Posts with tag: private rental sector

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

Published On: January 7, 2016 at 9:27 am

Author:

Categories: Landlord News

Tags: ,,,,

A major figure in the property industry has spoken up about the Government’s interference in the private rental sector.

The Director of Commercial and Franchising at chain Belvoir, Dorian Gonsalves, warns that tax changes for private landlords could discourage investment in the sector.

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

Stop Interfering in Private Rental Sector, Says Belvoir Boss to Government

He also urges the Government to “dramatically” increase the supply of social housing in order to reduce pressure on the private rental sector.

However, ministers’ plans currently go against Gonsalves’ wishes, as the Housing and Planning Bill is now heading towards its third reading in the House of Commons.

Propositions under the bill include extending the Right to Buy scheme to housing association tenants; opponents describe the bill as the end of social housing.

Gonsalves also believes that landlords may have “second thoughts about buying properties”, due to Chancellor George Osborne’s mortgage interest tax relief cuts and further 3% Stamp Duty charge on buy-to-let investments.

Referring to the Housing and Planning Bill’s focus on homeownership, Gonsalves says: “Whipping the public up into a home buying frenzy is not very sensible, as prices rise when the population feels they need to acquire a must-have commodity. If the opposite happens and prices stagnate, builders will not build.”

He continues: “With net immigration currently at over 300,000, over 1.5m people on council waiting lists, population forecasts as high as 85m by 2050 and 10m people already renting, it is clear that much more social housing is required.

“The Government has pledged 400,000 new builds in the next five years, but it is likely that 200,000 of these will be in and around London, and locations won’t be ideal due to lack of building land at sensible prices.

“The remaining 200,000 will be spread across the other 1,000 or so towns and cities across the UK, so there will probably be just 200 new affordable properties in each town or city.”

He adds: “The private rental sector has always existed to provide a choice for those people who need flexibility and is a good solution for people who do not wish to commit to purchasing a property.” 

He insists that the private rental sector should no longer be expected to bridge the “immense gap”1 between demand for social housing and its low supply.

1 http://www.propertyindustryeye.com/stop-meddling-in-private-rented-sector-belvoir-boss-tells-government/

 

Chancellor Warned to Ease Off on Private Landlords

Published On: December 18, 2015 at 3:10 pm

Author:

Categories: Landlord News

Tags: ,,,

Major property firm LSL Property Services has called for the Treasury to ease off on private landlords, suggesting that the Government looks for solutions to the housing crisis.

It also reports that the average monthly rent price in England and Wales fell to just under £800 in November.

Chancellor Warned to Ease Off on Private Landlords

Chancellor Warned to Ease Off on Private Landlords

Your Move and Reeds Rains, both companies under LSL, claim that the average rent is now £799 per month, a 1.2% decrease on the previous month and down from September’s record high of £816.

Although rents have fallen on a monthly basis, they have increased by 4% annually and the firms expect to see further rises in the early spring of next year.

Director of the two firms, Adrian Gill, believes: “Landlords have become fashionable targets for the Government and Bank of England.

“This is overdue attention for the sector that provides homes for more than one in five Britons.

“But negative campaigns and unconstructive policies, designed to attack landlords rather than support tenants, will not make rents lower or provide more homes.

“The effect will be quite the opposite, forcing rents upwards.”

Two-and-a-half years ago, LSL predicted that rents would surpass the £800 mark in mid-2015; this forecast was accurate, with rents breaking through that level in July of this year.

LSL also reports that rental yields for landlords have dropped, while tenants’ finances have worsened, causing more rent arrears.

Gill continues: “For new entrants, or landlords looking to invest in additional properties to let, market conditions could be a little harder to navigate than six months ago.

“Choosing the right property in the right area is even more important when looking for the best rental yield on new investments.

“Partly this is down to enormous competition in the property purchase market – homes are being sold rapidly, whether to landlords or owner-occupiers. It is a property seller’s market.”

He adds: “Similarly as yields continue to feel the pressure of rising prices, other factors will need to adjust in turn. That means higher rents. Most likely this will push rents higher still and indicates an earlier spring for rent rises in 2016.

“Combined with the latest attacks on landlords from the Government, this could propel demand even higher for every single home that landlords do have to offer.

“A continued shortage of properties to let is the challenge to overcome and the Government needs to think pragmatically about this conundrum, rather than looking for political targets.”1 

1 http://www.propertyindustryeye.com/lay-off-private-landlords-lsl-firms-tell-chancellor/

700,000 Rental Homes Have Category 1 Hazards

Published On: December 16, 2015 at 4:08 pm

Author:

Categories: Property News

Tags: ,,,,

Tenants living in private rental sector homes are living in unsafe properties that do not meet basic legal standards, according to a report from Citizens Advice.

700,000 Rental Homes Have Category 1 Hazards

700,000 Rental Homes Have Category 1 Hazards

The charity found that landlords are making billions of pounds from 700,000 private rental homes in England that have a category 1 hazard – the most dangerous issues – including rat infestations, unsafe electrics, cold and damp.

