Posts with tag: rents

Rental market set to swell further in next decade

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

Author:

Categories: Property News

Tags: ,,,

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

 

Buy-to-let leads other asset classes

Published On: May 12, 2016 at 9:17 am

Author:

Categories: Finance News

Tags: ,,,,,

Record-low mortgage lending rates, unshakeable demand from tenants and increasing rental yields have lead many people to turn to buy-to-let investment as a viable means of supplementing their regular income.

Poor returns from banks and building societies have also contributed to a rise in buy-to-let activity.

Performance

Buy-to-let investment continues to outperform all major asset classes. With the population of Britain set to drive demand, rental prices look set to soar even further.

The most recent PPRMI buy-to-let index for Property Partner indicates that residential property continues to thrive as an asset class. Returns on buy-to-let property are continuing to outstrip those generated by shares, bonds and cash investment.

Data from the Index shows total returns from buy-to-let property in England and Wales increased by an average of 9.6% over the last year. This was driven by gains in London, where buy-to-let landlords saw typical yields total 16.5%.

Increases

‘Total returns for residential property crept up to 9.6% in the year to March, as investors rushed to beat April’s stamp duty deadline. This was especially true of London, where annual returns were in double digits, reaching an eye-watering 16.5%. The East was strong too and from firsthand experience the Northern Powerhouse regeneration plan is boosting investment activity in the North West and in particular Manchester.’[1]

Despite the fragile nature of monthly figures, the report indicates clear regional disparities in the housing market. Yorkshire and the Humber and the North East regions in particular are looking extremely fragile.

‘Investors are understandably showing caution ahead of the EU referendum. But the fundamentals-high employment, wage growth, cheap borrowing and the chronic shortage of supply-remain in place and are positive,’ Mr Weaver continued.[1]

Buy-to-let leads other asset classes

Buy-to-let leads other asset classes

Substantial returns

Alternative research conducted late last year by economists at the Wriglesworth Consultancy for lender Landbay indicated that buy-to-let landlords have gained returns of around 1,400% since 1996.

This figure is significantly greater than other mainstream investments, such as shares, bonds and monetary transactions. With existing poor supply of housing failing to quell demand, present signs indicate that this growth will continue.

Additional data from HomeLet shows that typical rents in the UK outside of London stand at £764 per month, a rise of 5.1% year-on-year. The investigation found that rents rose in 11 out of the 12 regions of Britain annually in the three months to April 2016. The North West of England was the only region to see a fall, albeit of just 1%.

Martin Totty, chief executive of Barbon Insurance Group, Homelet’s parent company, noted, ‘rental price growth in most areas of the country is unchanged from the trends observed over almost three years.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/buy-to-let-returns-top-all-other-asset-classes

High demand and low supply to drive rents up

Published On: May 4, 2016 at 8:57 am

Author:

Categories: Property News

Tags: ,,,,

A director of leading letting agents in Britain has warned that rents will continue to increase over the coming months.

Adrian Gill, director of Your Move and Reeds Rains, feels that there will be a cut in housing supply in the private rental sector, with many buy-to-let landlords leaving the market.

Alterations

According to Gill, the recent tax changes, including the additional stamp duty charges, is driving many residential landlords out of the sector. This is turn is set to drive up an early chronic shortage of properties in many areas.

Mr Gill notes that, ‘ultimately, this will only punish tenants, driving out buy to let landlords will reduce supply leading to lower choice and higher rents for those that can least afford them.’

He went on to observe that Spring represents the calm before the summer storm, with demand for homes in the sector driven by a flow of jobs and a flux of a general more mobile workforce.

‘This reflects the strengths of private renting, the opportunity for young, independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy and will depend on the freedom to invest as a landlord,’ Gill added.[1]

High demand and low supply to drive rents up

High demand and low supply to drive rents up

Restraint

Just last week, a survey from the Association of Residential Letting Agents (ARLA) found that 65% of landlords will not look to purchase any more buy-to-let properties in light of the tax alterations.

61% of ARLA agents said that rents will rise even further as a result of the tax changes.

David Cox, director of ARLA, said, ‘whilst landlords adjust to the increase in costs we can expect to see one of three outcomes prevailing in the buy-to-let market: landlords absorbing the cost and taking the hit; landlords withdrawing from the market causing supply to fall; or landlords regaining those costs through hiking rents. Next month we can start to assess the damage.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/rents-set-to-rise-as-demand-grows-and-supply-falls

Main bugbears of tenants revealed

Published On: April 23, 2016 at 11:48 am

Author:

Categories: Landlord News

Tags: ,,,,

A new survey from tenant servicing firm Tenant’s Plus has revealed the main bugbears of renters.

In the questionnaire of 597 tenants conducted by Angels Media, publisher of Letting Agent Today, problems facing would be renters were highlighted.

Issues

39% of tenants questioned said they miss out on up to five properties before signing a tenancy agreement. 32% of renters admitted to prioritising cost over location when looking for a new place to live.

Problem residential landlords, including those who failed to fix repairs promptly, created issues for a worryingly high 52% of tenants. Letting agents’ fees amounted to problems for 30%.

Only 13% said that their rental payments caused them issues.

