Posts with tag: rental market

Rental market set to swell further in next decade

Published On: May 23, 2016 at 11:26 am

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Spiralling property prices and a shortage of affordable property is preventing many potential buyers out of the market. As such, they are left with little choice but to reside in rental accommodation.

According to new research conducted by landlord insurance specialists Cover4LetProperty, 28% of UK adults are currently living in privately rented or socially rented accommodation.

Giving up

Another recent report from Shelter revealed that many people of a younger generation are giving up on ever owning their own home, due to sky-high house values. However, Cover4LetProperty’s research shows that 57% of those over 60 live in rented accommodation.

The report also shows that 67% of renters earn between £10,000 and £19,999 per year. 40% of people living in the sector are women, with men accounting for 20%.

Last year, accountancy firm PwC suggested that the volume of new homebuyers will continue to drop in the next decade. This is due to them struggling to raise a sufficient deposit in order to buy their own place.

Rental market set to swell further in next decade

Rental market set to swell further in next decade

Rental rises

As fewer people are qualifying for social housing, the study suggests that in the next ten years, over half of those over the age of 40 are set to live in properties owned by private landlords.

By the year 2025, PwC suggests that 7.2m households will be in rental property, in comparison to 5.4m at present.

In addition, the report highlights the growing divide between those who can make it on to the housing ladder and those who cannot raise funds in order to buy a property. The report reads:

‘House purchases have historically been a major factor in driving wealth accumulation of lower and middle classes. The inability of many to get on the ladder may limit this avenue to social mobility in the future.’[1]

John Hawksworth, chief economist at PwC, said, ‘a large and sustained increase in affordable housing supply will be required to meet the needs of a UK population that is growing relatively rapidly by European standards.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/rise-of-generation-rent-as-more-people-live-in-rented-accommodation

 

How do rental costs vary between North East metro stations?

Published On: May 19, 2016 at 1:45 pm

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Interesting analysis into the private rental sector has looked at how rents vary between North East metro stations.

Research conducted by property firm KIS reveals that rents can alter by an average of £66 from station to station. Choosing the correct location could save as much as £500 per month in rent!

Fees

Data from the investigation shows that the average cost of renting a home on the Metro Map is £560. However, there is a £545 difference between the £938 a month paid to rent in Haymarket and Monument and the £393 paid in Jarrow.

At £808, Jesmond is the most expensive place outside of central Newcastle in which to rent. This is followed by West Jesmond (£726) and Tynemouth and Gateshead (£723).

On the flip side, Jarrow (£393) is the cheapest place in the region to rent, followed by Tyne Dock (£399), Wallsend (£412) and Hadrian Road (£413).

The map also reveals the average cost of renting a two-bedroom property within a quarter of a mile of all of the Metro’s 60 stations. This shows where Tyne and Wear renters can potentially locate a bargain.

Highs and lows

Excluding central Newcastle, the top five most expensive places to rent in Tyne and Wear per calendar month are:

  • Jesmond-£808
  • West Jesmond-£726
  • Tynemouth/Gateshead-£723
  • Whitley Bay-£673
  • Cullercoats-£660

The five cheapest areas to rent are:

  • Jarrow-£393
  • Tyne Dock-£399
  • Hadrian Road-£413
  • Chichester/Byker-£423
  • Meadow Well-£425
How do rental costs vary between North East metro stations?

How do rental costs vary between North East metro stations?

Between stations, the largest differences were found to be:

  • Manors to Byker-£477
  • North Shields to Whitley Bay-£235
  • Gateshead to Central-£212
  • Gateshead to Gateshead Stadium-£148
  • Haymarket to Jesmond-£130

Location

Managing Director of KIS, Ajay Jagota, commented, ‘location, location, location is one of the classic golden rules of property, but month after month I’m stuck struck by the fact that people are prepared to pay as much as £5724 a year to live in a particular area. To put that into context Metro journey of three or four minutes-or even a bike ride of a little more than five-from Gateshead to Gateshead stadium is worth almost £2,000 a year in rent.’[1]

‘It’s not just the rents that cost, it’s deposits too,’ Jagota considered. ‘If you want and can live in the heart of Newcastle, you’re not just going to have to find the best part of £1000 every month in rent, the chance you’ll need to find £1407 just to move in.’[1]

‘Research this week suggests there are only five places in the UK were renting is cheaper than buying and none of those are anywhere near the North East. One of the major stumbling blocks to buying a home is all-too often the difficulty buyers have in saving up a deposit, and extra costs like deposits can really make a difference to people’s ability to save,’ Jagota concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/choosing-the-right-metro-stop-could-save-500-per-month-in-rent.html

5m tenants have no plan to cover rent if they fall ill

Published On: May 18, 2016 at 9:17 am

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A concerning new report has indicated that nearly five million tenants in Britain have no contingency plan to cover their rent if they become too poorly to work for three months or more.

