Posts with tag: private rental sector

Three Quarters of Young Brits Believe They’ll Live in the Private Rental Sector Forever

Published On: March 22, 2016 at 3:28 pm

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Around three quarters of young Britons believe that they will live in the private rental sector for the rest of their lives, as it is unlikely they will ever own their own home.

A study by Ipsos MORI, commissioned by Shelter and British Gas, revealed that it is much more difficult for young people today to buy a home than it was for their parents’ generation.

Three Quarters of Young Brits Believe They'll Live in the Private Rental Sector Forever

Three Quarters of Young Brits Believe They’ll Live in the Private Rental Sector Forever

Yesterday, we revealed that it takes a single person 13-and-a-half years to save a 15% deposit for a home, while Londoners face a whopping 46 years of saving.

Of 1,906 people aged between 25-34, a large majority wish to live in a home for the long-term, but realise that this is unlikely as they are renting. The average 25 to 34-year-old has moved more than twice as frequently per year as pensioners.

The Chief Executive of Shelter, Campbell Robb, comments on the findings: “The fact that vast numbers of people fear their grandchildren will never have a home to put down roots in highlights the sad truth that this country is once again at the mercy of a housing crisis.

“While we have made progress over the last 50 years, our current housing shortage means millions are facing a lifetime of instability and, understandably, people are giving up hope. But if our history tells us anything, it’s that together we can make things change.”

He adds: “You have graduates starting on £40,000 to £45,000 in London, and they don’t take the jobs because they can’t afford to live in London or can’t afford to buy because it is so expensive.

“We are seeing a generation of people now in their 50s or 60s who are looking at their children, and their children will be worse off than they are. That is the first generation since the Second World War that we seeing that happen to, and that is primarily because of the housing market.”1 

These statistics arrive as the cost of housing goes up even more; Rightmove recently reported that the average house price is now over £300,000, with house price inflation standing at 50% for the past ten years, while wages have only risen by 22%.

1 http://www.theguardian.com/society/2016/mar/21/majority-fears-future-generations-never-buy-home-uk-house-price

Rental Demand Looks Set to Remain Strong

Published On: March 21, 2016 at 3:21 pm

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Landlords need not worry about rental demand waning, as new research indicates that private tenants are set to remain in the private rental sector for many more years to come.

Rental Demand Looks Set to Remain Strong

Rental Demand Looks Set to Remain Strong

Hamptons International has found that it will take no less than 46 years for an average single Londoner to save a 15% deposit to buy their first home.

Using figures from the third quarter of last year, Hamptons found that it takes the average single buyer in the UK 13-and-a-half years to save a 15% deposit, without assistance from their family.

Regionally, those in the North East are able to save for a deposit the quickest, with single buyers having to wait just under eight years.

Buying a home with a partner or friend is the best option for young buyers, as it cuts the time to save significantly. For the average couple working full-time, it will take three-and-a-half years to save a 15% deposit across the UK. In London, it takes eight years, while buyers face just two years of saving in the North East.

Therefore, it is unsurprising that the Help to Buy: London scheme received so much interest in its first few days.

The Help to Buy ISA scheme will also help reduce the time it takes to save for a deposit. The Government bonus of up to £3,000 will cut the time a single first time buyer must save for by between nine and 12 months, believes Hamptons.

Additionally, the introduction of the Lifetime ISA, announced in the Budget 2016, will help savers even more. First time buyers in England and Wales will be able to save almost three years faster using the ISA. In London, they can save a huge 19 years faster.

Despite this, it is clear that many households will be forced to stay in the private rental sector for many more years.

Hamptons assumes that households can save 22% of their income, after spending on accommodation, utilities and food.

And while single first time buyers may be able to save in the long-term, there are currently just 16 areas where they will be able to afford their own home.

Demand on Private Rental Sector is Greater than Ever, Says RLA

Published On: March 21, 2016 at 2:07 pm

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The Residential Landlords Association (RLA) has told the Government that it is the lack of housing supply, not the number of private landlords, that is causing a housing crisis.

The Policy Director at the RLA, David Smith, gave evidence to the House of Lords Economic Affairs Committee as part of its inquiry into the housing market.

Smith told peers that the demands on the private rental sector are greater than ever before.

