Rents have fallen in real terms over the last 10 years says Countrywide

So-called ‘real rents’ - those adjusted for inflation - have fallen by 2.2 per cent since October 2008.  

This means that the average cost of living has far outstripped average rents.

The claim comes from Countrywide’s high end brand Hamptons International, which monitors the rental market. 

In the last 10 years the consumer price index, which measures the average cost of goods and services, has outpaced rents.  

Over the last decade rents have actually risen 22 per cent but inflation has risen 24 per cent over the same period.

The East and London are the only regions across Great Britain where rental growth has outpaced inflation.  

In the East, real rents have risen 7.5 per cent over the last 10 years.  Meanwhile in London, real rents are up a mere 0.5 per cent since October 2008.

However, inflation has outpaced rental growth in all other regions across Great Britain, resulting in negative real rental growth.

The Midlands has seen the biggest fall in real rents, down 7.8 per cent since October 2008;  real rents in the North have fallen 6.9 per cent as inflation has outpaced rental growth. 

Aneisha Beveridge, Hamptons International’s head of research, says: “Real rents in Great Britain have been falling for the last 21 consecutive months. This comes as a result of sluggish rental growth and a post-EU referendum backdrop of rising inflation.  

“However, this could be set to change as inflation begins to fade and rental growth starts to pick up pace. Currently the East and London are the only regions where real rents have risen over the last decade.”

https://www.lettingagenttoday.co.uk/breaking-news/2018/11/rents-have-fallen-in-real-terms-over-the-last-10-years-says-countrywide

Trade body threatens council with Judicial Review over licensing plan

The Residential Landlords Association is threatening a council with a judicial review because of unresolved concerns over the authority’s selective licensing plans.

Great Yarmouth council is proposing to bring rented homes in parts of one electoral area, Nelson, into the scope of selective licensing.

However, the RLA believes one of the conditions set to be imposed as part of the scheme is unlawful and has written to the council asking for urgent clarification.

The RLA believes the local authority’s plans to make it compulsory for landlords affected to join a ‘landlord support service’ run by a third-party delivery partner are unlawful.

The association says that while some councils do legitimately use delivery partners to administer and enforce schemes – notably in Doncaster and West Lindsey – these do not require landlords to become members of the partner organisation as a pre-condition of licensing.

The RLA believes the council has no power to impose such a condition – and pointed this out in its official response to the licensing consultation earlier this year. In fact, the association believes existing rules do not even allow councils to ask whether landlords are members of such organisations.

RLA policy director David Smith says: “We are asking for immediate clarification on the council’s position. If our understanding is correct we want the council to reconsider this aspect of the scheme and come up with a lawful alternative. If it will not we will move ahead and issue a claim for a judicial review on this basis.”

Under the current plans the new licensing scheme is due to be introduced with fees set at more than £500 per property for the five-year licensing period, plus a monthly fee of £9.50 to be paid to the landlord support scheme.

The scheme is 20 per cent more expensive via the delivery partner, as VAT is payable.

https://www.lettingagenttoday.co.uk/breaking-news/2018/11/trade-body-threatens-council-with-judicial-review-over-licensing-plan

2,000 new riverside homes in former Fulham gasworks planned with food bank, youth club and allotments

This is how a derelict gas works will look after a multibillion-pound makeover of riverside land at Sands End, Fulham — but you’ll have to wait nearly 20 years to see it.

Work starts next year on 2,000 new homes in a series of towers of up to 37 storeys, with completion pencilled in for summer 2036.

The new homes come at the expense of a thriving “studio colony” which provided inexpensive workspace to some 300 small businesses including artists, makers and fashion designers. The Old Gas Works has already been closed down, forcing these businesses to relocate.

The project will join a string of high-end developments lining the river in south-west London.

Tens of thousands of homes are under construction on former industrial land including the reboot of Lots Road Power Station in and around Chelsea Creek, joining established schemes such as Chelsea Harbour and Imperial Wharf.

