Posts with tag: rents

Rents rising across Britain, but at a slower rate

Published On: August 9, 2016 at 9:01 am

Tags: average residential rents,Brexit,Buy-to-Let,rental market,rents

New research has revealed that average residential rents in Britain continued to rise during July, with demand still outweighing supply. However, the rate of growth is slowing.

Analysis from HomeLet reveals that with the exception of Greater London, the average monthly rent now stands at £779 per month. This is 2.3% higher than one year ago.

In the capital, rents are now £1,599 per month, a rise of 4% in the twelve month period.

Banishing uncertainty

Data from the report suggests that buy-to-let landlords have been able to secure higher rents on new tenancies, despite the uncertainty created by the Brexit vote in June.

This is in line with the housing market, as mortgage lenders are also reporting modest growth in house values in the month following Brexit.

Moving forwards, the private rental sector looks set to be unchanged by the result. A growing population, unaffordability of house prices and lack of new supply suggests that sector will be a vitally important component of the housing market in years to come.

Regional variation

A further look at the figures shows that there is a tangible regional variation recorded. Month-on-month, rents rose most in East Anglia, by 3.7%. In addition, the region came out on top for annual rises, seeing a yearly rise of 9.7%. As such, average rents in the area now stand at £897 pcm.

However, in Scotland rents dropped by 3.7% month-on-month. On a yearly basis, rents increased by 1.4% to an average of £676. The only other area to see a fall in the month was the North East, where rents fell by 0.4% to £537. Yearly, rents dropped by 5%.

Rents rising across Britain, but at a slower rate

Supply and demand

Martin Totty, chief executive at HomeLet’s parent company Barbon Insurance Group, believes rents will be determined by supply and demand in the sector.

Totty noted, ‘population growth will continue to increase demand and the housing stock isn’t growing quickly enough to meet that demand. However, with rents ultimately limited to a tenant’s ability to pay, rents are likely to continue to climb, albeit at the slowing pace noted most recently.’[1]

‘We won’t know exactly how Brexit is impacting the private rental sector and it will be several months yet until we see some clearly established trends in the marketplace. It seems likely that with lenders concerned about the prospect of falling house prices, loans to value in the mortgage market are going to become less generous, which may see more people turn to the rental sector rather than buying a property. However, it’s possible we may also see renewed interest in the London rental market as foreign investors seek to pick up investment property to make the most of the big exchange rate advantage following the fall in the pound,’ he continued.’[1]

Concluding, Totty said, ‘we may also see foreign investment increase outside the capital, in other cities across the UK. This coupled with recent figures showing that the number of people becoming homeowners is falling across the country, the demand for rental accommodation is likely to remain strong.’[1]

[1] http://www.propertywire.com/news/europe/uk-rental-market-prices-2016080912239.html

Rental values down year-on-year in Prime Central London

Published On: August 8, 2016 at 10:39 am

Author: Em Morley

Categories: Property News

Tags: Brexit,prime central london,prime central London rents,rents

Prime central London rental values have slipped by 3.6% year-on-year to July, but activity in actually greater than last summer, according to latest figures.

A new report from international real estate firm Knight Frank shows that values were down due to increased stock levels and uncertainty surrounding Brexit.

Ups and downs

The number of tenancies agreed in the second quarter of the year actually increased by 3% in comparison to 2015. Viewings were also up by 15.8%.

However, the number of prospective new tenants fell by 6.8% in the same period, while rental yields remained flat at 3.1%.

Tom Bill, head of London residential research at Knight Frank, said that the Brexit vote had served to reinforce existing pricing trends.

