Posts with tag: rents

Private Sector Rents Not Rising Faster than Wages

Published On: January 20, 2017 at 9:28 am

Tags: private rental sector,rent prices,rents,social rental sector,tenants

Private Sector Rents Not Rising Faster than Wages

Private sector rents in England are not rising faster than wages, in stark contrast to the social rental sector, where rents have increased faster than earnings, according to a new report from the National Audit Office.

Although private sector rents in England aren’t rising as fast as wages, the report does note that London is the exception to this. In the capital, rents are rising much faster than earnings, warns the National Audit Office.

The Residential Landlords Association (RLA) warns that this is a result of a chronic shortage of housing across all tenures in London. Indeed, it has been suggested that London’s housing bubble may finally burst this year, which would cause property owners to lose thousands off pounds off their assets and private sector rents to plummet.

The Royal Institution of Chartered Surveyors has also warned, “rents are being squeezed higher due to demand consistently running ahead of supply”, in its latest analysis of the sales and lettings markets.

The RLA cautions that there will be further pressure on private sector rents as a result of the forthcoming changes to mortgage interest tax relief.

The Policy Director of the RLA, David Smith, says: “Today’s findings from the National Audit Office will surprise those who have falsely sought to argue that landlords are profiteering. The question must surely now be why the heavily subsidised social rented sector is seeing its rents increasing so much more than earnings.

“We cannot afford to be complacent. Forthcoming changes to mortgage interest relief, due to be rolled out from April, will serve only to place upwards pressure on market rents, stifling the supply of homes to rent and reducing choice for tenants.”

He warns: “In the end, those who will suffer will be tenants unable to save for a house of their own, and the many vulnerable people, such as the homeless, who rely so much on the sector to provide a home for them.”

Prime rental values fall in Home Counties during 2016

Published On: January 17, 2017 at 2:29 pm

Author: Em Morley

Categories: Property News

Tags: Home Counties,Knight Frank,rents,rents in the Home Counties,tenants

Rents in prime locations of the Home Counties fell by an average of 0.8% last year, according to the latest Knight Frank rental index.

This fall has been attributed to a higher number of homes available at the top-end of the market pushing down prices.

Higher Volume

The rise in the volume of properties available in higher price brackets was primarily driven by larger uncertainty in the sales market after a number of tax alterations during 2016.

In the final quarter of 2016, prime rents in the Home Counties fell at twice the annual rate at 1.6%. Additionally, Knight Frank was instructed to let 39% more properties during the same quarter. Market appraisals also increased by 45% in the same period.

As such, Knight Frank feel that the market remains favourable to tenants, particularly those living in regions with high price brackets. Landlords in these areas have to be flexible in regards to asking rents, to try and stay competitive and keep void periods down.

Prime rental values fall in Home Counties during 2016

Decline

Jemma Scott, partner at Knight Frank, said: ‘The latest figures show that the rental market in the Home Counties is equally affected by the global markets as prime central London, which is reflected in the marginal decline in rents.’[1]

‘However, the surge in activity in the last quarter of 2016 and the significant increase in new tenant registrations suggest that the gap between available stock and tenant demand is closing, so our outlook for 2017 is very positive,’ she continued.[1]

The number of viewings actually rose by 17% in the same period compared to 2015, with the volume of would-be tenants also rising by 28%. Knight Frank agents attribute this demand mostly under the £4,000pcm price bracket. These properties usually sell quicker than those in higher brackets, driven by an increase in corporate enquiries from executives moving to the Home Counties for work.

‘Already in the first week of trading for 2017, the sub £4,000 per month market remains busy and we have seen an encouraging number of international corporate enquiries as families and businesses plan for relocation to the UK,’ Scott concluded.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/prime-rental-values-fell-in-the-home-counties-last-year

Rate of Rental Growth Halved in 2016

Published On: January 16, 2017 at 9:32 am

Author: Em Morley

Categories: Property News

Tags: rent prices,rental growth,rental properties,rents

The rate of rental growth halved in 2016 when compared to the previous year, from 3.1% to just 1.6%, reports Countrywide.

The average rent in Great Britain increased by 1.6% over the past 12 months – half the rate of rental growth recorded in 2015 – to stand at £927 per month.

Rate of Rental Growth Halved in 2016

Rent prices in the north of England increased faster than those in the south, while London dropped from having the second fastest rental growth of the country to the third slowest.

The average cost of renting a home in the capital fell by 2.9% over the year – the greatest decline seen since March 2009 – to £1,246. In central London, it will cost a typical renter £2,381 per month to rent a home.

The slowdown in rental growth was driven by an increase in the number of new homes available to rent, believes Countrywide. Over the year, the average number of available rental properties rose by 12% across the country when compared to the previous 12 months.

While every region experienced an increase in available rental stock, London saw the largest rise, with 22% more homes to rent than in 2015. Faced with greater choice, tenants have been able to negotiate on price, explains the firm.

Slowing rental growth has also led to a decline in the amount of tenants agreeing an increase in rent when renewing contracts. In 2016, a third (33%) of tenants who renewed their contract saw their rent go up, down from 37% in 2015.

The average change in rent prices remained unchanged, at 2.1%, over the course of the year. Only renewing tenants in central London and Scotland saw their average rent decrease, by 2.8% and 0.2% respectively.

Johnny Morris, the Research Director at Countrywide, comments on the data: “As the number of homes available to rent has grown, landlords have had to work harder to attract tenants. The average time to let spiked in April and has remained resolutely high ever since. Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents.

“Rental growth will likely increase in 2017. Squeezed yields, fewer tax breaks and higher Stamp Duty rates are likely to deter landlords from expanding their portfolios. Fewer homes on the market will leave tenants with less choice and negotiating power.”

