Posts with tag: rent prices

Rent Rises for Tenants Increases, Reports ARLA Propertymark

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

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The number of private tenants experiencing rent rises at the hands of their landlords increased in January, according to the latest Private Rented Sector Report from ARLA Propertymark (the Association of Residential Letting Agents).

Rent rises

The amount of tenants experiencing rent rises increased in January, with 26% of ARLA Propertymark member agents witnessing their landlords putting prices up, compared to 18% in the previous month.

This is the highest figure recorded since September 2018, when 31% of tenants saw rent rises.

Year-on-year, the number of tenants experiencing rent rises is up by 7% on January last year.

Supply and demand

The supply of properties available to rent rose to an average of 197 per ARLA Propertymark member branch in January, which is up from 193 in December. 

Demand from prospective tenants also increased in January, with the number of home hunters registered per letting agent branch rising to an average of 73, compared to just 50 in the previous month.

David Cox, the Chief Executive of ARLA Propertymark, comments: “This month’s results are another huge blow for tenants. With demand increasing by 46% from December, and rents starting to rise in response to all of the cost increases landlords have experienced over the last few years, tenants are in for a rough ride. Last month, there were three landlords selling their buy-to-let properties per branch, and, as landlords continue to exit the market, rent prices will only continue to rise.

“With the Tenant Fees Actpassing its final hurdle in the House of Commons and receiving royal assent this month, tenants will continue bearing the brunt, as agents and landlords start preparing for a post-tenant fees world.”

Landlords, how are you preparing for a world without tenant fees? Perhaps you are one of the investors that have put rent prices up for tenants in anticipation? 

New Bid to Introduce Rent Controls in Scotland Launched

Published On: February 22, 2019 at 10:00 am

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A new bid to introduce valuable rent controls in Scotland has been launched by a tenants’ union.

Living Rent, alongside think tank Common Weal, is upping the pressure on introducing rent controls in Scotland, with the launch of The Rent Controls Scotland Needs.

The Private Housing (Tenancies) (Scotland) Act 2016 granted the Scottish Government the power to introduce localised rent controls, or rent pressure zones (RPZs).

However, these powers have yet to be used, the campaigners argue.

In these zones, rent price rises would be limited to once a year and be capped.

The campaigners point out that there are serious flaws in the system, which they claim does not recognise that rent prices in Scotland are already too high.

A loophole of the legislation is that the date at which the first rent increase could be implemented in a tenancy is not set, meaning that landlords and letting agents could bring in dramatic rent price rises within a few months of a tenant moving in.

The campaign is now calling for a rent control system, through which rises would be attached to a new Scottish rental affordability index. This index would keep rents below an affordability level, which Living Rent believes is 25% of a tenant’s income.

It is also pushing for a new Scottish living rent commission to be created, to monitor and regulate the private rental sector.

Gordon Maloney, the co-author of the report and a member of Living Rent, says: “The Scottish Government urgently needs to take action. Tenants can’t wait. Rent Pressure Zones are not working, but the current situation is simply not sustainable. If we are serious about ensuring affordable, decent housing for everyone in Scotland, then we need proper rent controls now.”

Robin McAlpine, of Common Weal, adds: “We need effective rent controls to tip the balance back in favour of tenants.”

Read up on the campaign in this helpful document: https://www.scottishhousingnews.com/uploads/documents/Rent%20Controls%20%282%29.pdf

This campaign arrives at the same time that MPs are considering the pros and cons of rent controls in England. 

MPs Briefed on the Pros and Cons of Rent Controls

Published On: February 22, 2019 at 9:00 am

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MPs have been briefed on a new research paper that assesses the pros and cons of rent controls in England. 

The report’s conclusion suggests that property agents themselves may hold the key to the re-introduction of rent controls in the country.

Following its publication, the Private rented housing: the rent control debate paper has been placed into the House of Commons library.

Rent controls were in place in England until 1989. Up to this point, tenancies were generally covered by the Rent Act 1977, under which, fair or registered rent prices were set by independent rent officers.

Since deregulation, most new private lettings have been under assured or Assured Shorthold Tenancies(ASTs), through which landlords can charge market rents.

The new paper discusses the subject of rent controls returning to the political agenda in England. It includes housing charity Shelter’s call for a stable rental contract of five years, during which annual rent rises would be index linked.

The Labour Party’s 2017 manifesto stated: “Labour will make new three-year tenancies the norm, with an inflation cap on rent rises.”

