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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

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Average rental yield sees marginal decline compared to pre-pandemic levels

Average UK rental yield currently sits at 3.5%, a marginal decline from the 3.6% registered prior to the COVID-19 pandemic, according to research by lettings management platform Howsy.

Even with the obstacles facing the current market, there are still buy-to-let (BTL) pockets providing strong returns for landlords.

Bradford has the highest average yield at 10%, with Gwynedd (6.2%) and North Down (6%) following behind.

Other areas that rank highly are Glasgow, Liverpool, Preston, West Dunbartonshire, North Lanarkshire, Forest Heath and Manchester.

At the other end of the scale, Malvern Hills, Kensington and Chelsea and Chiltern have the worst average yields at 2.3%.

The largest increase in average yields has been in North West Leicestershire, up 1.4% during the pandemic.

Arun, Corby and West Norfolk have also seen increases of 0.8%, while North Dorest and Newark and Sherwood have had an uplift of 0.7%.

Kettering, Derby, Breckland and Falkirk are also among the top 10 for largest rental yield uplifts during the pandemic.

Rhondda Cynon Taf, York, Gedling, Chiltern and the Vale of Glamorgan, however, have seen the largest declines, between 1% and 3.5%.

Calum Brannan, founder and CEO of Howsy, said: “The current lockdown has seen the government introduce measures such as buy-to-let mortgage holidays and a ban on tenant evictions and this has understandably caused many buy-to-let investors to hesitate.

“But despite this overall air of market uncertainty, tenants still need to find rental properties and so it continues to be business as usual for many landlords and those agents who have adapted to a more digital mode of operations.

“There’s also still a large number of areas where potential and existing landlords can secure favourable yields much higher than the national average, with some areas still seeing an uplift in yields despite the spread of the coronavirus.

“As the nationwide lockdown continues to drag on, there may be another silver lining for buy-to-let investors.

“Should the property market see prices fall, the cost of investing will be lower, boosting profit margins in a sector that has had it tough of late due to government squeezes on profitability.”

By Jessica Bird

Source: Mortgage Introducer

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Tenant confusion remains despite rental payments remaining steady

The coronavirus crunch is yet to translate into delayed rental payments but agents are warning that there is still tenant confusion about whether they are obliged to pay.

Analysis of 20,000 lettings by Goodlord, which helps landlords and agents automate tenancy contracts and record payments, found only 2% more properties than usual – an increase from 4% to 6% – are behind on rent since March 11th.

This is based on rent being more than seven days late.

Goodlord also reported that claims from landlords against its rent protection insurance policies remain below 1% of rented properties covered.

However, a survey by Goodlord with 124 lettings agents alongside this research found 84% have reported confusion amongst tenants, with many not realising they remain under obligation to pay rent.

Of those surveyed, 70% said that they have agreed payment plans with less than 10% of tenants so far.

Another 40% letting agents noted that the landlords they work with are being particularly supportive and are working with tenants to address rent payment plans, rent reductions, or supporting late payment plans where necessary.

There have been calls from tenant groups for the Government to introduce rent waivers.

Landlords can apply for buy-to-let mortgage payment deferrals if renters are in difficulty but these are not compulsory.

Tom Mundy, chief operating officer at Goodlord, said: “Despite only being a month since lockdown began, the late payment figures for the rental industry are so far fairly steady.

“They show that the overwhelming majority of tenants are still able to meet their obligations and we believe the Government’s furlough scheme will no doubt be playing a key role in this continuity.

“At the same time, agents and landlords are gearing up to offer more support in the months to come.

“Many agents, along with their landlords, are thinking about how they can offer flexibility, support, and guidance to tenants who might start to struggle.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Average rental prices up 2.3%

Average rental price for a new tenancy in the UK was £953 per calendar month in January which is a year-on-year increase of 2.3%, the HomeLet Rental Index has shown.

Rents in London increased by yearly by 2.5%, with the average rent in the capital now standing at £1,627 a month.

This is 71% higher than the UK average.

These figures are higher than the rate of inflation which was recorded at 1.8% in the Consumer Prices Index in December.

Rents in the North West are growing faster than any other region in the UK, whilst London rental growth has decreased over the past three months.

Neil Cobbold, chief sales officer at PayProp, said: “The latest figures show the market resurgence seen in the sales market has extended to the rental sector.

“There was strong annual growth across most regions in January when compared with the same month last year, with impressive growth of over 5% in the North West, Wales, Scotland and the East Midlands.

“However, there were some regional dips last month when compared with December 2019.

“This could be due to the impact of the general election wearing off.

“The decisive election result may have pushed some tenants – that were delaying their move – into action.

“This could have inflated average rents in December due to higher competition for properties.

“This heightened activity may have levelled out, but the generally secure market conditions will be welcomed by letting agencies and landlords.

“There remain some bumps in the road to contend with, including changes to Capital Gains Tax, the final reduction of buy-to-let mortgage interest tax relief and the impact of CMP reform and the Tenant Fees Act throughout 2020.

“Knowing that rents are growing with increases above 5% in some areas will reassure landlords and agents that demand for rental property remains stable as they negotiate a market landscape which continues to evolve.

