Posts with tag: Buy-to-Let

Large decline in homes to rent over the last six years

Published On: June 22, 2017 at 8:51 am

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New research has revealed that there has been a sharp decline in the number of homes listed for rent over the last six years.

Figures from Home.co.uk reveal that there has been an 11.6% decline in available rental stock since July 2011. This was led by a 34.7% fall in properties to rent in Scotland.

Falls

In Wales, there have been falls of 28.1% while the South West of England also saw a substantial decline of 26.5%.

Overall, seven out of eleven regions in the UK saw a fall more than the UK wide average. More prominent falls included a 24.6% slip in the East Midlands, 20.8% in the South East and 16.7% in the West Midlands.

Only one region, the North East of England, experienced a rise in supply, with a substantial increase in rental stock of 33.4%. This is owed in part to the number of accidental landlords, with many would-be sellers looking to let out there properties as opposed to selling at a loss.

Demand

While supply in the PRS has fallen, demand from tenants continues to rise, with many would-be buyers mean priced out of the market.

A number of tax changes, such as the phasing out of mortgage interest tax relief and Stamp Duty rises, have led many landlords to leave the market – further exacerbating the imbalance.

In turn, this is moving to drive up rents across many regions of the UK.

Large decline in homes to rent over the last six years

Large decline in homes to rent over the last six years

Wales has seen rents rise by 113% during the last year, while Yorkshire has seen increases of 8.4% over the same period. Scotland too has seen rises, of 5.4% on average.

The South West saw rents rise by 5.7%, while there was a less profound rise in the South East, of 0.9%.

London however has actually seen rents fall by 5.3% in the last twelve months, largely as a result of the rush in investment seen before the Stamp Duty changes came into force in April 2016.

Backfired

Director of Home.co.uk, Doug Shephard, observed: ‘It is ironic that the government’s justification for tax changes in the PRS was to ‘level the playing field’ for wannabe homeowners. The result of this barrage of red tape and taxation, at both local and national government levels, has meant that the supply of rental properties has fallen behind demand in most regions thereby driving up rents. Of course, it’s not the first time that government tinkering and tax grabs have backfired but the upshot for Generation Rent is appalling.’[1]

‘The ‘elephant in the room’ for the government is that record low mortgage interest rates have driven unprecedented investment in the PRS over recent years. Simply put, those already with significant home equity have been able to come up with deposits for properties intended to let whilst aspiring homeowners are as cash-strapped as ever as they pay out huge sums in rent. However, ultra-low interest rates and the associated pain for renters look set to persist for the foreseeable future,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/sharp-decline-in-homes-to-let

 

Smaller UK mortgage lenders seeing strong growth

Published On: June 21, 2017 at 9:55 am

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The most recent report released by CML shows that small and medium sized mortgage lenders are seeing strong growth. This comes despite the 10 biggest lenders continuing to take up the most business in the market.

In 2015, medium-sized lenders saw strong growth, with a 56% increase in annual lending volumes. In 2016 however, there was a more steady rate of growth experienced by these lenders.

Instead, those classified in the next tier down – between 21-30 by volume of lending – saw improved growth.

Lending Rises

These firms saw volumes increase by 60% in aggregate and include names such as Paragon, Nottingham BS, Tesco Bank and Fleet Mortgages.

The proportion of new lending by the top ten firms remained steady at 84% during 2016. However, there were some considerable movements.

For example, Lloyds Banking Group remained the largest mortgage lender in the UK, but saw a fall in its market share, from 17.3% in 2015 to 15.6% last year.

Santander UK also saw a fall in its market share, from 11.8% to 10.4%. The Royal Bank of Scotland however saw its share rise from 1.8% to 12.9% – a rise to sit at third place in the lending list.

Smaller UK mortgage lenders seeing strong growth

Smaller UK mortgage lenders seeing strong growth

Challenger Headway

One particular trend that has continued for the last couple of years was the rise in challenger banks and specialist lenders making headway in the list. TSB Bank saw the most significant growth, with its market share rising by 0.5%.

Activity for this particular group was significantly up, with Precise Mortgages, Metro Bank, and Fleet Mortgages seeing rises of 54%, 67% and 150% respectively.

