Posts with tag: rent prices

The Cost of Renting Across the Capital

Published On: August 4, 2016 at 9:19 am

Tags: London,London property market,rent prices,rental returns,tenants

Although the cost of renting in the capital has slowed for the second quarter this year, unprecedented levels of demand mean that tenants are still struggling to find affordable housing.

A new report from flat and house share website SpareRoom.co.uk found that the average rent price in the capital has risen by just 1% over the year, taking the typical cost of renting a room to £734 per month in London.

The Cost of Renting Across the Capital

Although the cost is continuing to rise, this year’s rate of growth is significantly lower than the 8% recorded between 2014-15.

The Director of SpareRoom, Matt Hutchinson, explains: “It seems many areas of London are at rental saturation – people simply can’t afford to pay higher rents, so they’re stabilising.”

A third of postcode districts in the capital have seen an annual decrease in average room rents, with prices falling by 4% in northwest and 2% in west central and east central London.

A slowdown in rent price rises has also been seen across the wider residential lettings market. However, a recent report claims that rents are up in prime central London, as buyers remain cautious over the Brexit outcome.

Parts of southwest London are also bucking the trend, such as Barnes, Tooting, Mortlake and West Brompton/Chelsea, with average room rents now at £763 per month following a 5% annual increase.

However, demand continues to be high in this part of the capital, as an increasing number of tenants are priced out of Clapham, Battersea and Fulham. Four renters are competing for every room, while in west central London, the odds of securing a room are slightly lower, with five potential tenants for every vacancy.

The Head of Lettings at Rightmove, Sam Mitchell, reports: “Overall demand from tenants is at record levels. There will always be localised markets where there just isn’t enough property and rents therefore will rise. Typically, this happens in areas in Zone 2 with really good transport links.”

Mitchell also notes that following a rush of buy-to-let landlords to purchase rental properties ahead of the Stamp Duty deadline in April, the lettings market experienced an influx of properties on the market, which has led to a slowdown in rents.

According to SpareRoom, east London is the best bet for tenants to find a room, as it offers the greatest levels of supply and the cheapest prices.

Landlords looking for the highest returns should look to Abbey Wood in southeast London, which has recorded rent price growth of 21% over the year, largely due to the forthcoming Crossrail project. The average rent price per month here is now £564, cementing it as one of the few remaining areas with an average rent price under £600 a month.

The cheapest places in London to rent a room are Eltham (£518), Manor Park (£525) and Chingford (£544), which are all in southeast or east London.

With tenants heading east, landlords should move further out of central London to take advantage of high levels of demand.

Rent Prices Up in Prime Central London Following Brexit

Published On: August 4, 2016 at 8:34 am

Author: Em Morley

Categories: Property News

Tags: average rent price,Brexit,London,prime central london,rent prices,rental market

Rent Prices Up in Prime Central London Following Brexit

The prime central London rental market has remained strong following Brexit, with rent prices rising between May and July, according to London estate agent Portico.

The agency’s July Rental Market Update found that the average rent price for a two-bedroom property in the prime central London borough of Kensington and Chelsea has increased by 0.4% post-Brexit, while rents are up by 1.7% in the City of Westminster.

These two prime central London boroughs have again recorded the highest average rent prices of all the London boroughs, with the average rent price for a two-bed home in Kensington and Chelsea almost hitting the £4,000 per month mark, at £3,989.

On the whole, Portico’s data suggests that the rental market has remained fairly stable post-Brexit, with average rent prices experiencing a slight 1.7% decrease between May and July.

The boroughs with the greatest rent price rises between May and July were Camden, at 3.3%, Tower Hamlets, 1.2%, and the outer London boroughs of Newham, 2.6%, Haringey, 2.2%, Hillingdon, 1.3% and Sutton, 1.1%.

The Managing Director of Portico, Robert Nichols, comments on the figures: “Caution in the sales market has pushed demand into the prime rental market, and as such, we have seen rental prices rise over the past few months. We expect the market to remain stable throughout the summer months, but whether rental prices will continue to rise will depend on the economic consequences of Brexit.

“Outside prime central London, the rental market has remained stable, with tenants still keen to snap up properties in hotspot areas created by infrastructure projects like Crossrail and Crossrail 2, such as Tower Hamlets, Newham, Haringey, Hillingdon and Waltham Forest.”