Bill noted, ‘demand has been relatively flat since the start of the year due to uncertainty surrounding the state of the global economy, particularly in the financial services sector, which contributed towards a slowdown in rental value growth from its last peak of 4.2% in May 2015.’[1]

‘This trend has been compounded by higher levels of supply as stock has moved across from the sales market, with more vendors becoming landlords due to weaker conditions in the prime sales markets,’ he continued.[1]

Rental values down year-on-year in Prime Central London

Selective

Mr Bill observed that, ‘in the three months to the end of June this year, the number of new rental properties placed on the market rose by 49%, compared to the same period last year. As a result, landlords are reducing asking rents to prevent void periods and tenants are becoming more selective.’[1]

Properties where asking rents are seen as too high are struggling to receive viewings. Bill believes that the result of the referendum has highlighted this dynamic. Landlords are now taking a pragmatic approach to rents, with a background of rental uncertainty and increasing stock levels. Rental volumes are expected to increase into the Autumn.

‘The uncertainty ahead of the Brexit vote could be an explanatory factor for weaker registrations, although early signs are positive with no significant announcements that companies are pulling back from relocating staff to London following the referendum,’ Bill explained.[1]

Budgets

The investigation also found that relocation budgets have risen due to the effects of the falling Sterling price. This means tenants are searching in higher-value regions.

Indeed, the number of would-be tenants registering with Knight Frank with a budget of £1,500 per week rose by 11% in the three months to the 24^th July, in comparison to 2015.

Bill concluded by saying, ‘combined with the fact that rental values have been declining, it means tenants are widening their searches to higher value areas. For example, senior executives are increasingly able to rent in areas like Mayfair while some young professionals are looking in areas like Kensington rather than east London.’[1]

[1] http://www.propertywire.com/news/europe/prime-central-london-rents-2016080512232.html

Most ill-affordable rental regions in England revealed

Published On: August 8, 2016 at 9:37 am

Author: Em Morley

Categories: Property News

Tags: rental costs,rents,rents in England,tenants

A new investigation has found that tenants spend over a third of their disposable income on rent across many areas of England.

Analysis from the BBC shows that the typical rent of a one-bedroom property in nearly half of districts, boroughs and cities costs more than 30% of the average take-home salary in the area.

Unsurprisingly, this problem is most prominent in London and the South East.

Problems

BBC England’s data unit looked at average rents for varying property types in each local authority area, alongside the average wage in these regions. The unit looked at Office for National Statistics figures to ascertain their information.

Shelter and the Joseph Rowntree Foundation found that spending more than one-third of your disposable income on rent or a mortgage could lead to difficulties affording other basic amenities. What’s more, would-be homeowners are being more and more priced out of the market.

Looking at average rents and typical weekly wages, the investigation discovered:

renting a studio flat costs more than 30% of take-home pay in all bar one London borough
the average cost of renting a room or flat in London is £607 per month, in comparison to £424 in the South East
In the South East, the most expensive places to rent are Surrey, Oxfordshire and Tunbridge Wells in Kent
Renting a room in a house or flat would take more than 30% of disposable income in 15 of 32 London boroughs

The investigation found that the most expensive places to rent (where average rents exceed 30% of net pay) are:

Kensington and Chelsea
Westminster
City Of London
Camden
Islington
Hackney
Tower Hamlets
Hammersmith and Fulham
Lambeth
Southwark

Most ill-affordable rental regions in England revealed

Crowded

Dan Wilson Craw, policy manager at Generation Rent, noted, ‘across London and the South East, the only option for average earners is to squeeze themselves into ever more crowded flat shares. This might work for some, but it’s a completely unsustainable situation for anyone who wants to settle down. Unless rents start coming down, the capital and its hinterland will start losing workers and that will weaken the national economy.’[1]

Experts suggest that housing should cost no more than 30% of take home pay. The BBC investigation found that 30% of average monthly take home wage in England is £550. However, the typical rent for a one-bedroom flat is £694. This figure rises to £760 for a two-bed and £867 for three-bed.

North-South divide

Data from the report shows that 142 of 324 regions in England have average rents for a one-bedroom property over the 30% take-home wage for that area. Interestingly, only Manchester, Salford and York were Northern regions in this total.

Renting a one-bedroom property in the North falls within recommended limits, except in Salford, Trafford and Manchester. In the East and West Midlands, renting property falls within recommended limits.

