Posts with tag: London

Are rent caps the answer to rocketing London rent prices?

Published On: August 7, 2019 at 9:23 am

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Categories: Landlord News

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Rent prices for property in London are rocketing due to a dramatic reduction in available housing.

Property website Home.co.uk has found that there were only 18,700 newly advertised properties in Greater London last month. This is compared to 28,800 in June 2017, showing a 35% drop in the number of rental properties over two years.

With demand for rented homes still strong in the capital, this decline in supply has led to a marked increase in rents.

Rent prices across Greater London are up by 7.3% over the previous year. This is based on growth in the mix-adjusted average. However, certain central London boroughs have seen shocking rent hikes over the last 12 months, according to Home.co.uk:

  • Wandsworth has seen rents increase by 22.1%
  • Southwark rent prices have increase by 14.6%
  • Camden has seen an increase of 12.1%
  • Hammersmith and Fulham has seen a rise of 10.8%

The Labour Party and London Mayor Sadiq Khan have suggested tackling these increases by introducing rent caps. This would dictate the price level that a landlord can charge when renting out their property.

However, Doug Shephard, director of Home.co.uk, believes that such a move would be ‘treating the symptom and not the cause’ and it would hinder the recovery of the property sales market in London.

The latest Home.co.uk figures show that the typical London home is now worth 14% less than when prices peaked back in May 2016.

Doug Shephard said: “Lack of rental supply is the problem. Rent caps will just make the situation worse. I’m not convinced that London landlords will want to be participants in this Marxist dystopia, and the likely consequences for future supply are obvious. Price controls in communist Russia kept bread very affordable but the shelves were bare and many went hungry (unless you had friends in the Politburo). 
 

“In addition, the folly of rent capping would likely postpone the recovery in the London sales market indefinitely. Not an attractive proposition (or a vote winner) for the many new homeowners who managed to escape the rent-trap but are now trapped in negative equity.”

But he also acknowledges that “generation rent are not going to be happy” with escalating rents. 

The lack of supply and corresponding rise in rents has been largely brought about by increased regulation and taxation. This has forced many existing landlords to sell up. Many have also been put off the buy-to-let market in the capital.

Councils can also now impose their own licensing on landlords letting Houses in Multiple Occupation (HMOs).

Shephard added: “Over the last few years, the increased taxation and regulation of the private rental sector by a revenue-hungry government has been like shooting fish in a barrel.

“For many landlords, their secure revenue-generating asset has been transformed, through legislation, into a loss-making liability. Many have chosen to exit the sector or at least trim their portfolios of all but the profitable properties and pay down some or all of their debt.”

Rent Controls Called for by Mayor of London Sadiq Khan

Published On: July 23, 2019 at 9:01 am

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Categories: Law News

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Sadiq Khan, Mayor of London, has announced a proposal for reforming the private rental sector (PRS) in London. This will include a call for powers to implement rent controls.

David Smith, Policy Director of the Residential Landlords Association, commented: “Rent controls are meaningless if Londoners can’t find a home to live in. Rent controls will lead to a drop in investment and increasing supply should be the Mayor’s priority.

“Localised rent controls would also have a huge impact in the surrounding areas. With demand continuing to outstrip supply, residents would have to move out of the city and rents would be pushed up further as demand increases in the commuter belt.

“Research from the Centre for Cities has found that rent controls divide renters into the privileged and outsides, with those already renting when the controls are introduced doing well but those hoping to move into the city or for more space losing out, damaging social mobility.

“London rent rises are already well below inflation increasing at just 0.9% in the year to June compared to CPI at 2%.

“We do welcome a number of the Mayor’s proposals for improving London’s rental sector including establishing a dedicated housing court and reforming the Section 8 process for landlords to regain possession of their property in legitimate circumstances.”

David Cox, Chief Executive of ARLA Propertymark, has also responded to Mayor Sadiq Khan’s call for rent controls to be introduced in London: “Rent controls do not work; it hits hardest those it’s designed to help the most, and the Mayor of London has failed to learn the lessons of history.

“The last time rent controls existed in this country, the private rented sector (PRS) shrunk to the lowest levels ever recorded. At a time of demand for PRS homes massively outstripping supply, rent controls will cause the sector to shrink. In turn, this means professional landlords will only take the very best tenants, and the vulnerable and low-income people that rent controls are designed to help, will be forced into the hands of rogue and criminal operators, who may exploit them.” 

