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Em Morley

Rental growth soaring in East of England

Published On: October 9, 2015 at 12:27 pm

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Categories: Landlord News

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The latest Rightmove Rental Trends Tracker shows that landlords in the East of England are seeing the rewards of substantial rental and house price growth in the region over the last year.

Regional rent returns

A total return on investment of over 25% was evident in Halstead, Borehamwood and Brentwood, which make up the top-three investor hotspots outside of the capital.

Regions in Essex and Hertfordshire made up seven out of the top 10 investor hotspots, with Cottingham in Yorkshire representing the only area from the North to make the list.

This strong return on investment has been driven by the East’s annual rental growth soaring ahead of the other UK regions. Rents have risen by 6.4% on last year, in comparison to 4.5% nationally outside of London.[1]

During the last quarter, the East of England has seen rent rises of 2.0%. This was only bettered by the East Midlands, which recorded an increase of 2.1%.[1]

Demand

Sam Mitchell, Head of Lettings at Rightmove, said, ‘we’ve been reporting high tenant demand for rental property in Essex for a while now, so it makes sense that it should feature strongly in our new total return on investment league table.’ He feels that, ‘investors and tenants who’ve been priced out of London and the South East have looked for better value areas in the East and it seems they’ve both found a winning formula.’[1]

‘For example, if you look at the top 10, six of the areas have average asking prices below the national average, making it affordable for buy-to-let investors. From a tenant affordability perspective in the East of England’s average rent for a two beds is less than £900 a month, compared to over £2,000 in London,’ Mitchell added.[1]

Rental growth soaring in East of England

Rental growth soaring in East of England

Rental hikes

Further data from the report shows that rents in England and Wales are up by 1.3% outside of London during the last quarter. In Greater London, rents were up by just 0.2% in the previous three months, in comparison to 1.6% in the same period last year, indicating the affordability ceiling has been reached. The more muted increase could be down to the fact that the numbers of new rental properties in the capital have risen slightly.[1]

Mitchell stated, ‘we know the majority of investors purchase their property portfolio as a long-term investment and as long as they buy wisely they can benefit from both growth in their property values as well as rental yield.’ He notes that, ‘those landlords who bought in the East of England are seeing much higher returns on investment as the region leads the way for rental growth. But with a combination of such high returns for buy-to-let landlords and affordable prices for first-time buyers, demand for property is high and results in a stock shortage problem, as agents in these areas note.’[1]

‘There’ve been concerns raised by the Bank of England about the impact of buy-to-let investors on the property market and the threat to the economy more broadly. This echoes the current government’s policy of increasing taxes, or lowering claimable allowances, for landlords. Yet it’s clear that if landlords exit the market in any great numbers we can expect rents to continue to increase further.  It remains to be seen how much of an impact the new policy will have, but our report demonstrates that in the right areas and with proper advice and management, property remains an attractive investment,’ Mitchell concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/east-of-englands-annual-rental-growth-races-ahead.html

 

 

Rent Controls and Abolition of No Fault Evictions Confirmed for Scottish Bill

Published On: October 9, 2015 at 12:01 pm

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Categories: Landlord News

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The Scottish Government has released its new housing bill, which will see rent controls introduced and the abolition of the no fault ground for possession.

The Private Housing (Tenancies) (Scotland) Bill will mean, if passed, that renters cannot be asked to leave a property simply because the tenancy has ended.

Landlords will not be able to reclaim their properties on a no fault ground, but must use another one of the grounds for possession.

Rent Controls and Abolition of No Fault Evictions Confirmed for Scottish Bill

Rent Controls and Abolition of No Fault Evictions Confirmed for Scottish Bill

Additionally, rent rises will be limited to only one per year, requiring three months’ notice.

The law will also give local councils the right to enforce rent controls in certain areas. This includes places where there have been excessive increases in rent prices and where there is concern about the impact on tenants and the wider housing market.

A local authority will be able to apply for rent caps, with ministers deciding the outcome. Landlords and tenants will be consulted during this process, with ministers deciding on rent controls for a period of up to five years.

Scottish Housing Minister, Margaret Burgess says: “The changes outlined in this bill will give tenants greater security and stability in their home and community.

“It will also give landlords reassurance that their tenants will treat their property as a long-term home, rather than somewhere temporary.”

She continues: “The private rented sector is changing. It is now home to a growing number of people in Scotland and we recognise there are some areas where rents are increasing significantly. It is right and responsible to give local authorities the ability to introduce rent controls in order to ease areas under pressure.

