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‘Temporary relief’ for tenants as fewer landlords hike rents

The number of landlords increasing rents declined last month but is still “worryingly high”, ARLA Propertymark warns.

The trade body’s October Private Rented Sector Report found that the number of tenants experiencing rent rises fell by eight percentage points in October, with 50% of letting agents witnessing an increase in rent prices, down from 58% in September.

This is the lowest figure since June, when the number of tenants experiencing rent rises was 55%, but it is still up compared with the 22% recorded in October 2018.

Agents reported that more tenants successfully negotiated rent reductions last month, at 1.6% from 1.2% in October.

Despite this increase, the figure is down year-on-year from 3.7% in October 2018 and 2.5% in October 2017.

Agents also reported an eight percentage point increase in stock per branch to 201 in October, from 193 in September.

This is up from 198 in October 2018 and 182 in October 2017.

Demand from prospective tenants remained the same with 72 registered prospective tenants per member branch.

David Cox, chief executive of ARLA Propertymark, said: “This month’s figures show some temporary relief for tenants. However, while the number of landlords increasing rents has fallen, year on year the figure remains worryingly high.

“Even looking at the increase in the number of tenants negotiating rent reductions, which should be a positive thing, when comparing year-on-year it is less than half of what it stood at in 2018.

“For far too long, successive governments of all political persuasions have passed significant amounts of complex legislation for landlords, making the buy-to-let market a less attractive investment, and this coupled with Brexit uncertainty and a looming General Election has left the sector strained.

“Unfortunately, rents are likely to remain high and tenants will continue to feel the pinch.”


Source: Property Industry Eye

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More landlords fleeing the private rented sector or hiking rents

Letting agents have reported a spike in landlords selling up.

The exodus was ahead of the tenant fees ban, to be implemented tomorrow, and which is expected to result in higher costs for landlords and the abolition of Section 21.

ARLA Propertymark’s April report found that letting agents saw the highest number of landlords selling their buy-to-let properties since May last year.

The number of landlords exiting the market rose to five per branch, up from four in March.

There were also signs of rents rising ahead of the fee ban, with 33% of agents reporting a rise, up from 30% in March.

The number of tenants successfully negotiating rent reductions fell from 2.9% in March to 1.9% in April – the lowest figure seen since May 2016 when it stood at the same.

Rental supply was marginally down from 203 properties per branch to 202, but this is still up 13% annually.

Demand from prospective tenants also decreased over the month, with the number of house hunters registered per branch falling to 64 on average, compared with 67 in March.

David Cox, ARLA Propertymark chief executive, said: “As predicted, April’s findings have shown an upsurge in the number of landlords selling their buy-to-let properties.

“Tomorrow, the Tenant Fees Act will come into force in England.

“This, coupled with the proposed scrapping of Section 21, is forcing landlords to either increase rents or leave the market altogether.

“As supply of rental accommodation falls further, tenants will only be faced with more competition for properties, pushing up rent prices on good-quality, well-managed properties and decreasing tenants’ ability to negotiate rent reductions.

“In order to remain profitable, landlords will increase rents to cover the additional fees they are now faced with and as a result, tenants will continue to feel the burn.”


Source: Property Industry Eye

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Buy To Let Property Rent Rises On The Up

The number of tenants experiencing rent rises in the private rental sector rose in January for the first time since September last year.

According to the latest January Private Rented Sector (PRS) Report from ARLA Propertymark, the number of tenants experiencing rent rises increased in January, with 26 per cent of agents witnessing landlords increasing them, compared to 18 per cent in December.

This is the highest figure recorded since September, when 31 per cent of tenants were experiencing rent rises in their private rental properties.

The year-on-year figure for rent rises in private rental properties is also up, rising by 7 per cent when compared to January 2018.

The uplift in the rate of rent rises in January has come despite the average number of available private rental properties also increasing on a monthly basis, up from 193 in December to 197 in January.

This is possibly due to the increase in tenant demand also registered in the month. Demand from prospective tenants increased in January, with the number of house-hunters registered per branch rising to 73 on average, compared to 50 in December.

