11 million people to downsize their homes within 20 years

By Kate Hughes

Half of all pensioners are considering moving to smaller properties in a mass ‘exodus'

Do not pass go: downsizing could solve the housing crisis, experts say, but only if older owners have somewhere to go Getty

The UK could be on the brink of a huge property shift as 5.7 million people consider moving to smaller homes, new research suggests – but they could find few suitable homes to move to.

Half of those aged 65 and over would be tempted to downsize, an increase of 300,000 people in the past 12 months, according to the latest data.


About 38 per cent of the age group would consider downsizing now, with an additional 10 per cent encouraged to move with a stamp duty exemption, says housebuilder McCarthy & Stone as part of its annual Retirement Confidence Index.

With owners aged 65 and older expected to release an average of £80,000 each, and currently owning property worth around £1.5 trillion, this could equate to £450bn of equity to be spent on retirement funding or other expenditure at a time when the nation’s social care funding is under increasing pressure.

Roughly £720bn worth of property, including about 2.8 million bedrooms currently empty in older owners’ properties could be freed up for other buyers on the property market, McCarthy & Stone says.

But with long-standing suggestions that government could actively encourage downsizing through a series of measures including such tax exemptions, that figure could increase to more 11 million within 20 years.

This, the housebuilder – which constructs specialist retirement homes – says, would release around £877bn worth of equity.

“The rise in the number of those who want to downsize is an inevitable consequence of the UK’s rapidly ageing population,” says Clive Fenton, chief executive at McCarthy & Stone.

“Within the next 20 years, those aged 65 and over are expected to grow by almost 50 per cent, which will expose the UK’s grossly inadequate level of suitable housing for older people if we maintain the current status quo.”

As things stand, he warns, they are put off moving to smaller property due to the lack of suitable housing and the cost, he believes. “The Government needs to put specialist retirement housing and other forms of accommodation for older people higher up the agenda or we will simply lack the necessary infrastructure and support services, particularly from a health and social care perspective, to deal with such a huge demographic shift.

“The Government must build on the positive wording in the Housing White Paper and consider how it can influence market supply. The Government’s Help-to-Buy scheme and other initiatives aimed at first time buyers have spurred market supply of homes at that end of the spectrum but has done nothing to help the housing choices of those in later life.”

And this isn’t simply a case of a retirement home builder pushing for a bigger market. Jeremy Leaf, north London estate agent and a former RICS residential chairman, says: “Every study about downsizing seems to confirm that there is huge untapped demand from retirees looking to move to smaller homes but the lack of suitable options is proving a deterrent.”

Knight Frank recently reported that there are now only 715,000 homes or 2.6 per cent of total stock in this country classed as “retirement housing” ranging from age-restricted developments to care housing, and the numbers are only rising very slowly.

It found that 25 per cent of over-55s would consider moving into purpose-built retirement homes in future – a potential pool of demand of nearly two million homeowners.

“If more over-65s downsized then the housing shortage could be eased bearing in mind the amount of existing accommodation, which is substantially under occupied,” Mr Leaf adds.

“Many retirees would like to sell in order to fund their retirement by moving down the ladder or help children or grandchildren move up the ladder.

“One radical solution, rather than rearranging the deck chairs on the Titanic, could be for downsizing or all vendors, rather than purchasers, paying stamp duty as an incentive to help unblock the market.”

His suggestion comes as Lloyds Bank calculated this week that homebuyers in England and Wales paid £8.3bn in stamp duty in 2016 compared with £7.1bn in 2015 – a 17 per cent increase despite reforms to the tax that came into effect in 2014.

The average home owner now pays £12,693 in stamp duty over their lifetime as they move up the housing ladder.

“Alternatively, older people could share larger houses with their grandchildren, possibly converting their family homes to flats rather than being isolated and dependent on outside care while younger people pay high rents for sub-standard accommodation,” says Mr Leaf.

“Whatever happens, the Office for National Statistics said the number of over-65s is projected to grow twice as fast as the working-age population over the next 10 years so the problem needs to be addressed sooner rather than later.”

http://www.independent.co.uk/money/spend-save/uk-pensioners-downsizing-smaller-homes-11-million-retired-housing-market-a7872351.html

New bidding software available to letting agents for first time

By Graham Norwood

Bidding software that provides a new revenue stream for letting agents has been unveiled by a start up called Letsbid4lets.

