Posts with tag: rent prices

Rate of Rental Growth Halved in 2016

Published On: January 16, 2017 at 9:32 am

Tags: rent prices,rental growth,rental properties,rents

The rate of rental growth halved in 2016 when compared to the previous year, from 3.1% to just 1.6%, reports Countrywide.

The average rent in Great Britain increased by 1.6% over the past 12 months – half the rate of rental growth recorded in 2015 – to stand at £927 per month.

Rate of Rental Growth Halved in 2016

Rent prices in the north of England increased faster than those in the south, while London dropped from having the second fastest rental growth of the country to the third slowest.

The average cost of renting a home in the capital fell by 2.9% over the year – the greatest decline seen since March 2009 – to £1,246. In central London, it will cost a typical renter £2,381 per month to rent a home.

The slowdown in rental growth was driven by an increase in the number of new homes available to rent, believes Countrywide. Over the year, the average number of available rental properties rose by 12% across the country when compared to the previous 12 months.

While every region experienced an increase in available rental stock, London saw the largest rise, with 22% more homes to rent than in 2015. Faced with greater choice, tenants have been able to negotiate on price, explains the firm.

Slowing rental growth has also led to a decline in the amount of tenants agreeing an increase in rent when renewing contracts. In 2016, a third (33%) of tenants who renewed their contract saw their rent go up, down from 37% in 2015.

The average change in rent prices remained unchanged, at 2.1%, over the course of the year. Only renewing tenants in central London and Scotland saw their average rent decrease, by 2.8% and 0.2% respectively.

Johnny Morris, the Research Director at Countrywide, comments on the data: “As the number of homes available to rent has grown, landlords have had to work harder to attract tenants. The average time to let spiked in April and has remained resolutely high ever since. Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents.

“Rental growth will likely increase in 2017. Squeezed yields, fewer tax breaks and higher Stamp Duty rates are likely to deter landlords from expanding their portfolios. Fewer homes on the market will leave tenants with less choice and negotiating power.”

Have you been forced to reduce rents in order to keep tenants and prevent void periods?

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Published On: January 12, 2017 at 9:28 am

Author: Em Morley

Categories: Property News

Tags: landlord taxes,rent prices,rental yields,rents,tax changes

Asking rents will rise by 4% outside London this year, according to Rightmove.

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Last year, the property portal reports that asking rents increased by 3% outside London, but dropped by 4.4% within the capital.

The highest growth in rental prices of the year was recorded in the northern regions of Yorkshire and the Humber and the North West. However, all regions outside London saw a rise.

In inner London, rents fell by 5.2%, while there was a smaller decline of 2.5% in outer London.

The Head of Lettings at Rightmove, Sam Mitchell, considers the future of the rental market: “This year will be one of caution for buy-to-let investors, due to tighter lending criteria and increased Stamp Duty.

“We definitely won’t see the spike in Q1 purchases that we saw last year, as landlords rushed to buy before last April’s new Stamp Duty deadline.”

He also assesses how further changes will affect the sector: “If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents.

“We forecast that asking rents could rise by 4% outside London by the end of 2017, though in London, prices are likely to stay flat.”

Mitchell advises landlords on the best locations to invest: “Investors looking for the strongest yields could consider investing in certain areas in the North West, where both demand and yields are high.

“Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.

“In order to mitigate this, we would recommend landlords asking for longer tenancies to help secure a steady rental income over the next few years while they adjust to what the tax changes will mean for them.”

While recent reports claim that rental yields are expected to drop below the five-year average this year, landlords should be aware that strong returns are still possible in some locations.

Rental Yields to Fall Below Five-Year Average This Year

Published On: January 11, 2017 at 10:44 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let returns,property investors,rent prices,rental yields

Rental yields will fall below the five-year average of 13% this year, warns estate agent Carter Jonas.

Rental Yields to Fall Below Five-Year Average This Year

However, the research arm of the agent insists that rental yields will be sustained in 2017 by a reduction in housing supply and moderate house price growth. It predicts total returns of 5.6% for the year.

