Posts with tag: London

Rents are Highest on Record, Says Countrywide

Published On: February 15, 2016 at 9:41 am

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The average rent in the UK is now the highest on record, despite price growth slowing recently, according to the Countrywide monthly lettings index for January.

The figures show that compared to January last year, the average rent price in the UK has risen by 1.2% to £906 per month.

Although this is the slowest increase in three years, the average rent is still 12% above its pre-recession peak, hitting the highest level on record.

Rents are Highest on Record, Says Countrywide

Rents are Highest on Record, Says Countrywide

Expectedly, London has experienced the greatest rent price growth of anywhere in the UK since 2007, with rents sitting 34% higher than their pre-recession record. Between 2007-16, the average rent in the capital rose from £966 to £1,295 a month.

Despite data showing continuous rent rises over the last nine years, most of the country has seen rents growing steadily in line with wages. The average income has increased by 12% since 2007, according to the Office for National Statistics (ONS), compared to a 12% rise in rents.

However, there is still a distinct north-south divide in the rental sector. In the North West, North East and Wales, the average private tenant is still paying less than they did in 2007 by £12 a month. Across the whole of the UK, one in five renters are paying less than they were in 2007.

But in the capital, rents have spiralled compared with wages. Incomes have only rise by 10% since 2007, while rents are up 34%, fuelled by a lack of supply and high demand. Consequently, private tenants have been forced to share, downsize or move further out of central London.

It is expected that in the three regions where rents are still below their pre-recession peaks, the average price will surpass 2007 levels by the middle of 2016. In these areas, many long-term tenants have enjoyed years without any rent increases.

In January, more landlords in the North West, North East and Wales were able to raise rent prices for tenants that renewed their contract than at any point since 2012.

In 2007, the average rent in the UK hit a record high of £809 per month. Between the end of 2007 and 2008, the average rent on a new home dropped by 11%, or £87. This took the average cost of renting down to £720 a month. It wasn’t until the start of 2010 that rents began rising again.

The Research Director at Countrywide, Johnny Morris, comments on the data: “Nationally, rents in January rose at the slowest rate since 2012, as some of the upward pressure on prices subsided and affordability limited further rises.

“Across most of London and the South East, the slowdown in rental growth is the first since 2010, where rents have been growing for the past six years.”

He explains how we can overcome affordability issues in the private rental sector: “The most sustainable way of creating a more affordable rental market in London and the South is by building more homes of every tenure. Unlike in the US, where institutional investors build homes to rent, in the UK the sector is dominated by small landlords, meaning the link between new homes getting built and the rental market isn’t nearly as close as it should be.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2016/2/countrywide-rents-at-highest-on-record

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

Published On: February 11, 2016 at 9:26 am

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A shortage of properties for sale and a surge in buy-to-let landlords rushing into the market are pushing up house prices, according to the Royal Institution of Chartered Surveyors (RICS).

The RICS reports that while supply has increased slightly, it is not enough to meet a sharp rise in demand from buy-to-let investors, who are seeking to beat the 1st April deadline for a 3% Stamp Duty surcharge.

Housing stock grew over January, from 44.5 properties per branch in December to 46 at the start of the year. However, this is still down 21% compared to January last year.

The Chief Economist at the RICS, Simon Rubinsohn, explains the figures: “The rise in new instructions in January, although modest, is very welcome.

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

Surge of Buy-to-Let Investors in the Market Pushes Property Prices Up

“However, with buy-to-let investors rushing to get into the market ahead of the Stamp Duty hike, the near term pressure on prices is, if anything, intensifying despite a higher level of supply.”

He continues: “How the tax changes planned for the buy-to-let sector over the next few years play out remains to be seen, but there are concerns raised in the survey that some existing landlords will look to either gradually scale back on their portfolios or exit the market altogether as the more penal regime begins to bite.

“Against this backdrop, it is perhaps not surprising that the key RICS indicators point to further rent, as well as house price, increases.”1

As this news arrives, as does the latest data from LSL Acadata, which states that the average house price in England and Wales is now £290,642 – up 0.2%, or £700, over January.

Valuations firm e.surv expects there were 85,432 house purchase mortgage approvals in January, up by more than 20% from the 70,837 recorded in December. It predicts that January’s approvals will be the highest for almost nine years, since October 2007. It names the cause of the rise on a surge in buy-to-let mortgages.

Yesterday, we reported that rent price growth for new tenancies in London is at its slowest rate for around two years, announced by HomeLet. Find out more: /london-rent-price-growth-slowing/

SpareRoom has also seen price growth slowing in London, with rent increases in commuter towns such as Swindon and Luton rising by up to four times faster than in the capital. The most expensive room rents in the country are in Reading, at an average of £548 per month.

Another index has also launched, a buy-to-let study by Property Partners, which combines rental income and capital growth. It believes that the best returns for buy-to-let landlords are in the East of England, at 13.2%, with the lowest in the North East, at 4.1%.

