Posts with tag: rental market

NLA fears mass sell-off of buy-to-let homes

Published On: March 24, 2017 at 9:33 am

Tags: Buy-to-Let,investors,landlords,rental market,tax

An increasing number of buy-to-let landlords are looking to sell-off their properties, as Government tax changes leave them with no choice.

New research from the National Landlords Association reveals that the removal of mortgage interest tax relief and the 3% stamp duty surcharge is deterring a number of investors.

Selling

In fact, the number of landlords looking to sell-up during the next year has more than doubled since July 2015, from 7% to 16%. This would majorly reduce the supply of needed rental accommodation.

84% of buy-to-let landlords also said that they are not looking to add to their existing property portfolios.

As a result, the National Landlords Association suggests that there will be a net reduction in property transactions by 2018, which will only add to the supply/demand imbalance in the market. This is only likely to drive rents up.

NLA fears mass sell-off of buy-to-let homes

Activity

Richard Lambert, Chief Executive at the National Landlords Association, said: ‘There has been a clear correlation over the past year between our findings on what landlords have told us they intend to do in terms of buying and selling in the coming year and their actual transaction activity.’[1]

‘If the trends keep moving in the same direction, then by 2018 we’ll have more experienced landlords selling than buying, contributing to a net reduction of private rented properties,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/trade-body-fears-mass-sell-off-of-buy-to-let-properties

UK rental market slows in February

Published On: March 20, 2017 at 9:44 am

Author: Em Morley

Categories: Property News

Tags: listings,properties,rental market,To Let

The most recent Property Activity Index from Agency Express reveals that there were lower levels of activity in the private rental sector during February.

According to the report, the UK’s rental market showed signs of apparent weakness in the last month, with the number of homes to let falling. This lack of supply is only adding to the restricted choice for renters.

Declines

Throughout the UK, the number of new listings ‘to let’ stood at -13.8% in February. This was the largest month-on-month decline since the first records in 2012.

However, the number of properties actually ‘let’ in the same period rose to sit at 3.4%. This said, previous years were more robust, sitting at 4.5% in 2016 and 5.5% in 2015.

Performance activity across the UK shows that just two regions of the twelve recorded by the Property Activity Index saw increased in listings ‘to let.’ Five saw rises in properties ‘let.’

The two regions seeing a rise in properties ‘to let’ were:

East Midlands-10%
West Midlands-3%

UK rental market slows in February

The three regions seeing the highest number of properties ‘let’ in February were:

South East-40.2%
West Midlands-7.6%
Scotland 6.3%

Changes

Stephen Watson, managing director of Agency Express, observed: ‘The Property Activity Index historically shows us a drop in figures throughout February. However, this month we have seen a greater fall than in years previous, an impact of the buy-to-let changes which will undoubtedly affect the market ongoing.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/3/rental-market-slows-in-february-as-supply-crunch-continues

Fastest rental rises in January seen in the East

Published On: February 24, 2017 at 9:47 am

Author: Em Morley

Categories: Property News

Tags: average rents,rental market,rental yields,rents

Another new piece of research has underlined the fact that the rental market in England and Wales has seen a strong start to 2017.

The latest Your Move England and Wales Buy to Let Index shows that rents rose in all but one of the right regions analysed in the year to January.

Eastern Rises

Rents rose fastest over the year in the East of England, where average rents now stand at an average of £870pcm-a rise of 6.9%. Rental price growth in the region was also the quickest month-on-month, with rents up by 0.7% in January.

Other regions experiencing strong growth were Wales and the East Midlands, with rents rising here by 6.5% and 4.5% respectively.

In Wales, the average rent stands at £586pcm, while in the East Midlands, this figure is £634pcm.

On the other hand, London saw rents fall most quickly in January, down by 0.4% month-on-month. The North West was the only other area to see prices fall, albeit by an average of just 0.1%.

Fastest rental rises in January seen in the East

Rents

Taking England and Wales as a whole, average rents stood at £798 in January 2017, up from £790 in the same month last year. This represents a fall from the £811 recorded in December 2016.

Valerie Bannister, letting director at Your Move, noted: ‘Rents in nearly every region surveyed have increased compared to the same point last year.’[1]

It comes as little surprise to learn that London was the region with the lowest rental yields. Homes in the capital returned 3.2% on their investment in the last month, down from the 3.3% recorded in December 2016.

By contrast, investors in the North East are enjoying the strongest yields. In this region, the typical property returned 5.3% in January.

In England and Wales as a whole, the typical rental return was 4.6%, below the 5.1% seen in January 2016.

Concluding, Bannister said: ‘Yields continue to be squeezed in most areas of England and Wales, with all regions recording lower returns than at the same point a year ago.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/rents-are-increasing-fastest-in-the-east-of-england

Demand from investors leads to rise in bridging loans

Published On: February 22, 2017 at 2:20 pm

Author: Em Morley

Categories: Finance News

Tags: bridging finance,investors,loans,property,rental market

Demand for short term loans continued to rise in the last quarter of last year, with more property investors turning to bridging finance in order to fund their property acquisitions.