Most of the gas holders on the 16-acre Imperial Road site will be demolished but one, which is Grade II* listed and claimed to be the world’s oldest, will be renovated as the centrepiece of a public park.

A total of 646 of the homes, about a third, will be classified “affordable” and ring-fenced for first-time buyers and priced-out local renters.

However, many young Londoners will not be able to afford these shared-ownership homes, aimed at buyers with household incomes of up to £75,000 for one-bedroom flats or £90,000 for two-bedroom flats.

Rents will be capped at £250 a week for one-bedroom flats, and £302 a week for two-bedroom flats.

The project, by Berkeley Group, will also include a youth club, a playground, allotments and — in a stark sign of the times — a food bank.

Hammersmith & Fulham’s planning committee approved the scheme after receiving an enthusiastic report by Jo Rowlands, strategic director of growth and place.

“The proposed development will transform a redundant gas works site to a high-quality new urban quarter,” said Rowlands.

Dozens of local residents and the Fulham Society objected to the plans.

The society said the project had some “laudable elements”, but it did not like the idea of fitting 1,800 homes on to a site 10 times the size of Trafalgar Square.

The society claimed the site would be overdeveloped, with any open spaces being in shadow of some very tall buildings.

Alison Dowsett, managing director of St William, the joint venture company set up by Berkeley and National Grid, which owns the site, to develop the gasworks, said: “We anticipate that we will receive interest not only from residents already living in the borough, but also from across London. 

“The development at Fulham Gasworks will also include restoration of the heritage Grade II*-listed gas holder, which is the oldest in the world, as well as two Grade II-listed buildings and war memorials. Almost half of the site will be publicly accessible open space, with new pedestrian and vehicular access routes and a substantial new park, complementing the existing green space in the area. Work is expected to start on site in spring 2019.”

https://www.homesandproperty.co.uk/property-news/new-riverside-homes-fulham-gasworks-sands-end-food-bank-a125066.html

"Don't discriminate against benefit claimants" buy to let lenders told

Urgent action is needed to tackle discrimination against benefit claimants by buy to let mortgage providers according to a leading trade body.

The Residential Landlords Association is making the call following the revelation that a landlord has had the mortgage on a property revoked because she is renting to a benefit claimant.

Helena McAleer, a landlord from Northern Ireland, contacted her bank - NatWest - after she discovered that the value of her property had increased and that there was a potential that she could release equity from the house. 

Following discussions with the bank, she was told that she would no longer be able to receive her buy to let mortgage from NatWest as it was the bank’s policy not to allow rentals to benefit claimants. 

The RLA says that the bank’s own buy to let eligibility criteria notes: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or 'Related Person' tenancies.”

Helena McAleer has since established a campaign page on Facebook in which she writes: “I was beyond disgusted by the statement. Actually more than that I cried my eyes out for hours, how could a bank, a person at a bank make the decision that I had to kick someone out of their home simply because of their circumstances, because fundamentally that’s what they are asking me to do.”

McAleer has also started a petition calling for measures to tackle such practices which clearly discriminate against benefit and Universal Credit claimants.

Research carried out by the Residential Landlords Association’s mortgage consultants, 3mc, last year found that 66 per cent of lenders representing approximately 90 per cent of the buy to let market do not allow properties to be rented out to those in receipt of housing benefit. 

This includes TSB, Virgin and the NatWest.

Now in a letter being sent to the Treasury Minister responsible for banking, John Glen, the RLA is calling for:

- the government to use the influence it has in those banks in which it currently has shares to end such discriminatory practices;

- the Financial Conduct Authority, working with the Bank of England, to undertake a full investigation into the extent of this problem and prepare plans to end it. The RLA believes such practices breach a number of principles within the FCA’s ‘Treating Customers Fairly’ agenda;

- the Equalities and Human Rights Commission to undertake a review of whether such practices breach equalities law.

David Smith, Policy Director for the RLA says: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification. The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”

https://www.lettingagenttoday.co.uk/breaking-news/2018/10/dont-discriminate-against-benefit-claimants-buy-to-let-lenders-told

Rents in the UK continue to rise but landlords are concerned about impact of Brexit

Average rents in the UK have grown steadily over the last month, but the potential impact of Brexit is causing concern among landlords, according to the latest index report.