London-based estate agent Marsh & Parsons has experienced a 24% increase in applicants over January compared to January 2015. It believes the significant rise is from a surge in first time buyers. The CEO of the firm, Peter Rollings, reports that first time buyers now account for 66% of sales, up from 49% last year. It is believed that this will rise further, as a huge 15,000 prospective buyers have already shown interest in the Help to Buy London scheme. Read more: /over-15000-hopeful-buyers-interested-in-help-to-buy-london/

1 http://www.telegraph.co.uk/finance/property/news/12150353/Rare-rise-in-number-of-homes-for-sale-but-its-not-enough-to-satisfy-huge-demand.html

Over 15,000 Hopeful Buyers Interested in Help to Buy London

Published On: February 10, 2016 at 3:28 pm

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The Help to Buy London scheme has received more than 15,000 expressions of interest since it was launched on 1st February.

The Government scheme is aimed at helping the capital’s buyers get onto the property ladder.

Over 15,000 Hopeful Buyers Interested in Help to Buy London

Over 15,000 Hopeful Buyers Interested in Help to Buy London

It offers those with a 5% deposit an interest-free equity loan of up to 40% of a property’s purchase price. Buyers using the scheme can only purchase new build homes worth up to £600,000.

They will then need a mortgage of up to 55% of the property’s value.

Find out more about how to access the Help to Buy London scheme here: /help-to-buy-london/ 

However, property expert Henry Pryor has criticised the scheme due to the risk of negative equity.

He states: “Most people taking up the Government’s offer have no first hand experience of negative equity. You need to be over 35 to have lived through a property recession in the capital.

“They are scary things and although you will be sharing the pain with Government, the state will want its money back before you get yours.”1

The Head of Residential Research at JLL, Adam Challis, also expresses concern.

He adds: “I am concerned that the Government’s narrow focus on first time buyer support overlooks the hundreds of thousands that join the private rented sector each year, or the millions on housing waiting lists.

“Help to Buy only addresses a very narrow band of genuine housing need and represents a distraction from the bigger housing supply crisis in this country.”1 

Do you believe the Help to Buy London scheme will have an adverse effect on London’s private rental sector?

1 http://www.propertyindustryeye.com/help-to-buy-scheme-attracts-over-15000-expressions-of-interest-in-just-ten-days/

London Rent Price Growth Slowing

Published On: February 10, 2016 at 9:29 am

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Rent price growth for new tenancies in Greater London is at its slowest rate for almost two years, according to figures from the latest HomeLet Rental Index.

The January data shows that rent prices in Greater London were 6.2% higher in the three months to January 2016 compared with the three months to January 2015. This is the slowest pace recorded in Greater London since March 2014.

Comparatively, rents in other regions continue to increase steadily, with the South East and East Midlands experiencing the greatest rent prise rises in the three months to January, at 7.2% and 6.8% respectively.

London Rent Price Growth Slowing

London Rent Price Growth Slowing

In Greater London, the average rent price for a new tenancy in the three months to January was £1,510 per month. Meanwhile, the average for the rest of the UK, excluding Greater London, was £740 a month.

Although the data shows that the rate of growth in Greater London has slowed, monthly rents on new tenancies are still more than double the average for the rest of the country.

HomeLet’s Rental Index found that 11 out of 12 UK regions saw rent price growth in the three months to January 2016 compared to the same period last year. Just the North West experienced a decrease, of 3.4%, from £646 per month to £624.

On a monthly basis, rent prices have only increased slightly on the previous month. Across the UK, excluding Greater London, rents are 0.2% higher in January compared to December.

In Greater London, rents have dropped by 0.9% over the month. Overall, six out of 12 regions have recorded rent increases in January compared to December. Prices fell in the other six areas.

The CEO of Barbon Insurance Group, Martin Totty, comments on the figures: “It’s notable that there has been a further fall in the rate at which average rents in the Greater London area are rising. In recent years, the capital has seen much faster rates of increase than the rest of the country, but it may be that an affordability ceiling has now been reached in London and that rents will now track other parts of the UK more closely.

“The fact that UK-wide average rents in the private rented sector continue to show sustained upwards growth reflects there is still strong demand for rental properties, driven mainly by the impact of the long-term structural imbalance in supply and demand of property. Landlords achieving higher average rents over time also suggests that tenants starting a new tenancy are proving they can afford higher average rents – with demand outstripping supply, some would-be tenants may be able to outbid rivals for properties, which could drive higher rents.”1

Have you put your rent prices up yet this year?

1 http://homelet.co.uk/news/article/lowest-growth-rate-in-london-rents-for-two-years 

 

 

 

Why Landlords Should Buy in East London

Published On: February 9, 2016 at 4:05 pm

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Categories: Landlord News

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With changes to buy-to-let taxes looming, landlords are seeking the most profitable investments before they are hit by major financial changes.

Recently, we reported that buy-to-let investors are rushing to buy new rental properties ahead of the 3% Stamp Duty surcharge, which will be brought in on 1st April. Read more: /landlords-rushing-to-avoid-buy-to-let-tax-changes/

And opportunities are rife in east London, where the capital’s homebuyers and renters are moving.

