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Confidence among UK private sector landlords remains subdued
Confidence remains low among UK landlords as a result of recent government interventions in the buy to let market but buyers are slowly returning to the market, says a new survey. Overall, landlords report improved buying intentions, growth in tenant demand and yields and confidence is stable but remains at subdued levels, according to the research by BDRC Continental on behalf of Paragon Mortgages. Following an increase in the rate of stamp duty payable on buy to let purchases, and with a staged reduction in income tax relief available on rental income due start next year, landlord confidence remained low in the first quarter of 2016. Asked about expected business in the next three months, just 41% of landlords rated their prospects as being either ‘good’ or ‘very good’. This is down from 65% during the same period last year, prior to the government’s clampdown on buy to let. Indicating that falling levels of confidence may have stabilised however, the figure is just 2% down on the fourth quarter of 2015. Reflecting this, the survey also saw landlords’ property purchase intentions edge above selling intentions, reversing the situation seen in the final quarter of 2015 when more landlords were looking to sell property than were looking to buy. Some 19% of landlords indicated that they intend to purchase a property in the coming year, up from 17% in the fourth quarter of 2015 while 16% of landlords indicated that they intend to sell a property, down from 19% in the previous quarter. Driving this trend was an increase in tenant demand, with 39% of landlords reporting demand as increasing either slightly or significantly, up from 34% in the fourth quarter of 2015. Reflecting this increase, landlords reporting tenant demand as being stable declined from 40% to 36%. The research also shows that yields in the first quarter of2016 also grew slightly on the previous quarter, averaging 5.7%. Despite negativity persisting around business expectations over the short term, rental property as an asset class is still viewed favourably by landlords. Some 38% of landlords polled believe investing in the PRS to be ‘much better’ than other investment options such as stocks and shares. A further 33% believe investing in the PRS to be a ‘little better’ than other investments and just 10% believe an investment in the PRS is worse than other investments. ‘Increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising,’ said John Heron, director of mortgages at Paragon. ‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase… Continue reading
Families pay almost £44,000 extra for home in good primary school area
Families in the UK are having to pay a price premium of almost £44,000 to buy a property near the best performing primary schools, new research has found. Many parents want their offspring to get the best start in life and they are prepared to move home to make sure they are in the catchment area for those first crucial years at school. According to the research by online estate agents HouseSimple, the average premium paid is £43,773 to be in the catchment areas for the top 50 state funded primary schools across England that received the highest rating by Ofsted in its latest report. The research revealed that average property prices in streets that are close to these best schools are 18% higher than average property prices for the area postcode. Of the primary schools commanding the biggest premiums to live near to, more than half are in the South of England. The schools adding the biggest premium to local property prices are St Luke’s Primary School in Brighton and Hove and Crowland Primary School in Haringey, adding 45% or £151,121 and 44% or £193,816 respectively. But according to HouseSimple figures, there are some areas offering better value to live close to outstanding schools. Properties surrounding The Mayflower Primary School in Essex, Henry Cavendish Primary School in Lambeth and Highfields Primary School in Leicester have recently sold without buyers having to pay a hefty premium. ‘Many parents will go to great lengths to get their children a place at the best local state funded primary school. But there is a price to pay for the best free schooling,’ said the firm’s chief executive officer Alex Gosling. ‘Private education is out of reach for many families, which is why there is high demand for places at top rated state primary schools. But there aren’t enough places to go around, which has led property prices in the catchment areas of popular primary schools to rocket in recent years,’ he explained. ‘Attending an outstanding state school can offer an education as good as, if not better, than paying to go private, but with property prices close to the best state schools commanding average premiums of 18%, paying the price to live close by certainly doesn’t equate to a free education,’ he added. Continue reading
Rental supply in the UK continues to fall, latest analysis report shows
The supply of residential rental properties in the UK has continued to fall but this comes at a time when rental costs are expected to rise. Overall the number of rental properties managed per lettings agents branch increased by 8% in April to the highest level this year but is down from April 2015, according to the data from the Association of Residential Lettings Agents (ARLA). The jump from March this year follows a rush from buy to let landlords pushing to complete sales ahead of the April stamp duty increase deadline, the ARLA report says. But supply still stands at 5% lower than in April last year and continues to fall year on year. In April 2015, the average number of properties managed per branch was 193, this year it stands at 183. Demand is also falling year on year: In April, the number of prospective tenants per branch was 34, down from 33 the previous month and down from 36 April of last year. Meanwhile, rent costs expected to rise following buy to let stamp duty rise. Some 66% of ARLA agents predicted that the stamp duty reforms will push rent costs up for tenants down the line. ARLA agents also reported an increase in the number of landlords selling their buy to let properties. An average of four, up from three in March, are pulling out of the market, showing an increase for the first time in a year. ‘It’s likely that this increase in supply is only temporary. At the end of April we saw a flurry of landlords seizing the last few moments before the stamp duty rise to complete sales, triggering an increase in the supply of empty rental homes to be filled this month,’ said David Cox, ARLA managing director. ‘However, we expect that fewer investors will be taking on buy to let properties over the next six months, following the price hikes, meaning that once these properties are filled we’ll see supply nose dive once again,’ he added. Continue reading
