Friday 27 July 2018

Rising rents hit a 10-month high

There was a further rise in the number of tenants in the private rented sector experiencing a rent hike in June compared with a month earlier, as demand from tenants soared, according to ARLA Propertymark’s latest monthly Private Rented Sector Report.
The data found that the overall number of tenants experiencing rent increases rose to 35% in June, up from 28% in May.
This is the highest level since August last year when the same 35% of landlords put rents up for tenants.
An 18% increase in the number of prospective tenants registered per letting agency member branch helped to push up rents.
According to ARLA Propertymark, there were 71 prospective tenants registered per member branch in June, up from 60 in May.
The data also found that the number of rental properties letting agents managed increased in June, with 191 on average per branch, up from 186 a month earlier.
David Cox, ARLA Propertymark chief executive, said: “It’s positive to see the number of properties available to rent slowly rising but it still isn’t anywhere near enough to slow down the pace of rent rises, which are continuing to climb. 
“Over the last few years, we’ve seen taxes to both purchase and let a rental property increase. This combination – coupled with continued regulatory change – has unsurprisingly started pushing landlords out of the market.
“We predicted back at the end of last year that renters would be in for a rough ride in 2018, and we warned government about the impact.”

Wednesday 25 July 2018

Renters spend £1.1m more than buyers in their lifetime, research finds

So you want to buy a home? You’re in a shrinking majority. 
Of the 17 million renters in the UK, more than two-thirds now have no plans to purchase a property in their lifetime. 
A third of Brits are currently renting the home they live in, and official statistics place the UK ahead of only Denmark, Austria and Germany – some of the world’s wealthiest countries – in terms of the proportion of owner-occupied homes across Europe.
Affordability is, of course, a major hurdle.
The average price paid by first-time buyers in 2017 was £207,693, more than 50 per cent higher than five years earlier when the same property cost on average £138,663. That’s an increase of almost £70,000, or £1,150 every month.
Understandably, a fifth of those lifetime renters don’t want the financial commitment that comes with owning a property. Another fifth doesn’t want the cost or hassle of maintaining it, while just under a fifth cite flexibility – not wanting to be tied to one area or preferring the freedom to travel, according to research from Direct Line. 
With Scotland homing the highest proportion of renters – almost half the population – compared with just a fifth in the West Midlands, it takes a British renter anywhere in these islands an average of 15 years and two months to get on the property ladder. 
But for many, the cons are beginning to rapidly outweigh the pros.
“The UK housing market continues to change and we are seeing a major attitudinal shift when it comes to renting,” suggests Christina Dimitrov, business manager at Direct Line for Business.  “While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property rather than jumping into home ownership. 
“In line with the greater demand for rental properties, the government has introduced tougher controls and regulation.” Recent legislative changes mean landlords have to meet stringent guidelines to ensure the health and wellbeing of their tenants, for example.
Which all sounds fine. We’ll all go down the German route, spend our disposable income on nice clothes, holidays, decent cars and stylish stuff for our kids. We may never again worry about what miserable shoebox we could kill ourselves to afford. 
The major problem with all this is the cash, though not in the way you might expect. 

The truth behind the numbers

Renting for an entire lifetime will cost you £1 million more than purchasing your own home, according to research by – surprise, surprise – new home builder Strata.
The research, which compares the cost of owning a home in the UK to average monthly rental payments over a 60-year period, proves that purchasing is significantly cheaper over the course of a lifetime.
According to the Land Registry, the average first time buyer’s house costs £212,079, with a 16 per cent deposit. With an estimated £7,900 of purchase fees and other costs such as stamp duty, solicitors bills and moving costs, and assuming buyers rent for an initial nine-year period, they will spend around £432,000. 
Add in the bills associated with the typical five moves during an owner’s lifetime and the bill rises to £465,000. 
There are problems with these numbers though. It being almost impossible to work out an average increase in mortgage costs for upsizing, downsizing, moving area, even moving country and every variation in between during a lifetime, the figures are replicated for each purchase and both rent and ownership costs are subjected to inflation – at around 2.68 per cent a year.
But that £465,000 even includes the cost of renting for 9 years before you’re able to buy – at the average age of 30.
Meanwhile, renters will spend £909 a month on average on a lifetime home, which when adjusted for inflation, would reach a total of £1.6 million over a 60-year period – assuming, for the sake of number crunching, that renting starts at 21 and ends with the average life expectancy, 81.
The difference is well in excess of £1.1 million. 
Of course, figures across the UK vary dramatically. In London, where remarkably would-be buyers spend some of the shortest periods renting before stepping on the housing ladder, the gap is almost £2 million, even with the £87,000 bill just for a lifetime of moving costs as a homeowner. 
Even in the North East, at the lowest end of the scale, there’s still a staggering £720,000 difference.
In terms of the proportionate spend, lifetime renters in the North West will suffer the greatest difference, spending in excess of 300 per cent more than their owner-occupier neighbours, who would pay just under £300,000 in total. 

