Posts with tag: London

Brexit has Created a Buyers’ Market for Buy-to-Let in London

Published On: May 2, 2019 at 8:00 am

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Categories: Landlord News

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Although many reports are pointing the finger at Brexit for causing delays in the property market, London is starting to show some positive signs, becoming a buyers’ market for buy-to-let investors, new data shows.

Ongoing political uncertainty is clearly causing some buyers and sellers to adopt a wait-and-see approach towards property sales. However, with Brexit uncertainty continuing to hit house prices, a growing number of buy-to-let landlords are starting to see it as a good time to purchase.

New figures from specialist buy-to-let broker Commercial Trust Limited reveal that London regained its position as the leading region for buy-to-let business applications during the first quarter (Q1) of the year.

The number of submitted purchase mortgage applications for the capital in the 12 months to April rose by 4% on the previous quarter, to hit 15.8% of overall business. The South East was close behind, at 14.5%.

In Q4 2018, the South East had overtaken London for the first time.

Commercial Trust’s data ties in with a recent report from London estate agent Chestertons, which claimed that London is starting to offer improved rental yields, as the market shows signs of bottoming out.

The East of England and North West also enjoyed an increase in the proportion of buy-to-let applications submitted during Q1, with this type of business accounting for 12.5% of all applications in both regions.

The same two regions shared the top spot for buy-to-let completions over the quarter, with both contributing 13% of overall completions.

In total, remortgage buy-to-let applications continued to dominate in Q1, with 60% of business coming from landlords looking to refinance.

Andrew Turner, the Chief Executive of Commercial Trust, says: “The effects of Brexit have been keenly felt in London, and, perhaps, the stalling of house price growth has to some extent created a buyers’ market for buy-to-let.”

He believes that the firm’s latest figures underline the importance of London and the South East within the buy-to-let sector.

Turner explains: “For Q1 2019, these two regions contributed over 30% of our buy-to-let purchase applications, an increase from the 26% recorded in Q4 2018.

“Whilst it is good news to see increased activity in London, movement is not restricted to that area, and both the North West and East Anglia have also increased their proportion of overall purchase business during the quarter.”

He is positive about the future: “With Brexit now pushed back to later in the year, the combination of low interest rates, a wide variety of mortgage product choice, stalling house prices and soaring tenant demand, many investors are of a mind to invest in the private rental sector.”

Rental Affordability has Improved Across the UK since 2007 – Even in London

Published On: April 18, 2019 at 8:06 am

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Categories: Tenant News

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Weak rent price growth has resulted in improved rental affordability for private tenants across many parts of the UK, including London, while rents in northern regions of England are now the most affordable for a decade, a study by Zoopla has found.

The property portal has assessed the trends in rental affordability across the countries and regions of the UK since 2007, focusing on the affordability of renting privately for working households, with almost 75% of private tenants working full or part-time, according to the English Housing Survey 2016/17.

The analysis, which tracks the average rent for a one, two and three-bedroom property over time and expresses this as a percentage of average weekly net earnings for a single full-time worker, found that, over the long-run, rents have tracked the growth in typical wages.

Nationally, rent prices have ranged between 28-32% of average earnings over the past ten years.

The existing proportion of typical wages spent on rent is 30% – exactly in line with the long-term average. There are wide regional variations in rental affordability, however, as a result of differing levels of rent price growth.

The research shows that a range of factors influence rent prices and rent price growth, including: migration, employment growth, and the relative affordability of homeownership.

According to Zoopla’s data, rents have increased the most since 2007 in the East of England (23%) and the West Midlands (20%).

London and the South East have the highest absolute average rent prices, while both have recorded growth of 18% since 2007, with increases weakening in the last two years.

In contrast, rents have risen by just 1%, 5% and 9% in the North East, North West, and Yorkshire and the Humber respectively over the same period.

Weak rent price growth means that rents in the northern regions of England are the most affordable in a decade, averaging between 25-27% of the typical full-time wage.

Zoopla also found that rental affordability has improved in London, as rent price growth is unchanged on 2014 levels. This is a result of weaker employment growth, lower levels of in-migration and stretched affordability limiting what tenants can afford to spend on rent.

