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Residential rents falling across much of Scotland, latest index shows
Scottish rents increased just 0.6% year on year and were down 0.4% month on month in April, marking the smallest annual rise seen since the start of 2013, the latest index shows. Across Scotland the average rent now stands at £542, but Edinburgh and the Lothians shun the wider slowdown with a record 10.5% jump in rents since last year. The data from the Your Move index also shows that tenant arrears are escalating as the level of late rent climbed for the second consecutive month, up to 11.6%. The annual rise represents a significant downturn in rates of year on year growth from 1.1% recorded in March, and 2.1% in February and average rents are at their lowest since April 2015. Brian Moran, lettings director at Your Move Scotland, pointed out that overall rents haven’t risen at such a leisurely place for three years but the market is seeing many price fluctuations and also isn’t uniform across the country. ‘The lettings market is always at the mercy of local supply and demand, and in Edinburgh and the surrounding areas we’re seeing extraordinarily fast rent rises, as tenant competition shines brightest around the glow of the jobs market. Supply and demand need to strike a lasting equilibrium to prevent rent growth taking off and leaving tenants by the wayside and that’s a tall order in today’s regulatory environment,’ he explained. He also pointed out that landlords are up against a considerable number of hurdles, including a higher rate of stamp duty on property purchases, reductions in tax relief, and the Private Tenancies Bill. ‘While levied at landlords, these measures could soon hurt thousands of tenants too if buy to let investment retreats as a result and there are less houses and flats to rent,’ he added. On a monthly basis, rents were cheaper in all but one region of Scotland in April. The Highlands and Islands had the fastest drop in average rents in April, falling 1.7% on March, reducing typical rents in the region to £537 per month, the lowest level seen since December 2014. Rents in Glasgow and Clyde fell on a monthly basis for the fourth consecutive month, down by 1% in April to £538 while in the East of Scotland rents were 0.6% lower in April than in March, while the South experienced the smallest month on month reduction, down by 0.1%. Edinburgh and the Lothians is the only region to experience an increase in rents since March, up a solid 0.8% month on month following on from rises of 0.2% in March and 0.3% in February. In the longer term, rents also fell across the majority of Scotland year on year in April. Of the three regions to see rents decrease on an annual basis, Glasgow and the Clyde had the steepest drop with average rents 3.9% lower than in April 2015. Rents… Continue reading
Well over half of UK home buyers rent before they can buy a property
Some 64% of aspiring home owners in the UK rent a property before they pick up the keys to their very own home, new research has found. Saving a deposit is one of the biggest financial hurdles facing potential first time buyers and the survey found that renters are less likely to benefit from help from family, with only 41% receiving any financial assistance, compared to 62% of those who are living with their parents or family members. Building up the necessary deposit is also challenging for those who are paying rent as the research revealed an average monthly rent in the UK of £681.70, according to the research from Clydesdale and Yorkshire Banks. Of those who live with their parents before buying their own property some 21% don’t pay rent with a third of these potential home buyers putting this money towards their deposit instead. However 52% do pay a fixed amount every month to their family landlords while 22% contribute towards food and bills and others simply pay what they can afford on a monthly basis. The research also found that those in rented accommodation find getting on the property ladder more stressful as 28% admit to putting themselves under pressure compared to just 16% of those who are still living with their parents and are in less of a rush to flee the nest. ‘Buying a first home is one of life’s most significant financial milestones and the banks can work with the individual needs and circumstances of potential first time buyers to help make their dreams of becoming a homeowner a reality,’ said Steve Fletcher, head of customer banking networks at Clydesdale and Yorkshire Banks. Meanwhile, separate research commissioned by Royal London shows that almost five million renters in the UK have no plans in place to cover their rent if they became too ill to earn for three months or more, even though recent cuts to housing benefits could leave them at risk. This is despite the fact that some 27% of renters in paid employment said they knew someone who had struggled in this situation and the survey found 34% admit they don’t know how long they could survive. The research also found that 60% of those who had some idea said that they could only survive on their savings for three months or less. Some 53% said their first move would be to apply for state benefits, some 47% would reduce their household expenses and 39% start using their savings. Only 7% of renters in paid employment have ever consulted a financial adviser. The most common place people turn to for financial advice is their family and friends. ‘Renters who assume that housing benefit will be there when they need it could find the reality is very different. A series of cuts to housing benefit means that more people would not get their rent paid in full if their income fell unexpectedly,’ said… Continue reading
Mortgage lending in UK fell in April, but no surprise due to March buy let boost
Gross mortgage lending in the UK reached £18.5 billion in April, some 29% lower than March’s lending total of £26.2 billion, but 16% higher than the £16 billion lent in April last year. CML economist Mohammad Jamei pointed out that a fall was expected due to a rush in buy to let lending in March as landlords rushed through sales to beat the new 3% surcharge on additional homes that was introduced on 01 April. ‘As we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year,’ he explained. ‘This is likely to mean that over the next few months buy to let takes a back seat as lending is driven by first time buyers, movers and remortgage customers. The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment,’ he pointed out. ‘But it is possible that the uncertainty around the upcoming European Union referendum in June will weigh on activity in the upcoming months,’ he added. According to David Brown, chief executive officer of Marsh & Parsons, April lending was never going to live up to the March boost which was characterised by massively increased borrowing to landlords and second home owners. ‘But while we’ve seen a bit of a monthly comedown since then, the annual fundamentals are indicative of strength in the mortgage market. Widely expected to be an underwhelming month, April has still set an impressive benchmark for this time of the year, with lending levels harking back to the pre-recession era,’ he said. ‘Buy to let investors are just one type of buyer after all, and borrowing isn’t going to ground to a halt while they have a breather. The stamp duty changes didn’t affect the plans and intentions of hordes of other first time buyers and home movers, and in these areas buyer demand is still bursting at the seams,’ he added. David Whittaker, managing director of Mortgages for Business, pointed out that underneath the month on month lending patterns, there is a strong and steady current of buy to let lending critical to meet growing public demand for private rented accommodation. ‘Underlying annual growth in April shows a more sustainable path aside from any short term fluctuations and the need for buy to let mortgages to support the role of landlords,’ he added. The extremes of March make it futile to try to extract any meaningful insight from April's numbers, according to John Eastgate, sales and marketing director of OneSavings Bank. More importantly, market feedback suggests that normality has returned at enquiry level, although it will be the third quarter before we see this in new lending,’ he said. ‘A strong undercurrent of demand and a growing UK population means… Continue reading