Monday 23 July 2018

Landlords offered cash incentive to meet minimum housing standards

A pilot scheme has been launched with a view to improving property standards, increasing awareness, boosting engagement and increasing housing supply within Oldham’s private rented market.
The council is hoping to use cash incentives to encourage private landlords to improve sub-standard rented homes in Oldham to ensure that they meet minimum housing standards.
The trial new policy would see minimum property standards introduced, with landlords paid a cash incentive when they sign a contract with the council.
With demand for rental accommodation increasing in Oldham, the council is keen to improve standards in the local private rented sector (PRS) in the hope that it will lead to better quality housing.
A chronic shortage of social housing in Oldham has led to a major supply-demand imbalance in the social housing sector, leaving the council with little alternative but to try and encourage more people to consider living in the PRS.
To help support tenants and further incentives landlords to sign up to the initiative, a bond scheme is also being introduced which guarantees that the landlord can claim money from the council, normally equivalent to one month’s rent, if their property is not left in a suitable condition once the tenant moves out. 
Demand for social housing in Oldham is currently three times higher than its neighbouring authorities, Bury, Rochdale and Tameside, according to a report by Albert Margai, the Oldham Council’s principal housing market intervention officer.
He said: “The lack of sufficient social rented housing placed an enormous demand on the private sector to address the growing demand for housing.”
“The demand for private rented accommodation in Oldham has been unprecedented, demonstrated by record numbers of applicants approaching Oldham Housing Advice Service.
“The increased pressures led to the emergence of low demand areas in Oldham, rife with predominately outdated pre 1919 terraced housing stock.”

Friday 20 July 2018

Five year mandatory electrical checks for all private rental homes

All privately-let homes must have electrical installations checked every five years under new rules announced by the Ministry of Housing, Communities and Local Government. 
Housing Secretary James Brokenshire says there will also be a comprehensive review of guidelines covering fire safety, beginning this autumn. 
“There’s nothing more important than ensuring people are safe in their own homes. That is why I am announcing a package of measures focused on improving building safety, having listened carefully to the concerns which have been raised” says Brokenshire, who initiatives follow the review led by Dame Judith Hackitt, after the Grenfell Tower tragedy.
“Dame Judith’s report sets out the right framework to improve safety, but I will not hesitate to go further than the recommendations where I deem it necessary. That is why I am going further than my original commitment to simply clarify the guidelines, by commencing an end-to-end technical review of the fire safety aspects of building regulations in the autumn” continues Brokenshire.
Electrical Safety First, a safety charity, says over 18,000 house fires in England each year are caused by electricity, and claims private rental sector properties are most at risk.

