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Em Morley

Average UK rents rise 3% annually

Published On: April 22, 2016 at 9:18 am

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Average rents throughout England and Wales are now 3% greater than at the same period twelve months ago, according to new research.

The latest Buy-to-Let Index from Your Move and Reeds Rains show that rents now stand at £791 per month. This was a rise of around £23 per tenant from the same period in 2015.

Margins

These rises come after a fairly quiet March on a monthly basis, with the average level of rents the same as recorded in February. This comes after just a 0.1% rise between January and February.

By region, the East Midlands saw the greatest increase in rental growth, with rents now 8.5% higher than in March 2015. This has taken rents in the area to a record monthly high of £613. The West Midlands closely followed, with annual rises of 6.7%. This took the average rent to £597 per month.

London came in third in terms of annual rent rises, with rents up by 4.6% over the year. Typical rents here are now £1,231.

In contrast, Wales and the North East both saw rents fall annually. For both regions, rents dropped by 2.2%. Wales now has average rents of £551 per month, with rents in the North East standing at £507.

Average UK rents rise 3% annually

Average UK rents rise 3% annually

Storm coming

Adrian Gill, director of Your Move and Reeds Rains, stated, ‘as the Spring market warms up, recent weeks may have been the last of the best deals for those signing a new tenancy. Into April, market rents will start to build a gradual but inevitable path, ultimately reaching the very peak of the market in the Autumn. Early Spring is just the calm before the storm.’[1]

‘Early 2016 records for the Midlands demonstrate the direction of travel this year. Demand for homes in the private rented sector is driven by the flow of jobs and the flux of a generally more mobile workforce looking for a place to live. This reflects the strengths of private renting – the opportunity for young independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood,’ Gill continued.[1]

Concluding, Mr Gill said, ‘this regionality is also the core challenge for the private rented sector. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy, and will depend on the freedom to invest as a landlord.’[1]

[1] http://www.propertyreporter.co.uk/landlords/average-uk-rent-up-3-year-on-year.html

House Prices Increasing at Fastest Rate for 12 Years

Published On: April 22, 2016 at 8:36 am

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Over the first quarter of the year, house prices increased at the fastest quarterly rate for 12 years, according to the latest data from Hometrack.

The valuation firm believes that buy-to-let landlords have driven prices up as they seek cheap properties in high yielding cities.

House Prices Increasing at Fastest Rate for 12 Years

House Prices Increasing at Fastest Rate for 12 Years

The UK Cities Index for March reveals that average house prices rose by 4.2% in Q1 2016 – the fastest quarterly growth rate in 12 years.

The greatest quarterly increase of any city in the UK was in Liverpool, at 4.1%, taking the average house price to £113,100. Hometrack has found that many landlords have looked to the city for high yields in order to accommodate forthcoming tax changes.

A quarterly boost of 3.5% was also recorded in Cardiff, where the average property now costs £191,300.

The Insight Director at Hometrack, Richard Donnell, explains: “The acceleration in growth in the last quarter has, in part, been down to stronger demand from investors, especially those searching for higher yielding property and seeking to beat the Stamp Duty deadline.”

As of 1st April, buy-to-let landlords and second homebuyers are now charged an extra 3% in Stamp Duty. Ahead of the deadline, there was considerable evidence that landlords were fuelling a rush in the housing market.

The greatest annual increase in average house prices was in Cambridge, where values rose by 15.6% to £403,500. London was close behind, at 14.2%, taking the average property price to £468,100. However, recent research suggests that the London property market is finally running out of steam.

House prices in Bristol have also recorded double-digit growth for the year, at 13.5%, to £248,800.

Donnell adds: “In the recent past, periods of accelerating house price growth have coincided with changes in market sentiment and demand, notably following the introduction of Help to Buy in 2013 and after the 2015 general election.

“We believe house prices will continue to rise, but a moderation in investor demand and greater caution in the run-up to the EU referendum will limit further acceleration in prices.

“Most likely, the rate of growth will slow more rapidly in high value, low yielding cities such as London, where prices will be more responsive to weaker investor demand.”1 

Indeed, the Royal Institution of Chartered Surveyors believes that the Stamp Duty changes and the forthcoming EU referendum will cause a dip in house prices and sales.

1 http://www.propertyindustryeye.com/house-prices-rising-at-their-fastest-rate-for-12-years/

Gross mortgage lending hits biggest level for 9 years

Published On: April 21, 2016 at 11:41 am

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Latest figures released from The Council of Mortgage Lenders show March saw gross mortgage lending total £25.7bn.

This was driven by buy-to-let landlords rushing to complete deals before the additional 3% stamp duty surcharge came into play on April 1st.