The bidding software allows tenants to bid for rents, and was launched last evening at The Shard in London.

“We believe LetsBid4Lets is a game changer that provides agents with a whole new revenue stream and tenants with a level playing field. Three billion pounds worth of residential property was sold by auction last year and 10m people regularly use online auction sites” explains Spencer Rose, chief executive and founder of the firm.


“Our logic with this business is that auctions are a tried a tested way of selling property and people understand it, but no one has applied it to the lettings process yet. We believe LetsBid4Lets can provide transparency to both landlords and tenants” he adds.

He says Letsbid4lets can assist agents to let properties and can be used as a stand-alone marketing tool or in conjunction with traditional marketing.

All tenants that use the site will be pre-referenced before bidding, by FCC Paragon.

These references will last for 60 days so if a tenant doesn’t win on one property then they will be able to use the same reference to bid on another; tenants can also be prevented from bidding without first having viewed the property with the instructed letting agent.

https://www.lettingagenttoday.co.uk/breaking-news/2017/6/new-bidding-software-available-to-letting-agents-for-first-time

PropTech firm claims tool will ease agents' maintenance record-keeping

By Graham Norwood

A PropTech company claims its new software platform will make it easier for letting agents and property managers to co-ordinate maintenance reports and inspections.

The platform haas been created by former Dezrez director Richard Wilson and former contractor Brooke Williams; they have recruited Kevin Hughes, ex-marketing and finance director of GoCompare, as a non-executive director.

The platform, called Sorbet, handles transparency, accuracy and audit trails for the rental market; agents, landlords, tenants and contractors are able to raise and monitor maintenance requests and jobs through the platform.


It can automatically book contractors when reports and inspections are due, or deal with tenant maintenance requests without the agent having to intervene.

Tenants use a dedicated app to report issues and the software automatically chooses one an agent’s approved contractors to do the work. When a contractor has completed an inspection, they can use a separate app to let the agent and the tenant know.

Sorbet also keeps an audit trail of all communications between an agent’s team, contractors and tenant. When a house is sold, the landlord can pass all inspection reports over in one data transfer.

https://www.lettingagenttoday.co.uk/breaking-news/2017/6/proptech-firm-claims-tool-will-ease-agents-maintenance-record-keeping

Crossrail 2 is vital to 'fix housing crisis' say property experts

By Isabelle Fraser

Time for Crossrail 2? CREDIT: BLOOMBERG

Giving the green light to Crossrail 2 has been backed by more than 60 property industry leaders, who said it would help ease London's housing crisis by unlocking more than 200,000 homes.

Writing to the Chancellor Philip Hammond, they said: "It will transform transport capacity and connectivity for underdeveloped areas of the capital, such as the Upper Lea Valley, giving the certainty needed to accelerate the development of up to 200,000 new homes."


Signatories of the letter include Melanie Leech, head of the British Property Federation, all of the members of the G15 - London's biggest housing associations - and Tony Pidgley, the chairman of Berkeley Homes, who said that "Crossrail 2 is the only scheme that can make a significant difference to the South East’s housing stock".

The opening up of these areas previously under-served by transport would help not just London, but boost house building across the wider South East, with 30pc of the new homes to be delivered outside the capital.

Ms Leech said that the scheme "will stimulate regeneration up and down its route from the Solent to the Wash, opening sites for new housing and employment. A swift decision from Government on Crossrail 2 would provide a vote of confidence for our industry".

Crossrail 1, which is due to open fully in 2019, opened up the development of Thamesmead in south-east London, with 20,000 new homes there built by Peabody. Stephen Howlett, chief executive of the housing association, said: “Crossrail 2 would have a similarly transformative effect across London."

A new report by JLL for the Westminster Property Association found that the property sector could pay more towards the cost of the project than the Elizabeth Line, due to revenue from the community infrastructure levy and the business rate supplement. London has committed to meeting half the cost of the project.

Last month, more than 70 business leaders including EY, Canary Wharf Group and Heathrow Airport said that Crossrail 2 was "of national importance", adding that it would create more than 100,000 additional jobs in the capital. A decision on the project is expected from Government in the spring.

http://www.telegraph.co.uk/business/2017/04/03/crossrail-2-vital-fix-housing-crisis-say-property-experts/

Property transactions end last year almost unchanged at 1.2m sales

By Marc Shoffman
January 25, 2017

The Property Investor Centre

The number of property transactions increased by just 0.45% in 2016, HMRC figures reveal.

