Posts with tag: Buy-to-Let

UK rents up 4.9% in Q1, outside of London

Published On: April 13, 2016 at 10:51 am

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Rents for new tenancies in the UK experienced more growth in the first quarter of 2016, according to new research.

Latest figures from the HomeLet Rental Index show that rents on new agreements signed for properties outside of London were 4.9% greater than in the first three months of 2015. Average rents now stand at £755 per month.

In London, those signing new tenancy agreements were faced with average rents 7.7% greater than those one year ago.

Greater than inflation

Data from the HomeLet report indicates that rents continue to rise well ahead of inflation, with demand still showing no signs of cooling. These results however come ahead of reforms, such as increases in Stamp Duty, which are forecasted to have a substantial impact on the buy-to-let sector.

In addition, results from the report show evidence that residential landlords soared to the market ahead of the changes. HomeLet recorded a marked increase in enquiries for landlord insurance. 37% of insurance policies taken out by landlords were few new properties, in comparison to 24% in the same period in 2015.

London saw average rents for new tenancies rise to £1,536 and the region has once again seen prices increase more quickly than in other areas of the country. The gap between the capital’s rent rises and that of the rest of the UK is 2.8%.

Only the North West of England saw rents fall in the three months to March.

UK rents up 4.9% in Q1, outside of London

UK rents up 4.9% in Q1, outside of London

Continual increase

Martin Totty, Chief Executive Officer at Barbon Insurance, said, ‘we’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.’[1]

‘External factors may now come into play: the stamp duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply,’ Totty added.[1]

Concluding, Totty said, ‘despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future according to official projections.’[1]

[1] http://www.propertyreporter.co.uk/landlords/new-rents-outside-the-capital-rise-49.html

 

London rental market begins to slow

Published On: April 12, 2016 at 11:52 am

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Categories: Landlord News

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Following a year of sustained, record-breaking growth, the London rental market is finally starting to slow.

New data shows that for the third successive quarter, rents in the capital either stayed constant or experienced only conservative growth.

Falls

Many areas of prime central London saw rents tumble, underlining a trend that has seen demand rise in the inner suburb. With wealthy overseas investors being deterred by the upcoming Brexit vote, demand for luxury homes in places like Knightsbridge and Chelsea seemed to have peaked.

With this said, experts are still predicting that a fall in the value of British Sterling will make prime central London more sought after in the coming months.

London rental market begins to slow

London rental market begins to slow

Inner growth

Rental growth in inner London suburbs has continued, with the market growing in confidence. Wandsworth in particular saw steady growth, as did Bayswater, Queen’s Park and Kensal Rise.

However, North London, in particular the regions of Colindale, Golders Green and Hampstead Garden Suburb saw the most substantial rental growth in the last quarter. This was to be expected, following the completion of Crossrail works that had closed the Northern Line interchange at Tottenham Court Road.

Marc von Grundherr, of Benham & Reeves Residential Lettings, noted, ‘this is a much needed pause for breath after such huge gains in rental values. Unfortunately for tenants, this pause may only be temporary.’[1]

‘With increasing restrictions on buy-to-let, more amateur landlords will be exiting the market, leading to a drop in supply in the face of a growing population. Over the long term, rents will inevitably go up,’ von Grundherr went on to warn.[1]

[1] http://www.propertyreporter.co.uk/landlords/londons-rental-market-pauses-for-breath.html

 

Residential landlords ‘should offer longer tenancies’

Published On: April 12, 2016 at 10:57 am

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Residential landlords and property agents in Britain should consider adopting a different approach to tenancies to meet increasing demand.

That is the view of the Association of Independent Inventory Clerks (AIIC) which has called for longer-term tenancies to be agreed.

The firm said that better preparation should include more administration and more considered thought about the choice of interior design.

Tenant changes

Results from the English Housing Survey 2014/15 indicate that the average private tenancy length currently stands at 4 years. This is a rise from the three and a half years recorded in the previous year’s survey.

