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Rents Are Rising In Rural Areas

Rents for new lets increased in the year to October, but only in rural locations, Hamptons International has reported.

Its November Monthly Lettings Index put the annual rise across the whole of Great Britain at 1.4 per cent, and the average monthly rent for newly let residential properties at £1,041. The increase was the first annual rise indicated by the index since March 2020.

But the figure masks sharp differences between rural areas, where rents were 5.5 per cent higher in October than a year ago, and cities, where they were 5.3 per cent lower.

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‘This is due to a shift in tenant demand, with more renters looking to live in the country rather than cities’, said Hamptons. ‘As a result, there were 29 per cent more homes available to rent in cities and 48 per cent fewer to rent in the country during October than at the same time last year’.

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Rental growth accelerated across Great Britain in all regions apart from London, down 0.6 per cent, and Wales, down 4 per cent, Hamptons reported. ‘Rents in London fell for the eighth consecutive month in October as the gap between rental growth in Inner London, down 14.9 per cent, and Outer London, up 3.3 per cent, widened to the largest differential on record’.

The biggest rental growth was seen in the North of England and the South West where rent were up by 5.9 per cent year-on-year. Rents in the North reached a record high of £689 per calendar month.

Source: Residential Landlord

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Rental Market Buoyant Except In London

Rents in London have fallen during the Coronavirus pandemic, property portal Zoopla has reported. However, London is the exception and rents risen in a buoyant rental market across the UK as a whole, it said.

‘Average rents in London have fallen by 5.2 per cent over the last 12 months, reaching levels last seen in 2014’, Zoopla found. It puts this down to ‘new working patterns and lack of tourism during pandemic’.

In contrast, rents increased outside London by 1.7 per cent and rental has increased by a fifth over last year – strong demand that is being driven by a squeeze on lending to potential first-time buyers, said Zoopla.

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‘At the same time, supply remains constrained with levels of investment in buy to let still reduced following the changes to Stamp Duty (the additional 3 per cent surcharge on second properties) and the wider tax regime introduced from 2016 onwards’.

Renters are showing increasing interest in larger properties, especially those that may have access to outside space.

‘The search for space, first seen in the sales market, is now being firmly replicated by renters. Zoopla’s top searches for rental properties include the terms gardens, parking, garages, balconies and pets, reflecting a need for outdoor space and freedom necessary to cope with lockdown. There is also evidence that while the market as a whole is moving more quickly, the market for rented houses is moving more quickly than that for rented flats, reflecting this desire for more space among renters’.

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‘For most of the UK, the demand/supply gap is underpinning moderate levels of rental growth’, said Zoopla head of research Gráinne Gilmore.

‘The split in the rental market caused by COVID-19 has now crystallised and we are seeing the two-speed market firmly entrenched.

‘We haven’t seen the exodus of students from cities and, as more people are staying in the rental market given the squeeze on mortgage lending, higher levels of demand will continue to underpin rents. At the same time however, muted earnings growth will start to limit the headroom for rental growth in some markets.

‘The search for additional space, both indoor and outdoor, within the rental sector is also set to continue as the country goes through additional periods of lockdown’

Source: Residential Landlord

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Landlords report strongest tenant demand since 2016

The North West and South West of England experienced the strongest levels of tenant demand in a period which has seen the most buoyant growth since 2016.

A survey by buy-to-let lender Paragon Bank revealed tenant demand hit a four-year high in Q3 of 2020 with 29% of landlords reporting rising interest from renters during this period.

This was the highest number of respondents reporting increased demand since the third quarter of 2016 and came as one in ten of the 700 landlords quizzed reported ‘significant growth’.

But it was in the regions of the North West and South West where rental numbers were most buoyant with the survey finding 44% of landlords had seen a growth. This was closely followed by the East Midlands where 40% of landlords reported higher demand from tenants.

In Central London, meanwhile, just 16% of landlords saw growth in the last three months. Growth was slightly stronger in outer London areas, with a quarter of landlords recording rising demand.

