Another rogue landlord has been fined for failure to license their house in multiple occupation (HMO).
Mohammed Saleh Ahmed, a London landlord in the borough of Tower Hamlets, has been issued a £4,000 fine, including costs of over £5,000, after failing to obtain the necessary licence for his HMO.
Landlords must license their let if it is occupied by at least three tenants from two or more separate households, sharing facilities, such as a bathroom and kitchen.
This form of licencing has been put in place as a way of bringing safer housing to the private rental sector (PRS). An effort is being made to improve HMOs in the UK, with the introduction of such schemes.
John Biggs, Mayor of Tower Hamlets, commented: “This case sends out a message to show that the council can and will enforce against landlords who fail to register their properties and that they face serious penalties for failing to do so. This prosecution action and the new scheme shows we are taking action to protect tenants and support standards for renters in the private rented sector.”
Councillor Sirajul Islam Deputy Mayor for Housing and Statutory Deputy Mayor, said:“The council cares about renters and will insist that landlords get the necessary licensing that protects both landlord and tenants. Housing is at such a premium in the borough that shared overcrowded flats used by multiple tenants are common. The scheme is essential in protecting health and safety for tenants and has real teeth.”
As this case shows, it can be expensive to get caught with an unlicensed HMO. It may be an extra cost for buy-to-let investors, but the licence does last five years. Specifically for a licence in Tower Hamlets, you would be looking at a fee of £520, which is one of the lowest in London.
This documenton the GOV.UK website provides full guidance for HMO landlords.
Long-term renting is becoming the norm, as many tenants are favouring location preference over being homeowners.
The results from London estate agent Kinleigh Folkard & Hayward (KFH)’s Annual Tenant Barometer have been released, showing that tenants are expecting to rent for longer.
The highlights of these results include:
Tenancy length is now a top 5 priority for London tenants
59% of tenants feel they would never be able to buy in the Capital
Tenants now expect to be renting for 5 years, a 25% increase from a year ago
Lisa Campbell, a tenant who lives with her partner, has commented: “This was the first rental we had together, and the four years we have spent in our rental have suited us for this time in our lives. Buying a property outright was not affordable for us in the area we wanted to live given the current climate.”
Many feel that the prospect of purchasing a property in the capital city is one that is even more out of reach. This has led couples to make the decision to rent in a preferred area, over buying in a location that they don’t want to live in, purely due to affordability. Long-term renting provides them with more freedom of choice, when it comes to lifestyle, than being a homeowner in London would.
Carol Pawsey, Director of KFH Group Lettings, said: “The strength of the private rental sector has been well documented and debated, and there is no doubt that the demand for rented accommodation is set to continue. In fact, in the first 10 weeks of 2019, our online tenant enquiries were up by 57% on 2018 and tenant registrations across our 46 lettings offices were up by over 25%.
“It is a good time to be a landlord in London, albeit, with changes to legislation, it pays to be partnering with those who can guide you through.”
The Annual Tenant Barometer has concluded the top five tenant priorities, when looking to rent. These are respectively:
Rental price
Location within London
Size of the property
Proximity to transport links
Tenancy length
Younger renters (aged between 18 and 34) have also highlighted a preference for a fully furnished property and bills being included in the rent.
Brooke and Gordon Kenwright, who also rent through KFH, have said: “The main advantage of taking a longer tenancy is the feeling of security and knowing we won’t have to move again in 12 months – trying to minimise any disruption for our two sons, aged six and nine”.
The limbo caused by the impending Brexit is having a “suffocating effect” on the London property market, according to the latest Residential Index from London Central Portfolio (LCP).
The property investment firm has looked at prices, sales and new build developments across London, and the rest of England and Wales, in February 2019.
Prime central London
The average house price in prime central London (excluding new builds) stood at £1,812,051 in February, which marks a decline of 6.2% on January. On a quarterly basis, property values fell by an average of 12.7%.
Annually, transactions in this market remain just above historic lows, at a total of 3,405. This follows a decrease of 16.5% in sales over the year to February.
The average new build home in prime central London was worth £2,268,219 in February, which represents a 61.4% premium over existing stock. However, prices in this market fell by 29.6% on a quarterly basis.