The area has been experiencing a wave of activity since Stratford was selected to host the 2012 Olympic Games back in 2005.

Over the past decade, house prices have surged by over 300%, and they continue to rise. Last year alone, property values rose by 22% in Newham – more than in any other part of the UK.

The change in the east of the capital is continuing. More Londoners now live east of Tower Bridge than in the west, and east London’s population is expected to grow by a further 600,000 in the next 15 years.

Why Landlords Should Buy in East London

Why Landlords Should Buy in East London

With so many Londoners heading east, this area is proving profitable for property investors. And while prices may have increased significantly, there are still good value homes to be found.

A new wave of professionals – think the digital/design community – is sitting alongside Canary Wharf’s bankers to form a sophisticated spot. East London is also becoming a cultural hub; the English National Ballet recently relocated from upmarket Kensington to Canning Town.

But all of this is unsurprising – over £13 billion was invested in the area over the Olympics period. New infrastructure projects, such as Crossrail, are bringing more and more people into this thriving, yet still affordable, zone.

Boris Johnson has also revealed a City in the East master plan, suggesting how 203,500 homes and 283,300 jobs can be created over the next 20 years. With transport improvements such as an Overground extension to Barking Riverside, a new river crossing and train stations, the expansion seems likely.

The area in question stretches from London Bridge, through the Docklands, to Rainham Marshes in Essex and Dartford in Kent.

The Mayor of London’s document contains several maps that show how the city is moving eastwards. The individual areas’ growth can be seen here: http://www.london.gov.uk/press-releases/new-city-in-the-east

Alongside a change in residents, a building boom in east London is bringing better new homes.

New luxury high-rise housing at Canary Wharf is attracting wealthy buyers from Fulham, Putney and Chelsea. Meanwhile, modern lofts in Spitalfields and popular spots around Victoria Park are still affordable for young Londoners, especially due to shared ownership schemes.

While Whitechapel, Bethnal Green, Mile End and Bow might traditionally be known as rough-and-ready, they are now becoming cool places to be for the capital’s youngsters.

Additionally, inner-city quarters are being created through the release of disused public land. One example is a former postal depot in Stephenson Street, Hackney, where Berkeley Homes is building 3,500 new homes, a new school and shops.

The London Legacy Development Corporation, which owns most of the land, has taken control as the planning authority and is fast-tracking change.

Could you find a sparkling new investment with great promise of strong returns in east London? It seems so!

Report Explains How to Overcome London’s Housing Crisis

Published On: February 8, 2016 at 3:19 pm

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A new report, commissioned for the Mayor of London, has detailed plans of how to overcome the capital’s housing crisis.

The Growing London report states that by 2030, 1.5m more people – around the number that currently live in Birmingham – will be living in London, among the 8.5m residents the capital already has.

Growing London is the first in a series of reports, the Good Growth Agenda, written by the Mayor of London’s Design Advisory Group. It is examining what the capital will look like as it changes to accommodate a population of over 10m.

London has already surpassed a previous record of 8.61m residents back in 1939. However, in the 1930s, more than 500,000 homes were built on greenfield land. Now, the plan is to increase housing within London’s footprint.

Report Explains How to Overcome London's Housing Crisis

Report Explains How to Overcome London’s Housing Crisis

The report found that around 50,000 new homes must be built every year over a 20-year period in order to house almost 70,000 people in London, and the equivalent of more than eight Canary Wharfs to provide jobs.

One of Growing London’s key findings was the need to reconsider London’s overall density. This could lead to more tower blocks. It says that Londoners live at a density of 73 people per hectare, whereas 200 years ago, there were 297 – more than four times as many people in one hectare today. If London had the same density as it did in 1815, its footprint could accommodate around 35m people.

Density levels vary across the capital, with a high of 271 people per hectare. In comparison to other major cities, this is spacious; in New York City there are 585 people per hectare, and a huge 1,111 in Hong Kong.

Another method of measuring density is to count the number of units or dwellings per hectare. A tower block accommodates an average of 450 units per hectare.

The report found that while guidance suggests there should be a limit of 405 units per hectare, some developments in London have been planned for over 3,000 units per hectare. Growing London believes that more research should be conducted into high-density building.

At present, 263 buildings that are 20 storeys tall are in the pipeline for the capital.

Another of the report’s important findings was that local authorities have almost stopped building new homes, despite owning 40% of land that could be used for housing. In the mid-60s and 70s, councils built around three-quarters of all new homes. In 2014/15, councils built just 310 of the 26,843 new homes in London.

The report suggests that at least 154,000 homes could be built within existing town centres, which already have good transport links, shops and offices, with a potential of up to 218,000 new homes within ten years.

It also believes there is opportunity for building low-density housing in areas of outer London that have good transport links.

Acknowledging that the public must more involved in the planning process, Growing London says that information is often lost in translation when it comes to public consultations. It believes that a site notice and online planning database are inadequate in communicating the key characteristics of a planning application.

Do you believe the capital needs higher density housing, or are there alternatives?