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Average rent for newly let properties in England reach new record level
The average rent for a newly let property in England has increased by 3.8% in the last 12 months to £946 per calendar month, according to the latest index figures. In August the month on month average increase was 2.5% the data from one of the UK’s largest letting agents, Countrywide, shows and rent levels have reached their highest level since the index began. Annual growth in rent for new let properties was recorded in all regions except central London. The South West saw an increase of 7% and the Midlands and increase of 6.3%, the highest growth year on year. Overall some 45% of tenants renewing their tenancies had rent increases in August, the highest since the index began and in London and the South East more than half of tenants renewing faced higher rents, according to the analysis. The report explains that rents have been growing throughout 2015, driven by a lack of homes available to rent and high levels of tenant demand. The total number of homes advertised to let was down 8% in August compared to last year, whereas the number of registered applicants was up 4%. With fewer options available for tenants looking to move, those choosing to renew their tenancy are more likely to see their rent increase. However, they are still better off compared to those moving home. The average increase in rent of 2.5% for a renewing tenancy is still less than the annual increase in rent for newly let homes, the report points out. It also explained that rental growth remains well above CPI inflation, which slipped back to zero this month. The South West and Midlands saw rents rise faster than anywhere else in the country with growth of 7% and 6.3% respectively. Growth in newly let rents was seen in all regions except in Central London where rents decreased 1.4% year on year. Greater London, although still growing, has seen its rate of growth in rent halve since the start of the year. The South West has seen the highest rental growth in the UK since the start of the year. ‘Falling numbers of homes available to rent and increasing demand from tenants have been the defining features of rental market so far in 2015. Competition for rented homes has intensified and led to accelerating rent growth,’ said Johnny Morris, research director at Countrywide. Indeed, there are now nine tenants are registered for every home available to rent, up from 7.5 in August last year. ‘With pressure on rents and increased competition for homes on the market, the proportion of renewing tenancies seeing an increase in rent has grown. Faced with the choice of staying put or moving in a market with more competition and increasing rents, more tenants are choosing to accept a smaller increase in rent to extend their existing tenancy,’ Morris explained. ‘Rental price growth in the South of England, outside of London is being fuelled by an… Continue reading
RICS backs idea of older home owners downsizing to boost supply crisis
The Royal Institution of Chartered Surveyors has waded into the debate over housing supply in the UK, saying that measures such as downsizing could help alleviate the current problems. Last week the head of mortgages at the Financial Conduct Authority was criticised for saying that older people should move out of family homes to make way for younger families but RICS appears to also back the idea. In its latest policy review RICS suggest it is one measure that could help the current shortage of supply in the housing market and that more downsizing could release almost three million homes. It also suggests other measures such as the expansion of affordable ownership via planning controls insisting developers offer a percentage of new homes for affordable rent, regulations to oblige second home owners to release their properties for rental, and the creation of Self Invested Personal Pensions which would allow investors to put their money into Build To Let schemes. But it adds that downsizing is considered perhaps the most effective way of improving supply in the market. ‘Britain’s older home owners are understandably reluctant to move out of much loved, but often under occupied family homes,’ said Jeremy Blackburn, head of policy at RICS. ‘Clearly, it’s an emotive issue and one that needs to be treated with sensitivity, but we would like to see central and local government provide older people with the information, practical and financial support they need to downsize if that is their choice,’ he added. He explained that this might include offering a fund to support with moving costs and pointed out that Bristol City council is already piloting a scheme along these lines, and another suggestion is a stamp duty discount for retired people who are downsizing. RICS believes that the most consistent feature of the housing market over the last 18 months has been a shortage of homes on sale with stock levels on surveyors’ books dropping to lows not seen for at least three decades. ‘Almost a third of over 55s have considered downsizing in the last five years yet we know only seven per cent actually did. If we are to get to grips with this country’s housing crisis, we need to look at supply-led measures across government and the wider industry in order to get the market moving,’ Blackburn added. Continue reading
UK private rented market in a healthy state in third quarter of 2015, says new report
Landlords in the UK are preferring high demand property such as terraced houses and flats with the overall private rented sector in a health condition, according to a new trends report. On key indicators such as yields, void periods and tenant demand, the overall picture is one of steady growth, says the latest Private Rented Sector report from Paragon Mortgages covering the third quarter of 2015. The survey reveals that average yields have grown over the last three months from 6.3% to 6.4% and this growth is in line with steady growth observed throughout 2015. When asked about expected growth over the next 12 months, landlords expressed confidence that yields will remain stable and maintain current levels. On the supply side, void periods, the average period of time PRS properties spend unoccupied per annum, remain at historically low levels of just below 2.6 weeks. In conjunction with this, tenant demand is also healthy with more than half of landlords describing demand as ‘stable’ and more than 40% saying that demand is either ‘growing’ or ‘booming’. The prospects for expected demand are also positive, with more than half of landlords expecting demand to increase over the next 12 months, compared to 42% who expect it to remain stable. The survey also shows an increase in young families with children moving into the PRS, and a corresponding decrease in young couples and professionals. Despite this, demand for longer-term rental agreements remains relatively low. ‘The data is indicative of a market growing steadily and sustainably over the long term. With low void periods and steady tenant demand, which is expected to continue growing, yields remain on a gradual upward trend and landlords are confident they will continue to do so,’ said John Heron, the firm’s director of mortgages. ‘The data also reveals the changing demographic of those choosing to live in the PRS. This is reflected in the buying intentions of landlords which seem to be shifting slightly away from investing in multi-occupancy blocks, towards terraced housing, often more suited to young families,’ he added. The research also shows that average void periods, periods of time during which a PRS property is unoccupied, have dipped below 2.6 weeks per annum for the first time since 2002, down from a high of 3.4 weeks during 2010. Requests for longer term tenancies of two years or more remain low with 58% of respondents saying less than one in ten tenants ask for a longer tenancy. Overall some 43% of landlords surveyed indicated they are looking to invest in terraced houses, up from 38% in the previous quarter while the number of landlords seeking semi-detached properties has fallen from 38% to 27%. Continue reading