Richard Rowntree, managing director of mortgages at Paragon Bank, said the record levels of tenant demand being reported by the likes of Rightmove and Zoopla when the housing market reopened in May had started to feed through to landlords as tenants reassessed where and how they wanted to live.

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Central London, he explained, was seeing the impact of Airbnb-style landlords moving property into long-term lettings, as well as a desire for larger properties.

Rowntree continued: “Outside of London, demand is buoyant from the East of England, where 27% of landlords are reporting growth in demand, to the North East and South West, where nearly half of respondents are telling us they are seeing positive growth.”

He added: “We expect this to continue for the foreseeable future and there’s a number of factors we’re seeing at play.

“For example, there’s been growth in homeowners taking advantage of strong prices and selling to move into rented, people are looking to secure a new home ahead of entering a potential second lockdown, whilst students left it late to secure property for the new academic year.”

By Kate Saines

Source: Mortgage Finance Gazette

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The South West leads the way on rent rises

The South West of England is the leading UK region when it comes to rent increases, as they were 6.6% higher in September than the same month last year.

HomeLet’s Rental Index shows that rents averaged at £902 in the South West in September 2020, up from £846 in September 2019.

There were also strong annual increases in the North East (4.3%), East of England (4.3%) and the North West (4.2%), considering the year we’ve had.

At the other end of the spectrum, Greater London saw rents fall by -2.8%, while they also decreased by -2.4% in Northern Ireland.

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Martin Totty, chief executive at HomeLet, said: “Whilst it’s undoubtedly the case many landlords are being supportive of their tenants and agreeing temporary reductions or deferrals, it will be encouraging for them to see rents agreed on new tenancies, in almost all parts of the country, are continuing to hold up and generally edge forward.

“This is likely because tenant demand remains strong whilst supply may be a little more constrained if some landlords are selling into a stronger sales market, even if that could be a short term phenomenon. It also doesn`t help tenants much if, for them, the prospect of securing first time mortgage finance remains as elusive as ever.

“So, those landlords committed to the sector for the long term and having shown their willingness to confront the multiple headwinds of: taxation change; new regulatory requirements; and, in certain circumstances, longer notice periods to gain possession of their properties, may still be rewarded for their flexibility and their perseverance with reasonable returns on their investment risk.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Best boroughs for student rental demand

Benham and Reeves, has revealed the best boroughs for student rental demand, despite predictions of a rental market decline due to a lower level of students heading to the capital. London’s higher education providers accommodate 16% of the UK’s university students each year, and as many as 32% of the capital’s students come from overseas.

The average London student pays £702 a month in rent, meaning those on a three-year course will pay out £8,424 a year, totalling more than £25,000 throughout their course.

This means the capital’s student body brings in nearly £271m to London’s rental market in rent each month, with international students accounting for £85.6m of it.

However, with COVID-19 causing travel restrictions and broader health implications for universities, it’s predicted that the number of students heading to London this term will drop by as much as -24%.

That’s a loss of over £65m a month for the London student rental sector, but despite this prediction, many areas of London are still experiencing extremely high levels of demand for student accommodation, something that will be welcome news to student landlords across the capital.

According to the research by Benham and Reeves, the number of student-specific rental properties that have already been snapped up by students sits at 22% of all student-specific properties listed on the rental market.

However, in Merton, this ratio is far higher, with 80% of all student accommodation already let agreed.

Bromley (75%), Bexley (61%), Barking and Dagenham (60%), Hounslow (53%), Harrow (53%) and Redbridge (50%) are also seeing high levels of current student demand for rental properties.

Even in more expensive markets such as Hammersmith and Fulham, Islington and Camden, student rental demand is sitting at 19% to 25%.

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Director of Benham and Reeves, Marc von Grundherr, commented: “There is currently an evident decline in the level of rental demand from students than we might otherwise expect at this time of year. This has, of course, been driven by a lower number of international students looking for properties due to the travel restrictions and other hurdles that the current pandemic has presented.

“However, while predictions of student rental market losses are rather eye-watering, to say the least, we don’t believe this will be an issue that plagues the market for long.

