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Demand for rental homes to pass 1 million in 5 years

Published On: February 2, 2016 at 11:45 am

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More analysis of the rental market, this time from real estate advisor Savills, has found that demand for rental accommodation could rise by more than one million households over the next five years.

This will come as a blow to the Government, which has set of target of building 400,000 affordable properties over the course of the Parliament. If the predictions are true, the firm says that there will need to be a further 220,000 homes for rent per annum.

Changes

Upcoming changes in legislation for landlords will see demand for accommodation slow, but Savills still predict that the sector will grow by 1.1m households by 2021.

The steady economic recovery and record low interest rates have still not stemmed the tide of demand for rental property. In fact, house price inflation pushing ahead of wage growth has served to move homeownership even further out of reach for many. This comes at a time when social housing stock has dipped by 2.8% in the last five years, meaning more households have been forced back into privately rented accommodation.

According to the latest English Housing Survey, private renting has grown by a huge 17,500 households per month in the decade to 2014. The Government hope that their policies, including Shared Ownership schemes and Right to Buy/Help to Buy will reverse this spiral, by helping more people access the property ladder.

Demand for rental homes to pass 1 million in 5 years

Demand for rental homes to pass 1 million in 5 years

Sharp rises

‘Demand for rented homes could still rise more sharply than we have forecast,’ noted Susan Emmett, director Savills residential research. ‘We would question whether policies can accelerate housebuilding enough to see the Government’s target of 400,000 affordable homes for sale reached in the timescale set. And given the overlap between the different schemes, each focused at similar parts of the market, it is possible that one scheme could simply replace the other rather than providing additional homes.’[1]

‘This analysis demonstrates that we still need to provide a substantial number of homes for rent. Government policy should focus on supporting the development of new homes to rent as well as to buy,’ she continued.[1]

[1] http://www.propertyreporter.co.uk/landlords/demand-for-rented-homes-to-swell-by-over-a-million.html

How to Rent Leaflet Updated

Published On: February 2, 2016 at 9:17 am

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How to Rent Leaflet Updated

How to Rent Leaflet Updated

The Department for Communities and Local Government has released an updated version of its How to Rent leaflet to take into account the Right to Rent scheme, which was introduced across England yesterday.

Landlords or their letting agents must give a copy of the leaflet to tenants before the start of a tenancy.

The updated copy informs prospective tenants that landlords and agents must now confirm their immigration status.

It explains that checks must be conducted on all people living in the property that are aged 18 or over.

Landlords and agents must make copies of identification documents and return the originals.

The leaflet states that tenants cannot rent the property if they do not provide evidence of their right to rent and that landlords must not discriminate.

The guide also provides a useful checklist for anyone searching for a rental home, offering advice for every stage of the renting process.

It includes detailed information on the following:

  • What to look out for before renting.
  • Living in a rental property.
  • What happens at the end of a tenancy.
  • What to do if things go wrong.

Tenants are reminded that landlords or agents must provide them with a copy of the How to Rent guide. It can be delivered either through a link or as a hard copy. The leaflet is here: https://www.gov.uk/government/publications/how-to-rent

NLA Criticises Councils Over Eviction Advice

Published On: February 1, 2016 at 3:56 pm

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NLA Criticises Councils Over Eviction Advice

NLA Criticises Councils Over Eviction Advice

The National Landlords Association (NLA) has spoken out against local councils for telling private tenants to ignore eviction notices from their landlords and instead await bailiffs before moving out.

The organisation reports that half (49%) of tenants who’ve been served a section 21 notice by their private landlord say they have been told to ignore the order by their local council or an advice service such as Shelter or the Citizens Advice Bureau.

The statistic highlights the scale of the issue, which has been exacerbated by the increasing use of private landlords by local authorities to relieve their housing responsibilities.

The NLA believes that the advice is increasingly being offered, as councils are refusing to accept tenants’ housing applications before an order for possession has been granted by a court, despite guidance from central Government, which confirms that all housing applications must be accepted from the time notice is served on a tenant.