Wednesday 18 July 2018

Agents warned of growing arrears if wider economy doesn't improve

Letting agents and landlords have been warned to expect a possible rise in arrears in the coming months if conditions in the wider economy do not improve. 
RentalStep, a PropTech start-up, warns that if rents continue to rise and wage growth remains stagnant, arrears could grow. 
The company, which specialises in tenant referencing and associated services, says its concern is growing following recent data releases from agencies.
According to Your Move, the number of tenants in arrears increased for four consecutive months between January and April, with the proportion of its tenants in arrears up from 8.4 to 9.4 per cent during this time; meanwhile, Belvoir recently reported that a fifth of its offices had four to 10 tenants in arrears during the first three months of the year.
"Rent arrears are a real and serious issue for the nation's landlords and they need to do everything in their power to protect themselves from being seriously affected" says Mike Georgeson, founder and chief executive of RentalStep.
"Many industry commentators predict that rents could rise as a result of the incoming ban on tenant fees. Landlords need to be aware of how this could impact on rent arrears and prepare accordingly. Making sure you let to tenants who have been fully referenced and credit checked is absolutely vital" adds Georgeson.
He says it has been estimated that rent arrears collectively cost landlords somewhere in the region of £900 million each year. 
As tougher conditions and increasing regulation start to affect landlords and agents, the number of tenants in arrears could continue to increase throughout the year, particularly if rents keep rising.
RentalStep is one of the startups competing in the government’s Rent Recognition Challenge which was launched to encourage digital solutions to help share renters' payment histories with lenders and credit reference agencies.
After being named one of six winners of the first stage of the competition, RentalStep recently took part in round two by pitching to the Treasury. A total of £1.4m will be made available to the winners of the competition to develop their product. 
"Making it a formality for rent payments to be included in credit scores is key to securing the financial future of the next generation" concludes Georgeson.

Tuesday 17 July 2018

House prices latest:price of London first-time buyer homes drops as buy-to-let market collapses

The price of a first-time buyer home has dropped by almost £18,000.

London’s house prices are continuing to slide, with average asking prices down just over £11,000 year on year.
One and two bedroom properties have seen the largest price drops since July 2017, providing some much-needed good news for beleaguered first time buyers.
Starter-home prices have fallen 3.5 per cent (or almost £18,000) to an average £486,000, according to new research from Rightmove.
Meanwhile the price of three- to four-bedroom houses has remained relatively unchanged at just over £700,000.

But larger and detached homes have dropped by 2.7 per cent — although these “top of the ladder” properties still cost an average of almost £1.5m.
“Aspiring first-time buyers are among the greatest potential beneficiaries of the downwards adjustment in asking prices by London’s sellers over the last 12 months,” said Miles Shipside, Rightmove director and housing market analyst.
“It’s been well-documented that the top end of the London market has been struggling for the past couple of years, but … asking prices in the lowest priced sector are now experiencing a larger percentage fall than these high-end properties.”
Combined with Stamp Duty relief on properties worth less than £500,000 and Government initiatives like Help to Buy London, the news will bring relief to the 47 per cent of millennials who recently told Royal Bank of Scotland researchers they had given up hope of ever owning a home.
According to the latest analysis the number of first time buyers in the UK has fallen by almost a quarter since 1994 and the number of lone first time buyers have seen a more significant 45 per cent decrease.
The key reason for price drops in the capital’s starter home sector is a collapse in the buy to let sector.
Tax changes over the past two years have made owning a rental property a far less lucrative enterprise. The number of landlords snapping up flats in the capital has collapsed as a result, leaving the way clear for first time buyers.
Jonathan Samuels, chief executive officer of property lender Octane Capital, described the situation as a “sea change” in the property market.
‘Amateur landlords are fast becoming an anachronism,’ he said.
Of course London’s prices are still prohibitively high for hundreds of thousands of would-be homeowners.
John Phillips, group operations director at Spicerhaart and Just Mortgages, called for the Government to overhaul the tax system to make moving onto and up the ladder easier.
Around London the market is very much a game of two halves. Around half the boroughs have experienced price falls during the past 12 months, while the rest are still in the black (just).
The areas where prices are on the up are a mix of prime central London locations led by Kensington and Chelsea, up 4.1 per cent to an average of £1.7m, and far flung suburbs like Sutton, up 3.9 per cent to an average of £485,000.
At the bottom of the table the three worst performers are Hackney, down 3.5 per cent to an average of £649,000, Ealing, down 3.4 per cent to an average of £557,000, and Hammersmith & Fulham, down 3.3 per cent to £913,000.