Tenant lobby group Generation Rent wants to go one step further, calling for monthly rent prices to be capped at half of the property’s annual Council Tax payment. 

The briefing paper acknowledges the substantial opposition by landlords and landlord membership bodies, including the belief that market intervention would cause investors to leave the sector, thus reducing supply for tenants.

The main argument for rent controls is affordability. In London, for instance, tenants renting a median two-bedroom home can expect to spend half their earnings on rent. Not surprisingly, the Mayor of London is a firm advocateof limiting “unacceptable rent increases”.

Another argument is the cost to the public purse when private tenants are in receipt of housing benefit, receiving Local Housing Allowance, which is a flat rate payment that is capped.

The paper also discusses rent controls in other countries, including intense opposition from the likes of Assar Lindbeck, a professor in Stockholm: “In many cases, rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.”

The 37-page document is impartial, but ends on an interesting note.

In Paris, rent controls have been part of new regulations since 2014, under which a rent observatory provides the evidence for deciding whether to allow rent increases in re-let properties.

Apparently, reports of rent rises have been recorded, but there are also claims of “growing resistance by estate agents” to provide the evidence: “Without the statistics provided by the agents, it is difficult to see how the reference rents can be provided.”

The full document can be accessed here. 

Rental Decline Slowing Down in Prime London

Published On: February 19, 2019 at 10:57 am

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Rental Decline is Slowing Down in Prime London

Rental values in prime locations across London have seen some signs of a slowdown in decline, as initial signs of a bottoming out have appeared.

International property consultants, Savills, have reported that rental prices in London have declined by 0.8% in 2018, with cheaper properties significantly outperforming more expensive ones.

Properties with rental prices of up to £500 per week have seen a five-year price growth of 6.6%, but properties with rents of up to £3,000 have dropped by 19.5%.

What are the predictions for rental prices over the next few years?

Savills predicts that rents will rise going forward, over the next five years they predict an increase of 11.5% on average, with a 12.6% increase in the prime commuter zone. However, growth is expected to be slow or non-existent in the short term, as the political and economic uncertainty surrounding Brexit continues. Rents fell by an average of 9.6% across London’s prime areas since the referendum in June 2016.

What’s the demand for properties likely to be?

London’s commuter belt, the prime rental market of London, has seen a steady demand for smaller properties. This matches the need of younger tenants commuting to the city for work, and rents for one or two bedroom properties have seen double digit growth over the past five years.

The outlook for rental prices seems to be largely reliant on stock levels, and if the sales market improves, it could see many accidental landlords exiting the private rental sector. Similarly with recent restricted tax relief on interest payments and other changes recently, such as the stamp duty levy on buy-to-let properties, there are uncertainties regarding the availability of rental properties.

Head of Residential Research at Savills, Lucian Cook, said: “We are seeing footloose, cost-conscious tenants drawn to prime areas that offer greater value, rather than confining their search to premium addresses, and there’s a deeper seam of demand for smaller properties driven by needs-based younger tenants.

“But that doesn’t mean we can anticipate falling rental supply. Instead, we expect cash investors to become increasingly dominant, especially in central London, while history suggests international investors will become more active as uncertainty clears, particularly if they can play the currency card. Stock levels also look set to rise as the number of new build homes completing increases.”

Growth in Private Sector Rents has Slowed since 2016

Published On: February 15, 2019 at 9:59 am

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Private sector rents paid by tenants in the UK increased by an average of 1.0% in the 12 months to January 2019, which is unchanged from December 2018, according to the latest Index of Private Housing Rental Prices (IPHRP) from the Office for National Statistics (ONS).

Growth in private sector rents across the UK has generally slowed since the beginning of 2016, driven mainly by a slowdown in London over the same period.

Private sector rents in the UK, excluding London, rose by an average of 1.5% in the 12 months to January, which is up from 1.4% in the previous month. Rent prices in the capital increased by an average of 0.1% over the same period – down from 0.2% in December.

The December 2018 Residential Market Surveyfrom the Royal Institution of Chartered Surveyors (RICS) reported demand from prospective tenants holding broadly steady for the third consecutive month. New landlord instructions remained in decline, however, rounding off a year in which they had fallen in all 12 months.

In its Private Rented Sector Report for December 2018, ARLA Propertymark (the Association of Residential Letting Agents) reported that, year-on-year, both demand from potential tenants and the supply of available properties fell.

