Posts with tag: rental market

Rental market showing sustained stability

Published On: September 21, 2015 at 4:46 pm

Tags: rental market,rental yields,tenants

Encouraging signs for the rental market have come with the latest Private Rented Sector trends report from Paragon Mortgages.

The latest trend report for Q3 of 2015 suggests that the rental market remains healthy, taking in key indicators such as rental yields, void periods and tenant demand.

Growth

Data from the report indicates that average rental yields have risen slightly over the last three months from 6.3% to 6.4%. This slight increase is in line with the growth seen throughout 2015. When asked to forecast what would happen over the next 12 months, landlords were confident over sustained stability.[1]

There was also good news in terms of void periods, with the report pointing out that the average period of time that privately rented properties stood unoccupied was a historically low 2.6 weeks. Tenant demand is healthy, with more than 50% of landlords describing this as stable, while 40% said it was booming.[1]

Over half of landlords think that demand will increase over the next 12 months, in comparison to 42% who believe that it will remain stable.

In addition, the report shows that there is an increase in families with children moving into the private rental sector, with a decrease in the number of young couples and professionals. Demand for long-term rental agreements however remains fairly low.[1]

Rental market showing sustained stability

Sustainability

‘Our latest PRS Trends Survey data is indicative of a market growing steadily and sustainably over the long-term,’ said John Heron, Director of Paragon Mortgages. ‘With low void periods and steady demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so,’ he continued.[1]

Heron also said that the data, ‘reveals the changing demographic of those choosing to live in the PRS.’ He feels this is, ‘reflected in the buying intentions of landlords which seems to be shifting away from investing in multi-occupancy blocks, towards terraced housing-often more suited to young families.’[1]

[1] http://www.propertyreporter.co.uk/landlords/rental-market-remains-healthy-says-latest-report.html

Former East London police station was illegal hostel

Published On: September 10, 2015 at 10:42 am

Author: Em Morley

Categories: Landlord News

Tags: illegal tenants,rental market,rogue landlords

An unused police station in Barking, East London, has recently been discovered to have been turned into an illegal hostel. An anonymous tip off led to police and housing officers raiding the property, where 30 people were found to be residing.

Illegal lodging

The property on Ripple Road was raided on Friday, having been sold off as a police station in 2013. A team from Barking and Dagenham Council’s enforcement team found the large number of tenants living in five rooms, in what was an apparent ‘beds for hire’ hostel.

Inside the building were a number of mattresses and wardrobes packed with clothing. In addition, the team found a washing machine and a television. The telltale sign that the property was occupied was a notice informing residents to do their own washing up.

Zero-tolerance

‘Our war on rogue landlords will be relentless,’ said cabinet minister for crime and enforcement councillor Laila Butt. ‘We will not tolerate overcrowding in Barking and Dagenham and anyone making a mint out of others’ misery.’[1]

Former East London police station was illegal hostel

Both the police and the local council plan on speaking to the owners of the building following the raid on the property. Deputy Borough Commander Supt Sean Wilson commented that, ‘local neighbourhood police officers supported the London Borough of Barking and Dagenham Enforcement Officers in their closing of this venue.’[1]

‘The excellent work by the local authority has ensured that this venue can no longer be used for illicit purposes,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2015/9/east-london-police-station-turned-into-illegal-hostel

Renters in the capital being priced out

Published On: July 28, 2015 at 11:40 am

Author: Em Morley

Categories: Landlord News

Tags: London living wage,London rent,rental market

Concerning data taken from a recent report suggests that London could be heading towards a labour crisis, with renters earning the living wage being priced out of the capital’s rental market.

Worrying

The report by flatshare website SpareRoom.co.uk suggests that those earning the London Living Wage of £9.15 per hour would need to spend more than half of their pay on rent. Typically, affordable rent is classed as lower than 35% of an individual’s net earnings. In the capital however, the average weekly income on the living wage amounts to £292.69 post tax and with room rents rising by 6% in the past year, renters are spending up to 56% of their net income on rental costs.[1]

As part of its research, SpareRoom looked at each postcode district in London and alarming found that none were classified as affordable under those on the London Living Wage. The cheapest postcode region in the capital, Thamesmead, where rents average rents total £480 per month and the second lowest region Edmonton (£505) were both still out of reach.[1]

Even more alarming was the news that renters living in a ‘W’ postcode area face rental costs of £810 per month, 14% than the average London rent of £712. For those on the Living Wage, a rental property here would see them spending 64% of their wages on rent.[1]

