News
Number of rental sector tenant evictions up in England and Wales
The number of households evicted from rental accommodation in England and Wales rose by 5% in the first three months of the year, while the repossession rate for home owners fell to a record low. Seasonally adjusted figures from the Ministry of Justice show there were 10,732 repossessions of rented homes by bailiffs between January and March 2016, up from 10,253 in the final three months of 2015. The number of tenants evicted from their homes by bailiffs reached a record high in 2015, according to official figures for England and Wales, which shows that 42,728 households in rented accommodation were forcibly removed. Housing campaigners blamed welfare cuts and the shortage of affordable homes for the rise in repossessions over the year and more than half the evictions are thought to have been by private landlords. These figures are echoed by a new report from online letting agent PropertyLetByUs which shows that a quarter of landlords have served an eviction notice to tenants over the last 12 months and 5% have pursued an eviction through the courts. Furthermore, almost half of landlords have also experienced rent arrears over the last 12 months. ‘Landlords are increasingly facing rent arrears, as rent escalation continues to outstrip gross income. They are also facing a financial squeeze due to restrictions on their tax breaks and some may be raising rents to supplement their income. Pushing up rent rises further will put huge pressure on those tenants who are already struggling to pay their rent. We may well see evictions continuing to rise over the next few months,’ said Jane Morris, managing director of PropertyLetByUs. She pointed out that the statistics highlight the need for landlords to protect their rental income and ensure they carry out thorough references with all new tenants. ‘Times are very tough for many tenants and demand for rental accommodation is soaring in many parts of the UK. Landlords need to extra vigilant when they take on a new tenant. But a few simple checks will help identify if a tenant is in a good financial position or not,’ she added. Meanwhile, changes to the process of accelerated possession through applying to use High Court Enforcement Officers (HCEOs) to evict a tenant has brought an end the so called seven day eviction which were misleading for landlords as well as increased costs, according to legal experts, Landlord Action. The majority of residential possession claims are dealt with in the county court and enforced by county court bailiffs. However, with a backlog of cases and a reduction of bailiffs leading to longer waiting times in some courts, it can take several weeks for bailiffs to carry out an eviction, which is longer than most landlords wish to wait when suffering further loss of rent. In some cases, landlords can apply for their case to be transferred to the High Court once a possession order has been made, so that… Continue reading
French market not affected so far by Brexit vote
The decision by the UK to leave the European Union does not seem to have dented the French real estate sector with mortgage rates still low and currency differences still positive. Indeed, the vote coincided with a further drop for French mortgage rates to all time historic lows. These ultra-low long term fixed rates have in effect nullified the changes in exchange rates for British buyers and offer the opportunity to lock in long term value, according to John Luke Busby, private clients director at French Private Finance. He pointed out that a French repayment mortgage can now be found in the region of 2.15% fixed for 20 years nationally and perhaps down to 1.55% in Paris for some profiles. ‘This means that over a 20 year fixed rate mortgage period British buyers are now still ahead versus the highs of the pound against the euro last year,’ Busby said. ‘It is important to note that we have not had any withdrawals or cancellations on the basis of the referendum result from any of our ongoing applications. Whilst there will clearly be reflection around making new investment decisions in the French market for some UK buyers, investors from around the world are continuing with their purchases in France,’ he explained. ‘This trend is particularly noticeable in Paris where prices are starting to increase again, after a lull, and for investors earning in Dollars the euro is substantially cheaper. US dollar holders can now benefit from the double whammy of a strong currency and ultra-low interest rates,’ he added. Busby believes that overall there seems to be a quiet confidence emerging around the future of the UK economy whatever the result of the negotiations in Brussels or the UK Parliament. ‘There is confidence that, as of today, we remain in the EU so to all intents and purposes it is business as usual,’ he said. He also pointed out that all of the tax treaties relating to property are independent of EU membership for the British, who remain the largest non-resident buyers of French Property. Many regions in France are now starting to see growth in property prices, which herald larger gains once the EU economy can get going again,’ Busby added. ‘The mixture of the romance of French property ownership combined with soft property prices and ultra-low interest rates still conjure a compelling purchase proposition which is hard to ignore over the long term,’ he concluded. Meanwhile, one of the largest sellers of French property to British buyers has reported a 21% rise in sales in the first six months of 2016. Leggett Immobilier also says that since the referendum result enquiries have remained high with over 1,000 enquiries coming into the sales support team in the past seven days. Coupled with this Leggett Immobilier have had 34 offers accepted in the past week, a figure which is well above the weekly average. The firm’s figures show a 21% rise… Continue reading
Brexit set to have positive and negative effects for UK commercial property markets
Confidence in the UK’s commercial real estate markets will unquestionably fall due to the Brexit uncertainty with a ripple effect set to spread beyond London, according to a new analysis. It is likely that decisions will be pushed back in the period of heightened economic and political uncertainty that no one can define or quantify and it will most likely take several years for people to fully understand the implications of the decision to leave the European Union, says the report from Fidelity International. But there are likely to be positive as well as negative effects due to the referendum decision. ‘The question is whether resultant pricing volatility is a fair reflection of inherent risks or a potential mispricing opportunity,’ said Adrian Benedict, the firm’s real estate director. He pointed out that before the referendum, transaction volumes were already down 50% in the year to date compared with the same period in 2015. ‘We anticipate volumes to remain modest for the rest of 2016 as investors assess the implications,’ he added. ‘As we saw in the aftermath of the 2008 financial crisis, we can expect real estate investors to seek refuge in the relative safe harbour markets like London West End or long leased assets. However, unlike then, values are already 10% to 20% above long term levels,’ Benedict explained. He believes that many investors will be turning their attention to the occupier market, in particular evaluating the impact on financial and business services companies; anyone with those type of tenants are going to be more circumspect but the impact won't just be confined to London. ‘We can expect to see a ripple effect across the country. Bournemouth for example has a high proportion of people employed by financial service companies and it would be naïve of us to think the impact will be contained to the capital,’ Benedict said. ‘So long as occupiers remain cash generative, we’re unlikely to face a material pricing correction arising from weak fundamentals. Supply of new space remains very constrained and vacancy rates in the key cities across the UK have largely recovered,’ he added. He also pointed out that having short leased assets doesn’t necessarily mean occupiers will move out. ‘Fidelity’s experience suggests less than 25% of occupiers chose to exercise their option to terminate leases or move at expiry. Rather than selling or buying real estate ‘markets’ a greater emphasis will need to be placed on underwriting the occupiers and the certainty of their cash flows,’ he said. ‘As with most clouds, there is a silver lining. Over the last 12 months international buyers accounted for 40 percent of commercial property deals in the UK, a near doubling within 10 years. The relative attractiveness of the UK market is explained by a strong economy but also a relatively weak currency. In US$ terms, the UK real estate market is now back to pre-2004 pricing levels. The question is whether international investors will view this as… Continue reading
