Posts with tag: rent prices

Rent Price Growth Slows, as Landlords Look Beyond London for Returns

Published On: March 28, 2019 at 9:00 am

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Categories: Lettings News

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Rent price growth slowed to almost zero in February, according to the latest Rental Tracker from Your Move.

The estate agent found that the average rent price in England and Wales increased by just 0.4% in the year to February, to hit £861 per month. This is significantly lower than the 1.4% rate of growth recorded in the previous month.

The South West of England recorded the fastest rent price growth in the 12 months to February, at 4%, taking the typical rent to £703 a month. 

This growth was attributed to landlords looking beyond London for higher rental returns, and a boom in tenant demand in cities such as Bristol.

Other beneficiaries of this shift away from London were the West Midlands (3.1%), and Yorkshire and the Humber (2.1%). The average monthly rent in the West Midlands was £636 in February, while Yorkshire’s stood at £588.

Yorkshire is the second cheapest region to rent a property in England and Wales, just ahead of the North East, where the average rent price is £540 per month (up by 1% year-on-year). 

Meanwhile, London and the East of England registered a decline in rents in February, taking the average price in the capital to £1,260 per month. Tenants in the East experienced the greatest fall, of 1.8%, taking the typical price to £878 a month.

Your Move also revealed the highest annual rental return in February was found in the North East, at an average of 5.0%. The North West closely followed (4.8%), while investors in London experienced the smallest percentage yields, at an average of just 3.2%.

The returns recorded in each of the ten regions included in the report were the same in February as in January, but the average yield across England and Wales (4.3%) was down from 4.4% in February 2018.

Martyn Alderton, the National Lettings Director at Your Move, comments on the report: “Renters have been drawn to Bristol, not only because of its vibrant arts and cultural scene, but also its strong job prospects. This has been accompanied by a boom in build to rent in the city, which has driven up demand and the average rent across the region.

“Private landlords, meanwhile, have tended to prefer the charms of the north of England, a region where yields are significantly higher than elsewhere.”

He adds: “But returns in all regions have remained steady compared with January, meaning landlords across the country have enjoyed solid yields.”

The Your Move data also shows that tenant rent arrears remained below 10% once again in February, with 9.4% of all tenancies behind on payments. This is up on the 8.8% recorded in January, but is down on December’s 10.5% figure.

Landlords, are you looking beyond London for rental returns? Let us know where you’re interested in! 

Tenants with Pets Facing Rent Hikes after Fee Ban

Published On: March 26, 2019 at 9:00 am

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Categories: Tenant Fees Ban,Tenant News

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Private tenants with pets could face rent hikes after the letting fee banis introduced on 1stJune 2019, according to real estate firm JLL.

The investment management company believes that tenants with pets could suffer rent hikes of as much as 3-4% per week once landlords and letting agents are banned from charging fees.

The warning comes after JLL recorded a 25% increase in the number of tenants with pets over the past five years.

Lucy Morton, the Head of Residential Agency at JLL, says that landlords and agents typically charge a higher deposit to cover any damage and additional cleaning required from having animals in a property. However, this will be more limited once the Government introduces its five-week cap on security deposits.

She explains how tenants with pets may be affected: “With the five-week deposit cap, landlords may be deterred from letting to tenants with pets or forced to charge higher rents to cover any potential losses. The increase would depend on the rental value, but we anticipate approximately an additional 3-4% per week.

“For example, a rent of £700 per week would potentially rise to £725 per week to make up for the shortfall.”

Morton looks at the situation from a landlord’s perspective: “With a host of regulations that landlords must adhere to, as well as the changes to mortgage interest relief, the fee ban and five-week deposit cap is adding yet another cost.

“This gives landlords no choice but to increase rents in order to see a return on their investment, and they will need to hold firm on asking or renewal prices.”

She adds: “However, tenants will only be happy to pay more if the property is of high quality and well-presented. It’s the properties in the best locations offering quality amenities that will attract tenants willing to pay a premium.”

Landlords, how will you let to tenants with pets following the fee ban? 

Rent Price Growth Rate Strengthens, According to Official Data

Published On: March 22, 2019 at 10:29 am

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Categories: Lettings News

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The average growth rate of private rent prices in the UK strengthened in February, according to the latest official data from the Office for National Statistics (ONS).

In its Index of Private Housing Rental Prices (IPHRP) for February, the ONS found that the average private rent experienced a growth rate of 1.1% on an annual basis, which is up from 1.0% in the previous month.

The rent price growth rate in the UK has generally slowed since the beginning of 2016, mainly due to a slowdown in the capital over the same period.

Excluding London, rent prices rose by an average of 1.5% in the 12 months to February, which is unchanged on January. In the capital, the growth rate stood at 0.2% in February – up from 0.1% in the previous month.

In the February 2019 Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS), tenant demand appeared to rise modestly on a monthly basis. New landlord instructions, on the other hand, continue to dwindle, remaining in negative territory for the 29th consecutive month.

ARLA Propertymark (the Association of Residential Letting Agents) reported in its Private Rented Sector Report for January that the number of tenants experiencing rent price rises increased for the first time since September 2018. The supply of rental properties and demand from prospective tenants both rose, also.

These supply and demand pressures can take time to feed into the IPHRP, which reflects the growth rate for all private rental properties, rather than just newly-advertised homes.

Focusing on the long-term trend, between January 2015-February 2019, private rent prices in the UK rose by an average of 7.2%.

