Posts with tag: rental market

How will the property market change in 2016?

Published On: January 11, 2016 at 1:59 pm

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2016 looks to be a key year for the property market. Certainly, there is much more to consider than whether property prices will go up or down!

It looks increasingly likely that the Bank of England will follow the decision of the US Federal Reserve and raise interest rates in the coming months.

So just who and what will be most affected in the market over the coming year?

Landlords

Unfortunately, it seems as though buy-to-let landlords will see a particularly difficult 2016.

Stamp Duty

One alteration certain to have an impact on the market is the stamp duty hike coming into force on April 1st. Buy-to-let landlords and property purchasers buying a home that is not their main residence will face an extra cost of 3% in tax.

It is suggested that these changes will deter some potential buyers. With sales and mortgages being revived over recent years, the property market is set to receive some setbacks in 2016.

Tax Breaks

On top of stamp duty rises, a reduction in tax break privileges has been slated for, after an announcement in the Chancellor’s summer budget

What’s more, the Bank of England has indicated that it wants power to limit lending to buy-to-let borrowers and it appears likely that the Chancellor will side with this view.

The Government seemingly puts the blame for lack of affordable housing at the feet of private landlordism, with a booming private rental sector seeing potential home-owners out in the cold.

Buy-to-let

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (RICS) noted that, ‘the Government is very motivated to reverse the trend in owner-occupation-this is now a very important part of the Government’s housing strategy.’[1]

‘Buy-to-let landlords have had a very good run-holding property has been a very lucrative investment, so if the Government has to squeeze the buy-to-let landlord it will take that in it’s stride,’ Rubinsohn added.[1]

Property commentator Henry Pryor called the moves, ‘an extraordinary about-turn for landlords.’ He went on to say, ‘because rents are unlikely to rise to compensate for the increase in stamp duty, capital values are likely to fall-which is the Government’s intention.’[1]

How will the property market change in 2016?

How will the property market change in 2016?

Right to Rent

Just next month on February 1st, the controversial Right to Rent scheme will be rolled out in full across the country. Landlords will be responsible for checking the immigration status of potential tenants and could be fined up to £3,000 for non-compliance.

Pryor suggests, ‘many landlords are finding this is a rather frightening prospect and are talking of giving up as a result.’[1]

The Council of Mortgage Lenders forecasts that the number of new loans made to landlords will dip substantially, from 116,000 in 2015 to 90,000 in 2017.

Mortgages

It is now nearly seven years since the Bank of England cut interest rates to a record low of 0.5%. From then, economists have predicted that rates would begin to rise again, but have consistently been wrong.

However, it looks as though 2016 could well be the year where rates do eventually rise. The majority of independent economists believe that the first rises since July 2007 will occur in this year and will come in two increments of 0.25% each.

Ed Stansfield, forecaster at Capital Economics, thinks, ‘the economy is probably a little bit healthier than the collective wisdom of the Bank’s Monetary Policy Committee thinks. We think that one of the things that will convince the Bank to act is continued signs that incomes are recovering.’[1]

Thankfully, a growth in incomes should soften the blow of any interest rate hike.

Troubled Times

For many years, the low base rate has led to very low mortgage rates, making large mortgage rates seem affordable.

Schemes such as Help-To-Buy have buoyed house prices and sales, meaning many thousands of potential homeowners have received money to buy a property when previously they would not have been able to do so.

A steady growth noted in the economy, coupled with rising employment and income, means that prices and sales should remain at least even.

However, Ray Boulger, of mortgage brokers John Charcol, suggests that there could be some turbulence in the early months of this year. He believes that many people will rush to purchase buy-to-let property before the higher rates of stamp duty take effect.

‘Those people who want buy-to-let properties are clearly going to be incentivised to complete before 31 March. Till then I think we will see some quite strong growth in prices, then I expect to see prices falling for the next few months as that element of demand is taken out of the market,’ Boulger added.[1]

[1] http://www.bbc.co.uk/news/business-35135639

 

Renting in London – Only a Few Places are Still Affordable

Published On: January 10, 2016 at 2:50 pm

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Recent research has found that rent prices in London are the most expensive of any city in the world, at an average of £2,083 per month, after rising by 4% last year alone.

And while renting in the capital may seem impossible for some people, the huge gap between prices across London means that there is still hope for many prospective tenants.

