Posts Tagged ‘in’

First ever rent rises in January; Tenant arrears at 10.7%

Friday, February 17th, 2012

The rental market sprang back into life early this year, increasing 0.1% to £712 per month and the first rise in three months.

However, rental arrears hit a high of 10.7%, reflecting the poor economic backdrop.

For or against: Buy to let’s growth divides the masses

Buy to let: delivering the goods or failing landlords?

Platform ring-fences £600m for buy to let in 2012

MS Poll result: 56% identify abuse of bridging and buy to let

Annual rental inflation increased to 4.3% from 4% in December, a £30 rise in the average monthly rent in the past year, according to figures from LSL Property Services.

Rents rose the fastest on a monthly basis in the West Midlands and South West, where they increased by 1.8% and 1.5% respectively.

In London, rents rose by 0.8%, where they have only fallen once in the past 13 months. However, rents fell in four regions, with the biggest declines in the East of England and Wales, where they fell by 1.7% and 1.5% respectively.

London recorded the highest annual rental rises at 6.3%, followed by the East of England where rents rose by 5.9%, but fell in the North East by 0.7%

David Brown, commercial director of LSL Property Services, said the depth of the underlying demand for tenancies over Christmas brought greater competition for rental property and halted the usual downward pressure on rents.

“In January, activity has already moved up a gear in many parts of the UK, pushing rents up once more in a small, but significant rise,” said Brown.

“Mortgage lending has shown signs of improving in recent months, but transactions remain at almost half their historic levels, and the increasing dependency on rental accommodation will drive further rent rises over the long-term.”

Rise in reluctant landlords in private rented sector

Friday, January 6th, 2012

The number of homes coming onto the rental market because they cannot be sold is increasing in some parts of the UK, causing a rise in the number of ‘reluctant landlords,’ say ARLA.

During Q3 2011, nearly half (47%) of ARLA member agents surveyed reported a rise in the number of ‘unplanned’ lettings as homeowners turn to the PRS because they are unable to sell their property, or holding off until a higher price is achievable.

This figure has risen from 40% at the beginning of the year.

In England, this trend was noticeable in the North East and North West in particular, where higher proportions of respondents reporting an increase in rental property coming onto the market because it cannot be sold (67% and 62% respectively) .

More than 60% of members in Scotland, Wales and Northern Ireland also noted an increase. In contrast, the figure was lowest in Central London (17%).

According to ARLA, this means some homeowners will be turning landlord for the first time, many reluctantly.

ARLA President, Tim Hyatt, said:

“Letting a property is an excellent way of generating consistent income from your property, if the correct approach is adopted by prospective landlords.

“However, lettings is an unregulated industry and there can be pitfalls for both landlord and tenant, including loss of monies.

“While we are, of course, happy to see an increase in the number of landlords, it is vital that every landlord – reluctant or keen – seeks expert advice before embarking on a rental arrangement.

“In particular, we would advise anyone considering renting or letting a property, to consult a licensed ARLA member.

“Licensed agents have to adhere to a strict code of conduct, and must have a number of consumer protection mechanisms in place, meaning that if things do go wrong, there is a way to seek redress.”

ARLA agents report that the most likely types of home to be brought to market by a reluctant landlord are detached and semi-detached houses, while least likely are studio flats.

ARLA has the following top five tips for anyone letting a property for the first time:

- Notify your mortgage and insurance providers as you may need to amend the terms of both if you are changing the use of your home to a rental property.

- Conduct thorough research, or better, seek professional advice, about your local rental market to ensure you’re setting the rent a competitive but also realistic level.

- Put together a detailed inventory that includes the condition of features and fittings of the property as well as its contents, making a clear note of any wear and tear. Take photographic evidence throughout, and ensure the final documentation is jointly approved by you as the landlord, and your tenant.

- Remember that the property is no longer your home – it’s someone else’s home. Bear this in mind when making decisions regarding the decoration and furnishing in the property as not everyone will have the same taste as you

- Consider enlisting a managing agent. They will be able to help you find and vet tenants, arrange documentation, and manage the property.

If you do decide to use a letting and/or management agent, always use a regulated agent (such as an ARLA member) to ensure client money protection.

This will secure both your money, and that of your tenants’ and will give access to a redress scheme should it be required.

