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Rents in England and Wales close to record high, latest index shows
Rents in England and Wales are now £768 per month with average annual rent rises growing at their fastest pace in two years, up 3.7% over the last 12 months. The last time rents rose so quickly was in the year to April 2013, when this previously stood at 3.9% per annum, according to the latest buy to let index from Your Move and Reeds Rains. Between February and March rents have risen by 0.3% on a monthly basis and are now just £2 away from the all-time record high of £770 per month, set in October 2014, the data also shows. ‘Since 2010 the private rented sector has absorbed over a million extra households. With social housing in decline, alongside a parallel decay in the number of people owning their own home with a mortgage, private renting has stood in to fill the gap,’ said Adrian Gill, director of estate agents Reeds Rains and Your Move. ‘With only small real terms rent rises, this has generally been a success and tenants are now half as likely to fall behind on rent as at the peak of the financial crisis. However, this sector is carrying the weight of the housing crisis and that will mean faster rent rises in future if supply doesn’t keep up,’ he pointed out. ‘Without more homes every year to match a rising population, housing will inevitably become more expensive. And with one in five households now renting privately, this section of the population won’t be an exception to those fundamentals. Britain needs more homes, and over the long term, investment by landlords will only provide places to live as quickly as those homes are given planning permission and completed,’ he added. A breakdown of the figures shows that rents in the East of England stand out with 12.0% annual growth. The average property to let in the East of England region is now considerably more expensive than the South East. London is second in terms of annual rent rises with rents in the capital 5% higher than in March 2014, while Yorkshire and the Humber has seen rent rises of 3.3% over the last 12 months. At the other end of the spectrum, rents in the East Midlands are now 0.2% lower than a year ago, while the South West has seen no annual change. Most recently, rents have also risen the fastest month on month in the East of England, up 2.5% just since February 2015. However on a monthly basis the North West is not far behind, with rents up 2.3% over the last month, while this is followed by Yorkshire and the Humber with rent rises of 0.4% since February. By contrast, rents in the East Midlands have dropped by 0.6% between February and March, while the North East and Wales both saw rents 0.5% lower in… Continue reading
Election uncertainty and higher taxes affecting prime London property market
Higher taxes and election uncertainty have put the brakes on prime London house prices which fell by 0.5% in the first quarter of 2015, new research shows. This follows an average 2.6% downward price adjustment in the final quarter of 2014 that was triggered by the stamp duty reform announced in December’s Autumn Statement, according to the analysis by real estate firm Savills. It means that the 12 month rolling average for house price growth in the prime London market has now slipped into negative territory. ‘As we forecast in November, uncertainty regarding the general election and the potential for further taxation of high value property have contributed to a subdued market in the first part of 2015,’ the report explains. ‘The prime central London housing markets, that have been most affected by increased stamp duty charges, are looking fully taxed. This has meant sellers are typically having to factor in price adjustments equivalent to the stamp duty increase. Consequently, in central London values are down 4.3% year on year,’ it adds. The study shows that the markets of prime south west London have been similarly, but less significantly, affected. Buyers have become increasingly aware of the high cost of moving, which has tempered demand in the higher value parts of that market. By contrast, the markets of Islington, Wapping and Canary Wharf continue to show positive annual growth, despite a general sentiment-led easing in values in the past six months. ‘In part, this reflects the fact that lower tiers of the prime market have remained the most robust, with the market below £1 million generally benefiting from the stamp duty changes and unaffected by the political focus on taxation,’ Savills says. ‘Interestingly, the softening in the London markets has corresponded with a pick-up in the number of Londoners circling the country market. Prices of homes below the £2 million threshold in the prime regional markets beyond London continue to show year-on-year price growth, and rose by 1.1% in the first quarter of the year. However, market activity beyond London is still partly constrained by pre-election caution,’ it points out. ‘While the fundamentals of demand and supply remain sound, the short term outlook for the prime property market is heavily dependent on the extent to which the election brings political certainty and whether the sector is subject to further taxation. Certainty will, at least, allow buyers and sellers alike to take account of the impact of any fiscal change, as the all-important autumn market approaches,’ it adds. Savills is forecasting that prices in the prime London market will rise by 22.7% over the five years to the end of 2019 assuming no further taxation of high value property. In this case there would be a relatively swift bounce back in values as was seen in 1998 and 2002, when price falls in central London were contained to less than 5% and recovered lost ground very quickly thereafter. In the event of a mansion tax, Savills… Continue reading
UK mortgage brokers report impact of rules change a year ago
A quarter of mortgage brokers in the UK say they have experienced a decrease in volumes since new mortgage rules came into being almost a year ago, a new survey shows. The self-employed and retirees are the most difficult to find a mortgage for and mortgage intermediaries are very much divided on the impact of the Mortgage Market Review (MMR) on business volumes. The research by Paragon Mortgages that covers the first quarter of sought to establish the impact of MMR in terms of intermediaries’ business levels as we reach the one year anniversary of the changes coming into force. Of the 200 intermediaries who took part in the survey, 43% said that in their view there had been no change to their business volumes as a result of MMR and 24% said that business had increased. However, some 25% of those surveyed said they had experienced a decrease and only 3% said there has been no change in business. The majority of intermediaries who said they had experienced a decrease reported this had been up to 30% and only 14% said the decrease in business had been any higher. Looking ahead, 15% of intermediaries said they did not know what the long term impacts of the new regulations would be. Intermediaries were also asked which of their customers are now the most difficult to find a mortgage for. Top of the list were the self-employed at 75%, followed by retired customers at 52% and 51% said it was those customers with complex incomes. ‘The research shows is there is still some uncertainty in the market about the long term impact the MMR changes will have on business volumes. This isn’t unexpected, as with any significant change in regulation there will always be a period of adjustment, but it is important the industry monitors this carefully,’ said John Heron, director of Paragon Mortgages. ‘Looking at the feedback from intermediaries on the underserved areas of the market also provides a valuable insight into what lenders could be doing better. We need to recognise that there is no such thing as the average mortgage customer anymore, people have a greater variety of circumstances and we need to be more innovative in order to meet increasingly varied demand from customers,’ he added. Continue reading