Property investment firm CBRE found that Bexley is the most affordable London borough in which to rent, after examining 32 cities across the world. The average rental property in Bexley now costs around £1,007 per month.

Bexley, Havering, and Barking and Dagenham – all in the southeast of the capital – were named as the most affordable boroughs in London, with the average rent across the three areas more than £2,000 a month cheaper than in the most expensive borough.

Most affordable London boroughs for renters

Position Borough

Rent per month
1 Bexley £1,007
2 Havering £1,083
3 Barking and Dagenham £1,162
4 Sutton £1,166
5 Bromley £1,271
6 Enfield £1,285
7 Redbridge £1,293
8 Croydon £1,309
9 Waltham Forest £1,309
10 Hillingdon £1,311

The three most expensive boroughs for tenants are Kensington and Chelsea, the City of Westminster and the City of London, all with average rents of around £3,000.

Most expensive London boroughs for renters

Position Borough

Rent per month
1 Kensington and Chelsea £3,405
2 City of Westminster £3,062
3 City of London £2,945
4 Camden £2,615
5 Islington £2,282
6 Hammersmith & Fulham £2,168
7 Tower Hamlets £2,163
8 Lambeth £2,093
9 Hackney £2,088
10 Wandsworth £1,889

Although rent prices in Bexley are the cheapest in the capital, the borough has also experienced the fastest price growth over the past 12 months – rent there has risen by 10% in the last year, says CBRE.

Renting in London - Only a Few Places are Still Affordable

Renting in London – Only a Few Places are Still Affordable

There is a huge demand for rental property in Bexley due to good transport links, parks and low prices. Online letting agent Rentify found that last year, it was the second most searched for borough in London.

Head of Residential Research at CBRE, Jennet Siebrits, says Bexley – which was also the cheapest borough in 2015 – has remained affordable because of its location.

She explains: “It is a great place to live, but in outer London and therefore priced accordingly, it’s typically a family location, so hasn’t been a huge rental market. But its cheaper rents have attracted renters, hence the growth.”

Excluding London, rents around the UK sit at an average of £749 per month, after increasing by 3.5% over the year, according to the latest quarterly rental index from Homelet.

The firm reveals that the gap between rents in the capital and the rest of the UK is now the highest ever recorded.

Siebrits says the strength of the rental market reflects a sharp rise in the amount of tenants in London over the last ten years.

She says: “Renting is becoming ever more popular, with a significant increase in renters. This partly reflects affordability constraints – even before the financial crisis we were seeing an uptick, but it has magnified since the crisis – and subsequent credit constraints.”

She adds that the rise in immigration has led to more demand for rental accommodation: “London is arguably the global financial centre and attracts the top international conglomerate companies, which have workers who need temporary rental accommodation.

“At the other end, we attract Europeans who come here for employment opportunities, who also need accommodation and are not able to access the owner-occupation market.”1

1 http://www.telegraph.co.uk/finance/property/12058428/Where-in-London-can-you-afford-to-rent-Theres-only-a-few-places-left.html

 

New survey shows tenants’ top wish for 2016

Published On: January 6, 2016 at 11:24 am

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An interesting new survey has given landlords food for thought when considering their home improvements for 2016.

PropertyLetByUs questioned tenants on their main priorities for the new year. One-fifth replied by saying that cost-effective central heating is an absolute must.

Warm

A large majority of tenants said that they felt concerned over keeping their properties warm and damp-free over the coming months. In excess of 80% said that double glazing was their top priority for the next rental property.

In general, UK homes are some of the most expensive to heat in the whole of Europe, according to official EU figures. Estimates suggest that over 10m British families currently live in a property with a leaking roof, damp walls or rotting windows. Older, single glazed homes bring with them more chance of condensation and mould.

Jane Morris, Managing Director of PropertyLetByUs.com noted, ‘it is estimated that around one million tenants are paying as much as £1,000 a year more for heating than the average annual bill of £1,265. These excessive costs are mainly down to poorly insulated homes, many of which are thought to be the oldest and leakiest rental properties in Europe.’[1]

New survey shows tenants' top wish for 2016

New survey shows tenants’ top wish for 2016

Demand

Morris continued by saying, ‘clearly, double-glazed properties are highly sought after by tenants and landlords that offer this will be in large demand. However, landlords that are offering draughty, damp accommodation should not delay in improving their properties, as new legislation will see landlords banned from renting out England and Wales’ draughtiest homes from 2018, in a bid to cut energy bills and carbon emissions.’[1]