Increases

The surge amounted to a 43% month-on-month increase in comparison to February. What’s more, mortgage lending was up 59% greater than in March 2015 and the highest figure seen in the month since 2007, where lending hit £30.9bn.

Gross mortgage lending in the first quarter of 2016 was approximately £62.1bn. This is 39% higher than in the first three months of last year.

Economist at the Council of Mortgage Lenders, Mohammed Jamel, said, ‘against a backdrop of a recovering market, the substantial jump in lending in March was significantly influenced by a late surge of activity to beat the Government’s stamp duty change on second properties, which came into effect at the start of April. The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen.’[1]

‘As a result, we expect there will be about 10,000 fewer mortgage transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March,’ Jamel added.[1]

House price spike

Jeremy Duncombe, Director at Legal & General Mortgage Club, commented, ‘whilst these latest figures from the CML may seem to suggest that more people are securing mortgages, this rise in lending is actually the result of ever-increasing house prices.’ He feels, ‘the reality is that today’s buyers are being forced to borrow more to cover the cost of their home, which is artificially inflating lending figures.’[1]

Duncombe went on to say, ‘if we want to see lending grow correctly and help more people afford their dream home, the Government and the construction industry must work together to alleviate the housing crisis by building at least 250,000 homes a year.’[1]

Gross mortgage lending hits biggest level for 9 years

Gross mortgage lending hits biggest level for 9 years

Encouraging

‘Driven by the changes to Stamp Duty that kicked in from April, the mortgage market was firing on all cylinders in March as landlords, brokers and lenders shifted into top gear to complete on purchases,’ noted John Eastgate, Sales and Marketing Director of OneSavings Bank.

‘Whatever the cause, the effects of the Stamp Duty changes saw lenders, brokers and conveyancers burning the midnight oil to keep borrowers happy and this was reflected in mortgage activity,’ he continued.[1]

Henry Woodcock of IRESS, observed, ‘February’s gross mortgage lending figures were lower than January’s, so it’s very encouraging to see such a big pick-up in March. A month-on-month decline would have been concerning given the extremely favourable borrowing conditions.’[1]

‘We may we see a further uptick in April, however, looking to the next few months, there are a few factors I think will have a levelling-off effect on gross mortgage lending. The looming EU referendum may mean borrowers will wait and see the result before proceeding. The newly introduced stamp duty land tax surcharge, targeted at prospective private landlords and the Bank of England’s proposed new tighter lending rules to make it harder for landlords to get a mortgage, is bound to have a dampening effect on the buy-to-let market. Lastly, while remortgaging appears to be on the rise, I’d caution that increases may be limited for many interest only borrowers, as lenders now require credible repayment vehicles to be in place first,’ Woodcock concluded.[1]

[1] http://www.propertyreporter.co.uk/finance/market-booms-as-gross-mortgage-lending-hits-highest-levels-for-9-years.html

Housing Minister defiant on tax changes

Published On: April 21, 2016 at 10:32 am

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With the buy-to-let sector reeling from a raft of legislation and tax changes, Housing Minister Brandon Lewis has moved to defend these measures during a question and answer session.

Speaking to FT.com yesterday, Mr Lewis backed alterations in regulation, such as the additional 3% stamp duty and mortgage interest tax relief for buy-to-let landlords.

Defiance

In the session, Mr Lewis was asked:

‘Why does the Government want to cut down on landlords and how much do you think the recent measures against them (cuts to mortgage relief etc) will reduce the number of buy-to-let owners?’

Responding, Lewis replied:

‘The changes create a fairer system where buy-to-let investors do not have as much advantage over owner occupiers (who will not have 0 per cent mortgages or the mortgage tax relief, which buy-to-let had). Plus institutional investment (Build To Rent) will be able to continue to grow and I fully support the professionalism of the sector as it grows with more institutional investment.’ [1]

Rogue-landlords

Also in the question and answer session, Mr Lewis was pressed on whether or not he would give his backing to a public database of so-called rogue landlords.

Lewis answered by stating:

‘Our Housing and Planning Bill currently in the House of Lords will introduce bigger fines and banning orders as part of the biggest crackdown on rogue landlords by any Government ever. And we will introduce a database of rogue landlords.’[1]

Housing Minister defiant on tax changes

Housing Minister defiant on tax changes

Capital Pains

Finally, Lewis was asked:

‘Why does the Government allow homeowners to sell their houses and pay no capital gains tax?’ 