They are 1.7% higher than a year ago at an average of £943 but when London is excluded they have increase by 1.8% to £780 while in London rent are up 3% to £1,632, according to the HomeLet rental index.

The data also shows that the region with the largest year on year increase is Scotland, up 5.6% increase since September 2017.

In September rental prices increased in 11 of the 12 regions monitored by HomeLet, with only the North East seeing a decrease. The region with the largest month on month decrease was the East Midlands, down 1.6% decrease between August and September 2018.

The report says that the lettings market is sensitive to the balance between supply and demand, but the current steady growth suits both tenants and landlords. However, the initial findings from the company’s survey of over 2,900 landlords have shown that more than a third have concerns over Brexit’s impact on the market.

‘Historically, we have seen a higher rate of rental price growth in London and the South East. However, over the last six months the rate of growth in these areas has slowed to reflect a similar rate to the rest of the country,’ said Martin Totty, chief executive at HomeLet.

‘Throughout the UK, the longer term trend is one of fairly narrow, shallow growth over a longer period of time. Over the last year, the growth rate has remained below the average rate of inflation in the wider economy, and the growth in the housing market,’ he explained.

‘The rental sector can be seen to be performing at a much steadier rate, with a lower level of volatility when compared with house prices,’ he added.

The initial results of HomeLet’s annual Landlord Survey corroborate this largely positive picture, with nine out of 10 landlords intending to either keep or expand their property portfolio in the next year.

However, the potential impacts of Brexit rate highly among their main concerns, along with the possibility of increased regulation through legislation and changes to house prices.

‘While more than 90% of landlords intend to either keep or expand their property portfolio in the next 12 months, they are not without their concerns. Our initial results show that the three main concerns that landlords have are the macro-economic impacts they face on their finances and further changes to legislation, the potential implications of Brexit and house price values,’ Totty pointed out.

‘The results suggest that while landlords are not planning to leave the market at this stage, uncertainty over the wider economic picture, especially when Brexit is added into the mix, could easily change this,’ he explained.

‘The current, steady growth within the private rental sector suits the needs of both tenants and landlords. However, should landlords change their stance and begin to exit the market, therefore reducing the supply of rental properties, there is a possibility that rental prices could rise, as at this stage there is no indication that the demand for rental properties is going down,’ he added.

https://www.propertywire.com/news/uk/rents-in-the-uk-continue-to-rise-but-landlords-are-concerned-about-impact-of-brexit/

Brexit pause to be followed by bounce in prime housing markets in the UK

Heightened uncertainty around Brexit negotiations will delay recovery in the prime central London housing market for a further year to 18 months, a new analysis suggests.

But this will be followed by a bounce in 2021, according to international real estate adviser, Savills in the report of its new five year forecasts.

It points out that London’s highest value markets have more than corrected for the additional sale taxes payable since the stamp duty overhaul in 2014, with price falls totalling 18.4% since the peak earlier that year.

It adds that the proposed additional stamp duty levy of between 1% and 3% on non-UK tax paying international buyers announced at the Conservative party conference is expected to add to buyer caution in the short term and temper the recovery.

Until Brexit negotiations are complete, the market will remain price sensitive and driven by needs based purchases, the firm says. This will put price growth on pause for the next two years.

Savills forecasts that in the prime central London market prices could fall by 5% in 2018, by 1% in 2019, remain flat in 2020 and then rise by 6% in 2021, by 2% in 2022 and by 5% in 2023.

In the outer London market the forecast us for prices to fall by 1.5% this year and by 1% next year, remain flat in 2020 before rising by 3.5% in 2021, by 1% in 2022 an by 3.5% in 2023.

In England and Wales prices are expected to be flat this year then rise by 1% in 2019, by 2% in 2020, by 3% in 2021 and 2022 and by 4.5% in 2023 while in Scotland they are forecast to rise by 2% in 2018, in 2019 and in 2019, then rise by 3% in 2021 and 2022 and by 3.5% in 2023.