Over the same period, new build transactions dropped by 46.1%, to just 73.
Naomi Heaton, the CEO of LCP, says: “Transactions continue to limp along in prime central London, with only 3,405 over the year – fewer than 66 sales a week. This marks an unprecedented period of suppressed activity, lasting longer than that seen during the Global Financial Crisis in 2008.
“On a more optimistic note, there has been evidence of a pick-up in interest as investors seek to capitalise on extremely soft prices. However, with Brexit rolling on beyond March 29th, and neither the Prime Minister nor EU leaders able to state what is going to happen, investors may now wait to see if sterling weakens further. This limbo continues to have a suffocating effect on prime central London and is now extending to the whole of the UK property market.
“Transactions in the new build sector also continue to fall, with a drop of 46.1% in the last quarter, which does not auger well for housebuilders.”
Greater London
The average house price in Greater London (excluding new builds) was £610,708 in February, following a monthly decrease of 1.1%. On a quarterly basis, the typical property value was down by 1.9%.
Year-on-year, transactions fell by 4.8%, to just 87,233.
The average price of a new build home was £661,677, representing a 20.4% premium over existing stock and following an annual rise of 14.9%.
However, new build transactions continue to suffer, with a decline of 18.2% over the 12 months to February – the lowest level seen since 2015.
Heaton comments: “The tax changes over recent years have been aimed at higher value properties. Due to the concentration of these in London, the impact has been felt most acutely here.
Brexit Limbo is Having “Suffocating Effect” on London Property Market
“Transactions in the capital continue their downward trend, with an annual fall of 4.8%. They have now dropped 28.8% since the introduction of additional rate Stamp Dutyin April 2016.
“The circus that is Brexit also continues to derail many people’s plans to move or invest. Some positive news may provide the impetus to get the Greater London housing market moving again.
“Annual transactions in the new build sector continue to struggle, with a fall of 18.2% over the year. Although annual prices for new builds have increased, Brexit has not done anything to improve the flow of new developments. In all likelihood, this sector will take longer to recover than that of existing stock, due to the time lag to completion of new projects.”
England and Wales (excluding Greater London)
The average property value in England and Wales (excluding new builds) was £257,260 in February, following a monthly decline of 0.9% and quarterly decrease of 2.4%.
Annually, transactions continue to decline, by 1.6%, to stand at 796,431.
The average value of a new build property was £304,423, following an annual increase of 3.6% and representing a 15.0% premium over existing stock.
New build transactions totalled 95,715 in the year to February, marking an annual rise of 5.6%.
Heaton says: “Average prices in England and Wales (excluding Greater London) stand at £257,260 for February – a fall of 0.9%, which is the fifth consecutive monthly drop. February also sees the lowest level of annual growth since 2013, at 3.1%.
“Transactions continue a downward trajectory, with a fall of 1.6% over the year and now stand at 796,431, again the lowest level since 2013.
“The low level of transactions throughout the UK is already having a damaging effect on estate agents. With sales figures so low, many rely more and more on their lettings departments to keep the lights on.
“With the imminent ban on tenant feescoming into effect on 1stJune 2019, agencies are going to suffer reduced revenue at a time when many are already struggling. It is also likely that many tenants will hold back any move until this date passes.
“The combination of low sales volumes and reduced revenue may well bring further agency consolidation and closures throughout the rest of 2019.”
Following a recent report that tenancy renewals are running at a huge 90% in some parts of the capital, Agency Express has found that London boasted the strongest levels of tenant demand in the country during February.
In its latest Property Activity Index, Agency Express revealed that the number of properties let in London increased by 16.5% on a monthly basis in February, which marks the only region to record an increase in figures last month.
Following a buoyant start to the year, the index shows a slowdown in activity in the UK lettings market in February.
Nationally, the number of new property listings to let dropped by 16% month-on-month, while the amount of properties let was down by 5%. Although February’s data is affected by January’s spike, Agency Express’ annual statistics do show a greater level of activity in the same month of 2018.
Looking across the individual regions included in the index, all 12 recorded declines in the number of new listings, while just one region – London – saw growth in the amount of properties let in February.
