Tag Archives: crisis
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
UK property market picks up but shows signs of pricing expectation gap
The UK property market is set to see a pick-up in activity due to an election result that was positive for real estate markets but there is evidence of an ‘expectation gap’ emerging, new research suggests. Buyers and vendors have different expectations when it comes to pricing, according to the latest market update report from property firm Knight Frank. It shows that UK house prices rose by 1% in April, taking the annual increase to 5.1%, while prime central London prices rose by 0.3% in April, an annual uptick of 2.8%, and prime outer London rose by 0.4%, and are up 4.8% year on year. Overall prime country house prices rose in value by 2.5% in the year to March, while prime properties in Scotland climbed 1.2%. Meanwhile, the rental market in prime central London is showing continued growth, outpacing that seen in the sales market with growth of 4.1% while overall UK rents rose 2.1% in the year to March. Rates of growth are not uniform across different areas, for example there has been 6.2% growth in Kensington and just 0.1% in Mayfair. Rents in the Home Counties climbed by 4.7% in the year to the end of March. ‘Uncertainty had been the byword in most corners of the market in the run-up to what was considered the most closely fought election in decades. Now, with a majority government, there is clarity on the way forward on housing policies and a Conservative majority means that the approach is likely to be largely a continuation of what we have seen over the last five years,’ said Grainne Gilmore, head of UK residential research. She pointed out that housing supply will continue to be a priority as the current levels of new homes being delivered is far below the generally agreed target of 240,000 homes a year. Indeed, Knight Frank’s recent house building report revealed the measures house builders and developers think should now be a priority for policymakers to boost development and these include beefing up planning departments and releasing more public sector land. ‘The Conservatives have already pledged to extend the Help to Buy Equity Loan to 2020, something which has encouraged developers to take on larger schemes. Their plans to extend Right to Buy to more Housing Association tenants will provide the opportunity for home ownership among this group,’ explained Gilmore. ‘However in terms of housing supply, the policy of replacing each home purchased with another, new, home available for rent must be implemented, otherwise the scheme will result in a net loss of affordable homes,’ she added. Knight Frank expects sales to pick up. ‘In terms of activity and pricing in the market, it is likely that transactions will pick up now that the uncertainty in many parts of the market, especially the prime market which is no longer dealing with the prospect of a mansion tax,’ said Gilmore. ‘However, there is evidence that an expectation gap in pricing may be starting to… Continue reading
Houses in areas of low unemployment in UK have seen biggest property rises
British home owners in local authorities with the lowest levels of unemployment have seen the value of their property rise by almost £65,000 since the trough of the last housing market cycle in 2009, new research shows. The average house price in the 20 local areas that recorded the lowest unemployment rate between 2009 and 2015 rose by 25%, or £64,783, according to new research by Lloyds Bank. In contrast, the 20 areas with the highest unemployment experienced an average house price increase of just £4,100 or 3%. The report says that there is a clear link between levels of unemployment and house price performance in recent years. Those areas with the lowest average levels of unemployment since 2009, as measured by the claimant count, have, on average, recorded bigger house price gains. For example, the 20 local authority districts with the lowest unemployment have experienced average house price rises of 25% since 2009 compared with an increase of 17% for Great Britain as a whole. The outperformance is more marked once the impact of London is removed from the calculations with Great Britain excluding London recording an 11% price increase. The capital has seen the biggest price gains in recent years but none of the lowest 20 unemployment areas are in Greater London. The position for the 10 areas with the lowest levels of unemployment is even more marked with an average house price rise of 28% for these areas since 2009, more than 60% higher than the Great Britain gain and 150% more than Great Britain excluding London. Hart and Winchester, which have had the lowest average unemployment rates since 2009, have recorded house price gains of 33% and 37% respectively in the last six years. Similarly, those areas with the highest levels of unemployment have typically under performed compared to the Great Britain average. The 20 areas with the highest levels of unemployment have recorded an average house price gain of 3%. Hull and Middlesbrough, the two areas with the highest unemployment, have seen house prices increase by only 2% and 1% respectively over the past six years. ‘There has been a very clear relationship between conditions in the local jobs market and house price performance during the period since the housing market downturn between 2007 and 2009,’ said Andy Hulme, Lloyds Bank mortgages director. ‘Those areas with low unemployment and high levels of employment have tended to record above average house price growth. Areas with high unemployment and relatively low employment have, on the other hand, typically under performed,’ he explained. ‘The past few years have underlined the importance of local economic health in determining house price behaviour. Other factors, however, are also key drivers of house price trends including the strength, or otherwise, of housing supply,’ he added. The 20 local areas with the highest employment rates have experienced average house price rises of 19% since 2009 compared with an increase of 17% for Great Britain as a whole,… Continue reading