These supply and demand pressures can take time to feed through to the IPHRP, which reflects price changes for all private rental properties, rather than only newly-advertised homes.

Growth in Private Sector Rents has Slowed since 2016

Focusing on the long-term trend, between January 2015-January 2019, private sector rents in the UK rose by an average of 7.0%.

Private sector rents in Wales increased by an average of 0.9% in the 12 months to January, which is up from 0.8% in the previous month. Wales showed a broad rise in its annual growth rate between July 2016 and the end of 2017, but has fallen back since.

In Scotland, private sector rents grew by an average of 0.7% in the year to January – up from 0.6% in December. The weaker growth since 2016 may be due to stronger supply and weaker demand north of the border.

English private sector rents rose by an average of 1.1% in the 12 months to January, which is unchanged on December. When London is excluded from England, rent prices increased by 1.6% in the year to January.

The annual rate of change for Northern Ireland (1.6%) in September 2018 is higher than the other countries of the UK. Northern Ireland has seen an increase in its annual growth rate between the end of 2016 and the end of 2017, but fell back slightly in 2018. Northern Ireland’s data has been copied forward since September 2018. The next update to Northern Ireland statistics will be in the release on 20thMarch 2019.

All UK countries have experienced rent price rises since 2015. Since January of that year, private sector rents in England increased more than in Wales, Scotland and Northern Ireland.

In the 12 months to January 2019, rent prices in London rose by an average of 0.1%, which is down from 0.2% in December. The RICS reported in its September 2018 Residential Market Surveythat tenant demand has staged a sustained recovery in the capital over recent months, increasingly outstripping supply. However, it notes that rents are still anticipated to see little change in the near-term.

Focusing on the English regions, the ONS found that the largest annual rent price growth in January was in the East Midlands, at 2.4%, which is down slightly from 2.5% in the previous month. This was followed by Yorkshire and the Humber (1.9%), which is up from 1.8% in December, and the West Midlands (1.8%), which is unchanged.

The lowest annual growth in private sector rents was in London, where prices were up by just 0.1%. The North East followed, at 0.4%, which is up from 0.3% in December 2018.

Rents are Falling as a Proportion of Tenants’ Income, RLA Insists

Published On: February 14, 2019 at 11:00 am

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The proportion of tenants’ income spent on rent in the private rental sector has dropped from an average of 35.4% in 2010/11 to 32.9% in 2017/18, the Residential Landlords Association (RLA) is pointing out.

Including income from housing benefit, over the same period, the amount of tenants’ income used for rent on social housing has risen from 26.7% to 28.0%.

These figures, from the English Housing Survey for 2017/18, highlighted by the RLA, show that, over the ten years between 2008/09 and 2017/18, the average weekly rent price across England (excluding London) in the private rental sector increased by 22%, which is almost half of the 43% rise in social rents. 

In London, private rents grew by an average of 34%, compared to 55% in the social rental sector.

The data arrives as the Office for National Statistics (ONS) has reported that rents are falling in real terms, and the Government’s 2018 English Private Landlord Surveyfound that 70% of landlords kept their rent prices the same when they most recently renewed a tenancy, showing that landlords prioritise keeping good tenants for the long-term.

The RLA is warning of the risks now posed to improved affordability in the private rental sector as a result of changes, such as those to benefits and increased taxation driving landlords out of the market.

The Government’s statistics show that over 15% of private landlords in England, representing more than 23 of all tenancies in the country, plan to either decrease the number of properties that they let or leave the sector altogether. Of this group, almost 70% said that it was due to legislative changes, including the phased reduction of mortgage interest reliefto the basic rate of Income Tax and the 3% Stamp Duty surchargeon the purchase of additional properties.

This reduction in the supply of private rental housing comes at a time when demand for new rental homes shows no sign of abating, with the Royal Institution of Chartered Surveyors (RICS) reporting that demand “remains more or less steady”.

Alan Ward, the Chair of the RLA, says: “This data shows that the private rented sector is becoming more affordable, demonstrating the folly that forms of rent controls would be. We cannot, however, be complacent.

“The danger signs are there. Tax increases are choking the supply of homes to rent. Landlords like to keep their tenants who benefit from lower or no rent increases when tenancies are renewed, but fewer homes for rent means less choice for new tenants.”

He believes: “We need positive, pro-growth taxation that supports landlords investing in the new homes to rent the country desperately needs.”