ARLA Propertymark Chief Executive, David Cox, said: ‘This month’s results are another huge blow for tenants. With demand increasing by 46 per cent from December, and rents starting to rise in response to all of the cost increases landlords have experienced over the last few years, tenants are in for a rough ride.

‘Last month, there were three landlords selling their buy to let (BTL) properties per branch, and as landlords continue to exit the market, rent prices will only continue to rise.’

He continued: ‘With the Tenant Fees Act passing its final hurdle in the House of Commons and receiving Royal Assent this month, tenants will continue bearing the brunt, as agents and landlords start preparing for a post-tenant fees world.’

Source: Residential Landlord

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More Competition For The Buy To Let Private Landlord

The private landlord has a hard time; whilst many are aware that tenants will seek private rented properties because of better standards, sometimes better areas, there will also be those who believe that private rented accommodation is the worst deal available for tenants and strive to persuade others of this stance. 

I wrote a little time ago of the encouragement that seems to be given to the corporate landlord, the large companies who build new properties in large numbers; they would make up the shortfall there is between what social landlords can provide. Easier to control perhaps than the small private landlord?

I was surprised to read recently that a number of private builders have decided that as they cannot make profitable enough deals with housing associations, they will register themselves as social landlords. Hopkins Homes has a turnover of £166 million; with concerns that the homes they are building will not be affordable without branding as a housing association, they have registered Peal Community Housing as a housing association.

Others have gone the same way; Larkfleet Homes opened Swift Homes as an association in 2018. The Chief Executive of Larkfleet, Karl Hicks, stated ‘It is becoming increasingly difficult for associations to obtain the funds to buy new homes. We have therefore set up Swift…to take on this role directly’.

It seems probable that if these housing associations, and the others like them, operate with success, there will be others that will swiftly follow. Chris Wakefield, a director of Park Properties which registered in September said that there were problems with bureaucracy (there’s a surprise) but echoing other private builder Housing Associations, that the original housing associations, had been known to offer ‘less than build cost’ for developments. Of all the people that should be working for charity and negative profit, it is not fair to expect private builders to join that number.

But are a housing association the way to ensure houses get built and a fair deal be found all round? I think it will be confusing for many people. Will the properties be offered on the same terms as a social property? Will the tenants appreciate the differences, if there are any?

Why is this challenge for the private landlord? Brand new properties will always seem more appealing to some than a characterful, and probably more spacious, older property. I think the grants that landlords used, having diminished, will disappear; the landlords that the Government will want are the corporate lettings. I hope it will work, but not to the detriment of the many caring and responsive private landlords that the local authorities have relied on.

I cannot fail to mention this week that Amber Rudd has had the courage to say that Universal Credit is not working and that more changes need to be put in place if it is to effectively provide benefits to those that need them. Well said, Ms Rudd. Is she making a place for herself as the landlords’ friend? There may be a general election before long – Amber Rudd as Prime Minister? Remember you heard it here first!

Source: Residential Landlord

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Private Rented Sector investment to hit £75bn by 2025

Investment in the UK’s private rented sector (PRS) is expected to nearly double in size over the next six years, as home-ownership rates wane in the wake of affordability pressures.

The level of capital being invested or committed into the UK’s professionally-managed institutional PRS is forecasted to hit £75bn by 2025, marking a sharp rise from its current levels of just under £40bn.

The total proportion of the UK’s housing market which is expected to be privately rented is also set to grow from 20.6 per cent to 22 per cent, with an additional 560,000 households predicted to be living in the private rented sector by 2023, according to Knight Frank.

“Once again, affordability has emerged as a key reason for people choosing to rent in order to live in an area where they would not be able to buy,” said Tim Hyatt, head of residential lettings at Knight Frank.

Hyatt added: “However, average rents in Great Britain rose one per cent in the 12 months to December as more landlords leave the sector and levels of stock decline.”