Rental affordability peaked in London in 2017, at 43% of the average earnings, and has fallen back to 39% – in line with the long-term average for the region.

The proportion of earnings spent on rent reached almost 35% in the South East and East of England in 2018 – close to a ten-year high.

Stretched affordability has limited rent price growth in these two regions, causing rental affordability to improve over the past year.

Richard Donnell, the Research and Insight Director at Zoopla, says: “The private rental market is a complex and diverse tenure, which has been the focus of a growing number of policy changes, with further changes being proposed. The reality in the rental market is that landlords are rent takers, having to accept what renters in the market are able and can afford to spend.

“Just like the sales market, there is no single UK rental market. Rents have not increased rapidly in all markets. Our analysis shows a wide variation in rental growth over the last decade, which creates a varied picture for the affordability of renting.”

He explains: “In London and southern regions of England, rental affordability has become stretched, and this has acted to limit the growth in rents and resulted in a modest improvement in rental affordability. Rental growth is set to remain subdued in the near-term, but the underlying demand for renting is set to remain robust, largely a result of the high cost of homeownership, in terms of deposits and income required to buy. An under-researched part of the market is the level to which greater sharing of property has contributed to higher rents, particularly in inner London, which makes accurate assessments of the affordability of renting more complex.

“Weaker new investment by private landlords means slower growth in new rental supply, which also supports overall rent levels. In London, there are localised concentrations of new build supply where availability of high-quality rental supply will increase in 2019, boosting choice for renters.”

Donnell looks at the other parts of the country: “In northern regions of England, rents are their most affordable for a decade, as rental growth has fallen well short of the growth in average earnings. This does not automatically mean rents are set to rise. The growth in rents is dependent upon growth in employment. The lower cost of accessing homeownership means it is easier for renters to shift into homeownership than in regions with high house prices, and this keeps rental growth in check.

“At a national level, the proportion of earnings spent on rent has remained relatively stable over the long run. This is to be expected, as renters can only allocate a certain amount of earnings on rental payments. This relationship between rents and earnings is an important attraction for new corporate investors entering the market and developing so-called build to rent developments.”

He concludes: “The supply of rented homes is an important driver of rental levels and affordability for renters. Continuing to attract long-term, stable investment that continues to boost the supply of quality rented housing is important for the longer-term health of the private rented sector.”

Landlord Investment in London Plummets, Causing Rents to Surge

Published On: April 16, 2019 at 8:00 am

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Landlord investment in London is plummeting – even among those based in the capital – causing rent prices to surge to record highs in the region, according to Hamptons International.

There has been a sharp decline in the number of buy-to-let landlords investing in London’s property market since the 3% Stamp Duty surchargewas introduced three years ago, new data from the estate agent reveals.

Even London-based investors, who historically purchased their properties near to where they lived, are now deterred from buying in the capital, with Hamptons revealing that 59% of London-based landlords acquired their buy-to-let properties outside of the capital during the last 12 months, which is up from 25% in 2010.

High house price growth and a clampdown on landlord taxes have left more London-based landlords with little alternative but to invest further afield in search of higher rental yields and lower Stamp Duty bills.

The proportion of London-based investors purchasing buy-to-lets in their home region has dropped by 17% since 2015 (before the Stamp Duty surcharge on additional properties was introduced in April 2016).

The research found that 34% of London-based landlords purchased buy-to-lets in the Midlands and north during the past 12 months, which is up from just 14% in 2015 and 4% in 2010.

However, the South East remains the most popular location for London-based investors to purchase buy-to-lets outside of the capital.

Some 11% of London-based landlords invested in the South East over the last 12 months – 2% fewer than in 2015.

Dartford is the most popular destination for London-based investors in the South East. Landlords living in London purchased 60% of buy-to-lets in the town during the last year.

Aneisha Beveridge, the Head of Research at Hamptons International, comments: “April marks the three-year anniversary of the Stamp Duty surcharge introduction for second homeowners.