“The range of measures brought forward under this bill will ensure the private rented sector is better managed, simplified and successful, and creates a system that works for everyone.”1

The new grounds for possession are:

  • Landlord intends to sell.
  • Property to be sold by lender.
  • Landlord intends to refurbish.
  • Landlord or family member intends to live in the property.
  • Landlord intends to use the property for non-residential purpose.
  • Property is required for religious purpose.
  • Tenant is no longer an employee.
  • Tenant is no longer a student (if living in student accommodation).
  • Tenant is not occupying the let property.
  • Breach of tenancy agreement.
  • Rent arrears.
  • Criminal activity.
  • Anti-social behaviour.
  • Landlord has failed to register.
  • HMO license has been revoked.
  • Overcrowding statutory notice.

Housing charities, such as Shelter and Crisis, have supported the bill, but landlords and letting agents are concerned.

Dr John Boyle, against the law, believes it will cause disinvestment in the sector. He has also criticised the Scottish Government for introducing a bill that is not based on proper evidence.

1 http://www.propertyindustryeye.com/rent-controls-and-abolition-of-no-fault-ground-for-possession-confirmed-as-intents-for-scotland/

 

 

 

 

Property sales at 16 month high

Published On: October 9, 2015 at 11:19 am

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Categories: Property News

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Property sales across Britain reached a 16-month high during September, according to the latest report from the Royal Institution of Chartered Surveyors. (RICS).

In addition, data from the investigation shows that the last month saw an increase in property prices and mortgage availability. However, there was no improvement in supply, with buyer demand continuing to be higher than instructions to sell.

Highs

Across the UK, sales rose at the greatest pace since May 2014, with 14% more chartered surveyors experiencing an increase. This represented the fifth consecutive month in which sales have increased.

Regionally, the North, East Anglia and Scotland saw the sharpest rises in monthly activity, with the East Midlands the only region to see a small drop. However, this followed an increase in sales during August.

The report suggests that the increase in sales in Britain is reflective of spiral in demand that has been visible since the Spring. What’s more, the number of new buyer enquiries increased for the sixth consecutive month, with 18% of chartered surveyors saying they had seen an increase in demand.

There was good news too for mortgage approvals, which stand at an 18-month high and are up by 12% on the same time on year ago.

Increases

With mortgage finance availability seemingly improving, the average perceived LTV ratio given by respondents nudged up to 79.3%. This said, the ongoing lack of new instructions and the limited stock on the market is still the most serious issue for the sustainability of the market. The number of new instructions has fallen in 13 out of the last 14 months.

RICS said that 40% feel the greatest factor behind the negative trend in instructions is the lack of stock already fore sale. This is in turn deterring would-be homemovers as they struggle to locate a suitable property to move to.

As a result of the constant supply/demand imbalance, the national house price indicator continues to increase, which is likely to be highlighted in key house price indices over the rest of 2015.

In the lettings market, tenant demand increased once again, continuing a trend seen since December 2014.

Property sales at 16 month high

Property sales at 16 month high

Replenishment

‘Activity is now picking up which is encouraging but unless the stock being sold is replenished, there is a limit to how sustainable the modest improvement in market turnover will prove to be,’ said Simon Rubinsohn, RICS chief economist. He went on to say, ‘unfortunately, the indications are that we are locked in a cycle where the lack of available properties on agents’ books is itself deterring some potential vendors from thinking about putting their own property on the market.’[1]

‘Against this backdrop, it is hard not to see prices continuing to move higher over the coming months and into the early part of 2016, notwithstanding the present concerns regarding the affordability of housing in some areas of the UK that are being highlighted by respondents,’ Rubinsohn added.[1]

[1] http://www.propertywire.com/news/europe/uk-property-prices-sales-2015100911075.html

 

 

Average Advertised Rent Rises

Published On: October 9, 2015 at 10:57 am

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Categories: Property News

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Average Advertised Rent Rises

Average Advertised Rent Rises

The average advertised rent price increased by 4.5% on an annual basis during the third quarter (Q3) of the year, according to Rightmove.

The property portal reveals that the average advertised rent is now £762 per month across the UK, excluding London.

The average rent in Greater London is much higher, at £2,014 a month.

Rightmove’s research also found that for the highest landlord returns, head to Essex. It names Halstead in Essex as the top hotspot, with landlords earning a total return on investment (ROI) of over 26.3%.

Behind Halstead sit:

  1. Borehamwood, Hertfordshire – 26.1%
  2. Brentwood, Essex – 25.9%
  3. Cottingham, Yorkshire – 25.7%
  4. Purfleet, Essex – 25.1%
  5. Stevenage, Hertfordshire – 23.8%
  6. Bushey, Hertfordshire – 23.7%
  7. Henley-on-Thames, Oxfordshire – 23.4%
  8. Chatteris, Cambridgeshire – 23.2%
  9. Grays, Essex – 22.9%

Head of Lettings at Rightmove, Sam Mitchell, believes that rents could rise even further if landlords leave the market due to the clampdown on buy-to-let mortgage tax relief.