In addition, the report found that 46% of 25 to 34 year olds resided in the private rented sector in 2014/15, up from 24% in the previous reporting period.

Patricia Barber, chair of the AIIC, notes, ‘despite numerous reports suggesting that the average tenant doesn’t want a long term contract, the official statistics shows that the average tenancy lengths are increasing, particularly among families, as people rent for longer.’[1]

Re-think

The AIIC is urging landlords to really think about what features will make their rental property seem like a home and what could entice renters to stay for longer.

Barber observed that as tenancies last for longer, this underlines the importance of organisation for landlords: ‘when tenants stick around for longer, often the chances of confusion and disagreement over certain issues are increased when the tenancy does eventually come to an end.’[1]

‘The longer time goes on, the more likely landlords and tenants are to forget details from the tenancy agreement or important information about the deposit and that’s why stringent administration, including keeping copies of everything and organising it accordingly, is so important,’ she added.[1]

Residential landlords 'should offer longer tenancies'

Residential landlords ‘should offer longer tenancies’

Importance of inventories

Landlords should make sure, the AIIC states, that they recognise the importance of records and evidence, particularly for long-term agreements. This once again underlines the need for a thorough, professional inventory to be conducted at the start of the tenancy.

‘There are more grey areas over the condition of a property the longer a tenancy goes on. A detailed inventory will help landlords and tenants to determine exactly how the property’s condition has changed over the course of the tenancy, what can be deemed fair wear and tear and what needs to be replaced and therefore deducted from the tenant’s deposit,’ Barber concluded[1].

[1] http://www.propertywire.com/news/europe/uk-landlords-tenancy-terms-2016041211782.html

Is the North East the buy-to-let hub?

Published On: April 12, 2016 at 9:20 am

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Interesting new statistics may have revealed where the future of buy-to-let will be most prominent.

Research from the National Landlords Association shows that the half as many landlords in the North East have decided to sell their property during the past year than those in the rest of England. But just how will this affect the area moving forwards?

Northern Rule

In comparison to those in the North East, the number of landlords looking to sell in London has quadrupled since the announcement of increased stamp duty and cuts to mortgage tax relief.

Over the same period, the total of landlords looking to offload their property in the North East rose by only 7%. This was 40% less than the national average rise of 12%.

Further figures released by ARLA indicate that demand for rental properties in the North East rose by 17% between January and February of this year.

Property values in the North are still around half as much as those in the South. The average home in the North of England costs over £150,000 less than a similar property near to London.

Is the North East the buy-to-let hub?

Is the North East the buy-to-let hub?

Attractive

Ajay Jagota, founder and Managing Director of North-East sales and lettings firm KIS, observed, ‘there’s already been speculation that the tax changes could see 500,000 rental properties sold this year, but that doesn’t mean that their owners aren’t going to buy elsewhere-and anecdotally there seems to have been a real uplift locally in enquiries from investors from outside of the region looking to invest in property in the North East.’[1]

‘There’s no question that the region will become more attractive to investors in the coming months. Not least because the North East’s lower house prices will mean that the 3% rise in Stamp Duty on additional properties introduces last week and Bank of England plans for new affordability tests and stricter borrowing limits for buy-to-let mortgage won’t be so painful in this part of the country,’ Jagota continued.[1]

Yields

Mr Jagota went on to say, ‘the return on a typical buy-to-let property in London is currently something like 5.2% compared to as much as 7% in somewhere like Gateshead. You get a similar rental yield on a property in Peterlee than you do in London, with the added attraction that you can buy almost five properties there for the price of one in the capital.’

‘We don’t offer the same capital appreciation as other regions of the UK, but it’s clear that the North East has a lot to offer property investors-and as more competition can lead to lower rents and better homes, they have a lot of offer renters too,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/could-the-north-east-become-the-uks-new-buy-to-let-capital.html

Will new regulations slow buy-to-let market?