Main bugbears of tenants revealed

Main bugbears of tenants revealed

Offenders

Wayne Treveil, chief executive at Tenants Plus, noted that, ‘despite it often being presented as such, it is not the agents and landlords that are the main offenders here, whose hands are being forced by regulation, but the successive governments that do not deliver on new housing promises.’[1]

‘There is an obvious need for the government to prioritise longer, more stable tenancies and to commit to building the genuinely affordable homes that young people are desperate for, particularly in London,’ Mr Treveil added.[1]

The report from Tenant’s Plus comes on the heels of further data that indicates rental costs for new tenancies in the UK have risen by an average of 4.9% in the first quarter of 2016. However, this data excludes results from the capital., where rents continue to soar still further.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/4/letting-agents-fees-are-major-problem-for-30-of-tenants-claims-group

 

Average UK rents rise 3% annually

Published On: April 22, 2016 at 9:18 am

Author:

Categories: Property News

Tags: ,,,,

Average rents throughout England and Wales are now 3% greater than at the same period twelve months ago, according to new research.

The latest Buy-to-Let Index from Your Move and Reeds Rains show that rents now stand at £791 per month. This was a rise of around £23 per tenant from the same period in 2015.

Margins

These rises come after a fairly quiet March on a monthly basis, with the average level of rents the same as recorded in February. This comes after just a 0.1% rise between January and February.

By region, the East Midlands saw the greatest increase in rental growth, with rents now 8.5% higher than in March 2015. This has taken rents in the area to a record monthly high of £613. The West Midlands closely followed, with annual rises of 6.7%. This took the average rent to £597 per month.

London came in third in terms of annual rent rises, with rents up by 4.6% over the year. Typical rents here are now £1,231.

In contrast, Wales and the North East both saw rents fall annually. For both regions, rents dropped by 2.2%. Wales now has average rents of £551 per month, with rents in the North East standing at £507.

Average UK rents rise 3% annually

Average UK rents rise 3% annually

Storm coming

Adrian Gill, director of Your Move and Reeds Rains, stated, ‘as the Spring market warms up, recent weeks may have been the last of the best deals for those signing a new tenancy. Into April, market rents will start to build a gradual but inevitable path, ultimately reaching the very peak of the market in the Autumn. Early Spring is just the calm before the storm.’[1]

‘Early 2016 records for the Midlands demonstrate the direction of travel this year. Demand for homes in the private rented sector is driven by the flow of jobs and the flux of a generally more mobile workforce looking for a place to live. This reflects the strengths of private renting – the opportunity for young independent adults to strike out on their own, or for families to move across the country and earn the best possible livelihood,’ Gill continued.[1]

Concluding, Mr Gill said, ‘this regionality is also the core challenge for the private rented sector. In the towns and cities with the biggest renting populations it is a constant struggle for supply from landlords to match demand from tenants. With a surge in jobs and local economic activity, rents rise. Keeping pace will not be easy, and will depend on the freedom to invest as a landlord.’[1]

[1] http://www.propertyreporter.co.uk/landlords/average-uk-rent-up-3-year-on-year.html

UK rents up 4.9% in Q1, outside of London

Published On: April 13, 2016 at 10:51 am

Author:

Categories: Finance News

Tags: ,,,,,

Rents for new tenancies in the UK experienced more growth in the first quarter of 2016, according to new research.

Latest figures from the HomeLet Rental Index show that rents on new agreements signed for properties outside of London were 4.9% greater than in the first three months of 2015. Average rents now stand at £755 per month.

In London, those signing new tenancy agreements were faced with average rents 7.7% greater than those one year ago.

Greater than inflation

Data from the HomeLet report indicates that rents continue to rise well ahead of inflation, with demand still showing no signs of cooling. These results however come ahead of reforms, such as increases in Stamp Duty, which are forecasted to have a substantial impact on the buy-to-let sector.

In addition, results from the report show evidence that residential landlords soared to the market ahead of the changes. HomeLet recorded a marked increase in enquiries for landlord insurance. 37% of insurance policies taken out by landlords were few new properties, in comparison to 24% in the same period in 2015.

London saw average rents for new tenancies rise to £1,536 and the region has once again seen prices increase more quickly than in other areas of the country. The gap between the capital’s rent rises and that of the rest of the UK is 2.8%.

Only the North West of England saw rents fall in the three months to March.

UK rents up 4.9% in Q1, outside of London

UK rents up 4.9% in Q1, outside of London

Continual increase

Martin Totty, Chief Executive Officer at Barbon Insurance, said, ‘we’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply.’[1]

‘External factors may now come into play: the stamp duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short-term increase in the supply of rental property in some areas of the country. In the longer term, changes to rules around buy-to-let mortgage interest being offset against tax bills, coupled with the Bank of England’s instruction to lenders to apply more exacting criteria on buy-to-let lending, may have a limiting effect on supply,’ Totty added.[1]

Concluding, Totty said, ‘despite these factors, we expect the private rental sector to continue to play a crucial role in a housing market where population growth will continue for the foreseeable future according to official projections.’[1]

[1] http://www.propertyreporter.co.uk/landlords/new-rents-outside-the-capital-rise-49.html