“Looking forward to the next few weeks and months, there is nothing to suggest rental market prices won’t remain steady with annual growth continuing to rise.”

By Jessica Nangle

Source: Mortgage Introducer

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The proportion of income spent on rent drops

The proportion of income that tenants spent on rent fell between 2016 and 2019 despite increases in rental levels, according to The Deposit Protection Service (DPS).

Its rent index showed the average proportion of wages spent on rent decreased from 32.64% in 2016 to 30.64% in 2019.

The DPS said that various factors had helped improve the affordability of renting during the period.

These included: a 2.69% increase in average salary (from £29,559 to £30,353) and a £77 decrease in average tenancy deposits (from £905 to £828) since the introduction of the deposit cap in June last year.

Matt Trevett, managing director of the DPS, said: “Although rents have risen over the past decade, other changes since 2016 have helped ensure renting has become on average more affordable.

“Predictions that rents would rise in response to the introduction of the tenant fees ban and deposit cap do not seem to have materialised, with many landlords seemingly declining to increase rents since last summer.”

Average rents reached a peak of £777 during Q3 2019 before decreasing marginally by £4 to £773 during the following quarter.

Paul Fryers, managing director at specialist buy-to-let mortgage provider Zephyr Homeloans, added: “Although the longer-term recovery in rental levels is likely owing to broader economic factors, changes to rental figures are also more likely at moments where property changes hands.

“Over the past couple of years, professional landlords have become a larger proportion of the buy-to-let market as more and more smaller or ‘accidental’ landlords sell up, partly as a result of increasing costs.”

Northern Ireland saw the biggest increase in average monthly rents (3.01%) from £532 to £548 during Q4 2019, while average monthly rent in Yorkshire and The Humber dropped the most, from £551 to £524 (4.90%).

London continues to be the most expensive rental region, with average monthly rents standing at £1,345 in Q4.

This is over two and a half times the amount (£518) paid in the UK’s cheapest region, the North East, during the same period.

Excluding London, average monthly rent during the last quarter of 2019 stood at £672.

Detached properties saw the largest increase (0.81%) in average monthly rents, from £990 to £998, in Q4.

Monthly rents for terraced houses declined the most during the quarter, falling 0.55%, from £732 to £728.

By Michael Lloyd

Source: Mortgage Introducer

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Warning sounded on rental market as numbers plummet

Landlords are warning of a crisis in the private rental market as figures show a sharp drop in new rental properties becoming available.

The latest Residential Market Survey from RICs, published yesterday (December 12), showed surveyors reported a fall in the number of rental properties entering the rental market in November.

The November rating stood at -29 per cent — more than twice the -14 per cent recorded for November 2018.

In the RICs survey a negative net balance means more respondents were seeing a fall in new rental properties than seeing an increase so the lower the number, the worse things are in respect of rental property supply.

As tenant demand continues to increase, RICs predicted this would lead to rent increases of around 2 per cent over the next year and 3 per cent over the next five years.

Concerns have been raised about a dwindling buy-to-let market over the past few years since a series of tax and legislative changes had hit landlords’ pockets.

How the rules changed:

An additional 3 per cent stamp duty surcharge, introduced in April 2016, was closely followed by the abolition of mortgage interest tax relief for landlords.

Landlords then took a further hit when a shake up of rules by the Prudential Regulation Authority meant buy-to-let borrowers were now subject to more stringent affordability testing.

The changes to mortgage relief have been phased into the system since April 2017, but by April 2020 landlords will be unable to deduct any of their mortgage expenses from taxable rental income.

Instead, they will receive a tax-credit based on 20 per cent (the current basic tax rate) of their mortgage interest payments.

Following the changes, landlords who were higher or additional-rate taxpayers would now only get refunds at the 20 per cent rate, rather than top rate of paid tax.

On top of this, landlords could also be forced into a higher tax bracket because they would need to declare the income that was used to pay the mortgage on their tax return.

Some landlords have opted for owning property through a limited company to bypass the tax hike.

Meanwhile the Bank of England’s rule changes will mean fewer are able to borrow money to purchase a buy-to-let property than before.

David Smith, policy director for the Residential Landlords Association, said: “If the decline in the supply of new homes to rent continues to fall whilst demand is still rising, this is going to lead to a crisis in some areas as tenants desperately search for somewhere to live.

“This is all the result of increased taxation and other measures over the last three years and the result has been highly predictable as we said it would be.”

Carl Shave, director at Just Mortgage Brokers, said: “Following the onslaught of new legislation in the buy-to-let sector together with the recent tax changes for income and stamp duty, this shortage of supply will come as no great surprise.

“Changes by the government to try and assist the home ownership housing market have sadly been implemented without heed to the wider housing needs of the country.”

Alan Lakey, director at Highclere Financial, said clients were often turned away from the idea of buying a buy-to-let property once the true cost was explained to them.

He said: “Once they’ve considered stamp duty, the solicitor and valuer fees, the tax on the rental income and the capital gains tax when they come to sell, they usually no longer want to go through with it.”

By Imogen Tew

Source: FT Adviser