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English landlords enjoying a booming rental market, says new research
Landlords in England are witnessing a booming rental market, with earnings from rental payments in excess of £32 billion per year or almost £2.7 billion per month, according to new research. London landlords collect the largest proportion of private rental income in England at £14 billion per year, more than the North East, East Midlands, West Midlands, Yorkshire and East Anglia combined, says the report from Direct Line for Business. In total, 44% of the entire country's rent is paid in London. Outside the capital, Leeds pays the greatest amount of any city, with annual private rent totalling £565 million, followed by Birmingham at £521 million and Manchester at £401 million. The research also reveals that London and the Home Counties dominate rental incomes, with the highest average rents in Inner London at £19,596 per year or £1,633 per month. Elmbridge in Surrey, has the highest rents outside London, worth £18,948 per year or £1,579 per month, followed by South Buckinghamshire where monthly rental costs are £1,530 in the private sector. Despite this dominance, landlords outside of these regions can also make a healthy rental income. Many areas outside the London commuter belt can command high rental costs, for example Bath and North Somerset, and the Cotswolds both command annual rental incomes of more than £11,000 per year. Outside of London, Bournemouth leads the line in terms of private rentals with 30% of households there privately rented. The isles of Scilly at 29.7% and Brighton and Hove at 29.6% follow in second and third place respectively. Across the country, Inner London has the highest proportion of private renters, at 30.7%. ‘Buy to let is becoming an increasingly attractive option for people as property prices continue to soar. Landlords and potential landlords looking to take advantage of this should also appreciate the risks involved,’ said Jazz Gakhal head of Direct Line for Business. ‘Bad payers and potential damage to property are but just a few of the costs that can lead to landlords paying out 25% of the revenues they receive in rental payments annually. Taking the necessary precautions such as letting through an agency and taking out landlord insurance can help to alleviate concerns and ease the rental process,’ he added. To help landlords keep track of charges paid, ongoing expenses and to assist in calculating the yield on their portfolio Direct Line for Business has launched a new landlord app, Mobile Landlord that enables landlords to manage up to five properties on the go through a single online, mobile portal. Mobile Landlord is free to download and available on both iOS and Android. Continue reading
Property prices in Ireland up 13.4% year on year
National residential property prices in Ireland increased by 13.4% in the year to July, according to the latest figures from the Office of National Statistics. This compares with an increase of 12.5% in June and an increase of 2.3% recorded in the 12 months to July 2013. On a month on month basis property prices increased by 2% in July compared with June. This compares with an increase of 2.9% recorded in June and an increase of 1.2% recorded in July of last year. In Dublin residential property prices grew by 2.7% in July and were 23.2% higher than a year ago. Dublin house prices rose by 2.5% in the month and were 23.1% higher compared to a year earlier while apartment prices were 26.3% higher when compared with the same month of 2013. However, it should be noted that the sub-indices for apartments are based on low volumes of observed transactions and consequently suffer from greater volatility than other series. The price of residential properties in the rest of Ireland rose by 1.3% in July compared with a decrease of 0.1% in July of last year. Prices were 4.9% higher than in July 2013. Despite the gains house prices in Dublin are still 41.2% lower than at their highest level in early 2007. Apartments in Dublin are 48.4% lower than they were in February 2007. Property prices in Dublin are 43% lower than at their highest level in February 2007 while in the rest of Ireland prices are 45.1% lower than their highest level in September 2007. Overall, the national index is 42.3% lower than its highest level in 2007. Continue reading
New mortgage regulations hitting buyers with dependents and low incomes the most
Borrowers in the UK with dependents and on low incomes seeking a mortgage to buy a home have been the hardest hit by the new MMR regulations introduced earlier this year, new research shows. Lenders identified low income borrowers (85%), borrowers with dependents (77%) and self-employed or single borrowers (both 38%) as the three types of borrowers who have felt the biggest impact in terms of what they can borrow. Brokers felt borrowers with dependents have been the most affected (72%), followed by low income borrowers (60%) and self-employed borrowers (47%), according to the research by the Intermediary Mortgage Lenders Association (IMLA). Almost two thirds of brokers, 63%, believe significantly more borrowers are being turned down as a result of interest rate stress tests, but just 15% of lenders agree. The difference is likely to reflect the fact that while lenders are reporting on trends within their individual businesses, brokers working with multiple lenders have a view across the wider market. It may also be the case that brokers are advising some borrowers against submitting an application to lenders, based on a discussion about their finances and needs. However, both parties do agree that stress tests have had more of a direct impact on the amount consumers can borrow, compared with other changes to the MMR approval process. Some 79% of brokers believe interest rate stress tests have reduced the amount that can be borrowed, with over half of lenders, 55%, in agreement. More than one in three brokers, 35%, feel that stress tests have reduced loan sizes by more than 10%. Fewer brokers believe that more detailed income/expenditure assessments (58%) or evidencing requirements (42%) have had a direct impact on what consumers can borrow, although these numbers are still significant. Lenders report less of an effect with 45% believing income/expenditure assessments have reduced loan sizes, but fewer than 10% feeling evidencing requirements have had any effect. The majority of lenders, 71% and 58% of brokers believe that MMR will have a positive effect on consumers by improving the quality of advice they receive. Some 81% of lenders also believe the changes will improve consumers’ awareness of mortgage affordability and their related expenditure, with 61% of brokers agreeing. However, there are concerns over the implications on products, with 71% of brokers believing MMR will have a negative impact on sourcing mortgages. Reflecting this, 54% of lenders feel it will negatively impact product innovation and limit their capacity to develop new offers. ‘For many lenders, the MMR switchover has been more of a gradual shift than an overnight change. Even so, these are still early days and with processes being fine-tuned the real test will come beyond the six month milestone when we see if these effects have eased off or endured,’ said Peter Williams, IMLA executive director. ‘The fact that interest rate stress tests are having the biggest impact on borrowers shows they are doing their job by identifying those who would struggle to manage their repayments if rates rise…. Continue reading