Source: City AM

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Letting agents warn tenants that period of slow rental growth is ending as supply falters

Letting agents and broker groups are warning tenants not to be fooled by current slow rental growth.

ARLA Propertymark has warned that rental property supply has hit a seven-month low as agents warn of more landlord exits and subsequent rent hikes.

Its Private Rented Sector (PRS) report found the supply of properties available to rent fell to 183 in November from 198 in October.

This is down 4% annually.

The warnings come despite the number of tenants experiencing rent increases falling for the third month running in November, with 21% of agents reporting that landlords increased rents, compared with 24% in October and 31% in September.

However, year-on-year the number of tenants experiencing rent rises is up from 16% in November 2017.

Agents also reported that demand from prospective tenants decreased in November, with the number of applicants registered per branch dropping to 55 on average, compared with 71 in October.

David Cox, chief executive of ARLA Propertymark, said: “It looks like tenants are starting to take control, with the number of landlords hiking rents falling for the third month in a row.

“However, as we look ahead to 2019, things don’t look as positive for tenants.

“Our members expect more landlords to be driven out of the market by rising costs, which will increase competition and push up rent costs. If we want to secure market stability in the new year, we need to increase stock, and making the market more attractive for buy-to-let investors is the only way this can be done.”

It comes as ONS data showed that annual rental growth in the UK remained at 0.9% for the fourth consecutive month during November.

In England, private rental prices grew by 1%, Wales experienced growth of 0.9%, while in Scotland rents increased by 0.5% in the 12 months to November 2018.

Rents in London were unchanged at 0.0%, but this was up from the 0.2% decrease in October 2018.

The UK annual growth figure was 1.4% when you exclude the capital.

Commenting on the data, Kate Davies, executive director of the Intermediary Mortgage Lenders Association, said: “Rental prices continue to be subdued and below the rate of consumer price inflation across much of the UK. Unfortunately, this disguises the fact that not all is well in the private rented sector.

“Buy-to-let lenders continue to sharply reduce their new investment in rental property as more landlords withdraw from an increasingly unprofitable venture. This isn’t a new phenomenon.

“Our 2017 white paper, ‘Buy to Let: under pressure’, showed that the series of tax and regulatory changes imposed on the buy-to-let market were stunting rental property investment, and this trend has continued through 2018.

“We continue to raise concerns that this will eventually work its way through to higher rents for tenants, which will in turn make it still harder for those who are trying to save for deposits to buy their own homes.”

Source: Property Industry Eye

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Study finds standards have improved in rented homes in Britain

Standards have improved in rented properties in Britain but safety, particularly relating to gas and fires, still falls short, according to new research.

Over the past four years, during which time there has been a raft of new legislation relating to the private rented sector, there have been significant leaps forward in landlords’ professional standards, but safety is still compromised in too many rentals, says a report from insurer AXA.

It points out that the sector still has catching up to do on important areas like fire and gas safety. Every rental property requires an annual gas safety inspection but just 58% have had this check in the past 12 months.

Four in 10 tenants say they do not have smoke alarms installed, despite landlords being legally required to fit them on each floor of a property. This is still a marked improvement on 2014, prior to the rule being introduced, when six in 10 tenants lacked them.

Two other key requirements are that landlords provide an Energy Performance Certificate (EPC) to tenants, and in England and Wales the Government’s ‘How to Rent’ Guide, which informs them of their rights and responsibilities.

Yet only a third of tenants say they have seen the EPC, up from 19 in 2014, and just 15% of those eligible have received the Government’s mandatory guide.

AXA notes that landlords compromise their rights with these omissions, as those who have not provided the guide, EPC and gas safety certificate cannot evict a tenant under a Section 21 notice.

While recent legislation has increased pressure on landlords to raise their game, there is still little awareness among tenants of basic rights and entitlements. This means vital consumer pressure to push standards up further is largely absent.

Some 75% of tenants did not know their landlord is legally required to ensure a minimum energy rating for the property, and a similar number were unaware of the requirement for EPCs and gas safety checks. Most, some 89%, said it was the tenant’s responsibility to keep any chimneys swept too which is untrue as this is the landlord’s responsibility.