The Chairman of the NLA, Carolyn Uphill, comments on the issue: “We’ve always known that tenants receive this kind of advice, and it’s a huge problem because it damages the confidence of landlords who work in the community to home those who aren’t able to access social housing.

“There is no justification for prolonging the stress and uncertainty brought by a possession case. Advice like this creates unnecessary strain on tenants, landlords and the courts service, which must first hear the case and order possession before councils are prepared to carry out their statutory duties.

“Nobody should ever be told to wait until the bailiffs turn up; it makes an already unpleasant situation much worse for everyone, and creates a vicious cycle of misery and spiralling costs for all involved.”1

1 https://www.landlordtoday.co.uk/breaking-news/2016/1/nla-speaks-out-about-councils-bailiffs-advice

Extra 3% Stamp Duty Charge Comes Under Attack

Published On: February 1, 2016 at 12:53 pm

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The extra 3% Stamp Duty charge to buyers of buy-to-let properties and second homes has come under attack, as the consultation on the proposal comes to an end.

A consumer group, the HomeOwners Alliance, says the additional tax will bring “massive unintended consequences”.

Today, the official consultation on the extra Stamp Duty ends, after just seven weeks.

If the charge is approved, it will apply from 1st April this year.

The HomeOwners Alliance calls the measure “dangerously flawed” and insists the Government goes “back to the drawing board”.

It says it supports the charge on second homes, but believes the way the Government plans to introduce the surcharge is “overly complex and flawed”.

The group is especially concerned over the surcharge’s 18-month window; those buying a new home before selling their first must pay the extra 3% Stamp Duty, then, they have an 18-month window to sell their first home in order to receive a refund.

If they do not sell within 18 months, they lose the right to a refund.

The policy would also affect people relocating, for example for work, and who might normally rent out their first home while buying in a new area. If they do this, they must pay the surcharge.

Extra 3% Stamp Duty Charge Comes Under Attack

Extra 3% Stamp Duty Charge Comes Under Attack

The Chief Executive of the HomeOwners Alliance, Paula Higgins, states: “It is great the Government is trying to use Stamp Duty to help homeowners, but they have made a real hash of it.

“The ridiculously complex way they are planning to introduce the scheme will end up harming many of the very homeowners it is meant to help, and lead to widespread confusion among homebuyers.”

She continues: “We are already being contacted by distressed homeowners who have worked out they will be caught by it and not be able to buy the home they want to.

“Rather than push ahead with a well-intentioned but dangerously flawed scheme, it should go back to the drawing board and put it right.”1

Meanwhile, the Intermediary Mortgage Lenders Association’s Peter Williams has criticised the short consultation period, which is too short by the Government’s criteria.

He believes the Government has “no view about how this tax will impact on the market as a whole, let alone the buy-to-let market.”

He says that buyers will eventually be able to absorb the extra tax, but it will push rent prices even higher.

“It doesn’t seem at all sensible,”1 he adds.

Furthermore, the Council of Mortgage Lenders (CML) has also voiced its concerns.

Paul Smee, the CML’s Director General, says: “There is a risk of overkill in dampening investor sentiment to the extent that the flow of available private rented property could be disrupted, without any necessarily corresponding increase in the ability of households to become homeowners.

“In addition, with around a fifth of households currently renting in the private sector, there is the perverse risk that the SDLT increase could cause landlords to charge higher rents, and so actually make it harder for tenants who want to buy to save the deposit needed to do so.

“We urge the Government at least to move away from a position where people will have to pay and then potentially claim back to one where payment is deferred, and only triggered if the buyer genuinely falls into the intended target category.”1 

For further information about landlord finances, here is a round up of forthcoming changes to buy-to-let: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

1 http://www.propertyindustryeye.com/stamp-duty-surcharge-comes-under-savage-attack-ministers-told-to-turn-back/

Residential Rents In UK Rise By 2.5% in 2015

Published On: February 1, 2016 at 12:51 pm

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The latest data released by the Office of National Statistics indicates that private rental prices paid by tenants in the UK increased by 2.5% in the year to December 2015.