Darren Yates, Head of Research at Carter Jonas, reports that the property market has been affected by Stamp Duty changes that have reduced the appetite of smaller investors in particular, with many anticipating higher tax bills as the phased removal of mortgage interest tax relief begins in April.

He says: “With weaker capital value appreciation forecast over the coming year, investors are likely to adopt a more income focused approach to residential property. By focusing on areas that benefit from a balance of strong rental yields and growing local economies, investors can ensure good returns.”

Yates predicts that while Brexit negotiations are likely to dominate the political and economic landscape for the foreseeable future, the UK property market is coming to the natural end of a long growth cycle that has also contributed to lower forecasts for rental yields.

He insists: “Total returns are forecast to moderate across the board, but property remains an attractive proposition for many investors compared with other asset classes over the medium to long-term.

“Property yields continue to offer a significant margin over bonds and equities, as well as delivering a stable income with the ability to add value through proactive asset management.”

Yates’ warning concerning rental yields arrives as HomeLet reports a slowdown in rental inflation. The firm expects rent prices to hit an affordability ceiling in the near future, with warnings of tenants struggling to pay higher prices.

Although rent prices are still increasing and are due to surge following a series of measures affecting landlords’ finances, notably the reduction in mortgage interest tax relief, it seems that yields will not remain so strong.

Rent Prices and Yields are Still Strong, According to Report

Published On: January 3, 2017 at 11:25 am

Author: Em Morley

Categories: Landlord News

Tags: average rents,rent prices,rental yields

Rent prices and yields for landlords are still strong, as the private rental sector proves resilient to pressures on the British economy, according to Adrian Gill, the Director of Your Move.

Rent Prices and Yields are Still Strong, According to Report

“Landlords are continuing to see strong yield levels and rents are increasing, even if growth is slower than it was previously,” he reports.

Gill’s comments follow the release of the latest Your Move index, which found that rent prices increased in England and Wales by 3.9% in the year to November 2016, taking the average rent to £830 per month.

Although the rental market is cooling in London, the capital remains the most expensive place to rent a home in the country, with rents hitting a record high of £1,295 a month.

On a regional basis, rent prices rose in nine out of ten regions, led by a 13.6% annual increase in the South East, where rents now stand at an average of £875 per month.

The South West was the only region to record a decrease in rents last year, albeit slight, to an average of £656 a month.

Gill believes: “Tenants are now in a much better financial position than earlier in the year. Fewer are struggling with rent payments and this is great news for tenants and landlords alike.

“There is now a great deal of stability in the rental market, and this means there is a solid platform for growth in future months.”

Gill’s observations arrive despite the onset of a year that may prove difficult for the private rental sector.

Not only will landlords see their tax relief on finance costs restricted from 6^th April this year, the Government’s database of rogue landlords and letting agents will be introduced on 1^st October, as confirmed by ministers.

The ban on letting agent fees for tenants will also be on everyone in the property industry’s lips this year, as landlords work out how they will accommodate extra costs if the fees are passed on to them.

Gill’s comments will provide some slight relief to investors, who may have feared that 2017 will be tough on their finances.

Avoiding the Growing Trend of Rent Arrears

Published On: December 8, 2016 at 11:16 am

Author: Em Morley

Categories: Landlord News

Tags: rent arrears,rent prices,tenants

James Davis – Portfolio landlord & property expert

After being a landlord for 22 years and becoming increasingly frustrated with the lack of quality tenant find services for landlords, James started Upad – the UK’s largest online letting agent. Upad has mastered the intricacies of online to provide landlords a service they can rely on. In this week’s article, James highlights the increasing importance of selecting tenants based on affordability, given the growing cases of rent arrears.

Avoiding the Growing Trend of Rent Arrears

Avoiding the growing trend of rent arrears

Landlords and tenants are in a financial tug of war. While property owners struggle with growing rent arrears, renters are taking on too much expenditure. The worst possible eventuality is when this dynamic breaks beyond repair, leaving both sides with legal fees to pay and new relationships to build.