Friday 13 July 2018

Hot tip:first-time buyer homes in the outer London borough with designs to become the “UK’s first sustainable suburb”

Sutton scents a crop of eco-minded first-time buyers with new flats, a rooftop garden and plans to become "one of the greenest places in the country to live."
    Sutton, the outer London borough, had a purple patch in the 18th and 19th centuries when its lavender fields, feeding off the chalky, free-draining soil of the North Downs, grew to become the centre of a worldwide industry.
    Today the focus is on this suburb's town centre, which despite a conservation quarter, lost its allure in the Seventies thanks to some truly awful planning disasters.
    In travel Zone 5, Sutton is affordable territory for young first-time buyers who want a quick commute into central London: 25 minutes to Victoria or 33 minutes to Blackfriars. An extension to Sutton of the Croydon to Wimbledon tram service is on the agenda, along with some serious regeneration.
    Sutton Point, right next to the train station, is one of the key new projects, offering 332 high-rise flats plus shops and offices, a hotel and a fitness centre grouped around a new public square. A spectacular rooftop garden has been created on one of the buildings, too. Prices from £280,000, with Help to Buy available. Call CNM Estates on 020 8390 9265.
    The local council's mission is to make Sutton borough the "UK's first sustainable suburb, one of the greenest places in the country to live". BedZED, a showpiece zero-carbon housing project shortlisted for the prestigious Stirling Prize for architecture, showed the way.
    New Mill Quarter, being built beside the River Wandle, follows in this tradition, a new neighbourhood of 750 homes moments from Hackbridge train station and with its own district heating system. From £283,995. Call David Wilson Homes on 0844 7770057. 

Wednesday 11 July 2018

Study reveals significant fall in number of first time buyers in the UK

The number of first time buyers in the UK has fallen by 24% since 1994 and the number of lone first time buyers have seen a more significant 45% decrease, new research has found.
Also, those aged 16 to 34 are down by 49% since 1981 while 41% of people aged 35 to 44 are not earning enough to save for a deposit and 21% of over 55s are renting rather than owning a home.
The study from price comparison website MoneySuperMarket reveals the changing face of home ownership and suggests that a large portion of British people are putting their dreams of buying a home on hold.


Instead they are using their savings for short term commitments such as holidays or travelling with 43% doing so and only 20% say they would put their savings towards home ownership, with 22% preferring to put money away for a rainy day rather than buying a home and 27% saving for a holiday.

The research report says that this could be a result of the fact that home ownership has become increasingly more difficult over the last 20 years, with the average yearly salary accounting for only 11% of the average house price in 2018 compared to 23% in 1999.
Indeed, the demographic of a home owner has dramatically changed over the years, with 16 to 24 year olds particularly affected as the amount of home owners within this age bracket has seen a dramatic 68% drop between 1981 and 2016.
Due to the rise of house prices, larger deposits and increased rental costs, people are finding it increasingly harder to save. Those aged 25 to 34 now pay an average of 39% more on rent than those aged 55 and over did before purchasing their first home.

The data also reveals that there has been a 54% increase in the amount of those renting in the 34 to 50 age bracket from 1996 to 2016, with 60% of 35 to 44 year old renters citing a preference for renting over home ownership and 41% stating that they weren’t earning enough to even consider saving for one.

People also say they have found themselves compromising on many aspects when looking at purchasing home. Most commonly, first time buyers found they had to compromise on the size of their property with 36% finding this to be the case, while 29% of those surveyed found they had to settle for a less preferable location.

Specifically, those in the West Midlands had to make the most concessions when purchasing their first homes. In fact, more first time buyers in the West Midlands, some 42%, found they had to compromise on location when buying their first home than those in London at 40%.

Some 48% of buyers in the West Midlands also found they had to compromise on their budget, the most of any region in the UK. On the other hand, for Londoners the biggest issue was found to be space, with 51% stating the size of the property to be their biggest compromise.

‘It can be very disheartening for prospective buyers, especially younger ones, to look at the cost of buying a house. What used to be affordable 20 years ago is now proportionally double the investment, and accordingly we’re seeing a move towards favouring renting and even a lack of interest in saving towards a deposit,’ said Kevin Pratt, consumer affairs expert at MoneySuperMarket.