Provisional non-seasonally adjusted transaction data from the taxman shows there were 1,235,120 property sales in 2016, fractionally up from 1,229,58 in 2015.

In comparison, the number of transactions increased by 0.88% between 2014 and 2015.

On a monthly basis for December, transactions were at 109,100, up 5.1% on November and 4% lower year-on-year.

David Brown, chief executive of Marsh & Parsons, said: “Despite a number of obstacles in 2016, the total number of transactions rose slightly compared to 2015, to the highest since the financial crash.

“The resilience demonstrated in the face of a vote to leave the EU and marked changes to Stamp Duty – which significantly impacted sales of second homes and the buy-to-let market – is not to be scoffed at.*

“We’ve already witnessed an encouraging stream of interest from buyers across London during the start of 2017, particularly international buyers who have been buoyed by the falling value of the pound and continue to view London property as a solid investment.”

Shaun Church, director at mortgage broker Private Finance, said: “Reflecting on the second half of the year, the property market ended 2016 on more of a whimper than a bang, with transactions remaining largely flat and falling year-on-year.

“However, 2016 has been a very unusual stage in the life of the UK housing market with Stamp Duty changes resetting the dial for investors and wider uncertainty caused by the EU referendum.

“Given these challenges, the market has proven to be remarkably resilient and end-of-year sales meant December brought the largest monthly transaction total of the new Stamp Duty era.

“Although we have seen a degree of recovery since April’s reform, overall activity levels do not paint the full picture of pressures facing would-be homebuyers. Low supply continues to pose an affordability challenge for buyers at the lower end of the market, and there has been a continued slowdown in sales of higher value properties.

“The Stamp Duty change was originally designed to boost tax revenues, but with fewer high value transactions taking place, this could ultimately prove to be counter-productive.

“However, the good news for potential buyers is that Stamp Duty changes have suppressed house price growth at the upper end of the market, which has the potential to offset some of the additional costs they would otherwise face from a higher tax burden.”

Doug Crawford, chief executive of conveyancing firm My Home Move, said: “In the long term, demand for both rented and owner-occupied accommodation will support prices and sales volumes.

“There will undoubtedly be challenges for the market over the next 12 months, with the triggering of Article 50 and changes to landlords’ tax relief looming on the horizon.


“However, the property market has shown it is more than strong enough to overcome these obstacles.”

http://www.propertyindustryeye.com/transaction-growth-slowed-in-2016-hmrc/

Increasing supply has boosted ‘tenants negotiating power’

By Marc Da Silva
December 12, 2016

Buy-to-let landlords who scrambled to acquire homes earlier this year are beginning to rent them out or now looking to re-let them following the end of a tenancy, providing tenants with a flood of properties, new research suggests.

A record number of sales took place in March, as buyers tried to beat the introduction in April of the 3% stamp duty surcharge for those looking to acquire additional properties, including buy-to-let homes.

That has resulted in a sharp rise in rental properties being listed in November, according to new data from Countrywide.

Johnny Morris, research director at Countrywide, said: “Higher than usual numbers of homes available to rent has boosted tenants’ negotiating power.  Stock growth has outstripped that of tenants.  This is in part due to the hangover from the rush to beat the 3% stamp duty charge earlier in the year and a shift in stock from the sales market.

“With more choice and facing stretched affordability, many tenants are using their new found negotiating power to agree lower rents than in 2015.”

London, in particular, has seen rental listings surge, narrowing the gap between rents in the capital and the rest of the country for the first time since 2010.

In November, the average London rent was 0.7% lower than last year, the steepest decline since October 2010 when the average rent stood at £901 a month.

Over the course of the last 12 months, London has gone from the region with the second fastest rate of rental growth in Great Britain to the slowest.

The gap between rents in London and the rest of Great Britain has steadily grown over the last five years. By 2015, the gap had reached a record £490 a month, up from £150 a month in 2010. However, with rents in the capital now growing at a slower rate than in the rest of Great Britain, the gap between London and the rest of the country has narrowed.

Last month, the gap had dropped to £489 a month, the first fall since 2010, fuelled by a significant rise in housing stock. Rents in the capital currently stand 60% higher than in the rest of Great Britain.