In London, 57% of young professionals’ take home pay is being spent on rent. While this doesn’t represent the rest of the UK, it is a trend that we do not want to emulate.

If you think about the modern tenant lifestyle, there are many new and incremental outgoings that most tenants forget to account for. Whether it’s a Spotify subscription or increasing student loan repayments, renters are now committing to more standing orders than ever before. In fact, the growth in unsecured debt, such as loans, credit cards and overdrafts is nearly £10,000 per household.

As a result, I’d recommend that rent should be no more than 30% of a tenant’s net pay. This will allow a financial buffer for any unforeseen monthly payments.

Fail without the detail

Evictions are expensive. To rise above this worst case scenario isn’t easy, but it is necessary, especially if you are one of many landlords who own multiple properties. Multiple evictions are really expensive.

From the beginning of a tenant search, landlords must ask the right questions about income and help their tenants to understand the impact of local bills and taxes on their monthly living costs. It is also important to revaluate risk throughout a tenancy, continuing to communicate with tenants about their situation and employment.

Most importantly, you nip problems in the bud. When a tenant doesn’t pay or you notice that they have stopped responding to calls, take a soft but direct approach to understanding more about their situation. Do this yourself, as tenants are less likely to respond to impersonal, automated agency emails.

Letting Agents Profiting from Spiralling Fees, Believes Student Tenant Site

Published On: November 15, 2016 at 9:31 am

Author: Em Morley

Categories: Landlord News

Tags: letting agent fees,letting agents,rent prices,tenants

Letting agents are profiting from charging spiralling fees for “no extra work”, believes a student tenant website.

A study by StudentTenant.com – a free-to-list student lettings platform – highlights the extent to which letting agents are profiting from higher rent prices.

Their “antiquated model” of charging a high commission to let a property still allows them to pocket sky-high fees, without conducting extra work, insists the organisation.

Letting Agents Profiting from Spiralling Fees, Believes Student Tenant Site

In the last 12 months, rent prices have risen to an average of £901 per month – up by 3%, which is higher than the current rate of inflation.

The lowest rents can be found in the North East of England, at an average of £530 a month. However, in London and the South East, it’s a completely different story…

The cheapest London borough for private tenants is Croydon, where the average rent is £1,170 per month. In Westminster, this rises to a huge £2,241.

Although the problem is considerably worse further south, rent rises have been felt across the country.

The UK’s greatest increase over the past year was in Lambeth, where rents rose by 12% to reach £2,874.

Only one part of the UK, Scotland, has seen a decrease in rents over the past year.

Some London boroughs have experienced rent declines, however, with Haringey seeing the greatest fall, of 6.4%. Prices are also down in Brent, Bromley, Kingston and Chelsea.

With the majority of regions and London boroughs seeing rent price growth, letting agents will also have experienced a bump in their earnings, StudentTenant.com points out.

The firm’s research puts the average letting agent fee at 12.7% of the total rent for the year, meaning the typical fee across the UK is over £1,300. In the South East, it’s more than £1,500, while those in Westminster charge a whopping £3,415.

Following a bumper rent price rise, letting agents in Lambeth can now charge £345 more than at this time last year.

But is this justified, asks the group.

“It’s really hard to justify the amount that a typical high street letting agent charges in the first place, let alone above inflation increases in most parts of the country,” insists its Managing Director, Danielle Cullen. “There’s a significant shortage of good rental stock, which means higher rents and yields, which can be great news for landlords, but not so great for tenants.”

She adds: “But when much of that gain is eroded by greedy agents taking a fatter and fatter chunk of it, 12.7% of what would otherwise be the landlord’s income in effect, then buy-to-let investors might want to think twice about resorting to an old fashioned high street-based rental firm.”

In order to protect tenants from spiralling fees, Citizens Advice has called on landlords to cover letting agent costs. Do you think this is a good idea? And would this deter you even more from using a high street service?