The following regions experienced the smallest decreases in the month:
Property listings
Scotland: -0.7%
Central England: -5.7%
Yorkshire and the Humber: -9.1%
North East: -12.5%
London: -13.7%
Properties let
Central England: -0.7%
South East: -1.1%
Yorkshire and the Humber: -2.2%
West Midlands: -4.5%
Wales: -6.5%
The greatest decline in February’s index was recorded in Wales. Again, following a strong start to the year, the number of new property listings fell by 34.5% and, over a three-month rolling period, by 11.8%. Looking back at Agency Express’ historical data, this drop in activity is the region’s largest for the month of February.
Stephen Watson, the Managing Director of Agency Express, comments on the findings: “The Property Activity Index historically shows us a slowdown in activity throughout February. This month has remained relatively true to trend, but, overall, we are seeing a slower market compared to 12 months previous.”
London estate agent Benham & Reeves has recorded a growing shortage of good rental stock across the capital in recent months, as tenancy renewals peak at 90% in some areas.
A major contributing factor to a lack of rental homes is that tenancy renewals are at a high at the moment, so stock is simply not coming back onto the lettings market. In some locations across London, renewals are running at a huge 90%.
So, why is this? A few years ago, Benham & Reeves observed that a tenant might have moved to a new rental property because they fancied a change of scene. Today, however, budgets are uppermost in many tenants’ minds – as is the current political and, therefore, economic uncertainty – so stability and reducing costs are now priorities.
The estate agent is finding that, towards the end of a tenancy, most renters now contact their local branch, wishing to negotiate with their landlord and agree a new deal. It believes that there are real advantages in this for both parties.
For landlords, there is a huge benefit in maintaining continuity of income and eliminating any void periods – even a short void can cost thousands in lost rent in the capital. And, with rent prices fairly static across London, there is little to gain in holding out for a higher rent that probably won’t materialise. The cost of any void is therefore likely to outweigh any gain.
There are also direct cost savings – most notably, there are lower fees for renewing a tenancy (rather than having to find and reference a new tenant) and reduced costs usually associated with re-letting a property, such as decoration, replacing worn furnishings and deep cleaning. And, of course, you cannot underestimate the importance of keeping a tenant who looks after your property and pays the rent on time.
For tenants, too, moving home is no longer a priority once they have found a home and an area that they like. Who would choose to incur the costs and hassle of moving if you’re happy in your home?
But, if your tenant is moving on – perhaps because they’re changing jobs – then finding a new tenant quickly is vital.
Benham & Reeves has provided a detailed look at the state of the lettings market across its London branches, including the rate of tenancy renewals:
Tenancy Renewals Running at 90% in some parts of London
West London
The estate agent’s branches are all experiencing high demand at present. In some locations, it is struggling for stock, and is waiting for some tenants to vacate in March/April. However, around 70% of renters are choosing to renew their tenancies.
As a result of the lack of stock, apartments are letting on first viewing, or even sometimes before a viewing takes place. One-bedroom flats, in particular, are in very high demand and are letting instantly. In certain developments, around 90% of tenants are renewing.
Central London
After a quiet few weeks in central London, tenant demand is picking up again. Benham & Reeves reports good stock levels, with accurately priced, well-presented properties letting quickly, particularly to applicants relocating from the USA, Australia, Italy, France and Germany. The areas bordering Hyde Park are extremely sought-after. Tenancy renewals remain at a very high level – about 90% of tenants are renewing their existing agreements.
However, this is still a difficult market – applicants are knowledgeable and compare rent prices, expecting to do a deal with landlords, so flexibility is key to ensuring your property lets quickly. Many also request a six-month break clause in their agreement, in case their personal circumstances change.
With new developments setting the bar so high, in terms of presentation, another important consideration for landlords with older properties is refurbishment. Homes should be updated to a high spec to appeal to the tenants that are increasingly used to show-home standards.
Tenant demand in Nine Elms continues to go from strength to strength, with properties usually let within one or two viewings, at most. The agent is even letting apartments in advance, before the previous tenancy ends, so that the new tenant can move in immediately. And, of course, most renters renew their existing tenancies – the only ones vacating are those who are moving away.