“Many current students are beginning their studies in a virtual capacity until such time they can make a move to London, and once they do, we should see a further influx of demand for suitable student lets.

“University is very much about the life experience you gain from actually moving to a new city or country. With London still offering some of the best standards of higher education you can find worldwide it’s unlikely students will refrain from this first-hand experience unless absolutely necessary.

“Like many areas of life this year, we may see a slow start to the university year. But as life develops to deal with COVID-19, greater degrees of normality will prevail, and this is no different in the rental market student or otherwise.

“The very promising signs are that currently, many boroughs are experiencing massive demand for student rental properties, and this bodes very well for the academic year ahead. Foreign student demand, in particular, can bring very favourable levels of rent for buy-to-let landlords. We regularly have students from China and other areas of Asia renting at well above the average in their chosen areas to ensure they secure the best property they can while studying.”

DescriptionData PointSource or Workings
Number of UK higher education students2,383,970London Higher
Number of students studying at 39 HE providers in London386,000London Higher
London Students as a Percentage of UK total16% 
Number of overseas students (Other EU and Non-EU) in London122,000London Higher
Percentage of International Students in relation to London total32%Overseas student total as a percentage of all London students
Average monthly London student rent£702Save the Student
Total rent paid by all students each month£270,972,000Monthly rent multiplied by the number of London students
Total rent paid by international students each month£85,644,000Monthly rent multiplied by the number of international students
Expected Covid-19 drop in student numbers24%KCL
Forecast number of total students after drop293,360Total number of London students reduced by 24%
Forecast number of international students after drop92,720Based on international students accounting for 32% of total students
Decline in monthly student rental income as a result of drop-£65,033,280Total Rental income reduced by 24%
Decline in monthly international student rental income as a result of drop-£20,554,560Based on international students accounting for 32% of total students
Table shows the level of student rental properties already let as a percentage of total student properties listed.
LocationCurrent Demand for Student Rentals
Merton80%
Bromley75%
Bexley61%
Barking and Dagenham60%
Hounslow53%
Harrow53%
Redbridge50%
Waltham Forest44%
Greenwich42%
Kingston upon Thames37%
Lewisham34%
Wandsworth34%
Sutton33%
Croydon31%
Richmond upon Thames28%
Haringey27%
Hammersmith and Fulham25%
Ealing25%
Islington23%
Brent22%
Southwark21%
Hackney21%
Newham20%
Hillingdon20%
Camden19%
Lambeth18%
City of London18%
Barnet15%
Tower Hamlets13%
Kensington and Chelsea11%
Westminster10%
Enfield0%
Havering0%
London22%
Source: Rightmove

Source: Property118

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Rents rise in most regions

The cost of renting increased across six out of eight regions of the UK – with particularly strong increases in the North East and East Midlands, Goodlord’s rental index has found.

In July the typical cost of renting was £838.24 in the North East, up from £652.61 in June.

The East Midlands also saw a rise of 17% increase, with rents rising from £795.24 in June to £961.34 in July.

The only regions where rents didn’t increase were the West Midlands (0%) and Wales (-5%).

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Tom Mundy, chief operating officer at Goodlord, said: “July’s numbers confirm that the post-lockdown bounce we were expecting was more than a flash in the pan.

“The market has found its feet once more and is retaining momentum. Comparisons to 2019 data are highly encouraging; showing a return to predicted levels of activity and, in some instances, exceeding expectations.

“In addition, rental prices and void periods both bode well for the sector as we head into August, which is also a traditionally busy month for the industry.”

BY RYAN BEMBRIDGE

Source: Property Wire

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Plymouth rated top renter friendly city

Plymouth is the most renter-friendly city due to its low unemployment rate of 2.8%, and its low crime levels (59.4 cases per 1,000 people) and affordable rents, research from Insulation Express has found.

Only 32% of the average renter’s income is spent on rent – making it easier to save for a deposit.

In terms of affordability, Derby is the best city with tenants spending just over 1/5 (22%) of their wage on rent, followed by Sunderland who spend nearly 1/4 (23%.)