This alarming figure comes despite the fact that 27% of renters in paid employment said they knew someone who was struggling to keep up with payments.

Survival

34% of renters in paid employment admitted to not knowing how long they could continue paying rent for, should they fall ill. 60% said they could only survive on their savings for three months or less.

53% said that they would apply for benefits should they fall ill. 47% said that they would cut their household expenses and 39% said they would utilise their savings.

However, just 7% of tenants currently in paid employment said they had conducted a financial adviser, with most people turning to friends and family for help.

5m tenants have no plan to cover rent if they fall ill

5m tenants have no plan to cover rent if they fall ill

Reality

Head of Protection for Royal London Intermediary, Debbie Kennedy, said, ‘renters who assume that housing benefit will be there when they need it could find the reality is very different. A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly.’[1]

‘It would be bad enough to be taken ill without the added anxiety of getting behind with the rent and facing possible eviction. Income protection may be more affordable than people realise and can provide a financial safety net and enable people to focus on getting better,’ Kennedy added.[1]

Over the next ten years, economists predict that the UK will experience slower levels of homeownership and increased levels of private renting. It is predicted that in ten years’ time, 59% of 20-39 year olds will privately rent, up from 45% in 2013.

[1] http://www.propertyreporter.co.uk/landlords/5m-renters-at-risk-warns-royal-london.html

Landlords’ habits changing after SDLT rise

Published On: May 16, 2016 at 9:28 am

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Categories: Landlord News

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The 3% increase in stamp duty land tax on buy-to-let properties has led to many landlords to change their buying habits, according to a new report.

Data from Countrywide suggests that buy-to-let landlords are targeting cheaper properties to try and offset the additional charges.

Falls

The average house price paid by residential landlords dropped by 8.3% month-on-month in April. Figures show that investors paid £178,000 on average for a home last month, in comparison to £194,000 in March and £188,000 in April 2015.

London experienced the sharpest drop in property price paid, with landlords spending £365,000 in comparison to £436,000 in March. Overall house price values in the capital rose by 13.9% in the last twelve months, with landlords paying 8.2% less than they did in April 2015.

What’s more, April saw less landlords buying homes, following the rush to beat the stamp duty deadline. 61% more landlords purchased an investment property in the first quarter of 2016, in comparison to one year earlier. With many sales completed in March that would have probably been completed in April, there was a fall of around half of landlords purchasing during the month. However, sales to first-time buyers increased by 19% in the same period.

Landlords' habits changing after SDLT rise

Landlords’ habits changing after SDLT rise

Adjusting behavior

Average rents increased nationwide by 2% in the last year, which has lead the typical UK rent to stand at £932. In addition, rental growth is only half the rate as it was during 2015. This is due to a number of contributing factors, such as affordability concerns and an increase of homes coming onto the market.

Johnny Morris, Research Director at Countrywide, noted, ‘April’s fall off in investor activity seems to be the consequence of landlords bringing forward purchases to beat the stamp duty deadline. Rather than being dissuaded by the new 3% charge it seems that landlords are already adjusting their behaviour. In response to the extra purchasing costs many are choosing to buy cheaper homes that offer a higher yield and of course a lower stamp duty bill.’[1]

‘There’s early signs that first time buyer numbers are increasing as investor activity has declined. But it’s too early to tell whether this is simply the after effects of the stamp duty rush or the start of a longer term trend,’ Morris added. [1]

[1] http://www.propertyreporter.co.uk/landlords/landlords-change-tact-and-lock-on-to-cheaper-properties.html

 

New rental listings rise by 11.5% in April

Published On: May 13, 2016 at 10:43 am

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There was an 11.5% rise in new rental properties being listed in April, as the results of the pre stamp duty rush were absorbed.

Research conducted by Property Partner examined the total number of new rental properties being advertised in the last month, in comparison to March. The analysis looked at results from 90 towns and cities across Britain.