Monday 9 July 2018

House price growth falls to five-year low

UK house price growth has slowed to a five-year low, according to the latest research from Nationwide.
The annual rate at which property prices are rising eased to 2% in June, the lowest level since June 2013.
The slowdown came despite the average cost of a UK home climbing by 0.5% during the month - more than offsetting May’s 0.2% fall - to stand at £215,444.
In London, house prices fell for the fifth consecutive quarter, with values down 1.9% year-on-year between April and June.
But other regions fared better, with annual growth of 4.4% in the East Midlands in the last three months.
Robert Gardner, Nationwide’s chief economist, said: “There are few signs of an imminent change. Surveyors continue to report subdued levels of new buyer enquiries, while the supply of properties on the market remains more of a trickle than a torrent.”

Why is this happening?

Annual house price inflation has been stuck in a narrow range of 2% to 3% for the past 12 months.
On the one hand, subdued economic activity and ongoing pressure on household budgets is continuing to act as a drag on housing market activity.
But at the same time, high levels of employment, low interest rates and a shortage of homes for sale are all supporting property values.
Unless confidence among potential buyers returns or more properties are put on the market, the current subdued level of transactions is likely to continue.


Above: three-bedroom flat for sale in Harrogate, North Yorkshire 

Who does it affect?

Most regions of the UK saw a slowdown in the annual rate of growth in the last three months.
Scotland was the only place to see a notable pick up, with property values rising by 3.1%, up from 0.2% between January and March.
London continued to be the worst performer, with prices dropping by 1.9%, building on the 1% slide recorded in the first three months of the year.
But other regions continued to enjoy solid gains between April and June, with annual house price inflation of more than 4% in the East Midlands, West Midlands and Wales, although in all cases this was a slowdown compared with the previous three months.

What’s the background?

Going forward, Nationwide said it expected the current subdued levels of activity to continue, with house prices likely to end 2018 just 1% higher than they started it.
Gardner said: “Much will depend on how broader economic conditions evolve, especially in the labour market, but also with respect to interest rates.”
Nationwide also pointed out that despite price falls in London, the north-south divide was still very much in evidence.
In southern regions, property values are well above their 2007 peak, with prices 50% higher in London.
But in most northern regions, they are either close to 2007 levels or below them.

Read more at https://www.zoopla.co.uk/discover/property-news/house-price-growth-falls-to-five-year-low/#XsEjiKQu89rAbLVP.97

Monday 2 July 2018

Not just for millionaires:two-bedroom penthouse in new Acton Gardens development on sale for £645k

London penthouse doesn’t have to be priced out of your reach by millions.

 www.propertyplanet.city

Head over to West Park Gate in Acton Gardens, W3, where you’ll find this gorgeous two-bedroom duplex pad, set on the edge of West Park — the first of the new parks that are being built as part of the development. 
The bright and airy penthouse spans the seventh and eighth floors. Sleek designer kitchen and dining areas on the first level open out to a private sun terrace, while the top floor houses the bedrooms and a spacious living room with views across the London skyline from a mass of windows. 
Bustling Chiswick High Road, along with Acton Town and Chiswick Park Tube stations, is just a short walk away. 
This swish apartment is on the market with Countryside for £645,000. Call 020 8012 5166 for more details.

Mortgage Loan Deal Helps Landlords With Tax

In the past, I have regularly criticised the mortgage companies for not exactly being innovative, though in recent years, new entrant players like Aldermore, Paragon and Kent Reliance have increasingly shown the more established lenders the way ahead with new innovative products that meet the needs of the modern landlord.
So, I am very pleased to see a new mortgage loan deal that has just come out that actually helps landlords to reduce tax.
It is from the Leeds Building Society, who are the first lender to suggest that landlords might choose a mortgage deal that has a high upfront fee and a low interest rate as a smart way of making the most of tax relief on finance costs before the “Section 24” changes, (which affect how loan costs can be deducted from rental income for tax purposes), start to bed in.

A Quick Recap! – Section 24

First, a quick reminder for those who have been asleep at the back!
Landlords used to be able to deduct mortgage interest and other finance costs, including product fees, from rental income before calculating how much tax they should pay. But the government is phasing out this tax relief over four years to 2020-21. By 2020-21, landlords will only be able to claim a 20 per cent basic rate relief reduction on finance costs.

