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UK residential rents up 4.7% in last 12 months, latest research shows
The cost of renting a new home in the UK has increased 4.7% over the last 12 months while tenants renewing their contract saw their rent increase 1.8%, new research shows. It means that squeezed yields, particularly across London and the South East, have led to more landlords looking to buy rental properties with a tenant already in situ to preserve their return. Indeed, the proportion of properties in the UK bought by landlords with a sitting tenant has reached the highest level since 2005, according to the latest report from Countrywide Residential Lettings. Last year 11% of all rental properties bought by a landlord came with a sitting tenant, a fourfold increase on 2008. Landlords are increasingly recognising the value of keeping a reliable, long term tenant and are prepared to reward them with longer contracts, the report points out. Tenants in properties sold as occupied have lived in their home significantly longer than the average tenant. A quarter of these tenants signed contracts of two years or longer compared to just 5% of tenants overall. This means for a growing number of renters, the decision to sell by their landlord does not affect their living conditions. Across every region of the UK, the proportion of sales with a sitting tenant rose, with over quarter of all purchases by landlords in the Capital coming with a sitting tenant, up from 12% in 2008. It is in London and the South East where yields are lowest and where the proportion of landlord purchases with a sitting tenant is highest. Here, landlords are most likely to buy a property with a sitting tenant to ensure they receive a rental income immediately, improving their return. This is achieved by landlords buying directly from other landlords who are selling up, rather than buying from an owner occupier and having to find a new tenant. Between 2008 and 2014, the North East of England saw the largest uplift in landlords buying with a tenant already in place. Given the limited growth in house prices since 2008, landlords attach great importance to the yield they are able to achieve. Selling with a sitting tenant allows a vendor to demonstrate the yield they are already achieving and means the new landlord will receive an income immediately in a market where it takes longer than average to get a tenant. Equally the new landlord won’t incur search costs or suffer any void period. ‘It seems that the secondary market of landlords selling investment properties to other landlords is growing. Landlords are increasingly recognising the long term value attached to keeping a reliable, high quality tenant,’ said David Fell, research analyst, Countrywide plc. ‘Properties sold with a tenant in situ, which offer a readymade guaranteed income, can even trade at a premium. At Countrywide, we are able to assist landlords in their quest to find a landlord… Continue reading
Mortgage arrears and repossession downs in the UK, latest data shows
The proportion of UK mortgages in arrears or ending in repossession fell in the first quarter of this year, according to the latest figures from the Council of Mortgage Lenders. A decline was experienced in all arrears bands, and across both owner occupier and buy to let lending. The total proportion of all mortgages with arrears equivalent to more than 2.5% of the mortgage balance was 1.03% at the end of the first quarter, down from 1.05% in the fourth quarter of 2014, and well down on the 1.24% recorded at the same time last year. In numerical terms, there were 113,900 loans in arrears. Of these, just 24,400 were in the most severe arrears band at more than 10% of balance, equating to 0.22% of all mortgages. This is the smallest number and proportion of mortgages in the most serious arrears band since the end of 2008. The proportion of mortgages resulting in repossession in the first quarter was 0.03%, down from 0.04% in the fourth quarter of 2014 and 0.06% in the first quarter of last year. The number of repossessions was 3,100, down from 4,200 in the fourth quarter of last year, and 6,400 in the first quarter of 2014. ‘Although complacency would be misplaced, the underlying picture continues to be one of improvement and a continuing reduction in mortgage arrears and repossessions,’ said CML director general Paul Smee. ‘The message remains the same: don't delay in contacting your lender if you are experiencing temporary payment problems, as lenders want to help you resolve them, and will only take possession of property as a last resort,’ he added. Meanwhile, the latest figures from the Finance and Leasing Association (FLA) show that the number of second charge mortgage repossessions fell 45.3% in the first three months of 2015, compared with the same period last year. ‘Second charge repossessions are continuing to fall as second charge lenders continue to do all they can to help customers in financial difficulty,’ said Fiona Hoyle, head of consumer credit at the FLA. Continue reading
English regions start to outpace house price growth in London
House price growth in the South East and East Anglia has overtaken London for the first time in four and a half years, according to the latest index covering England and Wales. Overall, across England and Wales, house price growth picked up on a monthly basis in April, climbing 0.2% but the annual rate of property price growth has halved since last summer, down to 5.3% in April. The data from the LSL index shows that the average house price is now £275,961, a new high for this year and excluding London the annual growth is 4.1%. The data also shows that in the first quarter of the year sales were down 10% but the firm expects that to change as the political uncertainty that affected the market in the run up to the general election disappears. ‘Annual price growth is still cooling, but mainly due to some recent negative monthly price rises. The direction of travel is clear and accelerating and most importantly, momentum is picking up where it was lacking before,’ said Richard Sexton, director of e.surv chartered surveyors. ‘By contrast, annual price rises in London have fallen sharply. As a result, the capital has been knocked off its perch by the South East and East Anglia, who have now edged ahead of London with the strongest year on year increase in property values of all regions across the country, at 7.1% and 6.9% respectively. In contrast, annual growth in London has shrunk from 9% in February to just 6.8% in March 2015,’ he pointed out. ‘This is the first time for nearly four and a half years that London has not been leading the pack in terms of regional house price growth, as higher stamp duty rates take some of the shine off high end properties in prime central areas,’ he added. The data shows, for example, that in the City of Westminster, where the average property is now worth £1,382,965, prices dropped 5.2% during the month of March, as pre-election speculation of a mansion tax put a dampener on enthusiasm for the most exclusive London homes. London also saw the sharpest decline in completed home sales between the first quarter of 2015 and the same period a year ago, falling 16.5%. ‘Election uncertainty has now vanished, so arguably London’s unique property market could see a fresh boost. But this mansion tax effect is one for the very top of the market. Away from the prime hotspots, affordability is still the biggest factor holding back further price rises and owning a London home is still more of a dream than even an aspiration for millions,’ said Sexton. ‘The head start that the housing market in London has traditionally exercised over the rest of the UK is retreating, and more of an even playing field is emerging instead. Average property values also hit new highs in greater Manchester and Birmingham, as demand in… Continue reading