In November, there were 32% more homes to rent in London than 12 months ago while the number of would-be tenants rose by just 9%. Over November the asking rent was cut on 11% of homes let in London, more than double the proportion in 2015 (5%).

Across the country the cost of a new let rose by 2% over the last 12 months, or 3.1% if London is excluded.

Rental growth has been driven by Northern England; the North East, North West and Yorkshire & Humber. Taking these three regions together, rents have risen faster than in any other part of Great Britain. Some 25% of tenants renewing their contract in Northern England saw their rent increase in November 2016, up from 16% in the corresponding month last year.

Morris commented: “Since the gap between London rents and those in the rest of the country hit a high watermark in 2015, the gap has been gradually narrowing.  The pressure on affordability and number of homes coming onto the rental market in the capital means that rents are likely to lag behind the rest of the country in 2017.”

https://www.landlordtoday.co.uk/breaking-news/2016/12/increasing-supply-has-boosted-tenants-negotiating-power

Britain's rental crisis: Extra 1.8 million homes to rent are needed by 2025 but buy-to-let landlords are in retreat

• UK households renting doubled from 2.3m in 2001 to 5.4m in 2014
• A balance of 58% of estate agents saw a drop in buy-to-let sales since May
• 86% of landlords have no plans to increase their rental portfolio this year

Almost two million more households will need a property to rent within the next decade, new figures suggest, as they are squeezed out of buying by high house prices.

But a warning has been sounded that this could trigger a further crisis in the property market, as landlords are retreating after being hit with new taxes. 

The Royal Institution of Chartered Surveyors said the rise would occur as a result of home ownership becoming 'increasingly unaffordable', but warned that supply of rental homes is falling and that the situation will only worsen as demand increases.

In demand: But RICS said that 86%of landlords have no plans to increase their rental portfolio

It said that the number of households renting property had already doubled from 2.3 million in 2001 to 5.4 million in 2014.

RICS warned that within 10 years, there could be 'rental supply crisis' following changes to the buy-to-let sector that made it less attractive for landlords to invest.

These have included a reduction in tax relief that landlords can claim and higher stamp duty payable on buy-to-let properties.

RICS is urging the Government to back a new 'build-to-rent' sector where properties are built specifically for letting.

A balance of almost three in five estate agents have reported a drop in buy-to-let sales since May, according to the research, which follows the arrival of a new 3 per cent stamp duty surcharge for buy-to-lets and second properties.

RICS also found that 86 per cent of landlords have no plans to increase their rental portfolio this year nor over the next five years.

Jeremy Blackburn, RICS' head of policy, said: 'We are facing a critical rental shortage and need to get Britain building in a way that benefits a cross section of society, not just the fortunate few.

'With increasingly unaffordable house prices, the majority of British households will be relying on the rental sector in the future. We must ensure that it is fit for purpose, and the Government must put in place the measures that will allow the rental sector to thrive.

'Any restrictions on supply will push up rents, marginalising those members of society who are already struggling.'

In addition to tax rises, landlords are also finding that lenders are tightening borrowing criteria for mortgages, looking for bigger deposits, more rent to mortgage payment cover and checking landlords' own earnings not just rental income. 

Landlords face a further test after watchdog the FCA announced tougher rules to ensure they can survive a rise in interest rates. They will be stress tested against mortgage interest rates rising to a higher level than previously.

The measures mean investors will be forced to find larger deposits – or increase rents charged to tenants – if they want to take out a mortgage.

In some cases, landlords will have to put down an extra £15,000 deposit before they can get a home loan.

Thousands of borrowers could be prevented from buying rental properties when the changes come in next year. 

It could also affect existing landlords who want to borrow more money by cashing in equity on properties they already own. 

David Hollingworth, of mortgage broker London & Country, said: 'These rules could prove fatal for small landlords hoping to invest in buy-to-let properties to boost their incomes. Many are not going to be able to find the extra money they need for a deposit or increase rents by enough to cover the shortfall.' 

RICS is calling on the Government to address the current rental shortage by reversing the rise in stamp duty and pioneering a new build-to-rent sector for the long-term, where the private sector is encouraged to build properties specifically for residential letting.