The Paying a High Price for a Faulty Product report suggests that 30% of households living in unsafe rental properties have an annual income of over £30,000, while 18% earn more than £40,000 per year.

Citizens Advice states that private tenants must be given protections that exist in other consumer areas. It has been campaigning for renters living in dangerous accommodation to have the right to refunds of rent.

It is pleased to see that this has been included in the Housing Bill that is currently going through Parliament, but it hopes that tenants will not have to pay court fees to pursue this.

Although private rental housing costs the most out of the tenures it studied, this sector is most likely to have a category 1 hazard, at 17%, compared to 12% of owner-occupied homes and 6% of social rental properties.

Citizens Advice’s report, compiled with the New Policy Institute, also found:

  • Over 100,000 households pay more than £900 a month to live in an unsafe rental property.
  • The average monthly rent for a dangerous private rental home is £650, not much less than the average rent price of £720 for a property that meets minimum standards.
  • Private tenants in England spend £4.2 billion per year to live in hazardous homes that do not meet legal standards.
  • Half a million children live in unsafe rental homes.

Chief Executive of Citizens Advice, Gillian Guy, states: “Rogue landlords are forcing private tenants into a living nightmare.

“The private rented sector is the most expensive housing tenure but is in the worst state – consumers are paying top dollar to stay in dire homes that can threaten their lives and risk their health.”

She continues: “For too long, the private rented sector has been seen as a side issue in the British housing crisis debate. This is utterly wrong, as the astronomical cost of buying property means increasing numbers of people and families are moving into private tenancies.

“It is good the Housing Bill includes plans to give tenants the rights to rent refunds when their homes are unsafe, but it’s imperative renters don’t have to stump up court fees to seek this justice.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/rogue-landlords-forcing-tenants-into-a-living-nightmare

 

 

Landlord concern over short-term prospects grows

Published On: December 16, 2015 at 11:07 am

Author:

Categories: Landlord News

Tags: ,,,,

The buy-to-let sector continues to grow, with tenant demand remaining consistently strong.

However, a new survey has indicated that some landlords are concerned about their short-term prospects.

High demand, low confidence

BM Solutions’ buy to let quarterly index indicates that 41% of landlords reported an increase in tenant demand during the last quarter, but that confidence has fallen dramatically.

Tenant demand was highest in the East of England, with 52% of landlords reporting a rise in tenant demand over the last three months. The largest quarterly increase was recorded in the East Midlands, where demand was up by 12%.

At the lower end of the scale, the South West and North East saw the greatest drop in landlords noting increased demand over the last quarter.

By region, tenant demand altered in the last three months as followed:

Property location Tenant demand in Q2 2015 (Net increase) Tenant demand in Q3 2015 (Net increase) Quarterly change (% point change)
East of England 48% 52% 4%
London (Outer) 40% 48% 8%
South East 41% 47% 6%
East Midlands 35% 47% 12%
London Central*** 35% 45% 10%
Yorks & Humber 35% 39% 4%
West Midlands 37% 38% 1%
Wales 36% 38% 2%
South West 45% 37% -8%
North West 27% 34% 7%
Scotland 30% 33% 3%
North East 39% 31% -8%

[1]

Outlook

The report revealed that confidence in the UK’s financial market has dipped, with 25% confident about the outlook for the next quarter, as opposed to 37% in quarter two of this year. Landlords also reported a fall in confidence in the private rental sector as a whole, with 34% saying they were positive about the sector, as opposed to 59% in Q2 of 2015.

61% of landlords said that they intend to live off the rental income generated by their portfolio when they eventually retire. A further 36% said they would make a decision based on market trends at the time.

Landlord concern over short-term prospects grows

Landlord concern over short-term prospects grows

Void periods recorded also increased during the last quarter, with 35% of landlords experiencing this in Q3, as opposed to 29% in the previous two quarters. In addition, the average rental yield achieved dropped to its lowest level for five years, falling to 5.6%.

By region, landlords in Yorkshire and the Humber and Wales saw the highest rental yield of 6.1%. Those letting in Scotland and Outer London saw the lowest, with 5.1% and 4.8% respectively.

Average rental yields per region were over the last quarter were:

Property location %
Yorkshire & the Humber 6.1
Wales 6.1
North West 5.9
East Midlands 5.8
West Midlands 5.7
North East 5.6
East of England 5.6
South West 5.5
South East (excl. London) 5.4
London (central) 5.2
Scotland 5.1
London (outer) 4.8

[1]

Spotlight

Phil Rickards, Head of BM Solutions noted, ‘there has clearly been a spotlight shining on the Buy-to-Let market and Private Rental Sector for most of 2015. Landlord confidence in the outlooks for the private rental sector as a whole and landlord’s own lettings businesses have seen statistically significant declines when benchmarked against Q3 2014.’[1]

‘However, the market is still holding up and at the same time four in 10 landlords report demand has increased in the areas where they hold properties during the last quarter and yields remain strong. There’s no doubting 2016 looks like a challenging year ahead however I take comfort in the fact there’s still a need for a strong private rental sector along with good quality housing to support demand,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-confidence-dr0ps.html

 

 

Tenant Demand Grows as Yields Remain Steady

Published On: December 8, 2015 at 12:27 pm

Author:

Categories: Landlord News

Tags: ,,,

Tenant Demand Grows as Yields Remain Steady

Tenant Demand Grows as Yields Remain Steady

Demand from tenants for rental properties continued to grow around the country in the third quarter (Q3) of the year, according to a survey of almost 2,000 landlords from Paragon Mortgages.