The study found that in 82% of these locations, there was a rise in the number of new rental listings.

Regional rises

Worcester saw the greatest rise in new rental listings, seeing a surge of almost 48.9% during the last month. Chelmsford saw an increase of 38%, Stevenage 36.4% and Southport 34.4%.

Of the major towns and cities, London saw a 9.1% rise in new property listings during April. Birmingham saw the greatest rise of the larger cities, recording an increase of 20.7%. In Manchester, there was a rise of 14.3%.

The table below indicates the towns and cities in Britain that experienced the largest rise in new rental listings in April:

Town/City Region % increase in new rental property listings
Worcester West Midlands 48.9%
Chelmsford East 38.0%
Stevenage South East 36.4%
Southport North West 34.4%
Telford West Midlands 32.3%
Cheltenham South West 30.3%
Watford East 29.4%
Bath South West 29.3%
Newport Wales 27.0%
Woking South East 26.8%
Gloucester South West 26.4%
Milton Keynes South East 24.7%
Oxford South East 24.5%
Oldham North West 23.3%
St Helens North West 22.5%

[1]

New rental listings rise by 11.5% in April

New rental listings rise by 11.5% in April

Boost

Dan Gandesha, CEO of Property Partner, noted, ‘the rental market experienced a much-needed boost in April. Unfortunately, this was created by investor frenzy to beat the stamp duty hike and supply is unlikely to continue on an upward trajectory.’[1]

‘If anything, options for tenants could become more limited in the next couple of months as traditional landlords balk at the prospect of paying the surcharge now and losing mortgage interest tax relief from next year. There is still strong tenant demand but the Government has changed the traditional buy-to-let landscape and this will have ramifications for the rental market longer term. That demand will increasingly have to be met by professional landlords like Property Partner, offering tenants a better product and investors a better deal,’ Gandesha concluded.[1]

 

Typical tenancy duration just 18 months

Published On: May 13, 2016 at 9:02 am

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Categories: Landlord News

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A new survey has revealed that tenants are now taking on tenancy agreements for an average of just 18 months.

Research conducted by Direct Line for Business indicates that tenants are adopting a shorter-term view on renting property.

These figures are surprising, given that previous investigations indicated that the average tenancy length was longer.

Regional renters

The smallest tenant turnover was found in Birmingham, where renters stay for an average of two years and four months in the same location. This was followed by London, with tenants staying for one year and nine months. Leicester was the third best city for longevity, with tenants staying put for one year, eight months.

Edinburgh, Liverpool and Sheffield all have average tenancies of one year, seven months.

On the other hand, Cardiff has the greatest turnover of tenants in Britain, with tenants staying in the same rental property for less than one year (11 months). Leeds sees its tenants stay for exactly one year, with Bristol seeing renters stay put for 14 months.

Voids

In addition, the survey showed that the typical annual void period for buy-to-let landlords currently stands at 22 days. Looking at existing rental values, this could see losses of £547 in rent that is not collected.

Of course, this will have a negative effect on overall rental yields. Landlords should consider taking out unoccupied property insurance, to protect themselves against damages.

Birmingham again leads the way for filling vacant properties in the quickest time, with a landlord in the second city finding a tenant typically within 11 days. Buy-to-let landlords in Liverpool and Aberdeen fair the worst, taking an average of 33 days to fill their property

Direct Line for Business analysts suggest that this gap between tenancies could cost landlords as much as £761 in Liverpool and £913 in Aberdeen.

Typical tenancy duration just 18 months

Typical tenancy duration just 18 months

Moving

Further data from the investigation shows that landlords cannot rely on their tenants to see their tenancy agreement through. One in eleven renters were found move on before the conclusion of their contract.

The greatest rate of tenancy turnover is found in Aberdeen, where 19% of tenants leave their property before the end of their agreement. Leeds and Sheffield were both close behind, with 13%.

Nick Breton, head of Direct Line for Business, observed, ‘this research highlights the pressure landlords are under to replace outgoing tenants in their properties. Vacant properties are obviously a worry for landlords but it’s vitally important that they take into account void periods when calculating the affordability of owning a rental property.’[1]

‘Staying on top of the on-going changes within the industry can be time-consuming and a battle for landlords and we fully appreciate the challenges they face when it comes to managing their rental properties,’ Breton added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/average-tenancy-is-now-18-months