Campbell Robb, chief executive of Shelter, said, ‘our chronic housing shortage means private renting is no longer a stepping stone for people starting out in life-it’s where a quarter of families have to live. And with sky high rents eating up a huge chunk of people’s monthly income, it’s sadly no surprise that at Shelter we’re hearing from growing number of families who are struggling just to cover the cost of the basics and keep a roof over their heads.’[1]

Henry Gregg, assistant director of communications and campaigns at the National Housing Federation, noted, ‘these figures provide yet more evidence of how seriously unaffordable renting is in this country. Sky-high rents mean unstable and uncertain living situations are becoming the norm.’[1]

Stretching pay-packet

Analysis shows that the median monthly take home pay in England is around £1,833, after tax and national insurance payments.

The regions with the most left over cash between take-home pay and rent were found to be:

Copeland
Derby
Fylde
Barrow-in-Furness
North Lincolnshire
Selby
Darlington
Hartlepool
Amber Valley
West Lindsey

Alan Ward, chairman of the Residential Landlords Association, observed that there is a ‘supply crisis,’ with the Government focusing on home ownership.

Meanwhile a Department of Communities and Local Government spokesman said, ‘more than 300,000 people have been helped in homeownership through government-backed schemes since 2010, while almost 900,000 more homes have been delivered since the end of 2009.’[1]

‘But we know there is more to do. That’s why we’ve doubled the housing budget, including investing £8bn in an extra 400,000 quality affordable homes to rent and buy. We’re also extending shared ownership, giving more people the chance to buy a home with a deposit of as little as £1,500,’ they added.[1]

[1] http://www.bbc.co.uk/news/uk-england-36794222

Tenants getting creative to avoid rising rents!

Published On: August 5, 2016 at 10:21 am

Author: Em Morley

Categories: Property News

Tags: rental costs,rents,tenants,young tenants

Interesting new research conducted by comparethemarket.com has revealed that 11% of young renters in Britain are willing to sleep on someone’s sofa to avoid rising rents!

22% said that they would consider sharing a room with someone that isn’t their partner, while 9% said they would share a bed with someone to keep rents down!

Rental rises

With the housing crisis showing little signs of abating, spiralling rents mean that many tenants are thinking more leftfield when it comes to sharing accommodation.

30% of tenants said that they could do without living in a building and opt to live in a campervan!

Of course, the tightening of the purse strings comes at a cost, with people left with little or no personal space. 20% said that they could sacrifice their sex life and 10% said that they would even sacrifice comfort for lower rents!

45% of millennials said that they would turn their back on an active social life if it meant saving money.

Tenants getting creative to avoid rising rents!

Technology

Young people seem to prioritise technology over comfort when listing things that they would miss the most. 21% said that they would miss electricity and 17% said they couldn’t live without wifi

16% said that privacy was a must, while 15% noted a shower was imperative. 14% said that they couldn’t do without an indoor toilet, while 13% highlighted the need for a comfy bed!

Alarmingly, the investigation uncovered claims of friends living under stairs, in a cupboard or even a treehouse!

Gemma Sonfield, Head of Home at comparethemarket.com, observed, ‘continuously rising accommodation costs across the UK and particularly in big cities, is causing a housing crisis, especially for younger people. Millennials, often towards the start of their career, do not earn the salaries to cover typical rent, let alone the cost of a deposit on a house or flat. People are having to get creative with ways to cut costs and are seeking unusual living arrangements as a big way to save.’[1]

[1] http://www.propertyreporter.co.uk/landlords/would-you-couch-surf-to-avoid-rising-rent-costs.html

Nearly 9 in 10 renters can’t raise 5% deposit

Published On: August 4, 2016 at 9:51 am

Author: Em Morley

Categories: Finance News

Tags: deposits,mortgage interest,rents,saving for a home,tenants

An alarmingly new study has found that almost nine out of ten renters in Britain cannot save enough to cover even a quarter of the deposit required to buy an average-priced first home.

