Posts with tag: rent prices

Worries in the Private Rental Sector as Supply Drops Sharply

Published On: April 28, 2016 at 9:40 am

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The supply of rental housing stock on letting agents’ books has dropped sharply, causing worry in the private rental sector, according to the latest report from the Association of Residential Letting Agents (ARLA).

The March Private Rental Sector report found that the supply of rental accommodation fell to the lowest level since the start of last year in March.

Demand was also down last month, with ARLA agents reporting an average of 33 prospective tenants registered per branch, down by 11% from the 37 seen in February. This is also down on last year, from an average of 33.

Worries in the Private Rental Sector as Supply Drops Sharply

Worries in the Private Rental Sector as Supply Drops Sharply

Supply has also dropped on an annual basis. In March 2015, the average number of properties managed per letting agent branch was 192. This year’s figure of 169 properties marks a decrease of 12% and is the lowest level seen since records began in January 2015.

However, the private rental sector appears to be healthy in Scotland, where agents had an average of 273 properties on their books. In Yorkshire and the Humber, agents have 207 properties to manage. Contrastingly, there are just 122 rental properties available per letting agent branch in London.

Due to the 1st April’s introduction of a 3% Stamp Duty surcharge for buy-to-let landlords and second homebuyers, two-thirds (65%) of ARLA agents predict that current and prospective investors will leave the market, causing a decline in the supply of rental properties. Indeed, many have questioned whether buy-to-let is still a lucrative investment opportunity.

In March, rent prices rose for a third (32%) of tenants, and three in five (61%) ARLA members fear that they will increase further as a result of the changes. It has long been considered that buy-to-let tax changes will push rents up for tenants.

The Managing Director of ARLA, David Cox, comments: “We don’t expect falling supply to stop here – the recent Stamp Duty changes are very likely to cause supply to decrease even further, as landlords withdraw from the market.

“Not only do our agents predict that rent costs will increase further, but rental homes may also face a decline in quality over time, as landlords struggle to keep up with maintenance costs alongside the higher Stamp Duty charge.

“While landlords adjust to the increase in costs, we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.”

Greatest Monthly Fall in Scottish Rents on Record

Published On: April 27, 2016 at 9:13 am

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Rent price data for March shows the greatest monthly fall in Scottish rents on record, according to the latest Scotland Buy-to-Let Index from Your Move.

The average private rent in Scotland dropped by 0.7% in the month to March, the sharpest monthly fall since the index began. It is also the first monthly decline in rents recorded since September 2015, when average rents decreased by 0.3%.

The £4 drop in rents between February and March takes the average rent in Scotland to £544 per month – Scottish rents have not been this low since May 2015.

The monthly drop also takes annual rent price growth down to 1.1% – a significant downturn from the 2.1% inflation seen in February. The annual price change is now at a 13-month low, equal to the 1.1% increase recorded in February 2015.

The Lettings Director at Your Move Scotland, Brian Moran, comments on the figures: “Those who signed a new tenancy in March will be feeling confident they snapped up a competitive deal, and will be enjoying a little extra cash in their pockets at the end of every month. It’s been a rare break for cover and it’s unlikely to hang about for long, as the Scottish rental market begins to gear up towards the annual autumnal peak.

Greatest Monthly Fall in Scottish Rents on Record

Greatest Monthly Fall in Scottish Rents on Record

“Tenants in big cities like Edinburgh haven’t enjoyed the same reprieve at all, with the ratio of supply and demand still stacked greatly against them. Investment from landlords needs to follow the tune of the jobs market and economic activity.”

He continues: “Affordability is the main warning light to watch out for on the dashboard, and with the frequency of arrears on the rise once again, this reminds us of the considerable obstacles ahead. With landlords now facing an additional 3% Stamp Duty on property purchases, and the Private Tenancies Bill passed through Scottish Parliament, we’re entering unchartered territory. What we do know is that if landlords hit the brakes and cause a roadblock of supply in the private rented sector, tenants will be the casualties paying higher rents in the longer term.”

Rents in March were down in the majority of Scotland, with just Edinburgh and the Lothians recording a monthly rent rise. Rent prices in the region grew by 0.2% (or £1) to hit a new peak of £645 per month.

The greatest monthly decline was seen in Glasgow and Clyde, where rent prices dropped by 1.5% between February and March. This represents an £8 fall, taking the average rent to £544 a month.

