Posts with tag: rent prices

Rents in London to Rise Sharply due to Supply-Demand Imbalance

Published On: May 28, 2019 at 8:00 am

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Categories: Lettings News

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Rents in London are set to rise sharply over the next few months, as the supply of rental housing dwindles, while demand from tenants continues to increase, new data from Chestertons indicates.

Across London as a whole, the letting agent recorded a 24% annual rise in the number of registered tenants seeking property during the first quarter (Q1) of 2019, contrasting to a 2.4% decline in the amount of available homes.

Chestertons’ data shows that rent price growth in southwest London, in particular, is significantly outpacing the rest of the capital, as the ban on tenant fees approaches.

The Tenant Fees Act, which comes into force on 1st June 2019, will ban upfront fees and cap deposits, but Chestertons believes that renters in London are unlikely to feel the benefit, as the change follows a series of broader legislation that has pushed landlords out of the market, at a time when demand in the private rental sector is fierce.

Over recent years, the changes to buy-to-let mortgage interest tax relief and Stamp Duty on additional homes have encouraged many smaller landlords to leave the sector, which has significantly limited the choice of properties on the market for prospective tenants, causing an increase in rents.

In London, Chestertons reports that this strain is most apparent in popular southwest enclaves, which have typically been dominated by accidental landlords – those who, through circumstance, end up letting a second home.

Rents in London to Rise Sharply due to Supply-Demand Imbalance

The number of tenants registering for rental properties in Q1 has soared by 48% year-on-year in the southwest of London – the greatest increase in demand across the capital. However, the amount of available homes to rent in areas including Battersea, Clapham, Wandsworth and Putney has dropped by 30% over the same period.

This significant supply-demand imbalance in the rental market means that the southwest was the only part of London to experience a decline in new tenancies during Q1 – down by 12% annually.

By comparison, central London locations, such as Kensington, Marylebone and Notting Hill, recorded a 15% increase in lettings over the same period.

This fierce competition for limited rental housing in the southwest means that rents are climbing three times as fast in this area than elsewhere in the capital, at an average of 5.9% year-on-year in Q1. Central London recorded a 1.2% rise, while the north and east saw a 1.8% uplift.

Richard Davies, the Head of Lettings at Chestertons, says: “Renters may welcome the ban on fees, as it saves on upfront costs, but, in terms of its impact on people’s finances, it’s distracting from the bigger issues at play.

“It’s been a turbulent few years for landlords, and tenants are starting to feel the impact. With the Government’s reforms to mortgage tax relief, Stamp Duty on second homes and the recent announcement of the end of no-fault evictions, the buy-to-let market has become significantly more difficult to manoeuvre and, as a result, it’s shrunk.”

He adds: “For London’s renters, it’s tackling the shortage of available properties that will make the difference – not the overhaul in tenancy fees.”

UK Rent Price Growth Unchanged in April

Published On: May 24, 2019 at 8:00 am

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The UK rent price growth rate was unchanged on a monthly basis in April, according to the latest Index of Private Housing Rental Prices (IPHRP) from the Office for National Statistics (ONS).

The average private rent price paid by a tenant in the UK increased by 1.2% in the 12 months to April, which is unchanged on March’s figure.

The UK rent price growth rate has generally slowed since the beginning of 2016, driven mainly by a slowdown in London. However, it has started to pick up since the end of 2018, due to strengthening growth in the capital.

Rent prices across the UK, excluding London, rose by an average of 1.5% in the year to April, which is unchanged on March. London’s private rents increased by an average of 0.5% over the same period, also unchanged.

In its Residential Market Survey for April, the Royal Institution of Chartered Surveyors (RICS) reported that tenant demand continued to rise gently in the month, while supply slipped further, remaining in negative territory since mid-2016.

In contrast, ARLA Propertymark’s (the Association of Residential Letting Agents) Private Rented Sector Report for March noted that the supply of rental properties rose, but agreed that demand from prospective tenants had also increased marginally.

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

In England, private rents increased by an average of 1.2% in the 12 months to April, unchanged on March. When London is excluded from the figures, rent prices rose by an average of 1.6%.

UK Rent Price Growth Unchanged in April

Private rent prices in Wales grew by an average of 1.1% over the same period, which was also unchanged on the previous month.