Gross overall lending in 2016 amounted to £245bn, up 11% on 2015. This was a slightly higher rate of market growth than the 9% seen in the year before. In addition, there was a corresponding increase in marketplace competition. 60 lenders appeared in the CML table for lending in 2016 – made up of those who lent over £50m- up from 55 in the preceding year.

Fewer EU nationals looking to rent in UK following Brexit vote

Published On: June 21, 2017 at 8:51 am

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New figures have revealed that there has been a sharp fall in the number of EU nationals looking to move to Britain following the result of last year’s referendum.

This in turn is putting downward pressure on rental demand in many parts of the UK, according to data released by SpareRoom.co.uk.

Referendum Changes

In the lead up to the EU referendum, the number of EU nationals looking to move into the UK was up by 14.7%. However, during the 10 months following the decision to leave the European Union, that percentage fell to just 4.35%.

Further data from the flatshare website shows that the UK’s decision to exit the EU has led to a significant decline in people from Eastern Europe looking to rent in Britain. This was fronted by an 8% drop in those coming from Slovakia, 5.54% from Poland and 3.18% from Hungary.

Matt Hutchinson, director of SpareRoom.co.uk, observed: ‘With so much uncertainty over what Brexit really means, it’s no surprise to see interest in moving to the UK from EU countries in decline. Until people know how their freedom of movement and right to reside will be affected it’s hard for them to make long term decisions.’[1]

‘Key Eastern European countries like Poland, Slovakia and Romania, which have traditionally supplied large number of workers to the UK, are showing the biggest drops in traffic,’ he continued.[1]

Fewer EU nationals looking to rent in UK following Brexit vote

Fewer EU nationals looking to rent in UK following Brexit vote

Immigrants

What’s more, the data show that the result of last year’s referendum is putting off a number of immigrants from outside of Europe coming into the UK.

Growth in non-UK traffic in the 10 months following the Brexit vote stood at 8.73%, in comparison to 19.65% in the period before.

In addition, the UK saw a fall in interest from the USA.

Hutchinson concluded by saying: ‘We also saw a spike in interest in moving to the UK from the USA in the weeks surrounding the presidential election last year. While it’s probably too simplistic to entirely put that down to anti-Trump sentiment, the timing suggests that’s a factor.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/fewer-eu-nationals-renting-property-in-the-eu-flatshare-data-suggests

 

UK rental market bounces back in May

Published On: June 20, 2017 at 8:56 am

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Rental market activity recovered during May – putting an end to fears of a prolonged slowdown in the market.

The most recent report from Agency Express shows that after slower market conditions throughout Britain last month, activity improved during May.

Improvement

Agency Expresses’ Property Activity Index shows that national figures for properties ‘let’ in May increased by 13.8% month-on-month. New listings ‘to let’ rose by 15.8%.

Across the UK, 11 out of 12 regions recorded by the Index saw a rise in new listings to let, alongside those actually let.

The top performing region in May was the South East of England, where homes to let rose by 29.2% month-on-month. Properties let increased by 31.4%.

Other strong performing regions included the North East, London, Wales and the South West, where properties to let rose by 25.6%, 23.7%, 23.5% and 21.6% respectively.

In addition, the West Midlands, East Midlands and the South West saw a rise of 23.4%. 21.8% and 17.9% respectively in the number of homes let.

UK rental market bounces back in May

UK rental market bounces back in May

Falls

The largest falls in this month’s Index were recorded in the West Midlands and East Anglia. In the West Midlands, figures for new listings to let fell to stand at -2.4%, while a dip in East Anglia saw the number of properties let sit at -0.9%.

However, a slowdown in May is certainly not uncommon for these regions – with both faring better than they did 12 months earlier.

Stephen Watson, managing director of Agency Express, observed: ‘The Property Activity Index historically reports a decline in activity throughout May for many regions. This month however we have witnessed a good level of activity across the UK lettings market with some regional pockets recording record bests. Moving in to June and July we would expect a further increase in activity.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/6/uk-rental-market-bounces-back-with-greater-activity-anticipated-over-summer

 

AIIC calls for inventories to be made compulsory

Published On: June 19, 2017 at 1:27 pm

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The Association of Independent Inventory Clerks has called on the Government to introduce compulsory, unbiased and regulated inventories as an industry standard.