The Highlands and Islands experienced a similarly sharp 1.4% fall, with rents in the East down by 0.8% on a monthly basis. The South of Scotland saw a more modest 0.2% downturn in rents over the same period.

Despite widespread monthly decreases in rents in March, the proportion of rent arrears in Scotland has risen for the first time since October 2015.

The level of rent arrears increased to 11.3% of all rent due in March – up from a seven-month low of 10.9% in February. On an annual basis, the proportion of late rent is up from just 8.6% in March 2015.

Moran says: “March has seen a very unwelcome about-turn in the direction of tenant finances. Up until now, Scottish tenants have been making good ground over the spring months, and paying down levels of late rent – but there’s still a mountain to climb for many households.

“External factors and the wider economic climate obviously have a vital impact on tenants’ bottom line and the delicate balancing act between monthly income and outgoings, but landlords on the ground can help keep a lid on affordability pressures too. Good management of buy-to-let properties and regular communication between landlords and their tenants is crucial to signpost any early concerns and avoid the likelihood of rental arrears.”

He adds: “Tenants need properties they can afford, and landlords need tenants with a healthy grip on their household expenses, so it’s about striking a fair deal for both.”1 

1 https://www.landlordtoday.co.uk/breaking-news/2016/4/biggest-monthly-drop-in-scottish-rents-on-record

 

Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Published On: April 20, 2016 at 8:36 am

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The average price of a two-bedroom London rental property will reach £2,000 per month by the late summer, according to Portico, London estate agents.

The firm’s latest Q1 Rental Report found that the typical rent price on a two-bed property in the capital is currently £1,867. With rents rising rapidly, it is expected that tenants will be paying over £2,000 for the same property by September.

Portico believes that a rush of graduates seeking professional jobs and a new lifestyle in London around September time drives rent price growth. And it’s not just prices that rise – tenant demand surges by a huge 64% in September, as available rental stock drops by 10% when compared with average monthly growth.

Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Average Two-bed London Rental Property to Reach £2,000 Per Month by September

Portico sees almost double the number of enquiries per property in September than it does in an average month, and four times the level of interest compared with the typical December.

The particularly high demand seen in the late summer causes tenants to compete more fiercely for properties. Portico reports that prices achieved for similar properties are generally 11% higher in September than in December.

Based on this data, the firm predicts that two-bed rents will hit £2,008 per month in September this year. Split between two tenants – £1,004 a month – this shared rent will eat up 46% of the average London monthly salary.

Confirming this belief, the Residential Landlords Association recently revealed that almost all landlords (84%) are considering increasing their rents to accommodate the higher taxes they now face.

Buy-to-let landlords are now charged an extra 3% in Stamp Duty when they purchase a rental property, while the amount of mortgage interest that landlords can offset against tax will be reduced from April next year. For more information on how these changes will affect you, see this advice from Paul Mahoney of Nova Financial: /contrary-to-popular-belief-buy-to-let-is-not-dead-insists-finance-firm/

However, if you’re a landlord in London, you’ll be pleased to learn that rents are rising between 1-7% in the majority of London boroughs.

Portico has found that properties in Ealing have seen the greatest increase in rents, at an average of 6.9% for a two-bed property, to £1,825 per month. Richmond-upon-Thames follows with a rise of 6% to £1,934 a month for a typical two-bed, while rents in Lambeth are up by 5.8% to £2,051.

However, average rents on two-bed properties have fallen in seven London boroughs, including two parts of prime central London. Rent prices in Westminster and Kensington and Chelsea are down by 5.7% and 1.1% respectively. These figures reflect those reported recently, suggesting that the London property market is running out of steam.

During Q1, Bromley experienced the largest decrease in rents for all properties, with a drop of 6.3%, followed by Hillingdon at 4.4% and Kingston-upon-Thames at 4.1%.

If you are worried that you need to revise your rent prices, this advice will help you set the perfect rent for your property: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

Interest in Buy-to-Let Properties Falls by Over a Quarter

Published On: April 13, 2016 at 8:39 am

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Interest in new buy-to-let property purchases fell by over a quarter in March, as the Stamp Duty deadline loomed, according to new data from Rightmove.

Inquiries dropped by 27% compared with March last year, reversing the upward trend recorded between December and February, when interest rose by 24% annually.

