Landlords expecting continued increase in tenant demand, 19 July 2010

29% of landlords recorded growing levels of tenant demand during he second quarter of the year, compared to 10% who said it was falling, according to Paragon Mortgages’ PRS Trends Report.

This compares to the first quarter of the year, when 24% of landlords reported growing tenant demand and 8% reported falling levels of demand. Tenant demand was stable for the 54% of landlords during the second quarter, whilst 7% said they were unsure which direction demand was heading.

Landlords expect tenant demand to strengthen considerably: 35% of landlords expect demand to be higher in 12 months’ time, with 8% forecasting a decline.

Nigel Terrington, Paragon Group chief executive, said: “Tenant demand has been rising consistently for two years and shows no signs of slowing down. Would-be home buyers continue to be unwilling or unable to step onto the property ladder, whilst longer-term social changes, such as greater numbers of single person households and economic migrants, are also creating more demand for rented property.

“Strong tenant demand is great news for landlords, but will lead to rental inflation for tenants unless the private rented sector is able to expand to meet this demand. Pressure is building on the finite number of properties in the sector because the lack of buy-to-let mortgage availability has prevented landlords from growing their property portfolios.”

There was a significant increase in the proportion of landlords planning to purchase, with 21% intending to purchase during the third quarter of the year, up from 12% who said they wanted to purchase in the second quarter.

Four out of 10 landlords said that they attempted to secure buy-to-let finance for purchase or remortgage purposes during the second quarter, with 52% of those saying that it was more difficult than previous attempts to secure finance, with just 13% stating it was easier.

Landlords said that a wider availability of mortgage finance, tax incentives and sustained levels of tenant demand would encourage further investment in the PRS. Just over four out of 10 landlords (43%) said they would like a better tax environment to help expand their property business, with 45% calling for the expansion of available mortgage finance.

Terrington said: “It is clear that confidence is high amongst the landlord community, which is reflected in the greater appetite for investment. There is obviously a dislocation between landlords’ intention to purchase and their actual ability to do so given the continued scarcity of buy-to-let mortgage finance. However, PRS Trends confirms that landlords still value residential property as an investment vehicle.”

64% of UK Landlords confident about Buy-To-Let market, 13 January 2010

64% of the UK’s landlords feel more confident about the buy-to-let market as we enter into the New Year, according to the latest findings from Upad’s monthly Rental Confidence Index.

The figure represents a 6% increase from the same survey that was conducted in December 2009. Comments made by 2010 survey respondents feeling more confident included: “More repossessions, uncertainty with interest rates, difficulty in getting mortgages all add up to an improved buy-to-let market.”

“More confident of buy-to-let in the New Year, more students looking for rooms.” For the 36% who are feeling less confident, statements included:

“Buy-to-let mortgages are very difficult to get. Those available require very high arrangement fees – around three percent, and or low mortgage to value, or a high deposit.”

“Payments of Housing Benefit going direct to the tenant is making life very difficult?This is increasing voids and homelessness.”

James Davis, founder and CEO of Upad, commented:

“The results from this survey bode well for the private rental sector, which, I believe, will see real growth during 2010. This is a positive start after what has been a very difficult period. “Many professional landlords are taking a medium- to long-term view by taking advantage of purchasing deals in the current economic climate. In doing so they run their portfolio like a business, which will help to minimise unnecessary void periods.”

Letting agents experiencing high Levels of activity in run up to Christmas, 9 December 09

65% of consumers currently looking for new lettings accommodation

Landlords and letting agents are experiencing high levels of activity in the run up to Christmas according to a poll conducted by lettingsearch.co.uk.

Sustained high demand from current and potential tenants as Christmas approaches is keeping landlords and letting agents busy, greatly reducing the number of un-let properties and void periods over the festive season, in contrast to the situation in 2008.

While December and January have traditionally been quiet, with fewer people moving into new lettings accommodation, December 2009 is busy with tenants looking to move before the New Year, when rents are widely expected to increase further. Potential buyers continue to be cautious about committing to a purchase as house prices look set to dip further, creating additional demand for rental homes.

Phil Calderbank, Director at lettingsearch.co.uk, comments: “All signs are pointing to high levels of market activity right up until Christmas itself, which is great source of seasonal cheer for lettings professionals, allowing them to cut down on void periods and in many cases achieve the best rents possible for their properties.