Demand for rented homes in London sees cost soar to new heights

Wednesday, December 21st, 2011

The increase in demand for rented properties in London has seen the cost of renting a home in the capital soar to being an average of 80% more expensive than the rest of the UK – the largest difference ever seen, according to new research.

In November, rents in London increased to an average of £1,177 per month, whereas the average cost of renting a home outside the capital decreased over the same period to £653 per month, the latest HomeLet Rental Index reveals.

The increase in rental amounts in the Capital means costs are now 13% higher than last year. This is a stark contrast to the other UK regions that are only an average of 1.6% more than at the same time in 2010.

Although most other UK regions have seen an increase in rents over the past year, they are minimal compared to the increase in London.

Increases range from 0.2 per cent in the North West and almost six per cent in East Anglia.

The only regions that have seen average rental amounts decrease are Northern Ireland, the North East, and Scotland, which have dropped by an average of almost two per cent over the past 12 months.

Ian Potter, Operations manager at ARLA, said:

“The increase in the number of people renting a home means it’s now more important than ever that consumers have full confidence in lettings agents, and the industry must respond to their concerns about bad practice.

“That’s why in the absence of regulation, we developed our own licensing scheme to ensure all ARLA members are protected against negligence.”

John Boyle, Managing Director of HomeLet, said:

“The soaring cost of renting a home in the Capital, compared to the rest of the UK, reflects how demand for rental properties is increasing due to people’s continuing struggle to get onto the property ladder.

“Combined with the current Eurozone issue, this economic uncertainty could result in the demand for rental properties increase, and cause rental amounts to soar even further.

“Traditionally demand for rented homes dips before Christmas – however, London is bucking this trend and demand is higher than ever.

“This demand offers a fantastic opportunity for landlords and property investors who could offer a much needed supply of rental properties to the industry.

“However, as Ian mentions, it is essential confidence in the industry is maintained and tenants only rent a home through a regulated letting agent.”

Buying beats renting in 94% of UK towns

Thursday, December 15th, 2011

Buying now beats renting in 47 of the 50 largest towns across the country, according to the latest statistics from property website

The figures show a significant increase on this time last year, when it was better to buy than rent in only 40 out of the same 50 towns.

The continued mortgage drought and the rising demand for rental properties has led to renting now costing 15% more on average than buying, up from only 10% more this time last year.

To compare the cost of buying versus renting, Zoopla analysed the current asking prices and rents of over 78,000 two-bedroom flats currently on the market, comparing the rental cost to the cost of ownership based on servicing an interest-only mortgage at 5% p.a.

Swansea, Plymouth and Bournemouth are the only 3 locations on the list of 50 towns where it remains cheaper to rent than buy today.

In contrast, Milton Keynes comes top of the list of locations where buying beats renting and where renting is 36% more expensive than owning, leaving renters £2,436 per year worse off on average.

Warrington and Walsall also feature highly on the list of locations where it is cheaper to buy than rent, at 33% and 32% rental premiums respectively.

In London, where the average asking price for 2-bedroom flats currently stands at £442,036, buying also trumps renting by a big margin. With average monthly rents in the capital at £2,416, renting is 31% more expensive than the cost of ownership, leaving renters paying an extra £6,888 annually on average compared to owners.

Nicholas Leeming of, said:

“Although buying may be more cost-effective than ever compared to renting, many potential buyers arenít able to take advantage because they can’t access mortgage finance.

“The shortage of financing, especially to first time buyers, has pushed demand for rental property through the roof. But for those lucky enough to be in a position to get a mortgage, there may never have been a better time to buy.”

11% Rise In Tenant Demand

Tuesday, November 8th, 2011

Tenant demand for each property increased by 10.8% in the third quarter of 2011 compared to Q3 last year, a rise of 11.9% from Q2 2011, according to latest figures from Countrywide.

Its quarterly research into the private rental sector also found that the volume of viewings increased by 17.8% compared to the previous quarter, an annual increase of 8.2%.

Meanwhile, properties were let on average half a day quicker than the previous quarter, snapped up within a record speed of 12.7 days. In the same period last year, average properties were let within 13.5 days of being launched to market.