“Following the tax hike, landlords have been adapting their strategy to find new ways to make their returns. Lower entry costs and higher yields outside of the capital are enticing investors to look further afield than they have previously.”

Following this decline in landlord investment in London, rent prices surged by an average of 3.7% in the year to March, causing growth across Great Britain to hit 1.9% year-on-year.

Hamptons’ data shows that the average cost of a new let in Great Britain rose to £969 per month in March, as rent price growth continues to rise, led by Greater London, where the average rent reached £1,737 – the highest level on record.

Meanwhile, Scotland was the only region where rent prices fell in March – down by an average of 0.1% on the same month of 2018.

Beveridge says: “Following a sluggish 2018, London rents reached a record high in March. The average cost of a new let in London rose to £1,737 per calendar month in March – 2.3 times more than the average rent outside the capital.

“Meanwhile, every region in Great Britain recorded rising rents last month, other than Scotland.”

The Top 10 Most Popular Parts of London for Private Tenants

Published On: April 10, 2019 at 8:00 am

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Categories: Lettings News

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Property search data from Zoopla over the past 12 months has been analysed to reveal the most popular parts of London for private tenants. 

The property portal found that Canary Wharf and the Isle of Dogs (E14 postcode) is the most popular location for private tenants looking for a home to rent in London.

The W2 postcode district, which encompasses Paddington and Bayswater, was ranked the second most searched for location for a rental property in the capital, while SE1 (South Bank, Bankside, Bermondsey and Waterloo) came third.

Battersea, where there is a number of new build to rent schemes being developed, entered the top ten, as the tenth most popular part of London for private tenants.

Top 10 most popular parts of London for tenants

  1. E14 – Canary Wharf/Isle of Dogs
  2. W2 – Paddington/Bayswater
  3. SE1 – Southwark/Lambeth
  4. N1 – Islington
  5. NW1 – Camden
  6. E1 – Whitechapel/Stepney Green
  7. SW6 – Fulham
  8. NW3 – North and East Hampstead
  9. NW6 – Kilburn/West Hampstead
  10. SW11 – Battersea

Annabel Dixon, the Spokesperson for Zoopla, says: “It’s perhaps no surprise that Canary Wharf and the Isle of Dogs has been highlighted as a popular choice for London renters. This area has long been associated with gleaming office towers, but it is now buzzing with new restaurants, bars, shops and homes, transforming it into a sought-after destination to live as well as work.”

The portal has also segmented the most popular rental searches by property type and number of bedrooms, to reveal that E14, again, topped the list for tenants seeking a one or two-bedroom apartment.

Londoners looking for larger homes to rent showed a strong preference for the capital’s outer zones, with eight of the top ten most popular areas for searches on three and four-bed houses located in the southwest and northwest.

Dixon comments: “Renters searching for larger family homes in the capital showed a clear preference for the suburbs, with Colindale, Hendon and Kingsbury the most searched locations for three and four-bedroom houses.

“These areas are ideal for young families looking for space to grow, with leafy surroundings and several well-regarded schools nearby.”

Slow Rental Growth in London Weighing Down on the Rest of the UK

Published On: April 9, 2019 at 10:00 am

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The average rent price for a property in the UK rose by 0.96% in the year to March, as slow rental growth in London (0.57%) continues to weigh down on otherwise resilient increases (1.16%) in the rest of the UK, according to the latest Rental Index from Landbay.

Hotspots for rental growth over the 12 months to March included Edinburgh (5.97%), Nottingham (4.28%) and Blaenau Gwent (3.76%). The high growth areas are spread throughout the UK – of the top ten, two counties were in Scotland, three in Wales, two in the East Midlands and three in the rest of England. 

Looking at the countries individually, Scotland recorded the highest overall annual rental growth, at an average of 1.99%, while Northern Ireland saw the lowest, at just 0.63%.

However, Scotland is something of a tale of two cities, home to both the fastest and slowest growing locations. Aberdeen City and Aberdeenshire were at the bottom of the table, due to average declines of 5.59% and 4.31% respectively. Of the other eight in the bottom ten, a further location (Angus, at -0.83%) was in Scotland, while the others were in England. The slowest areas of rental growth in England were Redcar and Cleveland (-1.48%), Kensington and Chelsea (-0.54%), and Bracknell Forest (-0.24%).