Have you been forced to reduce rents in order to keep tenants and prevent void periods?

Renting could be more financially sound then estimated

Published On: January 12, 2017 at 2:19 pm

Author: Em Morley

Categories: Finance News

Tags: homeownership,property,renting,rents

Interesting new research reveals that the financial benefits of renting a property as opposed to owning could have been underrated.

Financial researcher at the University of Stirling, Dr Isaac Tabner, believes the cost of renting includes expenses such as homeowners, such as property maintenance and insurance.

Hidden costs

Dr Tabner said just a simple comparison between rent and mortgage costs can overlook hidden fees, thus overestimate the financial benefits of owning a property as opposed to renting.

The research, published in the International Review of Financial Analysis, gives a detailed explanation of how costs of owning versus renting a property could be assessed. Tenants’ and owners’ personal circumstances and macro-economic conditions are also taken into account.

When reviewing transaction costs, rental yields, inflation and length of ownership, the study reveals that in periods of deflation or zero inflation, people who rent are usually better off financially than those owning outright.

Favourable

In addition, the report found when economic conditions return to be favourable, households could need to own their home for between five and ten years before the costs of rent they no longer pay are sufficient to compensate for buying transactions costs.

Of course, rising inflation could serve to favour homeowners.

Renting could be more financially sound then estimated

Continuing, Tabner said: ‘It is often thought that buying a house makes more financial sense in the long run: however, renting is frequently more worthwhile than buying for financially-constrained households, as well as households likely to relocate within 10 years.’[1]

‘As well as a reduced ability to recover transaction costs, households relocating within a few years face a higher risk that medium-term prices will move against them, thus reducing or eliminating their equity, while financially-constrained households face much higher mortgage costs,’ he added.[1]

A full transcript of the research can be sourced here.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/1/renting-may-be-financially-more-worthwhile-than-previously-thought

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Published On: January 12, 2017 at 9:28 am

Author: Em Morley

Categories: Property News

Tags: landlord taxes,rent prices,rental yields,rents,tax changes

Asking rents will rise by 4% outside London this year, according to Rightmove.

Rents to Rise by 4% Outside London This Year, Claims Rightmove

Last year, the property portal reports that asking rents increased by 3% outside London, but dropped by 4.4% within the capital.

The highest growth in rental prices of the year was recorded in the northern regions of Yorkshire and the Humber and the North West. However, all regions outside London saw a rise.

In inner London, rents fell by 5.2%, while there was a smaller decline of 2.5% in outer London.

The Head of Lettings at Rightmove, Sam Mitchell, considers the future of the rental market: “This year will be one of caution for buy-to-let investors, due to tighter lending criteria and increased Stamp Duty.

“We definitely won’t see the spike in Q1 purchases that we saw last year, as landlords rushed to buy before last April’s new Stamp Duty deadline.”

He also assesses how further changes will affect the sector: “If the tax changes being phased in from this April lead to even fewer buy-to-let purchases and some landlords deciding to sell, then a tightening of supply in some areas will lead to increasing rents.

“We forecast that asking rents could rise by 4% outside London by the end of 2017, though in London, prices are likely to stay flat.”

Mitchell advises landlords on the best locations to invest: “Investors looking for the strongest yields could consider investing in certain areas in the North West, where both demand and yields are high.

“Those with a number of properties in the capital may find that tenants are more price sensitive, so setting realistic rent levels will be the key to avoiding void periods.

“In order to mitigate this, we would recommend landlords asking for longer tenancies to help secure a steady rental income over the next few years while they adjust to what the tax changes will mean for them.”

While recent reports claim that rental yields are expected to drop below the five-year average this year, landlords should be aware that strong returns are still possible in some locations.

Rents outside of the capital hit average of £750pcm

Published On: January 10, 2017 at 9:46 am

Author: Em Morley

Categories: Property News

Tags: average UK rents,Buy-to-Let,London rents,rents,tenants

The most recent rental index from Landbay has revealed that the average cost of renting a property outside of the capital rose during 2016.

Rents paid increased by 2% in the 12 month period and now account for 53% of the average take-home pay for people outside of London.

Capital Pains

In the capital, typical rents remain more than double the average for the rest of the UK at £1,882. This is despite a fall of 0.13% during December. Worryingly, with take-home pay averaging £1,967 per months, many on typical incomes will spent nearly all of their money on rent, unless they split the cost.

Taking London out of the equation, average rents across all properties rose by 2.13% in England, 1.42% in Scotland and 1.43% in Wales. This took average costs to £755pcm, £721pcm and £634 pcm respectively.

Wage growth has not been able to keep pace with rising rents, with disposable income dropping by 2.3% in the first quarter of 2016.

With inflation predicted to increase by 2.7% during 2017 and low interest rates hindering those looking to save for a deposit, there are real concerns for would-be homeowners.

Rents outside of the capital hit average of £750pcm

Robust Demand

John Goodall, CEO and founder of Landbay, observed: ‘Outside the capital, rents continued to grow across the country in 2016, a trend we expect to continue into the coming year. Demand for rented accommodation will remain robust, as the myriad threats of rising house prices, falling real incomes and rising inflation affect the ability of aspiring homeowners to get their foot on the housing ladder and save for a deposit.’[1]

‘The government may have just committed £7bn to building an additional 200,000 affordable starter homes, but supply across all tenures is still too low. The buy to let market has become a ‘catch all’ for a forgotten generation of house hunters, for those who cannot, or choose not to, buy a property outright. All eyes will now be on the upcoming Housing White Paper, which may be the best opportunity we’ve had in recent years for significant change,’ he added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2017/1/rents-outside-of-london-hit-average-of-750-a-month