In line with figures from the last quarter, Countrywide, which operates 1,300 lettings and estate agency offices across the UK, recorded an average of five tenants competing for each available rental property, despite a marginal increase in the number of properties available.

Demand from investors is also strong, with a substantial rise in the total number of instructions, up 9.2% from the previous quarter. Interestingly, the report has found that the mix of landlords has shifted since the beginning of 2011, with both a larger number and proportion of landlords falling into the first-time investor category. In Q3, 23.5% of all landlords were those investing in property for the first time, compared to 18.7% at the start of the year.

Margaret Longden, co-managing director at Countrywide Residential Lettings, said: “Since the beginning of the year we have seen a significant increase in tenant demand for private rental property and although there are still some slight fluctuations that can be linked to seasonality, we’ve found that the demand for rental property has remained incredibly high throughout the year.

“We expect this demand to continue over the coming months, not only because many first-time buyers are struggling to save the substantial deposits currently required to purchase property, but also because a lot of people now see renting as a realistic alternative to home ownership, whether it be because they are awaiting further house price falls or because they are attracted to the flexibility that renting can offer.”

John Hards, co-managing director at Countrywide Residential Lettings, added: “Whilst a range of economic factors continue to affect the appeal of investment in other areas, the availability of competitively priced buy-to-let mortgage deals has helped to make property investment an increasingly attractive option. The reports of fall in house prices and the increasingly high levels of tenant demand have only helped to highlight this further, and as the gap widens between supply and demand levels, there are some great opportunities for those looking to build their property portfolios or invest in the market.

“Tenants now understand that properties aren’t staying on the market for long, and many are setting up email alerts and SMS alerts with our branches to know instantly when a suitable property becomes available so they can arrange viewings. Our findings show that couples under 35 years old remain the largest proportion of tenants, so the demand for one and two bedroom properties remains very high, with most available properties snapped up extremely quickly.

“However, local demand and supply levels do differ, so for those looking to invest, it’s important to speak to your local letting agent about the tenant demand in your area.”

Rents rise as landlords enjoy surge in demand

Friday, April 15th, 2011

Rents rose for the second month in a row in March, according to the latest Buy-to-Let Index from LSL Property Services plc.

In March, the average landlord in England and Wales increased rents by 0.4% to £687 per month, with rents now 4.2% higher than in March 2010. This is their highest level since November 2010. Rising rents and slightly lower house prices means yields for landlords are rising, although the effect was small in March. The average yield was 5.0%.

The greatest monthly increases were in East England, where they rose 2.2% and the South East where rents increased 1.7%. However, on an annual basis, London is powering ahead – over the course of the last 12 months, rents have soared by 7.3%. The South East is close behind – rents there have increased by 6.7%.

The biggest monthly decreases were in the South West, where rents fell 1.6% and the West Midlands, where they dropped by 1.3%. Smaller monthly decreases also occurred in Wales and Yorkshire and the Humber. Over the course of the past year, across England and Wales, only the South West and Wales have registered annual falls in rents – 2.4% and 1.5% respectively.

David Brown, commercial director of LSL Property Services, owners of Your Move and Reeds Rains comments:

“Landlords are seeing demand for their properties go from strength to strength. Although more high LTV products are coming onto the market, there is still not much money at that level from lenders, and first-time buyers simply can’t afford the average £25,000 deposit lenders require without substantial aid from parents.

“As a result, most would-be first-timers are remaining in rented accommodation for nearly a decade. The growing demand continues to outstrip supply, and this is pushing rents upwards beyond the rate of inflation and well above wage rises. At the current rate of increase, the average rent will top £715 this time next year.

“London and the South East are the two regions which are coping best with the economy in its present state, and are least likely to be affected by public sector job losses. It’s unlikely that rent rises will fall away any time soon in these areas. In fact, at their current pace, London rents are likely to hit £1,050 in a years’ time.”

With rental properties worth an average of 1.8% less than a year ago, the total annual return on a property now stands at 2.6%. The total annual return is now the equivalent of £4,261 – £7,326 in rent, with a capital loss of £3,065. However, if property values continue as they have in the last three months, over the next year, a property investor could expect to make a total annual return of £5,114 per rental property[i] – £8,239 in rent, with a capital loss of £3,125.