‘Historically, any recovery in the prime housing markets has been sparked in central London, with a strong bounce in values, with double digit annual growth not unusual. The catalyst has often been a currency advantage, though prime central London residential property also has to look identifiably good value on a world stage,’ said Lucian Cook, Savills head of residential research.

‘This time around we’ll also need a backdrop of greater certainty, which we expect by the end of 2020, clearing the way for values to rise. However, a number of constraints, including rising borrowing costs, increased taxation, higher investment returns on competing assets and a general election in 2022, point to a slower rate of recovery than in previous cycles,’ he pointed out.

Brexit has not fundamentally altered the fundamentals of why people want to live and invest in London, Savills says. Office take up since the European Union referendum suggests the city remains an attractive place to do business to a wide range of wealth generating businesses. Global wealth creation remains strong; the pool of global ultra-wealthy individuals is expected to increase by 40% over the next five years.

‘Despite successive stamp duty increases, London remains mid table compared to other leading world cities in terms of buying and selling costs. The proposed surcharge will not substantially change that, rather it’s a clear signal to those still hoping to see a rate cut at the top end of the market that the higher rates are here to stay,’ Cook explained.

‘There will obviously be competition from increasing returns from other asset classes, but the rational is only part of the story. Those buying the most expensive homes in central London are often less concerned about rental yield and total return, but driven by the appeal of owning a piece of prime real estate in what is widely seen as a great city to live,’ he added.

The report also points out that the prime housing markets of the regions beyond London’s wider commuter belt were much slower to recover after the global financial crisis and there has been little buyer urgency over the past year to boost values.

As a result, these markets now look good value compared to London. A property bought for £1 million in prime central London in 2007 is now worth £1.37 million, compared to £1.28 million in outer prime London, £1.15 million in the suburbs, just £911,000 in the Midlands and the North and £876,000 in Scotland.

Over the next five years, the wider South, Midlands, North of England and Scotland are all expected to outperform London, as buyers recognise the relative affordability and the potential to stretch their equity.

‘Buyers see that the price gap between London and the country markets has probably stopped growing, so are more willing to sell up and make the move out. But rather than extending their borrowing, many are looking to buy a bigger home and potentially reduce their mortgage at the same time, capping price growth at the relatively modest levels we are forecasting,’ said Cook.

‘Our five year projection may look ambitious at this moment of peak uncertainty, but it looks pretty modest when viewed against history. And history tells us that when prime central London house prices bounce, the speed of that bounce can take the market by surprise,’ he concluded.

https://www.propertywire.com/news/uk/brexit-pause-to-be-followed-by-bounce-in-prime-housing-markets-in-the-uk/

First council backs campaign to scrap S21 eviction powers

Croydon council is reported to have become the first local authority to back the scrapping of Section 21 of the 1988 Housing Act, which enables landlords or their agents to terminate a tenancy agreement.

Alison Butler, Croydon council cabinet member with responsibility for housing, is reported to have told a council meeting: “The biggest cause of homelessness in Croydon is evictions in the private rental sector. With Croydon having lost around 70 per cent of its budget since 2010, we are struggling to deal with the scale of this problem, and it is unacceptable that private landlords are able to evict vulnerable tenants so easily, leaving the public sector to pick up the bill.”

The authority backed the End Unfair Evictions group, which includes individual protest organisations including Generation Rent, Shelter and anti-agency organisation Acorn. 

The campaign has already won high-profile local government supporters in the shape of Sian Berry, a Green Party member of the London Assembly, and Labour London Assembly housing spokesman Tom Copley. 

Nationally, Labour says S21 will be abolished if the party forms the next government, while consumer charity Citizens’ Advice claims 46 per cent chance of private tenants who complain about issues like damp or mould are issued with a Section 21 eviction notice within six months. 

https://www.lettingagenttoday.co.uk/breaking-news/2018/10/first-council-backs-campaign-to-scrap-s21-eviction-powers