For those in the SW or SE postcode areas, rents typically cost £764 and £617 respectively, which would mean putting aside 60% and 49% for their accommodation. In N and NW postcode districts, rents command 50% and 57% of wages.[1]

The table below shows the difficulty for those earning the Living Wage in London and also highlights the plight of apprentices working in the capital:

Renters in the capital being priced out

Area/Postcode	Average monthly room rent*	Room rent as % of monthly net Living Wage (£1,268)	Room rent as % of monthly net apprentice wage (£444)
London	£712	56.1%	160.4%
SE	£617	48.7%	139.0%
SW	£764	60.3%	172.0%
W	£810	63.9%	182.4%
E	£676	53.2%	151.8%
N	£635	50.1%	143.0%
NW	£721	56.9%	162.4%

Crisis point

Matt Hutchinson, director of SpareRoom.co.uk feels, ‘we’ve reached a point where the housing crisis is driving the lowest paid workers out of the capital. Even the cheapest way to rent, flatsharing, is officially unaffordable to them across the whole of London.’ He went on to say that, ‘the sad irony is those on the Living Wage are what keeps London ticking and they need to be able to afford to live in the city that depends on them. Rising rents are forcing many to live hand to mouth or increasingly, forcing them out. Apprentices are in an even worse position.’[1]

‘London is quite rightly celebrated for its vibrancy, diversity and creativity. To protect that we must make it affordable to live in, otherwise it’ll turn into nothing more than a theme park for the rich. The Government needs to take action to make sure the capital doesn’t face a labour shortage that could paralyse the heart of the British economy. An overwhelming 97%⁶ of renters in shared accommodation told us the Government isn’t doing enough to make housing affordable – it looks like they were right,’ Hutchinson concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/london-renters-on-living-wage-priced-out.html

Competition for school places affecting rental market

Published On: July 21, 2015 at 12:25 pm

Author: Em Morley

Categories: Landlord News

Tags: catchment areas,rental families,rental market

School is about to be out for summer and as teachers contemplate how best to spend their next six weeks of freedom, the search for property in the catchment area of a good school has been intensifying for some time.

New research by Countrywide plc indicates that those purchasing a home near a good school or college have long paid a premium in order to live there. The firm now believes that this competition is spreading to the rental market.

Working out

Like all good academics, Countrywide has shown its working out in its latest Quarterly Lettings Index. Data from the report shows that in 2015 to date, 28% of properties rented in the UK within a kilometre of an OFSTED outstanding school were made to families. This was up significantly from just under 10% in 2008.[1]

For catchment areas of outstanding secondary schools, this figure was even higher, with a third of properties rented out to families with children.

In the capital, the figures were substantially higher. During the first period of the year, over 50% of properties rented within a kilometre of an outstanding school were to families. While the figures are marked surrounding schools rated as outstanding, overall pressure for academic places in London has seen a number of families with children renting in areas surrounding most schools. What’s more, the growing numbers of families priced out of owning a home means many of them move into rental accommodation in order for both work and children’s education.[1]

Summer swap

As on the start line at Sports Day, the summer months are commonly when families start to limber up for a move. This is largely due to the fact that when a school application is made in January, it is the address from where the application is made that will be assessed. Countrywide’s textbook states that more than half of families with children in the private rented sector move during June, July, August or September. Households with children moving into the area close to an outstanding school were found to move just half a mile on average.

Tenants also pay premiums in order to move closer to a high-performing school. In 2015 to date, the average tenant living within a kilometre of an outstanding school paid 14% more than other families living more than a kilometre away. In addition, tenants living in three or four-bedroom homes pay an average of 16% more to live in these regions.[1]

Competition for school places affecting rental market

Flexibility

‘There are 1.6 million families with children living in the private rented sector, 20 per cent more than last year, which means school catchment areas are becoming increasingly relevant to the rental market,’ noted David Fell, Research Analyst at Countrywide plc. ‘Many of these families are choosing to rent close to the school gates and in some cases parents are taking advantage of the flexibility of renting to move from the fringes of their preferred school’s catchment area to ensure their child’s entry.’[1]

Fell believes that, ‘the flexibility of renting can present a challenge for schools, where competition for their places is high, particularly as some less scrupulous owners have in the past rented homes to try to secure a place in a school.’ He warns that, ‘schools are becoming increasingly savvy now, ensuring the home is a family’s permanent residence rather than somewhere which has been rented for a few months during the application process.’[1]