In London, rental growth is picking up again slightly after last year’s slump. Overall, annual rent price growth stood at an average of 0.57% in March – in the same month of 2018, it was -0.28%. In fact, 17 of the 33 London boroughs saw declining rents last March. A year on, only three boroughs continued to fall – Kensington and Chelsea, Merton (-0.17%), and Enfield (-0.08%). The average rent in the capital is now £1,903, following cumulative rental growth of 9.32% since January 2012.

The average rent paid for a property in the UK is now £1,217 per month, or £772 when excluding London. The lowest average rent is found in Northern Ireland (£576), where rents have shown very modest long-term growth. In England, the average price is £1,248. The second most expensive region (after London) is the South East, at £1,064, while the lowest is found in the North East, at £553 – this region has recorded cumulative growth of just 2.08% since January 2012.

John Goodall, the CEO and Co-Founder of Landbay, comments: “Despite political and economic turmoil, the British property market has remained resilient. Rents are growing at a steady pace, and that growth is not restricted to specific regions or rental brackets. 

“Meanwhile, house prices in England fell for the first time in seven years in the first three months of 2019. This combination is good news for first time buyers and landlords alike. This period of uncertainty may in fact be the best time for individual certainty – do your research and see whether it’s time to take the first step onto the property ladder (or expand your portfolio).”

Mayor Pledges £200m to Protect Affordable Housebuilding through Brexit Uncertainty

Published On: April 4, 2019 at 8:00 am

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The Mayor of London, Sadiq Khan, has pledged £200m to protect affordable housebuilding in the capital throughout the continued Brexit uncertainty.

The continuing Brexit negotiations are already affecting the housing market, with falling sales and uncertainty over house prices. This is having a knock-on effect on housing associations, which currently receive low levels of funding from the Government and, therefore, rely heavily on income from selling new market-price homes to help subsidise new affordable housebuilding.

Faced with a slowdown of new home sales, the Mayor will help housing associations, by offering extra funding to switch homes from market sale or shared ownership, to homes for rent at social or intermediate rent levels, which are lower than market rents. This extra funding will enable them to commit to their future plans, sign construction contracts and begin development without further delay.

Khan believes that the impact of Brexit uncertainty makes this extra funding essential, though he has warned that it will stretch City Hall’s affordable homes funding to its limit. The Mayor will explore all options for further funding, and is calling on the Government, at the very least, to match this funding, by providing extra investment for housing associations to deliver their planned schemes.

Khan says: “At City Hall, we are building record numbers of new social rented and other genuinely affordable homes. We must not let the Government’s chaotic mishandling of Brexit undermine our plans. That’s why it is right we push our funding to its very limits, to keep housing associations building more affordable housing through the ongoing uncertainty – and it’s even more important given the Government totally failed to address my concerns when I recently raised them. Whatever happens with Brexit, ministers must at the very least match my support, and ensure we can keep building the homes Londoners need over the coming years.”

The support received by individual housing associations will depend on the schemes and their pipeline, as well as those underway. Given the strains already on the Mayor’s affordable housebuilding budget, and the importance of targeting it effectively, this funding is only available for homes starting in this calendar year.

The Mayor’s investment comes after he wrote to the Secretary of State last month, along with Paul Hackett, the Chair of the G15 largest housing associations in London, and Councillor Darren Rodwell, the Executive Member for Housing and Planning at London Councils, outlining the immediate emergency support that would be required from the Government if the UK leaves the EU without a deal.

Helen Evans, the Chief Executive Officer of Network Homes and Vice-Chair of G15, comments: “The current market uncertainty limits our ability to generate cross-subsidy to reinvest in affordable homes, so this strong, positive action to address that is welcome. If enough additional funding is made available, we will be able to continue to commit to new developments and increase the levels of affordable homes we are building. We look forward to engaging with the GLA [Greater London Authority] to secure this.”