Prices increased by 2.7% in England, 0.7% in Wales and in 0.9% in Scotland. In London, prices increased by 3.9%.

English Increase

More detailed figures from the report show that since January 2011, rental prices in England have risen more than those in both Wales and Scotland. Indeed, the annual rate changes recorded in Wales continue to be less than the average for Great Britain.

Since the start of 2012, English rental prices have shown yearly increases of between 1.4% and 3%. In the 12 months to December 2015, rental prices rose in each of the nine regions of England. Unsurprisingly, the largest rises were in London, followed by the East and South East with 2.8%. Rental prices in the capital have been stronger than those recorded in the rest of England since 2010.

Overall, the rental market in the country showed signs of continued strength in the final quarter of 2015, with prices increasing 2.5% in the year to December. However, this was a slowdown of 0.2% in comparison to figures released at the end of quarter three.

Residential Rents In UK Rise By 2.5% in 2015

Residential Rents In UK Rise By 2.5% in 2015

Slows

This slowdown can be attributed in part to Scotland, where prices increased just 0.9% in the year to December 2015, a fall of 0.7% compared to the annual growth rate in September.

Additionally, conditions in the housing market in general may have had an effect on the rental market. House price growth has typically been greater than rental rises for a number of years.

Demand however remains high, with statistics released by RICS indicating that those interested in renting accommodation rose again in the three months to December. However, new landlord instructions fell.

Mortgage Approvals Up In December

Published On: February 1, 2016 at 11:58 am

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The latest Bank of England Money and Credit report has indicated that mortgage approvals were up in December.

Mortgage approvals totalled 70,837 during the month, slightly higher than the 70,410 recorded during November. In addition, this figure was higher than the average of 69,462 over the last six months.

Improving

Further data from the investigation indicates that net mortgage lending fell from £3.9bn in November to £3.2bn during December.

The total number of approvals for remortgaging also went up from 39,161 to 41,708 in the last month of 2015. This was higher than the average of 39,540 recorded over the latter half of 2015.

Total lending to individuals went up by £4.4bn in December, in comparison to £5.3bn in November and £4.6bn over the six month period.

‘Mortgage lending in December reflected some of the rejuvenated confidence radiating from buyers,’ noted Peter Rollings. ‘After the Autumn Statement extensions to Help to Buy and the rock-bottom base rate lasting out the year, first-time buyers were feeling decisive and this was mirrored by a clear upswing in house purchase approvals from November to December. This energy has definitely been carried over into 2016 and January has already seen an impressive influx of motivated buyers, eager to progress up the property ladder.’[1]

Mortgage Approvals Up In December

Mortgage Approvals Up In December

Momentum

Mr Rollings feels that, ‘2015 was also the year of remortgaging for many existing homeowners-and his momentum is showing no signs of dissipating while cheaper fixed-rate mortgages remain available.’ He notes that, ‘in coming months, we can expect strong buy-to-let lending, as the April introduction of higher stamp duty for second homes gives a new sense of urgency for those looking to invest in property or expand their existing portfolio.’[1]

Brian Murphy, Head of Lending at Mortgage Advice Bureau also said, ‘mortgage approvals reached a near two-year high in December, rounding off a successful year for borrowers. Existing homeowners were the frontrunners in this growth, with the number of remortgage approvals rising by more than a quarter since December 2014.’[1]

Murphy also noted that, ‘borrowers benefited from rock-bottom mortgage rates throughout 2015 and our data shows that rates continued to fall across all fixed-rate products in December. Growing numbers of homeowners are wising up to the fact that it pays to remortgage, particularly if moving from a poor value standard of variable rate. Borrowers who are comfortable with a long-term commitment can take advantage of today’s rates by locking into a fixed product, avoiding higher mortgage bills when an interest rate rise eventually kicks in.’[1]

[1] http://www.propertyreporter.co.uk/finance/mortgage-approvals-up-in-december-says-boe.html