“Current tenants are looking to get a good deal on the rent while they can, as supply continues to shrink and rents look likely to continue on their upward path in the New Year. Buyers are also playing a waiting game, choosing the lettings market instead of sales, until mortgage lending improves.

“Such strong levels of demand at this stage in the year suggest that the lettings market is set for a year of sustained recovery and consolidation in 2010.”

Tenants late in claiming deposits back, November 25th, 2009

Almost £5 million of deposits are still waiting to be claimed by tenants, according to the Deposit Protection Service.The DPS protects more than 480,000 of UK deposits. However, more than 8,000 of them are waiting for the response of the lead tenant before they can be repaid.

Kevin Firth, director of the DPS, said: “We are committed to repaying deposits as quickly as possible, but unfortunately, some tenants are not keeping their contact details up to date – resulting in this large number of unpaid deposits. Once the tenancy has been registered with us, only the tenant can update their details, for security reasons.

“I must urge tenants to give us accurate and up to date information to ensure that their deposit money can be returned as quickly as possible at the end of the tenancy.”

The DPS has undertaken a review of its processes in order to make it easier to avoid deposits being held in limbo due to tenants not responding.

Firth added: “The review highlighted that if we had either a mobile number or valid email address for the lead tenant from the outset, the number of deposits held in limbo would be dramatically reduced, providing a better service for both landlords and tenants. This is part of our continuous efforts to speed up the repayment process and reduce the number of outstanding deposits.”

In order to make a deposit repayment The DPS needs agreement from both the landlord or letting agent and the lead tenant, along with details of the correct payment method.

The DPS will be introducing changes to the on-line service. From 26 November, landlords will be required to provide either a UK mobile phone number or a valid email address for the lead tenant. One of these will be required as a minimum (both would be ideal). However, if tenants do not have any of this information then they should apply for a paper deposit submission form.

Early next year the DPS will also be introducing SMS text messaging to alert tenants when a deposit repayment has been initiated by their landlord or letting agent.

A boom for buy-to-let - lettings?, 17 November 2009

The recession could be over for the buy-to-let market, as mortgage lending to the sector picks up once again and landlords look to take advantage of more affordable property prices and high tenant demand, says Lettingsearch.co.uk the online lettings portal.

Buy-to-let investors are beginning to fight their way back into the property market as prospects for the sector improve following a sustained period of restricted financing and, until recently, weak rental yields. With banks finally increasing their buy-to-let lending in quarter three, a period of sustained investment in the industry is set to follow.

Many professional landlords still have liquid cash available to invest and are now likely to look to expand their portfolios over the next few months, buying property at the more affordable levels before prices climb too far. Investments in other asset classes continue to under-perform, and as a result, city bonuses will also be channelled into investment property, bolstering the buy-to-let sector further.

Investment in the sector will be underpinned by strong and rising tenant demand for lettings accommodation, as homeowners and first time buyers turn away from the sales market and will fuel heightened activity in the property market as a whole.

Phil Calderbank, Director at letting search.co.uk, comments: "Mortgage lenders are once again recognising the important role lettings has to play in the property market and as investors with liquid cash make a move to take advantage the affordable property, strong tenant base and improving returns, I think we can safely say that the recession is now over for buy-to-let."

"The current rate of house building cannot meet the demand from potential buyers, and while lending to homeowners remains scarce and the uncertainty over unemployment looms on the horizon, we will see people choosing lettings from every rung of the ladder."

Decline in number of accidental landlords, 10 November 09

The trend for reluctant landlords appears to be coming to an end as members of the Association of Residential Letting Agents (ARLA) report a drop in rental properties coming onto the market because they cannot be sold.

Here are the key points of the report:

- ARLA found that 80 per cent of its members' offices have seen property being rented out rather than sold.
- This has dropped from a high of 95 per cent of offices in November 2008 when consumer confidence and house prices dipped.
- The markets for London and the South East are showing particular signs for optimism with 72.5 and 78 per cent of offices citing a decrease in reluctant landlords - both down from highs of 92 per cent last year.

The number of family houses being rented out has decreased from 72.5 per cent in November of last year to only 66 per cent, but rentals for flats and studios have increased in the same time frame.