David Brown continues:

“Landlords are not currently seeing bumper capital gains but strong rental income is providing the bedrock for annual returns. The strong long-term underlying fundamentals of tenant demand and healthy yields are luring more professional landlords to the sector.

“With the recent budget removing some of the financial barriers towards institutional investment – and making bulk purchases easier – we may well see an increasing number of property funds enter the private rental sector over the medium-term. Much needed investment professional landlords should help alleviate some of the pressure on the private rental sector, preventing rents from soaring into the stratosphere.”

Tenants finances took a turn for the better in March, with 9.4% of all UK rent unpaid or late by the end of the month, a strong decrease from the 12.6% in the previous month. Unpaid rent totalled £224m across the UK in March, the lowest figure since October 2010.

Brown concludes:

“The dip in arrears suggests that renters are beginning to grow more financially prudent and get their household finances in order in the face of rising rents. Retail spending fell to its lowest level in 16 years in March. It’s clear that consumers, hard-pressed by rising costs of living, are beginning to rein-in high street spending.

“With tenants splurging less in the shops on credit cards, far fewer have fallen behind with monthly rent payments than in February. The improvement is a godsend to landlords. With annual returns so dependent on rental income, mounting rental arrears are no longer just headaches for landlords, but full-blown financial migraines.”

Paul Jardine, director of Templeton LPA, comments on LSL’s March Buy-to-Let Index:

“The drop in rental arrears will be warmly welcomed by landlords. Growing rents and pressure from soaring living costs means we are now seeing tenants demonstrating a tighter control over their household finances. As tenants adopt a more cautious approach to high street spend, their growing financial prudence is only part of the story.

“The recent drop in unemployment, albeit it relatively slight, has also contributed to fewer households struggling with their monthly rent cheque, reining in the number of tenants in arrears being experienced.. Nevertheless, with the brunt of public sector job losses still to be felt, over the next year, we anticipate that unemployment will creep upwards again, and tenant arrears will follow – especially in areas like the North East which are more heavily reliant on public sector employment.”

Strong Demand In Rental Property

Monday, October 11th, 2010

There is an abundance of opportunity for landlords looking to invest for the long-term across the South at the moment, accordingLeaders.

Leaders report that demand for properties to rent has been extremely strong over the last year, with more tenants choosing to rent for longer. This has led to a shortage of available properties to rent as fewer tenants are moving on at the end of their tenancies, choosing to renew instead.

Leaders’ managing director, Paul Weller, says:

“There is still a lot of uncertainty in the economy with talk of cuts. This means many tenants are opting to stay where they are for the foreseeable future while they take a ‘wait and see’ approach. This is great news for landlords because it means rents are rising and there is virtually no risk of a well-presented, well-situated property remaining empty for any significant time.”

Leaders, which has 46 branches across the South, reports that more tenants are now choosing to take a 12 month tenancy rather than just 6 months. Many are deciding to extend their tenancies, even at an increased rent, and average tenancies are currently around 14 months which means more security for landlords.

Says Weller:

“There are huge opportunities right now for landlords looking to invest or increase their portfolios in all the areas we cover. With the sales market still very slow and buy-to-let lending improving significantly in recent months, now is an excellent time to enter the market for a long-term investment.

“We are finding that good quality properties with neutral décor and modern kitchens and bathrooms are being snapped up within days, and often within hours, of coming onto the market with us.

“Whilst what is most in demand always varies from area to area, we are finding that good quality one bedroom flats are letting very quickly – often within hours – in many locations. Good priced one bedroom flats are giving gross yields of up to 7 per cent.

“Two and three bedroom houses are also very popular and let quickly as many tenants are not moving out of rented accommodation to the sales market but are trading up within the rental sector. This is definitely a trend we are seeing more than ever before. Two and three bedroom houses are frequently let within a few days of coming onto the market, with gross yields of around 6 per cent.

“Generally, we are seeing yields improving as sales prices come under pressure and rents continue to rise.”

Whilst buy-to-let looks a sound long-term investment, to minimise the risks and get the best results it is imperative to seek advice from an experienced and impartial, ARLA-registered letting specialist such as Leaders. They can tell you about where to invest, potential rental values and yields, how to prepare your property and your legal obligations as a landlord.

Landlords Expecting Continued Increase In Tenant Demand

Monday, July 19th, 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.”