The Head of Lettings at Rightmove, Sam Mitchell, comments: “This waning of interest definitely seems to predict a slowdown in the buy-to-let market, but what’s not yet clear is if this will only turn out to be a short-term pause.

“It could be that some investors are waiting until the tax changes have had time to bed in before they review their business and continue to make purchases. If this removes some of the competition for smaller properties, then it could spell good news for many first time buyers.”1

Interest in Buy-to-Let Properties Falls by Over a Quarter

Interest in Buy-to-Let Properties Falls by Over a Quarter

76% rise in buy-to-let sales in March compared to the previous year, as landlords rushed to beat the Stamp Duty surcharge.

Rightmove also found that the average rental asking price increased by 0.8% in the first quarter of the year.

Average rents ranged from a huge £2,021 per month in London – a 1.6% rise on last year – to £538 a month in the North East – down 0.5%.

However, some of Rightmove’s figures contrast with newly agreed actual rent figures released by HomeLet.

HomeLet’s research shows that the average rent in the capital is now £1,536 – up by 7.7% over the past year – and for the rest of the UK (excluding London), the average rent is £755 per month.

In the North East, however, Rightmove and HomeLet figures are only £7 apart, with HomeLet reporting £531 a month.

HomeLet’s study also found that in March, 37% of its insurance policies were bought by landlords with new properties. This was just 24% last year.

The CEO of Barbon Insurance Group, Martin Totty, says: “We’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.

“However, external factors may now come into play: the Stamp Duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply.

“The data from the HomeLet Rental Index will be eagerly anticipated over the next few months as an indicator of the impact these changes may have on the market. However, despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future, according to official projections.”2 

We will continue providing you with landlord updates on all the goings on of the market.

1 http://www.propertyindustryeye.com/interest-in-buy-to-let-purchases-drops-off-by-over-a-quarter/

2 https://www.landlordtoday.co.uk/breaking-news/2016/4/london-rents-7-7-up-on-last-year

The Shocking Difference in Rent Prices Around the UK

Published On: March 19, 2016 at 8:36 am

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A national self-storage firm has analysed average rental properties around the country to highlight the shocking difference between rent prices, particularly between the north and south.

StoreFirst.com has revealed what a private tenant can rent for £800 or less per month in the UK’s ten largest cities, from a three-bedroom house in Manchester to a single bedroom in a London flatshare.

The company found that the average UK rent price, excluding London, was £740 per month in January this year, up by 5.5% on last year’s £702.

Unsurprisingly, London was the most expensive place to rent, with the single bedroom flatshare in Whitechapel costing £800 a month.

The average rent price in the capital is a huge £1,510 per month.

The cheapest London borough for renters is Havering, which has an average monthly rent price of £1,161. Kensington and Chelsea was named the most expensive, at £2,720 a month.

Behind London, the most expensive place to rent in the UK is the South East, with an average monthly rent of £933.

The Shocking Difference in Rent Prices Around the UK

The Shocking Difference in Rent Prices Around the UK

In Birmingham, tenants can rent a furnished, two-bedroom terraced house with two reception rooms for £800 per month, or a two-bed apartment with parking for £725.

A two-bed flat with a separate utility area is £750 in Bristol.

However, the more shocking differences are found the further north you go.

In Manchester, a spacious three-bed terraced house with a cleaner costs £795, while £5 more gets you a two-bed apartment with parking.

But Liverpool is even cheaper – a two-bed duplex apartment costs £725, while you can also find a four-bed terraced house with a garden for the same price.

Tenants in Leeds can get a two-bed apartment in the city centre with a Juliet balcony for just £650.

In Bradford, a three-bed semi-detached house with a garden and parking for two cars is £800 per month. Alternatively, a four-bed detached house with parking, a double garage, en suite shower and breakfast bar costs £750.

The best value for money was found in Sheffield, where a three-bed terraced house costs £675, while a two-bed unfurnished house is £495 a month.

What can you get across the border in Scotland?

Tenants in Glasgow can rent a two-bed semi-detached house for £750 per month, or a three-bed house with a garden for £700.

In Edinburgh, a two-bed flat with a communal garden costs £799.

The three cheapest areas in the UK were the North East at £528 per month, Northern Ireland at £582 and Wales at £595.