The average rent in Scotland increased by 0.7% in the year to April, also unchanged. The weaker growth rate recorded in Scotland since 2016 may be due to stronger supply and lower levels of demand north of the border, according to ARLA Propertymark.

The annual rate of change for rent prices in Northern Ireland (2.0%) in December 2018 was higher than the other countries of the UK. This growth rate remained broadly consistent around 2% throughout 2018. Data for Northern Ireland has been copied forward since December 2018. The next update will be included in the ONS’ release on 19th June 2019.

Private rent prices in London rose by an average of 0.5% in the 12 months to April, which was unchanged on March, remaining at its highest annual growth rate since November 2017. The RICS reported in its Residential Market Survey for September 2018 that tenant demand had staged a sustained recovery in the capital, increasingly outstripping supply. These effects may now be starting to feed through to the IPHRP.

Focusing on the English regions, the greatest annual rent price rise in April was recorded in the East Midlands, at an average of 2.1%, which was down on the 2.3% recorded in March. Yorkshire and the Humber (1.8%) followed, unchanged on March, with the South West (1.7%) not far behind, also unchanged.

The lowest annual growth rate was seen in the North West, at an average of 0.4%, which was up from 0.3% in March.

Northern Regions Continue to Offer the Highest Rental Yields

Published On: May 23, 2019 at 9:36 am

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Categories: Landlord News

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Northern regions continue to offer the highest rental yields for landlords across England and Wales, according to the latest data from Your Move.

The letting agent revealed that rent prices in England and Wales edged slightly higher over the 12 months to April, by an average of 0.5%, to reach £861 per month.

The West Midlands overtook the South West as the fastest growing region for rent prices in April. The average rent increased by 4.0% in the year, to hit £641 a month. The South West recorded rent price growth of 3.7% in the same period, to £701.

Other areas to record strong growth included Yorkshire and the Humber, where rents were up by 2.5%, to £589, the North West, where prices stood at £648, following 2.3% growth, and the East Midlands, where rent price growth stood at 2.2%, to reach £666.

At the other end of the spectrum, rents declined in two regions in April – by 1.1% in London and 2.2% in the East of England, where the average rent was £874 as a result.

London remained the most expensive region to rent a home in the UK in April, at an average of £1,262 per month.

The North East remained the cheapest place to rent, at just £538 a month on average.

Once again, northern regions offered the highest rental yields in April, led by properties in the North East, which typically returned 5.0% to landlords, while those in the North West made an average of 4.8%.

This contrasts with an average yield of 3.2% in London, and 3.3% in both the South East and South West.

The average yield in England and Wales was 4.3% in April – the same as March’s figure, but slightly down on the 4.4% recorded in April 2018.

Your Move also reports that tenant finances remained relatively healthy in April, with the proportion of renters struggling with their rent payments standing at 9.1% in the month, which is down from 9.4% in March and February.

Martyn Alderton, the National Lettings Director of Your Move, says: “Across England and Wales, there are those areas which are seeing rents rise, and those where they are flat or falling.

“It is the areas which have seen periods of strong growth in recent years, such as London and the East of England, which have dropped back slightly.”

He continues: “Other areas of the country, including the West Midlands, are starting to catch up and are growing at an attractive rate.

“Regardless of the short-term rent fluctuations, the property market remains a great place to invest, with landlords also enjoying stable returns compared to last month.”

Scottish Labour Proposes Bill to Control Rent Prices

Published On: May 22, 2019 at 8:00 am

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Categories: Law News

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The Scottish Labour Party has proposed a bill that would control rent prices north of the border.

The Fair Rents (Scotland) Bill, proposed by Pauline McNeill MSP, seeks to enforce fair rent prices, by introducing a points-based system.

The law would link rent prices to average wages, to ensure affordability, while giving tenants the powers to challenge rents and seek reductions.

Rules on restricting rent price rises to once every 12 months are already in force in Scotland, through the Private Housing (Tenancies) (Scotland) Act 2016, but the new bill would further control rent prices. Labour claims that it would ensure that no one is “forced to rent a home that pushes them into poverty”.

The bill honours Scottish campaigner and socialist Mary Barbour, who organised rent strikes and actively opposed evictions.

At First Minister’s Questions, the Scottish Labour Leader, Richard Leonard, said: “We have seen the return of private landlord-ism and rents have soared whilst wages have stagnated.

“According to the Scottish Government’s own figures, over 40% of all children living in the private rented sector are now living in poverty. That is 60,000 children.”