‘Landlords with properties rated F and G will be unable to let them out from April 1st 2018. The regulations also mean that from 1st April 2016, tenants living in F and G rated homes will be able to request improvements, such as more insulation. The landlord will then be legally bound to bring the property up to a E rating. As a matter of urgency, landlords that are currently renting out F and G rated properties should be reviewing the improvements that can be made together with researching costs and available help, through the Government’s Green Deal,’ Morris concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/what-is-the-top-priority-for-tenants-in-2016.html

 

 

Government launches consultation on BTL regulations

Published On: December 31, 2015 at 11:47 am

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The Government has today launched its promised consultation on the jurisdictions that the Bank of England’s Financial Policy Committee should be allowed to implicate over the buy to let market.

This has been implemented in order to ascertain information on how the operation of the nations buy-to-let mortgage market could represent a risk to financial stability.

Targeted

Aimed primarily at individuals, institutions and associated bodies that could potentially be affected by the FPC’s powers of direction, the Government said it also would appreciate the views of other parties with an interest in housing market policies.

After the consultation has taken place, the Government has pledged to continue to examine the responses and utilise them accordingly to devise their instrument to place powers in legislation.

The Government believes that the Bank of England should have more powers to restrain the buy-to-let market if required. This could include directing regulators to permit lenders to put limits on their buy-to-let output.

In addition, the amount that buy-to-let investors could borrow or LTV could be altered and the Bank could also change the required ratio of perceived rental income to mortgage interest payments.

At present, lenders are not currently supportive of more controls for the market and warn that it does not necessarily need more regulations.

Changes

There have been calls for upcoming changes to the market, such as the 3% stamp duty charge from April, to take effect before any additional regulations are made. The Council of Mortgage Lenders director general Paul Smee said, ‘we understand the rationale for putting the macro prudential tools at the Bank of England’s disposal, but also recognise that this does not necessarily mean they will be used. In our view, buy to let does not constitute a market that currently requires further macro prudential intervention, especially as the effect of several recent tax changes is yet to be fully felt and evaluated.’[1]

‘We urge policymakers to be mindful of the risk of unintended consequences that could adversely affect the private rented sector, alongside their focus on ensuring that the buy-to-let market does not pose a threat to financial stability, ‘ he added.[1]

Government launches consultation on BTL regulations

Government launches consultation on BTL regulations

Confusion

Peter Williams, director of the Intermediary Mortgage Lenders Association, said that the industry could be confused by what the Government is trying to implement.

Williams said, ‘in the Autumn the Chancellor, in giving evidence to the Treasury Select Committee, appeared to state unequivocally that the power to place limits on place limits on buy to let mortgage lending was to be granted without the previously advertised consultation having taken place as to whether new powers were justified at all.’[1]

‘Recently the Governor of the Bank of England also appeared to suggest that he was preparing to exercise such powers,’ he continued. ‘Now the consultation on what those powers might be has finally materialised, there is much that should be discussed and challenged.’[1]

‘The points advanced in support of further regulation do not appear to be well supported by evidence. At the same time there is considerable work required on the part of lenders and trade bodies to bring together a detailed response, and we should be reassured that this will not be a waste of time if the consultation is simply to rubber stamp a decision already made behind the scenes,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-buy-let-regulation-2015123111379.html

 

 

Nearly half of BTL landlords looking to raise rents in 2016

Published On: December 31, 2015 at 10:30 am

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As 2015 comes to a close, a new survey suggests that 2016 could be an expensive year for tenants.

Data from a report conducted by SpareRoom.co.uk found that 45% of buy-to-let landlords are looking to increase rents in the coming year, with 18% planning on raising them by more than 3%.

Legislations

The most common reason landlords questioned gave for stating their plans to raise rents were the upcoming changes in legislation, with 38% giving this as their catalyst. This suggests that future cuts to mortgage interest tax relief, stamp duty alterations and the national Right to Rent roll out could be felt by tenants and landlords alike.

Additional reasons for rent hikes were local rent increases (23%), expensive property repairs (6%) and greater mortgage repayments (4%).

The table below indicates how landlords plan to change rents in the coming year:

Landlords: What do you plan to do with rents in 2016? Response (%)
Raise by more than 3% 18%
Raise by less than 3% 27%
Keep the same 52%
Lower by less than 3% 1%
Lower by more than 3% 2%

[1]

Nearly half of BTL landlords looking to raise rents in 2016

Nearly half of BTL landlords looking to raise rents in 2016

Reality

A harsh reality is that average rents per room could rise by more than 3% in 2016. During this year, the typical UK rent for a double room in shared accommodation increased by 8.6% to stand at £593, according to SpareRoom’s analysis.