If you are thinking of investing in the London market to take advantage of robust conditions and forthcoming infrastructure improvements, look to the areas that are likely to benefit from the new Crossrail 2 project. Portico has highlighted the areas that landlords should consider for their next buy-to-let investment: https://www.justlandlords.co.uk/news/crossrail-2-coming-london-invest-along-line/

Average First Time Buyer Age Rises to 30

Published On: July 26, 2016 at 11:00 am

Author: Em Morley

Categories: Property News

Tags: first time buyers,house prices,London,property ladder,rent prices

The average first time buyer in the UK is now 30-years-old and 32 in London, according to the latest Halifax First Time Buyer Review.

The report warns that rapidly rising house prices and sky-high rents are making it increasingly difficult for private tenants to get onto the property ladder.

The study also found that first time buyers in the capital are now putting down an average deposit of £96,000 – almost three times higher than the UK average of £34,000, where first time buyers are generally able to get onto the property ladder two years earlier than in London.

Average First Time Buyer Age Rises to 30

Rising house prices

The price of the average first time buyer home in the UK increased by 12% in the last year to reach just under £200,000. This rises to £385,000 in London and £257,000 in the South East.

Londoners will not be surprised to learn that the ten most expensive areas of the country to buy a first home are all in the capital, with Brent being the least affordable borough for first time buyers. Its average price of £460,000 is 12.5 times the average annual earnings of a typical buyer.

Across the capital, the average first time buyer deposit was 25% of the purchase price, compared with 17% in the rest of the UK. Halifax believes that Londoners opt for a higher deposit in an attempt to keep monthly mortgage payments as low as possible. Although higher wages in the capital might account for first time buyers being able to save more, the report adds that many are receiving more help from the bank of mum and dad than those in the rest of the country.

All first time buyers in London were liable for Stamp Duty, which applies to properties costing over £125,000, with 85% paying more than £250,000 for their homes.

More first time buyers

However, it’s not all bad news – the number of first time buyers rose by 10% over the first six months of this year, compared with the same period in 2015, with almost 155,000 people buying their first home in the first half of 2016.

The Mortgages Director at Halifax, Chris Gowland, comments: “This rise has been broadly in line with a general improvement in market activity and is likely to have been helped by Government measures including the Help to Buy scheme.

“Although numbers remain below their previous peaks and many potential first time buyers are facing escalating house prices and deposit sizes, record low mortgage rates continue to make buying seem a more attractive option than renting.”

Although the outlook for first time buyers appears more positive, many are still forced to rent privately while they save. It is vital that good landlords look in the right parts of the country to invest, so that they can provide the safe, secure and high standard properties that generation rent needs.

Scottish Landlords Making Losses of £3,800 Per Year

Published On: June 23, 2016 at 9:59 am

Author: Em Morley

Categories: Landlord News

Tags: rent prices,rental property,rental returns,Scotland,Scottish landlords

Scottish landlords are seeing a decline in their returns, of £3,800 per year, according to the latest Scotland Buy to Let Index by Your Move.

Falling house prices and higher taxes for buy-to-let properties have caused returns to drop for landlords in Scotland. Over the year to May, annual returns decreased by 2.2%.

In absolute terms, the average Scottish landlord has seen a paper loss of £3,782 in the last 12 months.

Scottish Landlords Making Losses of £3,800 Per Year

Your Move reports that the initial Land and Buildings Transaction Tax, introduced in April 2015, and this year’s 3% Stamp Duty surcharge for buy-to-let landlords have held down prices in May.

This has also created a shortage of homes to rent, pushing up costs for private tenants, says the index.

The average rent is Scotland now stands at £549 per month, compared with £538 in the previous month. This is the highest Scottish rent on record, surpassing the previous peak seen in July 2015.

Rents rose in all parts of Scotland in May, with Glasgow & Clyde recording the greatest increase, of 1.9%. This equates to an £11 jump in prices compared to the previous month.

On an annual basis, Edinburgh and the Lothians saw the sharpest rise of any region, at 12%, or £69, to reach £662 per month.

The Lettings Director of Your Move Scotland, Brian Moran, comments: “Rents are rising rapidly as a result of the new Land and Building Transaction Tax surcharge for buy-to-let properties.

“This tax hike has dissuaded landlords from investing in the sector, leading to a shortage of homes to rent, compared to the demand for housing.

“With the limited supply of rental properties, potential tenants have been forced to compete to secure homes, pushing up rents. The introduction of this anti-landlord legislation from Holyrood has ensured the cost of the policy has hit tenants hardest.”

The research also found that the average rent price in Scotland has risen by 7.9%, or £40 per month, since May 2011, when the Scottish National Party (SNP) gained an overall majority in Holyrood.