Last year, AXA found that one in 20 rental properties were still rated F or G for energy performance, categories now outlawed from the rental market. This has now fallen to three per cent of properties in the, equating to 150,000 properties nationwide.

Seven in 10 rental properties are now A to C bands for energy performance, but ‘cold hazard’ is still rated the number one health risk associated with living in private rented accommodation.

Indeed, half of tenants surveyed said they feel their rental property negatively impacts their health and poor energy performance was quoted by 21%. Most tenants in this group also cited damp or out of date heating systems at the same time.

Change is afoot, however, as AXA’s latest figures on energy saving features in the private rental sector show that landlords are upgrading their properties at a rapid rate, with figures jumping on smart meters in particular.

It also found that 78% of properties now have full double glazing, up from 73% last year, 26% have smart meters installed, up from 14% in 2017 and 34% have roof insulation, up from 32%.

‘Landlords are getting more professional, and we are seeing standards rise in British rentals, driven by legislation and desire of landlords themselves. We know that many start out as accidentals, and there is a big learning curve for them at the start, particularly as legislation changes so often,’ said Gareth Howell, managing director of AXA Insurance.

‘We find that both landlords and their tenants lag behind, so public awareness campaigns are vital to correct myths and promote new rules and standards. Gas and fire safety should be the priorities here: our research suggests that millions of properties are not compliant with today’s laws,’ he added.

Source: Property Wire

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Longer tenancies: more security for renters or a vote grabbing political move?

An estimated 46% of 25-34 year olds live in private rented accommodation. This has risen from 27% in 2006-2007 and, as such, the build-to-rent sector has seen massive growth. Of these, 81% of rental contracts are assured shorthold tenancies (ASTs) with a minimum fixed term of just six or twelve months, most allowing landlords to increase rents or evict tenants at the end of their contracts, without giving reason.

This can leave tenants feeling insecure, unable to challenge poor property standards (for fear of tenancies being terminated) and unable to plan for their future.

Earlier this month, the Secretary of State for Communities, Housing and Local Government, James Brokenshire, proposed the introduction of a minimum three year tenancy, with a six month break clause.

He wishes to offer greater protection to tenants, creating rental environments with more of a community basis. Tenants would be able to use the six month break clause and have greater protection if they wanted to stay for the full three years. Moving every six-twelve months can be expensive (deposits / moving costs / agents’ fees) and the proposals would help ease this issue. However, the proposal is not favored by everyone.

However, shadow housing secretary John Healey countered by saying this latest promise is ”meaningless if landlords can still force tenants out by hiking up the rent”.

But do tenants want longer tenancies? According to the National Landlords Association (NLA) only four out of ten tenants actually want longer contracts, and according to government data (even with the current forms of tenancy available) people stay in their rented homes for an average of nearly four years.

The proposals will help landlords avoid costly periods whilst searching for new tenants, offering them the flexibility to regain their properties when their circumstances change. However, many landlords worry about the time it can take to gain possession of their property in the courts. To this end, a call for evidence will be published this autumn to better understand the experience of users of the courts and tribunal services, including considering the case for a specialist housing court.

An eight-week consultation (until 26 August) is now underway and ministers are seeking views from landlords, tenants and other related organisations.

Lenders may also take an unfavourable view which could have a dramatic impact on the buy-to-let industry. ASTs gave lenders the confidence to grant mortgages against properties, as they knew they could repossess the property at short notice if necessary. But will the proposals make lenders wary about granting loans, or will they decide to increase the interest rate to reflect the additional risk? A further disadvantage for landlords.

Source: Property Week

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Why the tenants are choosing private rented sector

With reports that a quarter of the population will be privately renting by the end of 2021, it is clear that the UK’s Private Rented Sector (PRS) is becoming an increasingly popular alternative to property ownership.