In the capital, average room rents increased by 6.3% to hit £721 per month.

‘The roll out of Right to Rent legislation, removal of mortgage interest tax relief and changes to the wear and tear tax break from 2017, on top of stamp duty changes coming in 2019, means buy to let looks like far more of a risk than it did at the start of the year,’ noted Matt Hutchinson, director of SpareRoom.co.uk. [1]

‘The worry is that tenants will bear the brunt of these changes. And if renters end up being the ones to shoulder the burden of legislative change, something has gone very wrong. The private rental sector is already under immense pressure,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/45-of-landlords-say-they-will-raise-rents-next-year.html

Secure your homes over the break

Published On: December 29, 2015 at 10:57 am

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Categories: Landlord News

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With the festive period in full swing, many of us will be travelling to see loved ones over the extended break from work (well, for some of you!)

However, while Brits are getting stuck into mulled wine, leftover turkey and gorging on chocolate, it is important to remember that there are some that prey on poorly secured empty properties.

Stay secure

As owner of Belvoir, Birmingham Central, Major Mahill observes; ‘an empty property is a vulnerable property. So, if your tenant is intending to be away during the festivities, it’s important to put some security measures in place in order to protect it.’[1]

‘Opportunistic thieves love empty properties, especially over the Christmas period when piles of pricey presents are left unattended. In addition, unexpected maintenance emergencies can escalate at speed while no one’s home,’ he added.[1]

Maintain

During the Winter, one of landlords’ greatest fears is flooding, something which has been seen in extreme levels recently in the North. Charlotte Baker, owner of Belvoir Melton Mowbray and Bingham said, ‘a leaky roof, blocked guttering or burst pipes can all cause substantial damage swiftly in the absence of a tenant to notice or report them.’

‘To help reduce the potential of water worries, check that all roof tiles are secure and haven’t been damaged by the recent winds, plus that all guttering is unblocked and debris-free,’ she continued.[1]

Mr Major added, ‘to help prevent frozen pipes ensure all pipes are adequately insulated, plus ask your tenant to set the timer on the heating for an hour in the morning and at night while they are away.’[1]

Secure your homes over the break

Secure your homes over the break

Lengthy leave? Liaise

Tenants looking to leave rental property for an extended period should always inform their landlord first. Baker notes that, ‘if your property is going to be empty for 28 days or more its important that you are made aware. Some tenants may even be happy for you to visit the property occasionally in their absence to make sure all is well. Before doing so however, always ensure you have their permission for this.’[1]

‘It’s vital that you have a good insurance policy in place in case the worst was to happen,” she added. “when did you last check your policy? Is it going to cover you for all the common winter emergency situations? Plus, are there certain criteria you have to meet if the property is vacant for an extended period of time, such as draining the heating system?’[1]

Christmas crimes

It is important to remember that Christmas provides an opportune time for burglars to make their move. Unoccupied homes packed with Christmas gifts are the main target and tenants and landlords alike should work together to combat the mindless few.

‘If the property has a burglar alarm, window locks and other security features check that they are in working order,” says Baker. ‘Also consider installing outside security lights. It’s helpful to talk to your tenant in order to ensure they understand how to use the security measures you’ve put in place and are aware of their responsibilities.’[1]

Mr Major agrees, stating, ‘While it’s beneficial for you (and perhaps a neighbour) to know that your tenant is going to be away over the festive season, it’s just as valuable that other people don’t!” he says. ‘Providing an interior lamp with a timer can help make a property appear occupied, as can leaving a car in the driveway, plus asking a neighbour to push post properly through the letterbox and put out the bins.’[1]

Checklist

Tenants and agents should take time to look at this useful checklist to ensure their properties are as safe as possible over the break:

  • Advise of any extended periods where the property will be empty
  • Ensure alarms, windows and other safety features are working
  • Use central heating timers to help combat burst pipes
  • Check roof tiles
  • Unblock all guttering
  • Ask a neighbour to put the bins out
  • Install security lights
  • Take out sufficient insurance

[1] http://www.propertyreporter.co.uk/landlords/an-empty-property-is-a-vulnerable-property.html