The Operations Director at StoreFirst.com, Oliver Kitson, comments on the findings: “When looking at the prices of rentals going up predominantly in city/town centre locations, it’s clear to see that renters are getting much less space for their money in the rental market. Despite Government schemes like Help to Buy and Help to Buy mortgage guarantees, it doesn’t seem as though people are ready, financially, to become homeowners.

“With average property prices being over eight times the average wage, it’s not difficult to see why.”1

If you are a landlord struggling to set the perfect rent price for your area, this advice will help: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

1 http://www.24dash.com/news/housing/2016-03-15-800-links-a-three-bedroom-house-in-Manchester-to-a-single-bed-London-flat-share

First Rent Price Rises Recorded Since September

Published On: March 18, 2016 at 1:43 pm

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In February, rent prices in the private rental sector increased on a monthly basis for the first time since September last year, according to the latest report from Your Move and Reeds Rains.

As the sector prepares itself for a host of new Government policies, the average rent price in England and Wales is now £791 per month.

The research found that average rent prices are now increasing on a monthly basis for the first time since September 2015, up by 0.1% between January and February.

The average rent of £791 a month is 3.3% higher than a year ago, equivalent to an extra £25 per month for tenants.

First Rent Price Rises Recorded Since September

First Rent Price Rises Recorded Since September

The report also found that the rate of rent arrears has also increased, as tenants struggle with their finances.

The Director of Your Move and Reeds Rains, Adrian Gill, says: “Spring is here for the rental market. Rents are rising and demand is growing. In a warming market, tenants are beginning to feel the heat when signing new tenancies.

“But this delicate ecosystem of soaring demand from tenants and steady investment from landlords is under threat. Rent rises could now accelerate further, and gentle spring warmth could start to feel less comfortable. If Government attacks on landlords bite – having worsened again in this week’s Budget – the flow of investment from landlords could wilt.”

He explains: “Landlords are increasingly deliberate in their actions and savvy in their business decisions. But all landlords investing steadily in new property to let are the heroes of the buy-to-let industry, not the villains. Thanks to the business acumen and persistence of landlords, Britain’s private rented sector has become home to millions of households and the only real backstop against the weakness of other tenures.

“All landlords, regardless of the number of properties they own, want to provide a quality service as part of earning a reliable return on their investment. For those with the right advice, this is part of operating a successful business model. Avoiding void periods and ensuring a good relationship with reliable tenants is essential. So it is hard to understand the logic behind restricting the flow of new investment, and the competition between existing landlords.”

Gill adds: “Additional taxes on the purchase of new buy-to-let properties will not support the stated aims of these policies – namely to improve homeownership. By attacking buy-to-let, the Government will only serve to push up market rents more quickly, stymieing the efforts of many tenants to raise a deposit to buy a home, while also boosting returns for existing landlords with the best advice to navigate new complications.”1 

In Wednesday’s Budget, the Chancellor announced that large-scale buy-to-let investors will be subject to the 3% Stamp Duty surcharge, which is set to be enforced on 1st April.

Regionally, the Midlands has led annual rent growth.

Those living in the East Midlands have seen their rent prices rise by 7% in the last 12 months. This is followed by increases of 6.3% in the West Midlands and 6.2% in the East of England.

These three regions are all ahead of London, with rent prices in the capital up 4.8% on February 2015. As recently as November, London consistently led rent rises in the UK.

Meanwhile, rents are down annually in three out of ten regions. The North East suffered the greatest decline, at 2.5%, followed by Wales at 1.5% and 0.1% in the South East.

On a monthly basis, rents have risen in five out of ten regions. The East of England recorded the highest price rise at 1.1%, with the South East and East Midlands coming in joint second, at 0.6%.

Contrastingly, rent prices in Wales and the North East are now lower than they were in January, down by 0.9% and 0.7% respectively.

After these monthly increases, rents in the West Midlands are now at a record high of £596 per month, with Yorkshire and the Humber also seeing an all-time high of £559 a month.

Despite recording the fastest annual rent rise, prices in the East Midlands are still £1 short of their record high of £610, seen in November 2015.

Unsurprisingly, Your Move and Reeds Rains’ data shows that landlords’ gross annual rental yields are now at a 17-month high.

1 http://www.propertyreporter.co.uk/landlords/anti-landlord-policies-fuel-first-rent-rises-since-autumn.html