Rent Price Growth Rate Strengthens, According to Official Data

By country

The annual growth rate in Wales in February was 1.1%, which is up from 0.9% in January. Wales’ annual growth has been strengthening since October 2018.

In Scotland, rent prices rose by an average of 0.7% in the 12 months to February – unchanged on the previous month. The weaker growth rate since 2016 north of the border may be down to stronger supply and weaker demand.

English private rents increased by an average of 1.1% in the year to February, which is unchanged since December 2018. When London is excluded, rents rose by 1.6% on an annual basis. 

The annual growth rate in Northern Ireland (2.0%) in December 2018 is higher than the other countries of the UK. In fact, rent price growth in Northern Ireland remained broadly consistent around 2% throughout last year. This is the latest data available for Northern Ireland; the next will be released in June 2019.

All UK countries have experienced rent price growth since 2015. Since January 2015, rent prices in England have increased more than those in Wales, Scotland and Northern Ireland.

By region

The growth rate for rent prices in London stood at an average of 0.2% in the year to February. The September 2018 Residential Market Survey from the RICS shows that tenant demand has staged a sustained recovery in the capital over recent months, increasingly outstripping supply. However, it notes that rent prices are still expected to see little change in the near-term.

The greatest annual rent price growth rate of the English regions in February was recorded in the East Midlands (2.4%), which is unchanged on January. Yorkshire and the Humber (1.8%) followed – down from 1.9% – along with the West Midlands (1.8%) – unchanged on the previous month.

The lowest annual rent price increase was in London (0.2%), followed by the North East (0.3%), which is down from 0.4% in January.

East London Recording Twice the Rate of Rent Price Growth of West London

Published On: March 19, 2019 at 10:01 am

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Categories: Lettings News

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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.” 

Rental Income for Landlords Jumps 15% in a Year to hit £18.7bn

Published On: March 8, 2019 at 9:01 am

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Categories: Landlord News

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"The message, not just for investors but homeowners, too, is to play the long game. UK property has a track record of returns"

The total rental income received by buy-to-let landlords in the 12 months from 2017-18 has jumped by 15% to hit £18.7 billion, which is up from £16.2 billion in 2015-16. 

This comes as rent prices continue to rise, in response to all of the extra costs that landlords have been hit with over the past few years, analysis of HM Revenue & Customs (HMRC) data by Ludlowthompson reveals.

With demand from tenants increasing, at a time when the supply of much needed private rental stock is dwindling, rents are recording strong growth in some parts of the country, amid a shortage of homes.

The supply-demand imbalance has helped to ensure that buy-to-let remains one of the highest yielding mainstream investments in the UK, the estate agent believes.

The figures reveal that total rental income received by landlords has increased by 55% in the last five years. By contrast, income from savings and cash ISAs has continued to shrink, due to low interest rates.

Ludlowthompson claims that the data confirms that buy-to-let remains a relatively low-risk investment, which outperforms other asset classes over the long-term, including Government bonds, cash ISAs and shares.

It adds that buy-to-let landlords are also benefitting from downward pressure on interest rates on mortgages when adding to their portfolios, as a result of continued competition between banks for business.

Stephen Ludlow, the Chairman at Ludlowthompson, comments: “Buy-to-let property is now a key part of individuals’ investment portfolios and retirement income.

“Residential property not only offers investors a stable, regular monthly income, but also offers long-term capital growth. While house prices are not a one-way bet, property has historically been far less volatile than other asset classes, such as shares.”

He continues: “The fundamental supply-demand imbalance remains, with the pool of potential tenants getting larger each year. This is still the case in London, despite Brexit jitters.

“Some of the increase in rental income will also be from rental growth, which means that rents are largely growing with inflation. Additionally, wage inflation has been growing steadily already over the past few months, and, historically, rental increases track wage increases. Ultimately, these figures highlight the real-term growth in returns – the fundamental point behind any sound investment.”

West Midlands offers the Most Affordable Rents for Tenants

Published On: March 7, 2019 at 9:03 am

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Categories: Tenant News

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Why has Birmingham led UK House Price Growth Since the Brexit Vote?

The West Midlands offers the most affordable rents for private tenants in England and Wales, based on an average renter’s annual income divided by their yearly rent costs, according to the latest Rental Index from Goodlord.

The letting agent software platform found that landlords in the West Midlands offer the most affordable rents across the country, at an average of £689 per month. Based on a typical salary of £18,000 amongst tenants in the region, renters spend 24% of their annual income on rent, compared to 29% nationally. 

However, landlords in the Midlands – both the East and West – face the longest void periods in the country, at an average of 33 days. 

Overall, void periods were down in February for five out of the eight regions in England and Wales, to an average of 23.75 days, from 28.6 in January.

Landlords in London faced the shortest wait for new tenants, at just 13 days on average. 

Nevertheless, the least affordable rents in the country were found in the capital, at an average of £1,619 per month, which is a whopping 114% higher than the national average. Tenants in London, however, have the highest typical income, at £36,000 per year.

Despite offering the cheapest rents in the country (£635), rental properties in the North East eat up an average of 44.8% of a tenant’s income, due to their low average salary of £17,000. 

In terms of length of tenancy, London offers the longest average fixed term agreement, at 14 months, which is three months longer than the next region, which is the South East.

Landlords, how do these figures compare to your own experiences of rent prices, void periods and tenancy lengths? 

Perhaps the data may influence your decision when looking for a new investment property – will you focus on affordable rents or low void periods?