Figures compiled by The Association of Short Term Lenders from its members show that the value of bridging loans written rose by 26% in the final quarter of 2016, in comparison to Q3.

The year as a whole saw more modest growth, with value of loans written 9.4% greater in 2016 than they were in 2015. Lending in the year totalled £2.83bn, up from £2.59bn in 2015.

Finance

Benson Hersch, CEO of the ASTL, noted: ‘While lending by ASTL members didn’t quite hit £3bn, there are a number of bridging loans that fall under the radar, made by lenders that many people do not know exist, as well as those lenders who are not members, so the actual size of the bridging market is far larger.’[1]

The speedy nature of bridging finance is a main reason for its continued use. Unlike mainstream lenders, which have been wary of increasing short-term and commercial lending after the recession, a bridging lender can provide a real time solution to a funding gap. It does this by making funds available to acquire property in just 24 hours.

As such, investors chose short-term finance in order to avoid delays with their long-term mortgage, which could see a possible lucrative investment opportunity missed.

Demand from investors leads to rise in bridging loans

Increases

Continuing, Hersh said: ‘After a dip in volumes almost across the board in Q3 last year following the referendum, the size of the increase both in the quarter and across the year has overshot even my most optimistic expectations.’[1]

‘I do expect volumes to rise again in the first quarter of this year, however I expect the percentage increase to be lower compared to Q4, as this quarter’s figures very much contrast with the Brexit blues that affected people looking for bridging loans between July and September last year,’ he added.[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/5/lenders-helping-investors-bridge-the-finance-gap

Importance of inventories highlighted by AIIC

Published On: February 22, 2017 at 10:30 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,inventory,landlords,rental market,tenants

The Association of Independent Inventory Clerks has moved to further underline the importance of professional inventories.

In light of the host of tax changes, the AIIC says inventories can save landlords money at an expensive time for investors.

Costly

From April, mortgage interest tax relief for landlords is to be phased out and with letting agents’ fees to be banned in 2018, the next two years could be extremely costly for landlords.

Chair of the AIIC, Patricia Barber, noted: ‘ It’s clear that while the private rental sector remains a strong investment option-with high tenant demand and the opportunity to generate strong yields-Government intervention in recent years has made the prospect of being a landlord more expensive.’[1]

Barber stresses this is why it is so important that landlords ensure they are covered when it comes to damage to their property caused by tenants.

In addition, she reminds landlords and agents acting on behalf of them that an inventory is vital in confirming the condition of a property at the conclusion of a tenancy. This will make it clear if any deposit deductions will have to be made.

Importance of inventories highlighted by AIIC

Difficulties

Those without an inventory at their disposal at the end of a tenancy will find it difficult to claim back funds should there be any damages or lost items.

Concluding, Barber said: ‘During a period when letting property is becoming more complicated, not providing an inventory could prove damaging to the landlord’s investment.’[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/2/fees-ban-highlights-need-for-professional-inventories–claim

Longer-term tenancies are increasing

Published On: February 21, 2017 at 9:45 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,landlords,rental market,tenants

An interesting piece of research sure to please buy-to-let landlords suggests that four in ten tenants expect to be renting for up to a decade.

The survey was commissioned by property and construction consultants McBains Cooper and is sure to give the build-to-rent market a shot in the arm.

Rental Accommodation

Quizzing over 2,000 people, the survey revealed that one in four people devote over 40% of their income towards funding rental accommodation.

In addition, the study showed that renters look for more traditional factors when choosing a rental property, such as size of rooms, affordability and outdoor space. These factors were found to be more important than shared amenities such as sports facilities or communal room.

Michael Thirkettle, chief executive of McBains Cooper, noted: ‘Our survey shows that renting for the longer term is becoming more common. For some it might be because they are priced out of the housing market, for others, it may also reflect a more continental attitude where people are content to rent rather than buy. Either way, the potential for PRS and build-to-rent is clear.’[1]

‘The findings will be of particular interest to investors and developers in the PRS and build-to-rent sector. Interestingly, a high proportion of the older generation are now long-term renters. This might reflect the more ‘traditional’ characteristics in terms of the most important factors people look for when choosing rented accommodation – such as room size and a garden or outdoor space, as opposed to amenities like sports facilities or a cinema and internal communal spaces,’ he continued.[1]

Longer-term tenancies are increasing

Rising Demand

Further analysis from Savills suggests that demand for rental properties will increase by over one million households during the next five years, despite Government measures intended to help more buyers get onto the ladder.

The Government has set a target of building 400,000 new affordable homes for sale over the course of this current parliament. However, Savills forecasts that Britain will require an extra 220,000 homes for rent per year.

Susan Emmett, director of residential research at Savills, said: ‘Demand for rented homes could still rise more sharply than we have forecast. Government policy should focus on supporting the development of new homes to rent as well as to buy.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/2/increase-in-long-term-rentals