He comments: “It remains to be seen how much of an impact the new policy will have, but in the right areas and with proper advice and management, property remains an attractive investment.”1

1 http://www.propertyindustryeye.com/asking-price-rents-rise-and-the-only-way-is-essex/

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Buying is Cheaper than Renting in Over One Third of Cities

Published On: October 9, 2015 at 10:03 am

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Categories: Property News

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Buying a home using a mortgage is cheaper than monthly rent payments in over one third of British cities, according to recent research from Zoopla.

It reports that buying is most cost-effective in the north, with homeowners in Glasgow over £100 better off per month than if they rented.

Buying is Cheaper than Renting in Over One Third of Cities

Buying is Cheaper than Renting in Over One Third of Cities

However, in the south, it is cheaper to rent than buy.

Zoopla states that as a national average, renters pay £58 less a month than buyers with a mortgage.

The property portal’s study compares the cost of renting with buying a two-bedroom home.

In London, the typical rental property costs £2,218 per month, compared with an average monthly mortgage repayment of £3,302.

Meanwhile, in Hull, buyers pay an average monthly repayment of £397, while renters pay £452 a month.

The top ten areas where renting is cheaper than buying are:

  1. London
  2. Reading
  3. Cambridge
  4. Brighton
  5. Aberdeen
  6. Bristol
  7. Norwich
  8. York
  9. Bedford
  10. Southampton

The top ten locations where buying is cheaper than renting are:

  1. Glasgow
  2. Dundee
  3. Birmingham
  4. Hull
  5. Manchester
  6. Coventry
  7. Edinburgh
  8. Rotherham
  9. Bradford
  10. Sheffield

To calculate the averages, Zoopla used a 25-year mortgage with repayments and a fixed interest rate at the current average best rate of 4.5%, based on 90% loan-to-value.

House prices in England and Wales up again

Published On: October 9, 2015 at 9:15 am

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Property prices across England and Wales rose by 0.4% in September, taking the average property price in the two countries to £284,742. What’s more, this was the 9th successive month of increased property values.

The new LSL property price index also shows that yearly, prices have increased by 4.2% and by an average of £11,500.

Solid foundations

In London, prices rose at their highest level since June 2014, with the South East seeing the strongest year-on-year rise of any region. According to Richard Sexton, director of e.surv chartered surveyors, this growth is being driven by continuing demand and solid activity towards the bottom of the property ladder.

‘The most frequently paid property price across England and Wales is just £125,000, mirroring the level at which stamp duty becomes payable and reflecting the impetus that has been injected in the first-time buyer market recently,’ he stated.[1]

‘It is also the lower to mid-range properties priced between £180,000 and £360,000 which are seeing the fastest increases in value, while the shift in stamp duty bands continues to slow growth at the higher end of the market and prices above £600,000 are largely stationary,’ Sexton added.[1]

Capital confidence

Mr Sexton went on to point out that a price surge in London during the last month has stopped its stalled market. Sexton said, ‘as in the rest of the country, it’s the more affordably priced London boroughs which are behind this renaissance, as the strengthening of sterling, rising stamp duty rates and moves again the non-doms take their toll on the high end market.’[1]

Data from the index shows that the ten capital boroughs with the lowest average house prices all set new record highs during August. Barking and Dagenham, at the foot of the price rankings, recorded the quickest year-on-year increase in property values of 15.7%.[1]

House prices in England and Wales up again

House prices in England and Wales up again

‘While London is once again leading the pack in terms of monthly price growth, the South East region has soared two places in the rankings to top the charts with the highest annual increase in property values,’ Sexton continued. ‘Average house prices in the South East have grown 5.8% over the past twelve months.’[1]

‘Combined, these two regions are now having a much greater influence on national measures of price growth. Compared to July, when they were only pushing up the overall annual change by 0.1%, this has grown to 0.7%. As house price growth becomes more southern-centric again, the London commuter belt is spurring some of the fastest rates of change with Luton witnessing the steepest price rise compared to last year, jumping 14.9%,’ he concluded.[1]

Regional divides

The regional spread of home sales shows a distinctive north/south divide with cheaper northern regions seeing the quickest growth in property sales. However, a shortage of properties available on the market in the South is slowing activity.

In the three months to August 2015, the North and North West of England saw the largest year-on-year increase in sales, while East Anglia, London and the South East saw the most substantial falls.

[1] http://www.propertywire.com/news/europe/england-wales-property-prices-2015100811069.html