Demand on Private Rental Sector is Greater than Ever Before, Says RLA

Demand on Private Rental Sector is Greater than Ever, Says RLA

He said: “Unless we address supply radically, there will be no significant change in housing cost. Simple shifting the dynamics so that it is more attractive to owner-occupiers than it is to private landlords does not increase supply; it just moves property around a merry-go-round. We must increase supply. Everything else, to some extent, is a red herring.”

Smith also promoted the RLA’s call to local authorities to free up small plots of land to be redeveloped as housing, after 46% of RLA members said that they would be interested in helping to fund developments of fewer than ten homes.

He stated: “At the moment, there is no pressure on local authorities to release small plots. We asked the two proposed candidates for the new [London] mayor, whoever is finally elected, to look at using their planning powers to reconsider that.

“Currently, the mayoralty’s planning interests focus more on building large institutional structures or large buildings that are sold to private sector landlords abroad. We have asked the mayor to rethink his planning powers to look at smaller plots and to encourage or compel local authorities to make them available.”

Additionally, he commented on the new changes to Stamp Duty – announced in the Budget 2016 – calling for tax relief for landlords investing in new build properties.

Under the Budget’s plans, large-scale landlords will also be subject to the 3% Stamp Duty surcharge, set to be implemented on 1st April.

Smith said: “We would like to see a change to the Stamp Duty Land Tax to give landlords a discount on the 3% increase when they have done something that brings new build property onto the market.

“Where they have invested money in new build property, thereby increasing the overall supply, hopefully, we think that they should be relieved from the 3% uplift that will apply to Stamp Duty Land Tax.”1 

Smith gave evidence along with: Nick Jopling, the Executive Director of Property at Grainger PLC; Chris Taylor, the President of the British Property Federation; Dr. David Miles, a Professor of Financial Economics at Imperial College London; and Paul Johnson, the Director of the Institute for Fiscal Studies.

1 http://news.rla.org.uk/rla-gives-eviden-lords-committee/

Paragon Urges Chancellor to Make No Further Changes to Landlord Taxes in Budget 2016

Published On: March 16, 2016 at 9:45 am

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Paragon, a specialist mortgage lender, has urged Chancellor George Osborne to make no further changes to landlord taxes in the Budget 2016, which will be released today.

The firm also suggests that a full review of the UK’s housing requirements is conducted.

The UK’s population is predicted to grow from 64.6m in 2014 to 74.3m in 2039. But Paragon notes that with limited house building, reduced investment in social housing and a range of tax changes for private landlords, there is little prospect that quality, affordable housing will be available for all without directional action from the Government.

Paragon Urges Chancellor to Make No Further Changes to Landlord Taxes in Budget 2016

Paragon Urges Chancellor to Make No Further Changes to Landlord Taxes in Budget 2016

While homeownership is the aspiration of many, private landlords are increasingly housing the UK’s young adults that either cannot or choose not to buy, either because of mortgage affordability and strict criteria, or lifestyle changes and a requirement for flexibility.

It is believed that in 30 years’ time, 30% of all households in the UK will rent from private landlords.

So far, Government initiatives to encourage homeownership have been counteracted by reduced investment in local authority housing, a lack of support for housing associations through the Right to Buy scheme, and a complicated string of tax and policy changes for private landlords.

A leading financial expert explains the forthcoming, planned changes: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

The dangers of these changes are highlighted in an independent London School of Economics report, commissioned by Paragon, which argues that the private rental sector plays a key role in the UK’s housing system, and that any slowdown in private rental housing supply, as a result of changes in taxes and regulation, will put pressure on rent prices and household budgets.

The Chief Executive of Paragon Group, Nigel Terrington, insists: “The Government needs to instigate a thorough review of UK housing need in the context of the expected population growth. The size of forecast population growth is the equivalent of nine cities the size of Birmingham.

“The private rented sector is an important provider of homes for people in the UK. For many years, successive governments have actively reduced the provision of social housing. This, together with other regulatory changes, such as the Mortgage Market Review, which has restricted mortgage credit to homebuyers, means more people are turning to the PRS [private rental sector].”

He continues: “There is real risk of lasting damage to the sector if the impact of the changes is not fully understood, and particularly if the Government continues to layer one measure upon another without a thorough and robust assessment of the progressive impact different measures will have.

“The PRS does not have a binary relationship with homeownership; holding back growth in the number of properties for rent will simply not increase homeownership and may increase costs and reduce amenity for tenants.