Published On: April 11, 2016 at 11:51 am

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Categories: Finance News

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Over the past year, residential landlords have been subjected to a whole host of new regulations. Alterations to mortgage interest tax relief, an increase in stamp duty surcharges on buy-to-let purchases and changes to the wear and tear allowance are just some of the initiatives aimed at cooling the market.

Should the Bank of England press ahead with its plans for tighter mortgage lending criteria, this will be a further blow to buy-to-let landlords.

Intentions

The Bank of England believes the stricter lending criteria will cut the amount of buy-to-let borrowing by between 10%-20% in the next three years. Until presently, landlords have needed between around a 25% deposit to secure a buy-to-let mortgage.

Changes proposed by the Prudential Regulation Authority-the Bank of England’s regulatory sector-has called for lenders to make more stringent checks on landlords. This is to ensure that they can afford the mortgage repayments on their property. In addition, it has called for banks to test if landlords would still be able to afford monthly payments should interest rates rise.

Will new regulations slow buy-to-let market?

Will new regulations slow buy-to-let market?

Slowing Tactics

Jane Morris, Managing Director of PropertyLetByUs, observed, ‘this new lending criteria is a move at slowing down the booming buy-to-let market, which has seen a rush of landlords purchasing property to beat the stamp duty rise, which comes into effect this month. We have seen a sharp increase in the number of landlords placing properties with us over the last six months and since January, landlords sign ups have increased by 50-60%.’[1]

‘However, the market is very likely to slow down over the next few months, with Britain’s 1.8million landlords now facing the brunt of the increased taxes and new mortgage restrictions. The buy-to-let market provides the UK with essential housing for over 2.5million tenants and has been unjustly targeted by the government,’ Morris continued.[1]

Concluding, Morris noted, ‘landlords will need to find ways to protect their profits and income.’ She feels it is inevitable, ‘we will see rent rises and many landlords will be reviewing their fixed costs.’[1]

Finally, she said, ‘it is certainly a good time to review lettings costs, as some landlords could make significant savings on their letting agent finder and fully managed fees.’[1]

[1] http://www.propertyreporter.co.uk/finance/is-btl-lending-getting-tougher.html

CEO of lettings agency in scathing attack on the government

Published On: April 11, 2016 at 10:54 am

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A chief executive officer of a leading lettings agency has slammed the Government’s performance for its first year in office.

Writing in the property magazine Estates Gazette, Ian Wilson, chief executive of Martin & Co, gave David Cameron just two out of ten in a ‘scorecard exercise.’

Performance

Mr Wilson’s analysis focused on how policies implemented or announced in the last twelve months have impacted on the residential property market.

In the last year, cuts in landlords’ mortgage interest tax, the rises in stamp duty on buy-to-let transactions, Right to Rent immigration checks and alterations to Wear and Tear allowance have all had impacts on the sector.

Wilson is particularly damning in his assessment, noting, ‘the Conservative government has failed the private rental sector. Unintended consequences of the reforms are emerging, with residential landlords fighting to complete on properties before April, pushing first time buyers aside. House prices are artificially high in the UK because of restrictions on land use dating back to World War 2.’[1]

CEO of lettings agency in scathing attack on the government

CEO of lettings agency in scathing attack on the government

Solutions

Continuing, Wilson said, ‘the private rental sector has been superb in providing housing solutions for those unable to buy a home and as such, the sector has doubled in the last 20 years, organically and with no government support. Individuals have invested in the buy-to-let sector out of their own pocket, made feasible by allowing the interest on a Buy to Let loan to be offset as a business expense.’[1]

‘The changes the Conservative are imposing have not only caught people off guard, undermining confidence in a highly valuable sector of the market, but have deliberately penalised small time landlords, the stalwarts of the sector. Meanwhile corporate organisations, who have offered little in the way of housing solutions, retain in all tax benefits. The government needs to think hard before using a blunt instrument in a fragile housing market as it could have far longer term implications,’ Wilson added.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/agency-chief-gives-cameron-2-out-of-10-for-lettings-sector-performance