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Private rents up an average of 1.7% in 2014 in Britain, official data shows
Private rental prices paid by tenants in Britain rose by 1.7% in the 12 months to December 2014, according to official figures from the Office of National Statistics. A breakdown of the figures show that private rental prices increased by 1.8% in England, 2% in Scotland and 0.2% in Wales in the 12 months to December 2014. Rental prices increased in all the English regions over the year to December 2014, with rental prices increasing the most in London at 2.4%, followed by the South East at 2.1%. A spokesman for the ONS pointed out that improved methodology means that the annual growth rate has been revised upwards considerably. ‘Improved methodology has been implemented leading to revisions to the full IPHRP time series. The latest data uses the new methodology,’ he explained. David Whittaker, managing director of Mortgages for Business, said it is no surprise as those in the industry have seen rents rising much faster than the ONS previously estimated. He pointed out that even a plain vanilla buy to let property now commands an average yield of 6.3%, according to our the firm’s latest Complex Buy to Let Index, while a larger, multi-unit freehold block can provide a landlord with a 9.3% rental yield. ‘But rents still aren’t rising much faster than inflation. We’re talking an average annual rent rise of 2.1% over the last couple of years instead of 1.2%. Affordability of renting, like the affordability of most things in an unprecedented economic slump, has been squeezed. But the culprit hasn’t been excessive rent rises,’ he explained. ‘That’s thanks to the vast investment that landlords are pouring into this industry, supported by a healthy buy to let mortgage market. More homes to let are keeping rents from rising at an unhealthy pace,’ he added. He also pointed out that the latest figures from the Bank of England showing approved mortgage increased in December 2014 for the first time since June, only goes to show the importance of investing in the private rented sector. ‘The mortgage market has continued on a mainly stable trajectory, going in the right direction but not taking off. Private renting will continue to dominate the housing market, and as an industry it needs all the investment and financial support it can get,’ he concluded. Continue reading
UK year on year house price growth down in first few weeks of 2015
Annual house price growth in the UK continued to moderate at the start of 2015 with the latest housing index showing it slowed to 6.8% in January compared to 7.2% in December 2014. However, the data from the Nationwide Building Society also shows that month on month prices increased by 0.3%, taking the average price to £188,446. ‘After taking account of seasonal factors, UK house prices are currently 2.4% above their pre-crisis peak. The further moderation in the pace of price growth is unsurprising, given the slowdown in housing market activity in recent months,’ said Robert Gardner, Nationwide's chief economist. He pointed out that the number of mortgages approved for house purchase has been around 20% below the level prevailing at the start of 2014 and surveyors continue to report subdued levels of new buyer enquiries. However, he added that the reasons for the slowdown in activity remain unclear. ‘Unemployment has continued to decline and wage growth has started to outstrip increases in the cost of living for the first time since the financial crisis. Surveys suggest that consumer confidence remains elevated, a view corroborated by healthy gains in retail sales over recent months,’ explained Gardner. ‘Although house price growth continues to outpace income growth by a significant margin, affordability does not appear stretched at a national level. The cost of servicing a typical mortgage remains close to the long run average as a share of take home pay, in part thanks to the ultra-low level of mortgage rates,’ he added. Gardner also explained that the supply side developments are crucial in determining the pace of price growth. ‘Surveyors continue to report a dearth of new homes coming on to the market, which may help to explain why house price growth has remained fairly robust, despite a more noticeable decline in housing demand since the summer,’ he said. ‘If the economic backdrop continues to improve as we and most forecasters expect, activity in the housing market is likely to regain momentum in the months ahead,’ he added. He also said that it is encouraging that the number of new homes built in England was up 8% in the year to the third quarter of 2014. ‘However, this is still 34% below pre-crisis levels and little over half the expected rate of household formation in the years ahead,’ he concluded. Continue reading
Demand sees average rents in UK go up, especially at end of 2014
A slowdown in the sales market in the UK during the last six months of 2014 saw a demand for rental accommodation grow with average rents up 1.8% during the year. But this headline figure hides what has actually been happening towards end of the year as there was a 4.2% rise in average rents for new lettings, according to research by Countrywide Residential Lettings. There were 7% more would be tenants registering during the second half of the year than they did during the traditionally busier first half. The firm says that movement of households between the sale and rental markets has had an impact on shaping growing demand in the second half of the year. Indeed, the data shows that 14% of households that moved in England last year, moved between the owner occupation and the private rental sector, broadly in equal numbers. The increase in demand from tenants for rental properties is reflected in the growth in average rents. For newly let properties, the rate of annual growth ran at an average of 3.7% during the first six months of 2014, rising to 4.2% during the final six months. It was a similar story for sitting tenants for whom rents increased from 1.7% to 1.8% over the same period. 26% of tenants who chose to renew their contract at the end of 2014 saw their rent rise 2.9% over the year. Alongside the relationship with the sales market, the nature of the lettings market means it is highly seasonal. Much activity is concentrated within a few key times of the year. In city centre markets, the summer months tend to see particularly high levels of activity, the time when students seek property for the forthcoming year. In the heavily dominated student markets of Birmingham, Bath, Cambridge, Oxford and Liverpool, over a third of lets are made during just two months in the summer. For many investor landlords, this represents the best time to market their property to let. Outside of the city centre, where three times the proportion of homes are let to families with children, activity in the rental market is closely correlated to school terms. Given the longer timescales involved, properties have to be secured well in advance of the September term. April, May and June represent the three months when 35% of lets are made in the year. Conversely, half terms and the first few weeks of September see activity levels decrease, with the number of registering tenants, viewings and agreed lets all running at two thirds of the average over the year. ‘The sales and rental sector are closely linked with thousands of households moving between the two tenures every year. In the second half of 2014, we saw a decrease in the number of tenants actively looking to buy. This has kept demand for rental accommodation at a high, allowing more landlords to stand firm in the face of attempted negotiation… Continue reading