Moran explains: “Since the SNP came to power five years ago, monthly rents have increased by an average of £40. However, the rent control policy in the Scottish government’s private tenancies bill will only treat the symptoms, not the cause, of rising rents. By limiting the rent that can be charged on a property, becoming a landlord will become less appealing, limiting investment and forcing many to consider leaving the sector. This will lead to an even greater shortage of homes to rent.

“In addition, without the potential incentive of higher rents, landlords will lack the motivation and finance to improve the quality of their properties. The government needs to look at incentivising landlords to increase the supply of rental properties in Scotland. With more homes available to rent, tenants wouldn’t need to compete for properties and rents would be more affordable.”

Young Tenants Spend Half of Their Wages on Rent

Published On: June 15, 2016 at 11:20 am

Author: Em Morley

Categories: Finance News

Tags: Generation Rent,letting agent fees,London,rent arrears,rent prices,tenants

Young tenants in Britain are forced to spend around half of their wages on rent, a new report has claimed.

Young Tenants Spend Half of Their Wages on Rent

A single working tenant aged between 22-29 and renting a one-bedroom property spends an average of 48% of their taxed income on keeping a roof over their head, according to the study by Countrywide.

The property firm found that the amount of income that tenants spend on rent is up by 3% on 2007. However, in London, young tenants typically pay 57% of their earnings on rent, up by 16% over the same period.

The average cost of renting a one-bedroom home in Britain is £749 per month, while in the capital it soars to £1,133.

A spokesperson for Countrywide comments: “In London, rents have risen much faster than wages, stretching affordability. Many have adapted by moving to cheaper areas or sharing.”

However, away from the capital, the proportion of income taken up by rent is lower than it was in 2007 in many parts of the country, found Countrywide.

In the North East, the cost of a one-bedroom property accounts for 35% of a young tenant’s post-tax income, down from 42% in 2007.

Young renters in Scotland, Yorkshire and the Humber, the East Midlands, South East and South West have also experienced falls in the proportion of income being eaten up by rent.

Positively, new data also shows that the amount of tenants in serious rent arrears has dropped, as employment levels remain high. However, the private rental sector continues to grow, meaning that supply levels and the Government’s crackdown on buy-to-let could push rent prices higher.

Tenants may be facing some good news, however, as the proposed Renters’ Rights Bill was unopposed in the House of Lords on Friday. The bill plans to abolish letting agent fees charged to tenants, making the renting process cheaper.

London Tenants Spending 70% of Their Income on Rent and Bills

Published On: June 8, 2016 at 11:36 am

Author: Em Morley

Categories: Property News

Tags: housing crisis,London,London tenants,rent prices,tenants

London tenants are now spending 70% of their average income on rent and essential bills, according to research by London estate agent Portico.

New data analysis by the firm shows that for three-and-a-half out of five working days, Londoners work solidly to pay their rent and other essential expenditure, such as taxes, housing costs and household bills.

The following table details how the typical London tenant’s working week is divided to pay for essential costs:

London Tenants Spending 70% of Their Income on Rent and Bills

Portico claims that it is not until 1pm on a Thursday that the average Londoner has earned enough to cover all of their essential expenses for the week. They are then left with around £201 of disposable income to be spent or saved as they like – although the firm notes that bills do not include food.

From 10am on a Tuesday until 4pm on Wednesday, Londoners are working to pay their rent, whereas all day on Monday, they work to pay their Income Tax and National Insurance.

Portico has also analysed the data on a borough-by-borough basis, adjusting the cost of rent, Council Tax and travel to zone 1 accordingly, but using the average London salary of £34,320 a year.

The agent found huge variations between boroughs; London tenants living in Bexley will have the greatest amount of disposable income left over after rent and essential bills, at £287 a week, while City of London workers have the least amount of disposable income, at £32. If tenants are looking to live in zone 1, Lambeth offers the highest amount of weekly disposable income, at £209.

The Managing Director of Portico, Robert Nichols, comments: “Londoners have to work increasingly later into the week before they start to spend some of their hard-earned money. Working for five hours alone to pay Income Tax, plus almost two days on rent, clearly shows how private rents in the capital have skyrocketed.

“But while rents are increasing, public transport is also improving significantly, so we’re seeing a huge number of tenants move further out to boroughs like Bexley, Barking and Dagenham, and Ealing to benefit from affordable rents, a quick commute – which will become even better with the arrival of Crossrail – and a good sum of disposable income in their pockets at the end of each week.”