Boasting more than 850 members nationwide, the AIIC feels that regulated inventories could assist in raising standards in the lettings market.

Deposits

A recent tenant survey from HomeLet has revealed that 12.5% of over 20,000 renters asked have had a deposit withheld.

The most common reasons for this were cleaning and redecoration fees – which could have been prevented with a solid, photographic inventory.

Interestingly, the research found that just 70% of tenants asked received an inventory of their property and its content from an agent before they moved in.

Danny Zane, joint chair of the AIIC, noted: ‘With the election over and a new housing minister now in place, it’s time for the government to think about housing and in particular the growing private rented sector, which now accounts for around a fifth of all households.’

‘Independent, third party inventories are a fundamentally important part of the lettings process and they need to be made obligatory.’[1]

Digital signature on tablet. Man hand puts digital signature on tablet. Vector illustration in flat design. Businessman approves deal or offer by electronic signature.

AIIC calls for inventories to be made compulsory

Biased

Moving on, Mr Zane said that: ‘Landlords and letting agents should not be compiling what can very easily be considered as biased inventory reports that tenants must sign prior to getting access to their new home.’

‘The proposed ban on letting agent fees charged to tenants has hogged all the headlines in recent months but there are other industry issues the government needs to think about. This ban seems very short-sighted to me as it is likely to encourage a rise in rents as well as a reduction in the protection of unbiased inventory reports being used.’

An unbiased and independently compiled inventory can save both tenants and landlords money, ensuring a fair move-in/move-out process for all parties,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/calls-for-government-to-make-independent-inventories-compulsory.html

 

Will Stoke-on-Trent be the next investment hotspot?

Published On: June 16, 2017 at 2:08 pm

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New analysis from Property Partner reveals that Stoke-on-Trent is the best region for buy-to-let landlords- based on affordability and rental return.

The Potteries region was followed by Oldham and Liverpool, with a distinctive North/South divide noticeable in the research.

Efficient

The top-ten most efficient regions to become a buy-to-let in Britain are located in the North, while the least efficient are in the South.

Property Partner’s study ranked the UK’s 100 major towns and cities, looking at average income, average property price and typical rent in every area.

Alongside those regions mentioned, the top-ten was also made up of Leeds, Milddlesbrough, Newcastle, Stockton-on-Tees, Gateshead, Rotherham and Rochdale.

Demand

On the other hand, the South dominated the bottom of the rankings, as a result of demand driving prices up. This in turn leads to high capital requirements in order to enter the market and lesser rental yields.

Landlords in Poole face the most challenging investment, followed by those in Central London and Sevenoaks. The rest of the top-ten was made up of Bournemouth, Cambridge, Oxford, Winchester, St Albans, Chelmsford and Brighton.

Will Stoke-on-Trent be the next investment hotspot?

Will Stoke-on-Trent be the next investment hotspot?

Yields

For buy-to-let investors seeking income, the research reveals a correlation between low rental yield and investment inefficiency.

Leeds for example had the highest yield of all 100 towns and cities with 6.92% and came in fourth overall. Four other regions featured in the top ten yielding locations and the ten best places to become a landlord overall.

This trend is the same at the other end of the market, with six of the most challenging areas to profit from buy-to-let amongst the ten lowest yielding regions.

Divide

Dan Gandesha, founder of property investment marketplace Property Partner, noted: ‘What our research reveals is a clear North-South divide in the investment opportunities facing buy-to-let landlords. We have always been at pains to point out to investors that prime locations such as Kensington and Chelsea can offer some of the lowest yields available, because prices have raced ahead while rents have failed to keep pace. It just goes to show, you shouldn’t always follow the crowd and the right investment could be on your doorstep where there is far less overall demand.’[1]

[1] http://www.propertyreporter.co.uk/landlords/could-stoke-on-trent-be-the-uks-next-btl-sweet-spot.html