‘The growth of families with children renting is just one of the changes the sector will see as the number of renters in all different stages of life continues to grow. Adapting to provide for these changing needs is a big challenge for the sector,’ Fell concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/relentless-competition-for-school-places-feeds-through-to-rental-market.html

Landlords Positive About Tenant Demand

Published On: July 2, 2015 at 1:00 pm

Author: Em Morley

Categories: Landlord News

Tags: Affordable housing,high tenant demand,housing crisis,rental market,tenant demand

Landlords Positive About Tenant Demand

Tenant demand in the second quarter (Q2) is continuing to grow, as 43% of landlords believe demand is either growing or booming, revealed research by specialist buy-to-let lender, Paragon Mortgages.

The study found that the trend for high tenant demand is strong, with continuous steady growth for the past three consecutive quarters.

This level of growth is expected to continue over the next 12 months, with over half of landlords (51%) predicting a further rise in demand.

The research also highlighted the tenant groups that landlords are most frequently renting to: Around half of landlords (47%) let to young couples, 43% to young singles and 42% to families with children.

Managing Director of Paragon Mortgages, John Heron, explains: “It is no surprise that rental demand is steadily increasing. With continued stress on the housing stock driving prices up, tough affordability hurdles for would-be buyers and a social rental sector under pressure as a result of renewed interest in Right to Buy, a steady increase in rental demand was inevitable.

“It is important that landlords continue to expand the supply of rented property in order to maintain a balance and so avoid unsustainable increases in rents. A healthy, competitive and innovative buy-to-let market is critical to this.”¹

¹https://www.landlordtoday.co.uk/breaking-news/2015/6/landlords-upbeat-about-tenant-demand

Renting in UK is More Expensive than Anywhere Else in Europe

Published On: July 1, 2015 at 12:51 pm

Author: Em Morley

Categories: Landlord News

Tags: private rental sector UK,rental market,renting in Europe,renting in the UK

Renting in UK is More Expensive than Anywhere Else in Europe

Private tenants in the UK are paying higher rents than anywhere else in Europe, spending a larger proportion of the average wage on accommodation, revealed research by the National Housing Federation (NHF).

The average UK rent is £750 (€902) per month. The European average is just £400 (€481) a month, found the NHF, which represents housing associations.

Renting privately in the UK costs around 40% of a tenant’s income, comparing to the average of 28% in Europe.

Renters in Spain are the only ones that are close to the UK average, with their typical rent of €622 a month accounting for 39% of their income. In Germany, the average monthly rent of €600 is just 25% of the average wage.

Chief Executive of the NHF, David Orr, comments: “Not only do British renters face crippling rents, but they have almost no certainty about whether they will be able to stay in their home from one year to the next.”¹

The average UK rent vs. European averages

Country	% of income spent on rent	Average monthly rent
UK	39.1	€902
Switzerland	31.9	€922
Spain	39	€622
The Netherlands	28.5	€625
Germany	24.8	€600
France	29.5	€598
Sweden	34.8	€500
Malta	29	€461
Romania	34.7	€333
Slovakia	13.2	€239

Short-term tenancies in the UK mean that 77% of renters in Great Britain and Northern Ireland moved house in the last five years, compared to 43% across Europe.

This data arrives after the Halifax revealed growing numbers of aspiring first time buyers are moving back in with their parents, despite record low mortgage rates and a rising availability of mortgages for those with low deposits.

The Halifax, who surveyed 1,000 parents of 20-45-year olds, found that 28% have taken their children back into the family home, compared with 24% in 2012.

However, super low mortgage rates are enabling thousands of buyers to purchase a home, if they can save a large deposit. Research released from the British Bankers’ Association (BBA) revealed that the amount of people who were granted a new mortgage in May increased to the highest level since March 2014.

On the BBA figures, Richard Sexton, Director of chartered surveyors e.surv, says: “Borrowers finally have more money in their pockets as inflation remains limited and wages are experiencing a tangible rise. Meanwhile, lenders continue to offer an increasing number of products to borrowers with smaller deposits, at record low rates.”¹

However, the NHF also found that increasing property prices mean that two thirds of first time buyers are dependent on financial help from their parents for buying their first home.

¹http://www.theguardian.com/money/2015/jun/24/uk-tenants-pay-more-rent-than-europe