“In the context of forecast population growth, together with a current and projected housing shortage, the key requirement is for the Government to create a stable policy framework that will encourage investment in the supply of good quality, affordable housing across all tenures, so that people can choose the best housing option to suit their lifestyle.”1

Chancellor George Osborne will present the Budget 2016 at 12:30pm today.

1 http://www.mortgagefinancegazette.com/latest-news/paragon-calls-for-housing-review-and-no-more-tax-on-landlords/

Less single renters taking on new tenancies

Published On: March 15, 2016 at 10:47 am

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The latest HomeLet Rental Index indicates that new tenancies taken on by single renters dropped over the last year. Instead, there has been a rise in families and people sharing rental accommodation.

Single slide

In the last year, tenants living in privately rented accommodation alone made up 33% of new tenancies, down from the 67% recorded in 2008. However, the number of new tenancies signed by two tenants rose from 28% to 52% over the same timeframe.

What’s more, HomeLet’s figures show that the number of new tenancies agreed by three or more tenants increased from 5% to 15% between 2008 and 2015.

HomeLet suggests that its figures could well reflect the trend of more families entering the private rental sector, with high house prices preventing them from getting a foot on the property ladder.

Family ties

More recently released data, from the English Housing Survey, shows that number of privately rented properties let to renters with dependent children increased from 30% to 37% in the last decade.

In addition, the Index shows that the typical rental agreement signed for properties signed in Britain outside of London was 4.8% greater in the three months to February 2016 in comparison to the same time last year.

This however does represent a fall in comparison to last month’s Index, which reported that typical rents in the three months to January was 5.5% greater than in 2015.

According to the data, HomeLet reports the average rent in Britain-with the exception of the UK, is now £744 per month. In the capital, the average monthly rent stands at £1,521.

Less single renters taking on new tenancies

Less single renters taking on new tenancies

Quicker than inflation

Martin Totty, chief executive of Barbon Insurance Group, parent company of HomeLet, said, ‘average rents are still rising and while we are not seeing the double-digit increases recorded in some areas of the country during the summer of last year, the cost of a new tenancy continues to rise more quickly than general inflation.’[1]

‘Landlords are letting out homes to many more families, with rental property representing an increasingly important alternative to owner occupation; we’re also seeing people manage with higher rents by meeting the costs as joint tenants,’ Totty added. [1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/3/number-of-single-tenants-falling-as-families-and-sharers-enter-prs

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

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

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The Royal Institution of Chartered Surveyors (RICS) has called upon the Chancellor ahead of tomorrow’s Budget to exempt residential landlords from Capital Gains Tax (CGT) if they sell their rental properties to tenants.

The RICS Property Tax Report states that the Chancellor should use his Budget to deliver a clear property tax policy, which will give private tenants, homebuyers and buy-to-let landlords the “clarity, certainty and predictability they need for future stability and growth”.

It believes the measure could allow 100,000 private tenants to own their own homes.

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

Landlords Should be Exempt from CGT if They Sell to Tenants, Says RICS

Buy-to-let landlords are liable for CGT whenever they sell a rental property, which is often considered a barrier to the release of housing stock onto the market.

The RICS says that the current tax system is a disincentive for landlords to sell.

“By removing CGT for landlords, the Government could find a solution to the housing crisis that it has been so keen to address,” reads the report. “Houses could be released to private tenants with the funds reinvested in more homes.”

The call from the RICS follows research from the Residential Landlords Association (RLA), which shows that 77% of private landlords would consider selling their properties to tenants if liability for CGT was removed.

The report continues: “Given the Government’s focus on homeownership, we recommend one way that homes could be delivered is if the UK’s 3.84m private landlords were incentivised to sell to existing tenants. If just a fraction were encouraged to sell at affordable rates, thousands of new homes could potentially be released onto the market. Further incentives could then be provided to encourage the seller to invest in further rental properties.”

The RICS hopes that tomorrow’s Budget provides stability for the property market.

The Policy Director at the RICS, Jeremy Blackburn, comments: “The Government has changed its policies around property taxes more often than the Chancellor has been pictured in a hard hat. That has resulted in uncertainty in the property market.

“What we need is a period of stability, and we call on the Government to set a course and see it through.”1

Throughout the Budget and the aftermath, we will provide you with the latest landlord updates and advice. Yesterday, we revealed that 70% of private landlords expect their investments to be affected by tomorrow’s Budget.

1 http://www.rics.org/uk/news/news-insight/press-releases/property-tax-reform-could-encourage-landlords-to-sell-to-private-tenants/