Ian Potter, Operations Manager of ARLA, said: "Many sellers were left with little option other than to rent their properties out earlier in the year but this trend seems to be slowly diminishing.

"There are, however, still a huge number of these reluctant landlords in the market who need to understand the obligations of a landlord to their tenants and the importance of choosing a regulated and qualified letting agent."

Buy-to-let market grows for first time in two years, 12 November 09

Gross lending in the buy-to-let mortgage market grew in Q3 for the first time in two years, according to data published by the Council of Mortgage Lenders (CML).

At £2.1bn, lending was 10% higher than in the previous three months. Q3 2009 also saw a similar first increase in two years in the number of buy-to-let loans advanced, from 21,600 to 23,700. However, the CML stated that the recovery in buy-to-let lending was from a low base, with current lending volumes sharply lower than their peak in 2007.

The number of outstanding buy-to-let loans grew to 1,205,000, representing 11% of all mortgages by the end of the quarter compared to 1,180,000 three months earlier. The value of outstanding buy-to-let mortgages increased by 2.5% to £144.2bn. Within the buy-to-let market, both lending for house purchase and remortgaging grew in the last three months.

As with the mainstream mortgage market, however, house purchase lending was stronger. Remortgaging capacity was constrained by the unavailability during the quarter of any buy-to-let mortgages at over 80% LTV. Landlords with existing mortgages at a higher LTV are therefore effectively obliged to stay on their existing lenders' reversion rates.

Low borrowing costs also contributed to a continued improvement in cases of buy-to-let arrears and an improvement in the number of landlords facing enforcement action. For the third quarter in a row, there was a decline in the number of buy-to-let mortgages with arrears of more than 1.5% of the balance. In the last three months, the number has fallen from 22,900 to 20,500, representing 1.7% of outstanding buy-to-let mortgages.

The number of properties taken into possession rose in Q3, from 1,400 to 1,600, equivalent to 0.14% of all buy-to-let mortgages. Over the same period, however, there was a sharp decline - from 2,500 to 1,700 - in the number of arrears cases in which a receiver of rent was appointed.

Michael Coogan, director general of the CML, said that although the recovery is modest, the figures show that buy-to-let is here to stay. He commented: "Buy-to-let lenders are among those facing some of the biggest challenges in raising mortgage funding, so the improved figures are all the more welcome. Future demand for housing in all tenures supported by lenders will remain strong, despite mortgage funding constraints and low construction rates."

Landlords rewarded as rental market strengthens, 28 October 2009

Buy-to-let landlords have been rewarded with rising rents and a dramatic reduction in stock levels, according to the FindaProperty October Rental Index.

FindaProperty said rents climbed by 0.1% this month to £830. This was the sixth consecutive month of stable or rising rents as competition has increased among tenants who are seeking homes. Stock levels have also reduced as the number of rental properties on the market have plunged by 10% between September and October, bringing supply back to the same level last year.

Michael O'Flynn, director at FindaProperty, said: "Buy-to-let landlords have had a tough time over the last eighteen months, but those who have managed to hang on in the rental market, despite a dramatic oversupply of properties, falling rents and rising unemployment among tenants, are now breathing a sigh of relief." He added: "Rents are on a clear road to recovery with six consecutive months of stable or rising prices. Landlords could be set to enjoy a further recovery in rents over the coming months."

The residential rental market is beginning to stabilise with property oversupply decreasing across the UK and the number of new tenancies increasing, according to the Association of Residential Letting Agents (ARLA).

Results from the latest ARLA survey of its members show that the historical decline in numbers of tenants, which led to a surplus of properties to rent, is coming to an end. 83% of ARLA members signed up 10 or more tenancies during the last quarter, compared to 79% last quarter. Each member signed up an average of 36 new tenancies, compared with 32.6 last quarter.

Almost a third of members (33%) surveyed felt that supply and demand of properties is in balance; this compares with just 19% last quarter. Ian Potter, Operations Manager of ARLA, said: "This shift in the balance of supply and demand is extremely significant for the private rented sector. It gives further evidence to suggest that the property market as a whole is getting back on its feet.