The study also found that rental yields – the annual rental income as a percentage of the property value – have remained steady throughout the year.

The research, conducted by BDRC Continental on behalf of Paragon Mortgages, found that the average national yield was 5.6% in Q3. Amongst Paragon customers, the figure was higher, at 5.9%.

The greatest proportion of landlords, 17%, reported yields of between 3%-4%, while one in ten investors have seen yields of 10% or more. Landlords in Yorkshire and the Humber reported the highest average yield, of 6.1%, with the lowest found in outer London, at 4.8%. However, outer London had the second largest rise in levels of tenant demand.

Regarding tenant demand, the East of England performed the best in Q3, with 52% of landlords reporting an increase in demand. In the North East, just 31% of investors saw a rise, while the national average is 41%.

This indicates strong annual growth in tenant demand across several regions since Q3 2014, with demand in the North East rising from 23% to 31% and in outer London from 42% to 48%.

Director of Mortgages at Paragon, John Heron, says: “This research shows that yields and tenant demand have remained strong throughout Q3, in common with 2015 overall. The figures reflect a steadily improving economic outlook for the UK as a whole and show that more and more people are actively choosing the flexibility of making a home in the private rented sector.

“Yields too have remained stable throughout 2015. Q3’s data shows London and the South East slowing down somewhat, while yields in the regions are growing. This represents a welcome rebalancing of the national economy, with some of the heat from London’s economy escaping the M25 and being distributed around the country.”1

1 https://www.landlordtoday.co.uk/breaking-news/2015/12/tenant-demand-continues-to-grow-in-q3-while-yields-remain-stable

 

 

 

 

 

 

 

 

 

 

 

 

 

Build to Rent Set to Triple in Size to £50bn by 2020

Published On: December 7, 2015 at 2:24 pm

Author:

Categories: Finance News

Tags: ,,,

Investment by large-scale investors in the Build to Rent sector is expected to triple by 2020, according to a recent report from Knight Frank.

Build to Rent Set to Triple in Size to £50bn by 2020

Build to Rent Set to Triple in Size to £50bn by 2020

The property firm estimates that this growth will take the total investment in the sector to £50 billion in the next five years, increasing the size of Build to Rent from 2% of the private rental sector to 5%.

This prediction forms part of the Investor Survey from Knight Frank, which includes a study of 16 large-scale Build to Rent investors. The firms shared their views on where gross yields will stand around the country in 2020. They estimate that yields in regional city centre markets will settle 1.75 basis points higher than London, assuming that the economy performs in line with market expectations.

The Tenant Survey report includes the results of a nationwide study of private rental sector tenants – the largest survey of its kind ever conducted, with over 5,000 respondents.

The research, undertaken alongside YouGov, found:

  • More than half (52%) of tenants said living close to work or their place of study is a priority.
  • 30% of renters reported that their main reason for moving was to upgrade to a larger or nicer home, emphasising the flexibility of renting.
  • 38% of respondents have lived in five or more rental properties. While many tenants have moved within one mile of their previous home, around a fifth (19%) have moved more than 60 miles, citing relocation for work or study.
  • 28% of tenants across the country said they would be prepared to pay up to 30% of their gross income on rent, with almost a third (31%) of under-25-year-old renters in London prepared to pay up to 50%.
  • A quarter of private tenants live alone, while 34% live as a couple without children. 43% of 18-24-year-olds share with other adults in a flatshare.

Head of UK Residential Research at Knight Frank, Grainne Gilmore, comments: “The Tenant Survey shows us that priorities for tenants when choosing a property include proximity to their place of work or study, how easily they can reach transport links and how affordable the property is.

“Tenants are mobile, owing to the flexibility offered by renting as a tenure, and while the motivations for moving vary, the largest cohort of respondees identified the wish to upgrade to a bigger or nicer property as their key motivation for moving into their current rented property.”1

James Mannix, Head of Residential Capital Markets at Knight Frank, adds: “The results from the Tenant Survey and the Investor Survey demonstrate that there is a generational shift in the market, both amongst renters and investors, which stands a good chance of both stabilising the volatility of the housing market and satisfying some of the structural shortfall in supply. One of the major controls on production of housing is projected rates of sale. The rental market could significantly accelerate this factor through immediate absorption.”1

1 http://www.propertyreporter.co.uk/landlords/large-scale-prs-sector-to-triple-in-size-to-ã¢50bn.html