Buoyant Buyer Demands Resulting in London Property Market Recovery

Published On: June 28, 2019 at 9:35 am

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Categories: Property News

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London Property Market Recovery

Properties in London are seeing a slowdown in price reductions, according to research from estate and letting agency Chestertons.

This increase in confidence in the Central London market has lead to data finding that property price reductions were 35% fewer in the first five months of 2019, compared with the same period last year.

Buyer registrations since the beginning of the year have been up 19% on 2018 across the capital, thanks to this buoyant buyer demand.

Central London has seen the biggest rise in demand, with areas such as Chelsea, Westminster, Mayfair and Knightsbridge. There has been a 32% increase in the number of people registering for property to buy, year-on-year.

With activity across the London market picking up, exchanges in May have jumped 23% year-on-year across the capital.

However, property supply coming onto the market for sale is lagging significantly behind last year. It’s down 15% over the first five months of 2019, compared to 2018. In Central London, instruction levels in May were 20% lower than last year.

Guy Gittins, Managing Director at Chestertons, comments: “With confidence comes an acceleration in activity – and that’s what we’re seeing as buyers shrug off the current political uncertainty and the London housing market starts moving again. This has been the most encouraging start to the year we’ve witnessed since the EU referendum result, and the change in buyer appetite is palpable.  The brakes may have been on at the end of last year, but motivated buyers have been quick to recognise the opportunity presented to them by property prices now offering genuine value for money, and demand for properties is consequently overwhelming the current levels of supply. That it’s Central London which is spearheading this recovery is particularly encouraging for London’s long-term outlook, in a sign that overseas buyers are returning to capitalise on the attractive investment opportunities on offer.  

“The direction of travel is clear – the recent upswing in buyer demand means it’s much more likely that a property will sell for its asking price compared to a year ago, as competition for available homes ramps up. And this is only the start. We know there’s a huge amount of pent-up demand in the market, and once there is greater clarity over Brexit, more buyers are going to be getting off the fence and flooding into the marketplace.”

South East London Boroughs see Biggest Rise in Rents Across the Capital

Published On: June 14, 2019 at 8:10 am

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Categories: Tenant News

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South East London Boroughs see Biggest Rise in Rents Across the Capital
  • The south east of London is one of the areas of London that is going through drastic and fast-paced change at the moment
  • Gentrified areas of Peckham are causing an influx of money
  • Now one of the trendiest areas of the capital, but used to be one of the most ‘unloved’

Average rents for buy-to-let properties in London’s south east boroughs have risen by 5% in the last year, from £1,491 in Q1 2018, to £1,560 in Q1 2019. This is the largest increase in average rents across the capital, shows new research from estate agent ludlowthompson.

The gentrification of certain areas, such as Peckham, are likely to have been a key driver behind the South East’s rent rises.

Average rents for the whole of London rose 3%, from £1,711 to £1,770.

Average rents for buy-to-let properties across Greater London from 2018 to 2019:

1. South East London – £1,491 to £1,560 (+5%)

2. North West London – £1,879 to £1,951 (+4%)

3. London Average – £1,711 to £1,770 (+3%)

4. East London – £1,620 to £1,671 (+3%)

5. West End – £3,584 to £3,678 (+2%)

6. West London – £1,770 to £1,805 (+1%)

7. North London – £1,603 to £1,629 (+1%)

8. South West London – £1,978 to £2,003 (+1%)

9. City – £5,310 to £5,272 (-0.7%)

Stephen Ludlow, Chairman at ludlowthompson, says: “The ‘hipsterfication’ of areas like Peckham has seen the South East become London’s trendiest area.

“New bars, cinemas and other changes mean that Peckham is now a ‘destination’ for people to live. Landlords are likely to continue to see their buy-to-let investments outperform other areas of London as more young money moves into the South East.

“Our study shows that South East London is quickly cementing itself as one of the best places for landlords to invest in across the capital.”

Prime London Buyers Choosing to Rent, Causing Tenancies to Surge

Published On: June 5, 2019 at 9:27 am

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Categories: Lettings News

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Short let guests can be a great option for landlords and homeowners alike

Prime London buyers are choosing to rent, due to political uncertainty, causing tenancies to surge in the capital, according to the latest Prime London Lettings Index from Knight Frank.