The number of households renting property has doubled from 2.3m in 2001 to 5.4m in 2014

Helen Gordon, chief executive of residential property owner Grainger, said build-to-rent would increase housing supply at a quicker pace than traditional house-building and offer tenants more stability.

Grainger said they planned to invest over £1billion by 2020 in ‘high quality, long term rental housing’.

‘In order to support us in this ambition and many others with similar plans, the Government should recognise the important role we have to play and explicitly support build-to-rent in its policies.’

The RICS findings echo those of a separate survey by the Residential Landlords Association, which said that two thirds of landlords plan to increase rents to cope with recent tax increases. 

The survey of almost 3,000 private sector landlords carried also found that the same proportion do not plan on purchasing any additional properties for their portfolio.  

More than half surveyed landlords said they planned to increase rents in the next 12 months to offset the impact of changes to mortgage interest relief.

And almost two in five said they would cut back on improvements to their rental properties because of the new taxes. 

http://www.dailymail.co.uk/property/article-3820004/EMBARGO-UK-faces-renting-crisis-extra-1-8m-rental-homes-needed-2025-BTL-landlords-retreat.html

Pace of rental growth slows across UK, says HomeLet

Rents on new tenancies continued to increase across most parts of the UK over the three months to July, albeit at a slower pace, according to new figures.

Fresh data from the HomeLet Rental Index shows that the cost of a new tenancy in the private rentals market in the UK, excluding Greater London, rose by 2.3% to £779pcm in the three months to July 2016. However, the figures represent a fall from the 3.5% annual rise recorded over the three months to June.

According to the Index, rental prices rose in almost every area of the country, with 10 out of the 12 regions surveyed seeing an increase over the three months to the end of July.

Rental price growth in the UK was led by East Anglia and the East Midlands, where rents on an annual basis rose by 9.7% and 5.4% respectively.

London remains by far the most expensive place in the UK to rent property, with the average rent on a new tenancy now stood at £1,599, up 4% year-on-year.

The North East, South West and North West of England all saw annual rents fall, down -5%, -2.1% and -0.5% respectively.

The data suggests that the rental market remains robust despite impending tax changes and uncertainties around the UK’s vote to leave the European Union in June.

Martin Totty, chief executive of Barbon Insurance Group, HomeLet’s parent company, said: “Ultimately, rents will be determined by supply and demand in the private rental sector; what we know here is that population growth will continue to increase demand, and that 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.

“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. Expect to see some interesting insights from the HomeLet index in the months ahead. 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. 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.”

https://www.landlordtoday.co.uk/breaking-news/2016/8/pace-of-rental-growth-slows-across-uk-says-homelet

Significant rise in number of retired people that are renting

There has been a sharp increase in the volume of people residing in private rented accommodation in retirement across much of the UK since 2012, new figures show.

The latest survey from the National Landlords Association (NLA) reveals that the number of retired private renters has increased by more than 200,000, or 13%, in the last four years, reflecting the fact that more people are turning to the private rented sector.

A breakdown of the data reveals that just 3% of the retired private renting population live in London, despite the fact that 17% of the nation’s retired population reside in private rented accommodation across the South East – the area with the highest proportion across the UK.

There are close to four times as many retired renters living in the North West at 15% compared to the North East at 4% and twice as many retirees rent property in the West Midlands at 8% compared to the East Midlands at 4%.

However, only 9% of landlords said that they currently let to retirees, down from 19% in 2012.

The findings from the research indicate that it could may soon become harder for those approaching retirement to find suitable rented accommodation in the future due to the general supply-demand imbalance in the market, according to Carolyn Uphill, chairman of the NLA.

She said: “More and more people are turning to private rented housing at every stage of their lives, including in retirement. Landlords appreciate the stability and assurances often provided by older households, but are finding it increasingly difficult to build businesses around the needs of potentially vulnerable tenants.

“Successive cuts to the welfare budget, uncertainty about pension provisions, and the devastating impact of the Government’s tax changes are likely to mean that private landlords will soon be unable provide homes in high cost areas like Central London for anyone without a well-paying job,’ she pointed out.

“As the proportion of retired renters continues to grow there’s a real worry that homes won’t be available in the private sector, forcing people to look further afield, leaving communities they have known and contributed to for decades.”

https://www.landlordtoday.co.uk/breaking-news/2016/6/significant-rise-in-number-of-retired-people-that-are-renting