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London tenants face the most financial strain, spending nearly 2/3 (64%) of their salary on rent, followed by Reading where tenants spend almost 1/2 (49%) of their income on rent.

Belfast has seen the highest annual rent price rise of 2.2%, whereas comparatively, Sunderland and Newcastle Upon Tyne have seen the lowest – at just 0.5%.

Manchester has the highest crime rate, with a staggering 164.1 offenses per 1,000 people (16%).

By RYAN BEMBRIDGE

Source: Property Wire

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Pent up demand fuels resurgence in the rental market

Lettings market activity in June was significantly higher than the same month last year, the Rental Index from Goodlord has shown.

After number of new tenancy applications were received during May, June saw that demand translate into completed lets.

The number of completed lets stayed above 2019 averages for all but six days of June, marking an extremely busy month for the industry.

The cost of renting rose by 3% across the England and Wales between May and June.

Void periods also dropped in five out of eight regions.

Tom Mundy, chief operating officer at Goodlord, said: “If May was characterised by a release of pent up market demand, then June was that demand translating into action.

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“The numbers throughout the month were incredibly impressive and show how hard the industry has been working to serve as many tenants and landlords as possible.

“We saw an unprecedented number of lets completed each day in June. It’s therefore no surprise to see those levels of demand starting to affect average rental costs and void periods.”

The biggest rent rise was seen in the South West, which saw average prices increase by 11% – from £859 per month to £965.

Wales wasn’t far behind, posting a 9% rise in average rental costs.

The average salary of a UK renter dipped slightly month-on-month, from £25,068 to £24,613.

BY RYAN BEMBRIDGE

Source: Property Wire

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June lettings activity matching 2019 levels

The first fortnight in June has seen new and completed lettings applications surge above 2019 levels in some cases, research from Goodlord has found.

Demand for rental properties has steadily gained paced since 13th May, when restrictions on moving house were lifted.

The busiest day for new applications was 2nd June, when they hit 112% of the volumes recorded on the same day in 2019.

Meanwhile the busiest day for completed lets to date was the 10th June, when activity levels reached 124% of that recorded on the same day in 2019.

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Tom Mundy, chief operating officer at Goodlord, said: “It’s been an incredibly busy few weeks for letting agents, landlords and tenants.

“They’ve risen admirably to the dual challenges of a surge in demand coupled with a totally new way of working and doing business.

“We are starting to see some much needed stability and consistency in the market.

“Alongside this, we’re seeing agents embrace new tools, processes and strategies to ensure lettings can continue safely across the UK.”

Since 1st June, completed lets have been running at an average of 94% of 2019 levels.

On each day between 7th June and 13th June, completed lets have remained higher than the 2019 average.

BY RYAN BEMBRIDGE

Source: Property Wire

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Rental market starts to rebound after tough month

The UK’s rental market has started to rebound after falling between March and April, Goodlord’s Lettings Activity Tracker has found.

Between April 12th and May 7th new applications rose by 45% and completed tenancies by 22%.

Between March 17th, when initial lockdown measures came into effect, and April 14th, the number of new tenancy applications plummeted by 72%, reducing market activity by three-quarters compared to the same period in 2019.

Tom Mundy, chief operating officer of Goodlord, said: “The last month has been intensely difficult for letting agents.

“The steep decline we saw in new and completed tenancy applications was unprecedented in modern history.

“However, there are now some glimmers of hope. The numbers are showing early signs of levelling out.

“If this proves true, retaining this subsistence level of demand will prove vital to agents when it comes to surviving the duration of social distancing restrictions, as will their ability to pivot to a fully remote offering.”

He added: “If they are able to weather a few more weeks, we are predicting a much more significant rebound for the market once restrictions on moving house are lifted.

“Many moves will be on hold right now, meaning demand is building up each week with some already trickly through, as we can see.

“As with any downturn, sales will be hit harder than lettings, as people delay getting their foot onto the property ladder and remain renting instead.

“For the agents that can go the distance, there will be a chance to claw back some of their losses once restrictions are lifted.”

BY RYAN BEMBRIDGE

Source: Property Wire