Lewis answered:

‘We have halved the time a property can sit empty before capital gains tax is due and we have tightened the rules about buying residential property through a company. Additionally, we will support families buying their own home through a three percentage point surcharge on rates of stamp duty land tax on purchases of additional properties, like buy-to-lets and second homes.’[2]

A full transcript of the questions can be found be visiting the Financial Times website.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/housing-minister-claims-buy-to-let-changes-create-a-fairer-system

[2] http://www.ft.com/cms/s/0/9bf91dee-071a-11e6-9b51-0fb5e65703ce.html#axzz46SGeH610

 

 

Six in Ten London Tenants Face Daily Living Hazards

Published On: April 21, 2016 at 10:20 am

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Around six in ten London tenants have to face daily living hazards in their rental properties, according to a study by housing charity Shelter.

The research found that 39% of renters in the capital have to deal with damp or mould, while 26% live in cold homes or have inadequate insulation.

Six in Ten London Tenants Face Daily Living Hazards

Six in Ten London Tenants Face Daily Living Hazards

Shockingly, a quarter of tenants reported an animal infestation, such as mice or cockroaches.

Even more worryingly, some tenants are being put in danger as a result of unsafe conditions in their rental properties. 14% of tenants have experienced problems with electrical hazards, while one in six live in a home that is poorly secured.

As the average Londoner spends 59% of their income on rent, pressure is mounting for more to be done to protect the capital’s renters.

A quarter of all Londoners rent from a private landlord. However, the private rental sector has little regulation. In 2014, Boris Johnson launched the London Rental Standard to tackle rogue landlords, but uptake is poor.

The Chief Executive of Shelter, Campbell Robb, states: “Every day at Shelter, we hear from London renters who are dealing with appalling conditions and, shockingly, most are paying extortionate rents for the privilege.

“We should all have a place to call home – somewhere warm, safe and secure – but for more than a million Londoners, home is cold, damp and often downright dangerous.”

He urges: “It’s about time London’s 2.5m renters were given a better deal. Renting in the capital doesn’t have to be like this, and the mayoral candidates need to show that they will take action to prevent people from unsafe conditions.”1

Recently, the Residential Landlords Association released its London mayoral manifesto, detailing what it hopes the new mayor will introduce regarding the private rental sector.

It is unsurprising that so many Londoners are forced into private renting, as recent research highlights the spiralling costs of purchasing a property in the capital.

1 http://londonist.com/2016/04/60-of-london-renters-face-rats-mould-and-leaks

The Cost of an Average Property for Each Mile of the London Marathon

Published On: April 21, 2016 at 9:30 am

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Buying the average property in London would cost you £20,243 for each mile of the London marathon, according to online estate agent eMoov.

On Sunday, around 38,000 people will take to the streets of the capital for the 26.2-mile race. And while the runners may be able to enjoy London’s iconic landmarks along the way, many will have no hope of ever getting onto the property ladder in the capital.

Based on the average London house price of £530,368, a buyer would have to raise £20,243 for every mile of the London marathon to get into the housing market. Failing that, each of the 38,000 participants could contribute £14 each to jointly own one London home.

eMoov has calculated the average property price per mile to work out how much it will cost a buyer for each mile they run. The race starts in Greenwich…

Greenwich 

The Cost of an Average Property for Each Mile of the London Marathon

The Cost of an Average Property for Each Mile of the London Marathon

Around the leafy start line of Greenwich Park, the price per mile has come down slightly from the London average, at £19,969 for the typical property, which costs £523,208.

Woolwich

Through the two to four mile mark, Woolwich will offer runners the cheapest price per mile of the whole route. At £290,915, the average home here will cost £11,103 per mile of the marathon.

Rotherhithe

As the runners push to the ten-mile mark, the property price per mile shoots up again to £19,401, as the average house price in Rotherhithe is £508,321.

Bermondsey

As the racers prepare to cross the Thames, the last area south of the river they pass through is Bermondsey. With an average house price of £546,974, a property here will cost £20,876 per mile.

Canary Wharf and the Isle of Dogs

North of the river, property isn’t any cheaper. In Canary Wharf, a typical property will cost a buyer £19,367 per mile. It does drop slightly in the Isle of Dogs, where buyers will face a price of £18,469 per mile at the 16-mile mark.

Monument

As the runners head into prime central London, the property price per mile picks up to £35,653, as the average house price in Monument is a huge £934,115.

St James’s Park

However, nowhere on the route costs more per mile than near the finish line at St James’s Park. A home here is a whopping £2,478,034, costing a runner almost £100,000 (£94,581) for each mile ran.

The CEO and founder of eMoov, Russell Quirk, comments on the findings: “Although the real obstacle of the day is the gruelling 26.2-mile slog across the capital, these figures paint a really clear picture of just how unobtainable a London property is for the majority of us.

“To think that for every mile of the route, each runner would need to raise close to the average UK salary just to get on the London ladder is a little sickening. I for one am glad the money raised is going to worthy causes and not to further fuelling the London property bubble.”