New data from insurers Direct Line for Business only goes to strengthen this argument, with a recent study revealing that 70% of UK renters have no intention of buying a home. The research supported the idea that the UK is moving toward a German Housing Model, where the majority of the population opt to rent, supported by government policy and encouraging attitudes toward long term renting.

In fact, further research shows that more people rent in Britain than almost anywhere else in Europe, with only Denmark, Austria and Germany having a lower percentage of home owners.

The reasons for this are varied but often come down to financial cost. With the average first-time buyer looking at prices double what they were just five years ago, it is understandable that home ownership is slipping through the fingers of younger generations, but interestingly that is not the only reason cited by responders for wanting to stay in the PRS.

The Direct Line for Business study shows that of the 12 million adults who said they don’t intent to buy property 22% said that the financial commitment of buying was a turn off, 9% said that they chose to rent so they could freely travel and 12% didn’t want to be tied to one place. An additional 22% commented that they didn’t want the hassle and cost of maintaining a property and would instead prefer a landlord to hold responsilbity for repairs.

Business manager at Direct Line for Business, Christina Dimitrov, said: “The UK housing market continues to change and we are seeing a major attitudinal shift when it comes to renting. While price is a factor, many people are increasingly comfortable with the flexibility afforded by renting a property rather than jumping into home ownership.”

The transition toward a new model of long-term renting is positive news for the future of the buy-to-let sector, with landlords able to support a growing pool of tenants and renters able to have greater choice in the market.

Source: Property Forum

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Financial pressure on landlords is harming the PRS not improving it!

In a report published 25th June, property expert Kate Faulkner has claimed that while legislation has been introduced to improve the private rented sector (PRS), it is not being properly communicated to landlords, agents and tenants.

Writing in her seventh report funded by the TDS Charitable Foundation, Kate highlights the ever-increasing financial and administrative pressures on landlords and agents due to legislative changes.

Of over 147 new pieces of legislation, covering the sector, more than half have been introduced since buy-to-let mortgages were launched in 1996. While the percentage of homes in the PRS classed as ‘non-decent’ has reduced (47% in 2006 to 28% in 2015), there has been an increase in real terms as the sector has grown (1.2 million in 2006 to 1.3 million) over the same period.

Commenting on the report, Kate said: “Due to the rising costs to good landlords and a scant enforcement of PRS regulations, there is an incentive for some landlords and agents to act outside the law to increase their profit margins.

“The increased costs to landlords of buying a property, then letting it legally and safely, means that in some cases rents have increased beyond the means of some tenants. Reputable landlords and agents are being penalised financially for abiding by the law.

“It can create a vicious cycle and a two-tiered rental market, which the legislation was never intended to create.

“The problem, as I see it, is that bills are introduced on the sector all the time, but aren’t backed with a communications plan or funding for enforcement. As I wrote for a previous TDS Charitable Foundation report; legislation is meaningless without enforcement.

“Myriad legislation can be confusing for tenants and rogue landlords and agents often get away with offering sub-standard homes as tenants don’t know their rights. In reality, tenants hold the power in terms of accepting or rejecting poor or dangerous properties, although where supply is scant, this power disappears.

“I would like to see a more concerted approach to educating tenants on their rights. Nobody could have escaped hearing about the introduction of GDPR, but when rental laws are introduced, affecting millions of people across the country, there doesn’t appear to be the same public awareness campaign.

“That is not to say that legislation introduced has been wrong-headed or ineffectual, but it could have had a greater positive impact on the sector if it were backed with enforcement and communication.”

The TDS Charitable Foundation commissioned Kate Faulkner to produce research reports into the PRS to improve knowledge and educate landlords, agents and tenants, in line with the Foundation’s aims. Her latest report, What are the real legal requirements and costs of letting a property, and how can we communicate them better to landlords and tenants? Is now available to download as a PDF.

While the TDS Charitable Foundation funds the reports, Kate retains editorial control and the opinions expressed in the report do not necessarily reflect the views of Tenancy Deposit Scheme (TDS) or the TDS Charitable Foundation.

Source: Property118