He added: “We think that private rent rises should be capped and controlled. So, Nicola Sturgeon has a choice, will she take the side of rogue landlords and a broken housing market? Or she can back Labour’s plans and back our Mary Barbour Bill.”

A consultation on the bill can be found here. 

South of the border, the Housing Secretary, James Brokenshire MP, has rejected rent controls, but the Labour Party supports them.

In recent years, private rental legislation in Scotland has set a precedent for legal changes in England and Wales, notably the tenant fees ban and proposed abolition of Section 21 notices.

What are your thoughts on Scottish Labour’s plans to control rent prices? 

Increase in Tenant Activity Expected in June for England

Published On: May 16, 2019 at 8:54 am

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Categories: Tenant Fees Ban,Tenant News

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With the Tenant Fees Act coming into force on 1st June in England, letting agents and landlords are being warned to prepare for an increase in tenant activity.

No Letting Go, provider of inventory services in the UK, says that many tenants are waiting to move homes after 1st June, in order to avoid paying any upfront fees and to benefit from capped security and holding deposits.

This warning follows recent research from The Deposit Protection Service (DPS) suggesting that tenants could be delaying their move until the Tenant Fees Act officially becomes law in a couple of weeks’ time.

According to the study, rents dropped during the first quarter of 2019, which meant that the average rent across the country during the first three months of the year had fallen to £757. This is a drop of £5 (0.64%) from the last quarter of 2018 and £14 (1.87%) from the first quarter of if 2018.

The DPS has said that this drop-off is down to a range of economic factors, as well as a period of ‘tenant inactivity’ leading up to the fees ban.

Nick Lyons, CEO and Founder of No Letting Go, says: “It’s no surprise to see shrewd tenants delaying moves until after the fees ban and deposit caps are introduced on 1stJune.

“The upfront cost of moving between rental homes can be high – particularly in London and the South East – so renters will do anything they can to keep costs down, even if that means putting their move on hold for a few months.

Lyons has said that although this recent dip in activity may have allowed extra time for agents and landlords to prepare for the new system, they should expect a significant increase in tenant activity from June onwards.

Lyons also commented: “Tenants are likely to have continued searching for properties over the last few months and will be keen to push their moves through as quickly as possible so they can be settled in their new property for the majority of the summer months.”

No Letting Go also wants to remind landlords that once the five-week deposit cap is enforced, an independently compiled inventory will be even more valuable towards protecting their investment. 

Lyons said: “Inventory reports confirm the condition of a rental property at the beginning and end of a tenancy. The presence of this document provides landlords with the evidence to make fair deductions for damage and lost items.

“With the fees ban likely to reduce average deposits in some areas, it’s vital that landlords have peace of mind that their property is protected by an inventory that can support them in the event they need to make deposit deductions.” 

Rents Continue to Rise Across Most of England and Wales

Published On: May 8, 2019 at 8:00 am

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High demand is causing tenants to miss out on rental properties

Rents continued to rise across most parts of England and Wales between March and April, according to the latest index from proptech firm Goodlord.

The average monthly rent price increased between March and April in six of the eight regions included in the index, with declines only recorded in the North East and South West.

Goodlord’s figures reveal wide regional variations in rents. As of April, the average rent price in each region stood at the following:

  • London: £1,652
  • South East: £1,009
  • South West: £867
  • East Midlands: £832
  • North West: £774
  • Wales: £770
  • West Midlands: £699
  • North East: £618

The index also found that landlords in London experienced the shortest void periods in April, at an average of just 12 days, while the capital also boasted the longest fixed term tenancies, at an average of 14 months. This is a full two months longer than the South East, which recorded the second longest tenancies in the country.

Void periods continued to hit landlords in the West Midlands the hardest, at an average of 31 days.

The North West and Wales were the most affordable regions for tenants in April. Goodlord calculates affordability by dividing a tenant’s annual income by their yearly rental costs.

London and both regions in the south of England continued to present the most expensive rent prices for tenants in April.

Is this a trend that you expect to continue into the summer months, as the private rental sector in England prepares for the controversial tenant fees ban?

It is expected that, once landlords and letting agents are prohibited from charging administration fees and high deposits to tenants, they will put rent prices up to recoup any lost income from the ban. Perhaps this latest data indicates that property owners are already preparing for a reduction in income…