The Leeds Mortgage Loan Deal

High fee products enable landlords to front load funding costs and maximise the use of existing tax relief, whilst minimising the interest payable in future years when tax relief is going to become less favourable.
The lender charges £2,499 for a two year fixed rate loan at a low interest rate of 1.44 per cent for a mortgage up to 60 per cent loan to value, or 1.69 per cent if the loan to value is 70 per cent. Maximum loans are £500,000.

Mortgage Loan Deal Helps Landlords With Tax – Other Situations

There are other situations too where this kind of deal could work well.
Take a person who is going to retire in a year or two and then fall into a lower income tax bracket, she could also use the opportunity to maximise use of the tax relief before it tapers away. The lower interest rate would later help her sustain profits.
In another case, a landlord who was expecting to refurb a property might sign up for a high-fee deal in order to maximise his mortgage interest (and fee!) relief until 2020-21, but delay work on the property, since refurbishment remains tax deductible.
All in all, a smart move from the Leeds. I just hope the regulators and HMRC don’t start to say that the lenders are gaming the tax and regulation of mortgage systems.

http://www.lettingfocus.com/blogs/2018/06/mortgage-loan-deal-helps-landlords-with-tax/

Secretary of State for Housing announces action plan over tower block cladding

Study reveals home buyers are confused by mortgage contracts



An action plan to accelerate remediation of private high rise residential buildings with ACM cladding, the kind discredited since the Grenfell Tower fire, has been announced.

The aim of the package of measures is to drive forward swifter action by building owners to remove potentially unsafe cladding on private sector high rise residential buildings.

Since the Grenfell Tower tragedy a year ago, local authorities have been working hard to identify affected buildings in their areas and have carried out the large scale, complex task of assessing more than 6,000 buildings.

The latest monthly data published by the Ministry of Housing, Communities and Local Government (MHCLG) shows that 297 private sector high rise residential buildings have unsafe cladding with a small additional number expected to be confirmed.

Building owners are responsible for ensuring the safety of their buildings and their residents, and the Government and councils will continue to monitor and hold them to account where they have unsafe cladding systems, according to Secretary of State for Housing James Brokenshire who announced the plan.

He revealed that local fire and rescue services have been informed about all of these buildings to ensure appropriate interim measures are in place so residents are safe now, adding that Ministers have been clear that building owners are responsible for making buildings safe and local authorities have also started enforcement action in all but a handful of cases to compel them to take action.

Whilst remediation work has begun on 21 of these buildings, of which four have been completed, he pointed out that the Government is determined to accelerate the pace of this work and this package aims to progress this work.


Under the plan a new taskforce will oversee a national programme of remediation in the private sector and ensure plans are in place for every single building affected. The taskforce will be chaired by ministers and membership will include Local Government Association (LGA), National Fire Chiefs Council (NFCC), London Councils, local authorities who have experienced the largest degree of impact and industry representatives.

A new inspection team, backed by £1 million government funding, consisting of experts from environmental health, building control and fire inspection will provide support to individual councils boosting their capacity and expertise to undertake enforcement action and ensure building owners take the necessary action and speed up the remediation process.

A follow-up industry roundtable next month will be held to that representatives can present their proposals on solutions to remove unsafe cladding from high-rise buildings without passing on the costs to leaseholders.

In the meantime, MHCLG will continue to explore other routes for protecting leaseholders, such as supporting local authorities to take more targeted action to identify and remediate affected buildings and recovering costs from those responsible for ensuring the safety of buildings and supporting leaseholder enfranchisement.

Letters will be sent to all relevant private sector building owners to remind them of their responsibility to make their buildings safe.

‘The safety of residents is my main priority and fire and rescue services are working with building owners to ensure residents are safe now. But I want to see swifter progress in removing unsafe cladding which is why I have announced further action to support councils as they work with owners of high rise blocks,’ said Brokenshire.

‘I have been clear that leaseholders should be protected from unfair costs and we expect the industry to do the right thing. If they don’t, I will continue to explore other routes and I am not ruling anything out,’ he added.