: energy costing,energy efficiency,Mortgage lending

A new project, entitled LENDERS, is looking to demonstrate that more specific fuel cost estimations utilised in mortgage lending decisions could lead to homes with lower energy to be allowed larger value mortgages.

The project is made up from mortgage lenders, building industry specialists, green energy groups and other bodies.

Energy estimates

Chaired by Nationwide Building Society, the scheme is presently searching for ways to move away from current ways of estimating energy costs for mortgage purposes.

The group is currently collating data in order to process more accurate information on energy fees and how they lead into the mortgage lending process.

LENDERS stated, ‘this helps support responsible lending, it also means due to lower fuel bills, lower energy homes will have lower other unavoidable costs and can therefore afford to repay higher mortgage repayment amounts without increasing their overall outgoings. This, in turn, leads to the capacity to deliver high capital lending amounts.’[1]

Project to provide more accurate energy estimates

Increased awareness

Continuing, the statement says, ‘The larger mortgages available for lower energy homes are hoped to stimulate an awareness in consumers of the benefits of buying a greener home and, longer term, this increase in demand should help drive (via values and speed of sales) the housing market and house builders to provide more energy efficient homes and increase the value of such homes.’

‘It may also help encourage homeowners to invest in improving energy efficiency building solutions by enabling the mortgage market to more accurately reflect fuel costs in lending offers. This could be useful for re-mortgages to undertake energy refurbishment projects, where the realised savings in fuel costs enable the additional mortgage repayments.’[1]

[1] http://www.propertyreporter.co.uk/finance/calls-for-larger-mortgages-on-energy-efficient-homes.html

House price growth stays static in May

Published On: June 7, 2016 at 11:48 am

Author: Em Morley

Categories: Property News

Tags: average property prices,buy-to-let landlords,property investors,property prices

The most recent Halifax house price Index has revealed that the average property price in Britain has remained static during the last three months to May.

According to the report, the average price of a home in the UK remained at 9.2% in the last month. This was the same as in April and is the lowest level for the last six months.

House price growth levels

Further data from the analysis suggests that property values in the three months to May were 1.4% greater than what they were in the preceding three months. This was just below the 1.5% seen to April and the lowest since November 2015.

Martin Ellis, housing economist, said, ‘house prices in the three months to May were 1.4% higher than in the previous quarter. The annual rate of growth was unchanged at 9.2%; the lowest since last autumn. Low interest rates, increasing employment and rising real earnings, continue to support housing demand. The strength of demand, combined with very low supply, is causing house price to rise at a brisk pace in quarterly and annual terms.’[1]

‘Increasing affordability issues, caused by a sustained period of higher-than-earnings house price growth, should curb housing demand and result in some slowdown in house price growth as the year progresses.’[1]

House price growth stays static in May

Remarkable resilience

Ian Thomas, co-founder and director of LendInvest, said, ‘the resilience of house price growth is remarkable. Even now, that the Stamp Duty stampede of the first quarter is behind us and with the uncertainty of the EU referendum result dampening activity, house prices are still holding up. Demand continues to outpace supply; there simply aren’t enough houses being built. The latest disappointing housebuilding stats make this abundantly clear. The Government’s dream of one million new homes by 2020 simply isn’t realistic without a fundamental change of approach.’[1]

Concluding, Mr Thomas noted, ‘as a result, house prices will continue to rise. Investors will continue to enjoy great returns from putting their money into property, while aspiring home buyers face a tricky time getting the sums to add up in order to move up the housing ladder.’[1]

[1] http://www.propertyreporter.co.uk/finance/house-price-growth-remains-static.html