Tag Archives: crisis
UK private rented sector stable with voids at historic lows
The private rented sector in the UK is a stable market where yields have seen modest improvements and void periods, the average amount of time PRS properties spend unoccupied, are at historic lows. More than half of those landlords surveyed in the latest trends data report from Paragon Mortgages report steady tenant demand over the quarter, while 40% said tenant demand was either ‘growing’ or ‘booming’. The percentage of respondents expecting tenant demand to remain stable over the coming 12 months, or grow, has also increased from 85% to 89%. The latest data also shows that average yields have grown over the last three months from 6.3% to 6.4%. This improvement is in line with steady growth seen throughout 2015. In another key indicator of confidence that the PRS market will remain stable, landlords indicated that they expect yields to remain stable and maintain current levels over the coming 12 months. On the direct question of whether or not landlords intend to purchase properties over the coming 12 months, the figures again show a steady market, and a slight increase in optimism. Those intending to buy are up from 16.8% to 18.4%. Reflecting the overall stability of the market, however, landlords on average expect the number of PRS properties in their portfolio to be the same as they are currently in 12 months’ time. Void periods remain historically low at just below 2.6 weeks. This could be a reflection of the changing demographics of those choosing to live in the PRS. The most recent data shows an increase in the numbers of families with children moving into the PRS, and a corresponding decrease in young couples without children and single professionals. But despite the changing makeup of the tenant population, demand for longer term rental agreements remains relatively low, the research shows. These demographic changes also appear to be reflected in the ongoing buying intentions of landlords who are investing more in traditional family housing. On the question of how landlords view their portfolios compared with three months ago, levels have remained stable throughout 2015 and continue to do so in the latest data. Those feeling a little more optimistic are up by 1.6% and 58% report that optimism levels are unchanged since the last quarter. ‘This quarter’s results present a picture of a PRS sector that is neither booming nor contracting, but rather growing steadily,’ said John Heron, managing director of Paragon Mortgages. ‘There is room for improvement and it will be interesting to see, in future reports, if macroeconomic concerns about the stock market and the Eurozone, and changes in tax and regulation such as those recently announced by the Chancellor, have an impact on sentiment,’ he explained. ‘For the time being however, landlords are seeing steady growth and they expect to see this continue as demand for quality PRS accommodation remains buoyant,’ he added. Continue reading
Landlord sentiment survey reveals impact of tax changes for buy to let
The UK Government’s reduction of landlord buy to let tax relief looks set to have an impact with landlords in the private rented sector looking to sell up, according to new research. The latest sentiment survey indicates that the tax changes, announced as part of the Summer Budget, are proving a major concern for buy to let investors. Currently, 9% of landlords think it’s a good time to sell up, with the tax reforms influencing their decision more than any other factor. Indeed, according to the survey from lettings agents Your Move and Reeds Rains, many fear letting out a property will become far less profitable when the reforms start to come into force in April 2017, and they are now considering leaving the sector as a result. This loss of enthusiasm is even dampening the optimism of the 31% of landlords who think that now is a good time to buy rental properties and 44% believe investing in buy to let property is more complicated than it was six months ago. The survey report says that this is due to more rigorous regulation, also introduced as part of the Budget, which includes requirements for landlords to check their tenants’ immigrations status before they let their properties. Some 19% of landlords are daunted by this task, and now feel unequipped to let out their houses without the support of letting agents to manage their investment. The survey also shows that 24% of landlords believe the legislation on letting out properties has become more confusing, with 11% feeling that they don’t fully understand the current regulations. These changes are denting landlord confidence, and general disenchantment with the letting industry was an important factor for 23% of landlords who think now is a good time to sell. ‘Landlords could be forgiven for feeling a little deflated at the moment and its worrying to see this may motivate many to reconsider their investment. The Government’s tax changes appear to be making investing in buy to let less attractive because of the seemingly smaller profits margins on offer in the future,’ said Adrian Gill, director of Your Move and Reeds Rains. He pointed out that if a tenth of landlords do decide to leave the industry, this would seriously shrink the number of properties available for tenants. ‘At a time when tenant demand is only rising, shorter supply will only translate into increased rents. This may mean landlords are underestimating the likely pace of future rent rises,’ he explained. ‘The government needs to cut the red tape involved in providing homes for renters if they hope to maintain a healthy supply of rental properties. With the Bank of England keeping a wary eye on the buy to let market, further regulatory interference may only make landlords’ and tenants’ lives harder. We need landlords to stay in the market and invest further in the sector,… Continue reading
World Heritage status boosts property values
Living near a world heritage site in the UK might mean putting up with a lot of tourists but it certainly helps property prices with new research showing homes in these locations are worth 27% more. Whereas the average UK home is valued at £284,127, properties in or near locations with World Heritage Status awarded by UNESCO status can carry a heftier price tag of £77,993, according to research from property portal Zoopla. The Orkney Islands are the UK’s most affordable World Heritage Site to buy a property near while homes near the Palace of Westminster and Westminster Abbey are the most expensive. Homes close to the Neolithic monuments in Orkney currently cost an average of £130,169, coming in at 178% less than the average house price near to a World Heritage Site in the UK at £362,120. UNESCO sites in Bradford and Liverpool are the least expensive urban sites. Saltaire, an industrial village from the second half of the 19th century within the city of Bradford is the most affordable urban site with a typical property here costing £155,868. Liverpool’s Maritime Mercantile City, includes the Albert Docks and the largest collection of Grade I-listed buildings anywhere in the UK, has a typical property price of £167,771. Zoopla analysis found the longer an area has enjoyed World Heritage Status, the higher the property values are, as the area reaps the economic benefits. The first 10 UK locations to be granted World Heritage Status between 1986 and 1987, including Bath, Stonehenge and Blenheim Palace, have an average value of £424,873, compared to just £274,611 for the locations chosen since 2000. In July of this year the Forth Bridge in Scotland became the UK’s latest World Heritage Site. Located between Edinburgh and Dunfermline, average homes in the area currently cost £202,011. The traditional World Heritage Sites in London are the most expensive to live near. Properties in the proximity of the Palace of Westminster and Westminster Abbey are comfortably the priciest heritage location in the country, with a typical value of £1,715,292. ‘Bradford and Liverpool offer fantastic opportunities for potential buyers to live in cities which have shaped world culture,’ said Lawrence Hall of Zoopla . ‘Britain’s World Heritage Sites have contributed massively to our history and our research shows that living near to one can add significantly to a property’s value. Looking at the most recent site to gain World Heritage Status, home owners near the Forth Bridge could expect to see property values increase in future, as the full benefits the award brings to the area begin to be felt,’ he added. Continue reading