In prime central London, the average rent price increased by 0.2% in the year to April, while quarterly growth was flat. In prime outer London, annual growth stood at 0.1%, while rents were up by an average of 0.3% on a quarterly basis.

The number of tenancies agreed in both prime central and prime outer London rose by 11% in the 12 months to April, compared to the previous year. This followed a 13% uptick in March – the highest increase in seven years. Demand has risen in recent months, as some buyers respond to political uncertainty by renting instead.

Meanwhile, the higher value rental market in London, which is traditionally driven by corporate demand, has strengthened over the year to April. The total number of deals per Knight Frank office worth between £1,000-£4,000 per week was 13% higher in April than in the same month of 2018, while the equivalent rise in properties let for less than £1,000 per week was 3%.

Demand is also increasing more strongly in the higher value lettings market. The amount of new prospective tenants registering on a budget of between £1,000-£4,000 per week rose by 2.4% in the year to April, compared to the previous 12 months. The equivalent figure below £1,000 was flat.

The strongest annual growth in rent prices in May was also in the highest price bracket in prime outer London, of £2,000+ per week. While the average growth stood at 0.3%, it was 1.0% for properties above £2,000 per week.

uk rental market
Prime London Buyers Choosing to Rent, Causing Tenancies to Surge

On the other hand, Knight Frank’s Prime London Sales Index shows that annual house price growth in prime central London hit -5.0% in April. Prices were down by 0.8% on the previous quarter, while they dropped by an average of 0.3% month-on-month.

In prime outer London, prices fell by an average of 4.3% in the year to April and by 0.2% on a quarterly basis, but were flat on the previous month.

The number of exchanges above £2m rose by 1% in the year to April, compared to the previous 12-month period. There was a 9% decline across all price brackets, which underlines how pent-up demand in higher value markets is being released to a greater extent, following Stamp Duty-related price adjustments.

This same trend is borne out by the fact that transaction volumes across all price brackets are rising to a greater extent in higher value areas of the capital. In central London neighbourhoods, exchanges rose by 7% in the year to April, while north London saw an increase of 17%.

Viewings have risen for properties worth more than £2m. There were 3% more viewings in the first quarter of this year than in the same period of 2018 – the first such increase since 2017.

The number of offers made by buyers has risen by more than a quarter since the start of last year. Over the same period, the amount of new properties listed for sale has fallen by more than a third, underlining the relatively advantageous position for active vendors, particularly should the current political uncertainty recede.

Hostmaker Apologises for Holiday Let Ad seen as “an Attack on the City”

Published On: June 4, 2019 at 8:03 am

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Categories: Lettings News

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Hostmaker, the holiday lets platform, has agreed to remove its ‘anti-tenant’ adverts from the London transport network.

Generation Rent, the national campaign for private renters, began a petition, after a holiday let ad appeared, encouraging landlords to change their investments from long-term tenant lets to short-term holiday lets, claiming the latter would earn them 30% more. 

Londoners made this appeal to Mayor Sadiq Khan, asking him to ban such adverts, as they were at odds with his goal of making renting more affordable in the city. Over 8,000 people signed a petition on the 38 Degrees website within the space of 12 days.

The decision was also made for protesters to gather at Bond Street Station to campaign against the advert, which suggests that landlords should turn to holiday lets for higher profits. 

Hostmaker then released a statement on Friday, apologising for the adverts. The company has now acknowledged that “the tone was misguided”. 

In the statement, Nakul Sharma, CEO of Hostmaker, said: “the adverts will be coming down this weekend and we will be reviewing all future creatives with our partners.”

This statement also said that Hostmaker’s “portfolio is made up of premium homes in zone 1&2 postcodes and does not take affordable housing stock away from the market.”

Dan Wilson Craw, Director of Generation Rent, has commented: “The growing short term lets market is taking homes away from ordinary Londoners, pushing up rents and eroding the capital’s local communities. These adverts were an attack on the city and we are glad that Hostmaker is now doing the right thing and taking them down.

“But it is still far too easy for landlords to take homes out of the long term rental market in pursuit of higher profits. We need much stronger regulation of the holiday lets market so that we can give all Londoners an affordable home.”