"This shift also indicates that confidence is rising among prospective tenants; it seems that people who delayed setting up home 12 months ago, now feel secure enough to proceed. Equally, those who historically have shared a rental property seem happy to set out independently." In addition, the number of members who believe that there are more residential properties available for rent than there are tenants to fill them dropped significantly in the three month period, from 70% to 43%. The number who say that there are more tenants than properties has risen from 10% to 24%.

The situation is particularly significant in the rest of the South East, where three times as many members said that there are more tenants than properties (27% compared with 9% last quarter). "This recovery of sorts is still in its infancy and needs as much support as the Government can muster. As we have stated repeatedly, a healthy private rental sector is the only way in which the Government can hope to house future generations. Accordingly, the Government must do all it can to nurture the recovery of the PRS including the implementation of meaningful consumer protection measures," Mr Potter added.

Historically, tenancy rose across all regions of the UK until the recession hit, when properties became harder to let and supply outweighed demand. This trend was felt hardest from late 2008 and into early 2009. This latest ARLA research also showed that the average void period of a rental home has dropped for the first time in more than a year, indicating that properties are being rented more quickly.

In the winter of 2008 the average length of time for a property to remain empty was 3.8 weeks across the UK, yet by May 2009 this had risen to 4.3 weeks as homes became harder to rent. Now, the figure has dropped to an average 4 weeks (and 3.8 in the South East), giving further indication that the rental property market is picking up.

The Royal Institution of Chartered Surveyors (RICS) has combined with a number of trade associations, redress schemes and consumer champions to improve standards in residential property.

A new body, The Property Standards Board, which is to be launched today in Central London, has been created by RICS, the NAEA (National Association of Estate Agents) and ARLA (Association of Residential Lettings Agents) to set standards across residential property. It will develop codes of practice for estate agents, lettings agents and property managers and become a focal point for better consumer information on buying, selling and renting property.

The initiative is the bodies' response to Sir Bryan Carsberg's 2008 report into residential property. RICS believes that common and consistent standards for residential agents are long over due and supports attempts to seek government endorsement of the Board, giving it power to set standards for all property agents.

It is clear that the HIP has failed to improve the consumer's experience of buying and selling homes. We believe that the introduction of basic standards for all agents will provide consumers with better service and better information on what to expect from agents they come across in property transactions.

Gillian Charlesworth, RICS director of external affairs: "Home purchase and renting are far too important in people's lives to be left to a sector with no commonly applied and enforced standards and where anyone can set up shop. We want the industry to do this for itself but look to government and consumer bodies to help us to make it happen."

Professional landlords are reporting that despite an increase in the availability of credit in the wider mortgage market, it is becoming even harder to source buy-to-let mortgage finance, says Paragon

According to Paragon's Trends research, a panel-based survey of UK landlords, over half of professional landlords (54%) have attempted to obtain a buy-to-let mortgage in the three months to the end of August for either remortgage or new purchase purposes.

Of those landlords, nearly nine out of 10 stated that it was more difficult to secure a buy-to-let mortgage than in the previous three months. Nearly one in ten (8.4%) said that they had noticed no change in buy-to-let mortgage availability over the period, with 2.8% stating that they had found it slightly easier to secure a mortgage.

Buy-to-let product availability has continued to fall in recent months, in contrast to the residential market where availability has improved. There were 196 live buy-to-let products available at the end of August (a 94.4% reduction on August 2007), compared to 218 in May. This compares to 1,329 prime residential mortgage products available in August (an 86.1% reduction on August 2007 numbers), against 1,266 in May.

John Heron, Paragon Mortgages' managing director, says: 'Product availability in the general mortgage market has improved slightly in recent months, but has worsened for the buy-to-let market. Mainstream lenders are reducing their focus on this sector and specialist lenders are still unable to access the wholesale funding markets to enable them to offer new products.

'We know that there is demand from investors to purchase new property, particularly with returns from savings products being so low, but they are being frustrated by a lack of mortgage supply. Buy-to-let lending has slumped and there is a real danger that the private rented sector could start to contract, particularly if the 'accidental landlord' begins to sell property. This would be disastrous for those sectors of the population that rely on the private rented sector for their housing needs.'

EPC - Energey Performance Certificates Required on all Rented Properties

From the 1st October 2008 Landlords offering property to rent became legally required to provide prospective tenants with an Energy Performance Certificate,

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