The investigation by the Equality Trust discovered that 86% of tenants have less than the £8,838 required for just a 5% deposit on a typical home.

Crisis?

This news comes on the heels of reports that the so-called housing crisis has spread north from the capital, taking hold of cities from the Midlands upwards.

Spiralling rents are pricing many families out of getting onto the property ladder, despite mortgage interest rates plummeting to historically low levels.

Those renting in the capital already spend in excess of 60% of their income on rent. Average rents in Britain currently stand at £764 per month, while in London they are £1,543.

A spokesperson for The Equality Trust said, ‘the vast majority of renters are locked out of home ownership through a lack of income and savings, with many unable to afford even the cheapest housing.’[1]

Priced out

The study found that even in Burnley, the local authority with the cheapest houses in Britain, eight in ten people don’t have enough savings to raise a quarter of the deposit for a home.

John Hood, acting director of the Equality Trust, said, ‘it’s startling to see just how many people are priced out of owning their own home. At the same time, a small number of people at the top are making huge wealth from our dysfunctional housing market.’[1]

‘This isn’t sustainable and we need action from our politicians. That means reforming council tax, which hits the poorest hardest and a substantial house building programme. Anything less threatens to lock a generation out of home ownership and into insecurity and punishingly high rents,’ he added.[1]

Nearly 9 in 10 renters can’t raise 5% deposit

Tackling

New Prime Minister Theresa May has promised to tackle the housing deficit. Just last month, she noted that unless this issue was dealt with swiftly, young people in the UK will, ‘find it even harder to afford their own home.’[1]

‘The divide between those who inherit wealth and those who don’t will become more pronounced. More and more of the country’s money will go into expensive housing,’ she added.[1]

[1] https://www.theguardian.com/money/2016/aug/02/nine-10-renters-do-not-have-savings-buy-home-deposit-study

Evictions up by 5% in Q1 of 2016

Published On: June 29, 2016 at 10:54 am

Author: Em Morley

Categories: Landlord News

Tags: Buy-to-Let,evictions,landlords,rents

Seasonally adjusted figures released from the Ministry of Justice indicate that the number of households evicted from rental properties in England and wales during Q1 of 2016 rose by 5%.

Pleasingly, repossession rates for homeowners have fallen to record lows.

Repossession rates

The figures show that there were 10,732 repossessions of rented homes between January and March 2016. This was a rise from the 10,253 recorded in the final three months of 2015.

During 2015, a record number of tenants were removed from their rental properties by bailiffs. 42,728 households were forcibly evicted in the year.

Welfare cuts and a lack of affordable homes have been cited as reasons for the rise. More than half of the evictions are thought to have been conducted by private landlords.

A separate survey from online letting agent PropertyLetByUs shows that one-quarter of buy-to-let landlords served an eviction notice to tenants during the past twelve months. 5% of these landlords pursued an eviction through the courts.

Evictions up by 5% in Q1 of 2016

Increasing arrears

Jane Morris, Managing Director of PropertyLetByUs, noted, ‘landlords are increasingly facing rent arrears, as rent escalation continues to outstrip gross income. According to HomeLet, rents on new tenancies signed on UK rental property outside London over the three months to April 2016 were on average 5.1% higher than a year earlier.’[1]

‘Landlords are also facing a financial squeeze due to restrictions on their tax breaks and some may be raising rents to supplement their income. Pushing up rent rises further will put huge pressure on those tenants who are already struggling to pay their rent. We may well see evictions continuing to rise over the next few months. These uncomfortable statistics highlight the need for landlords to protect their rental income and ensure they carry out thorough references with all new tenants. Times are very tough for many tenants and demand for rental accommodation is soaring in many parts of the UK,’ she continued.[1]

Concluding, Morris said, ‘landlords need to be extra vigilant when they take on a new tenant. But a few simple checks will help identify if a tenant is in a good financial position or not.’[1]

[1] http://www.propertyreporter.co.uk/landlords/eviction-numbers-up-5.html