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Property rents rise as Scotland catches up with England & Wales

Scottish property rents have continued to rise at a higher rate than the rest of Britain after years of low increases according to analysis of the latest data from property firm DJ Alexander Ltd, part of the Lomond Group which is the largest lettings and estate agency in Scotland.

The latest data up to February 2022 shows that the annual increase in rents was 2.6% compared with 2.1% in England and 1.4% in Wales. The Scottish annual rate has been higher than England and Wales each month since July 2021. However, over the long term since 2015, rents in England and Wales have risen at a higher rate than Scotland.

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David Alexander, the chief executive officer of DJ Alexander Scotland, commented:

“The current increases in rents across Scotland reflects growing demand but is also a sign that the market is correcting itself. This data shows that Scotland’s rent increases have consistently been lower than England and Wales since 2015 and the current increases are simply a sign of Scotland catching up.

“It also needs to be remembered that a 2.6% annual increase in rents is still quite low given that inflation is now running at around 6 to 7% which means that this increase is actually a reduction in real terms.

“The Scottish government’s own data reveals that two-bedroom private rented sector (PRS) rents over the last eleven years have risen at a rate similar to inflation (25.1% rent increase compared to inflation of 24.3% over the same period).

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“Too often the focus on rent rises produces a headline figure rather than one which is adjusted for inflation. This is like saying a pint of beer should be the same price in 2022 as it was in 2010. Everybody knows that is ridiculous but when it comes to the private rented sector many people seem to ignore the fact that rents, like all goods and services, must rise each year by at least inflation.

“I do believe that rents will increase much more in the coming year due to skyrocketing inflation and the cost-of-living crisis. Hardest hit will be those properties which are let on an all-inclusive basis including bills as the soaring cost of utilities will be a particularly strong driver of rising prices.

“Landlords, investors, and agents should all take care in explaining the reasons for rent increases whilst tenants, their representative organisations, and politicians must also take a realistic approach. Rental prices must rise to keep up with inflation and that such increases are entirely necessary to cover greater costs.”

Source: Property Industry Eye

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Rents up nearly 1% year-on-year

In August rents in the UK rose by 0.9% year-on-year with the average monthly rent now at £947 a month, the HomeLet’s Rental Index has found.

Rents in London increased by 1.4% in August this year compared to August 2017 and the average monthly rent in the capital now stands at £1,632 a month. When London is excluded, the average UK rental value was £786 in August 2018, 1.3% year-on-year.

Adam Male, director of lettings at Urban.co.uk, said: “Rental prices are now at their highest point in the last two years and while the rate of rental growth has slowed, this will do little to encourage those struggling to make ends meet or indeed those saving for a mortgage deposit to exit the sector.

“This continued increase is a direct consequence of ill thought out government policy, as an exodus of buy-to-let landlords has led to an inadvertent chokehold on the level of stock available in the market.

“In addition, many landlords are having to increase their rent in order to compensate for these consistent financial impediments.

“While the London sales market has come off the boil post Brexit, rents have increased across almost all London boroughs with central London remaining a hotbed for tenant demand for those that work in the city.

“That said, eight out of 12 UK regions have seen rents maintain their upward curve and so it highlights that the issue of rental affordability and the persecution of the nation’s landlords is far from a London-centric issue.”

When London is excluded, the average rental value was £786 in August 2018, up 1.3% on last year. The UK average rental value increased by 1.1% between July and August.

In August, average rental values in London (£1,632) were 72.3% higher than the UK (£947).

When London is excluded the average rent in the UK was £786 in August, meanwhile average rents in London (£1,632) were 107.6% higher than the rest of the UK.

Source: Mortgage Introducer

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UK property rents to rise 15% by 2023?

Falling levels of supply could increase pressure on the market, with calls for rental market reforms such as more investment into the purpose-built rental sector.

Summary:

  • The number of new rental properties coming onto the market in the UK is falling
  • A new survey from the Royal Institute of Chartered Surveyors has found a reduction in the number of private landlords in the country’s traditional buy-to-let sector
  • Industry commentators have called for ways to encourage investment and greater levels of quality in the rental sector

Are UK rental prices about to surge once again?

New research from the Royal Institute of Chartered Surveyors (RICS) has found that supply levels in the rental sector have steadily been falling over the last two years.

The result is that rental prices in the UK could rise by as much as 15% by 2023.

According to RICS, it has seen a significant reduction in the number of private landlords who once operated small portfolios of traditional buy-to-let property. New tax changes implemented by the UK government in 2017 is starting to make buy-to-let property less profitable for private landlords – with many investors seemingly leaving this sector of the rental market.

Explaining these tax changes, a spokesperson from the Treasury said: “We want to realise the dream of homeownership for a new generation, and that’s why we introduced a cut to stamp duty for first-time buyers.”

But while this is good news for potential homeowners, RICS believes that more needs to be done for a rising generation of Britons that are actively choosing to rent their homes rather than owning them.

Abdul Choudhury, Policy Manager at RICS, has called on the government to do more to raise standards in the purpose-built rental sector, particularly in cities such as Manchester where demand for this type of property is highest.

Mr Choudhury said: “Withdrawing tax breaks that small landlords relied on, placing an extra 3% on second home stamp duty, and failing to stimulate the corporate build-to-rent market, has understandably [had an impact on] supply.

“The government must urgently look again at the private rented sector as a whole, including ways to encourage good landlords.”