The areas bordering Hyde Park are extremely sought-after
The City and east London
Properties in the City and east London continue to let quickly, especially those priced up to £750 per week. And, with tenancy renewals still running at over 60% (reducing the number of properties coming back onto the market), Benham & Reeves is seeing shortages of rental stock, particularly one-bed homes priced up to £550 a week.
The lack of this type of property in the City is pushing many young professionals to move east towards Canary Wharf, where there is a greater choice of good quality rental stock at affordable price points.
At the upper end of the market, the agent has new stock of two-bed/two-bathroom properties priced at £750-£800 per week coming onto the market – these are popular with senior executives, as well as professional sharers. At this price point, sharers can find a high spec home with good amenities, which would be beyond their budget if they were to rent alone.
North London
Certain Benham & Reeves branches have a shortage of rental properties at the moment, especially one and two-bed apartments, so accurately priced flats are letting quickly, but presentation must be immaculate. Applicants are savvy, though, as they research the market and compare properties in detail, shopping around to find the right rental home at the right price. Many are looking to reduce costs, so negotiate hard to get a good deal, and, increasingly, they are requesting a break clause at six months, in case their job situation changes.
The agent advises landlords to be prepared to be flexible in order to secure a tenant quickly. New developments in north London are setting the bar high in terms of décor and presentation, so it also recommends that landlords consider a refurbishment if their property has not been decorated for a while. Refurbished properties always let more quickly, so the cost usually pays for itself pretty quickly.
Benham & Reeves is receiving a lot of enquiries from relocation agents and professionals working for some of the large tech companies moving to north London at the moment. Being close to the Northern Line means that it is an easy commute to Kings Cross and nearby areas, where many of these firms now have headquarters. The availability of parking is also an important issue, with most applicants requesting an apartment with its own private parking space.
Tenancy renewals are very high, at around 80%, which illustrates how popular these developments have now become.
New analysis of rent price growth across the capital over the last seven years shows a clear regional divide, with private tenants in east London seeing twice the rate of growth of their west London counterparts, according to the latest Landbay Rental Index, which is powered by MIAC.
Of the nine east London boroughs, the average cumulative rent price growth since January 2012 is 21.41%, with a typical rent now standing at £1,241 per month. Leading the way are Barking and Dagenham (27.66%), Waltham Forest (23.56%) and Bexley (22.02%). The only east London borough that didn’t make it into the top ten areas for rent price growth in the capital was Greenwich, which is still above the London average, at 15.48%.
Contrastingly, the 12 west London boroughs saw average growth of just 10.79% over the period, with monthly rents now a typical £1,456. Towards the bottom of the league table are Kingston upon Thames (8.04%), Richmond upon Thames (6.14%), and Hammersmith & Fulham (5.73%).
However, boroughs in central-west London report even lower growth. Camden recorded an average increase of just 3.78%, while Westminster, and Kensington and Chelsea experienced declines over the period (0.77% and 2.31% respectively).
Nevertheless, when inflation is taken into account (since January 2012, cumulative CPI is 16%), the figures are even starker. In real terms, tenants in 21 of the 33 London boroughs recorded a fall in rent prices. Of these, only one is in east London (Greenwich, at 15.48%). While the vast majority of those in west London have seen declines, just two have witnessed rents rising faster than inflation – Hillingdon (17.12%) and Sutton (16.82%).
Throughout the capital, three-bedroom homes have seen the highest rent price growth over the last seven years, at an average of 10.11%, compared to growth of 9.45% for two-beds and 8.98% for one-beds. This trend has now reversed over the past year – one-beds have recorded an average increase of 0.9% year-on-year, while two-beds have seen 0.83% growth and three-beds a mere 0.34%.
Elsewhere, annual rent price growth in England (excluding London) is at an average of 1.13% – its weakest since February 2013. Scotland is the only country in the UK with improving annual growth, at an average of 1.78% in February this year. The average rent price in the UK is now £1,216 per month, or £772 without London.
John Goodall, the CEO and Founder of Landbay, comments: “We are seeing a cultural shift in London, as demand climbs in the east and traditionally popular areas, like Westminster and Chelsea, slide down the league tables. While part of this is a function of affordability, other things, too, are at play. Rising employment and a thirst for flexible living mean renting is more attractive than ever, with a widening commuter belt in the face of developing infrastructure like Thameslink and Crossrail.”