Source: Select Property

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Availability Of Rental Properties In London Half National Average

The availability of investment properties to rent in London has fallen 46 per cent below the national average, according to new monthly figures from the Association of Residential Letting Agents (ARLA).

ARLA has found that landlords are being increasingly priced out of the capital. This has led to increasing competition in the buy to let sector for rental properties, and a lack of availability of suitable properties.

It was found that in January, letting agents situated in London were managing an average of 99 properties. This is in comparison to the national average of 184. London was also the lowest region for supply during December, but it stood at 130 properties per letting agent then. This was in comparison to a national average of 200.

The buy to let market in London suffers from a unique mix of issues given the capital’s extremely high prices. This is coupled with growing legislation and regulation in the buy to let sector, which adds to making landlords’ jobs more complex.

ARLA chief executive, David Cox, spoke out about the research findings: ‘The rental market in London should be thriving as the capital is a hub for business and culture and attracts a huge influx of new residents every year. But the prospect of being a landlord is becoming less tenable, as potential buy to let investors are deterred by increased taxes and ever more complicated legislation and higher property prices in London are making it becoming more and more difficult for landlords to make ends meet.’

He argued that the increasingly dense field of regulation surrounding the buy to let sector is having an adverse effect on government policies. He continued: ‘Government policies designed to help renters now seem to be having the opposite effect, as landlords are moving away from using professional agents. This puts tenants at risk of falling into the hands of rogue landlords, or novice ones who don’t have any experience in the sector.’

Source: Residential Landlord

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Rental property supply hits three-month low as landlords quit the market

The gap between supply and demand for rental properties widened in January with more prospective tenants than stock coming onto the market.

ARLA Propertymark members reported 70 prospective tenants per branch in January, compared to just 59 in December, but supply dropped from 200 to 184 over the same period.

The last time supply reached a level this low was October 2017, when it stood at 182.

The research, based on responses from 361 members, showed 19% of tenants experienced rent hikes in January, compared with 16% in December, but this is down from 23% in the same month of 2017.

David Cox, chief executive of ARLA Propertymark, said: “This month’s results indicate that renters are in for a rough ride in 2018.

“Housing stock is falling as rising taxes continue to force established landlords out of the market and deter entry into the sector – and the volume of renters is increasing as the cost of buying a home is moving further out of reach for many.

“The fact that one in five tenants are experiencing rent increases is just another blow. Ultimately, until the prospect of investing in the buy-to-let market is more attractive for prospective landlords, and stock subsequently increases, tenants will continue to feel the burn.”

The rising rents are reflected in data from Your Move.

The agent’s England & Wales Rental Tracker for February shows annual growth for rents increased from 2.3% in December to 2.5% in January.

The average rent in England and Wales was £829, with the north west and east midlands growing fastest, up 2.9% annually to £636 and £652 a month respectively.

London remained the most expensive part of the country to rent a property with rents at £1,276 a month on average, but this is down 0.8% annually.

The biggest percentage fall was in the north east, where rents declined by 2% in the 12 months to January to £534 per month. It remains the cheapest place to rent in the UK

Martyn Alderton, national lettings director at Your Move, said: “The new year has started in a positive fashion for the rental market in England and Wales.

“With more tenants seeing renting as a long-term option, landlords, with their letting agent’s support, should identify features to encourage longer tenancies.

“For example, our recent tenant survey has found that more than a quarter of tenants would pay on average £24 more a month to live with their pets.

“Tenants are also prepared to pay more for communal living extras, such as a shared garden, childcare facilities or a gym.”

Source: Property Industry Eye

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Property rents falling in London, but still rising in the West Midlands

Property rents have started to fall in the UK for the first time in five years – but not in the West Midlands.

Nationwide property rents were down by a tiny 0.01 per cent in November, compared to last year, but that was driven by 0.8 per cent falls in London, where average monthly rents are £1,870.94.

Everywhere else they are still rising. In the West Midlands the last year has seen a 1.52 per cent rise to an average of £682.80 a month.

These are the findings of the National Rent Review from buy-to-let lender Landbay, aided by the Mortgage Industry Advisory Corporation (MIAC).

And it shows that Millennials renting a property outside London from the age of 21 will on average spend £110,800 on rent by the time they buy a house at the average age of 32.

But 40 per cent don’t believe they will ever be able to afford a house and face a £1.1 million bill as lifetime renters.

John Goodall, CEO and founder of Landbay said: “Landlords have faced up to challenge after challenge over the past two years, from stricter regulation, reductions to tax relief, and a significant stamp duty tax hike when buying a buy to let property.

“One would expect this pressure to push up rents, but two key factors have allowed them to shoulder these rapidly rising costs: the Bank of England’s enduring Term Funding Scheme (TFS), which has injected a significant sum of cheap capital into banks, together with record low interest rates, which have also kept borrowing costs low.

“With interest rates now rising, and the TFS coming to an end in February, we expect upward rental pressure to be just around the corner.

“Without a radical house building plan for purchase as well as purpose-built rental properties, rental prices are in danger of soaring over the coming decades.”

Mr Goodall added: “While younger people have always been overrepresented in the private rented sector, over the last decade there has been a marked increase in the proportion of younger households relying on the buy to let market.

“The Government is giving off strong signals that it is ready to tackle the supply shortages gripping the nation, while also improving standards, affordability and the institutional supply of rental properties in particular.

“This can only be good news if it becomes reality, but with so many of the issues being systemic, only time will tell if these measures will have the desired effect.”

Source: Express and Star