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UK lettings agents see surge from buy to let landlords ahead of April tax change
New tenants and rental housing supply fell in the UK in December but agents are seeing buy to let investment demand rise ahead of new tax changes. Overall the number of prospective tenants in the private rental sector dropped 15% last month with agents registering an average of 29 per branch, down from 34 in November. The data from the monthly report from the Association of Residential Letting Agents (ARLA) also shows that a quarter of agents saw an uplift in buy to let investments as landlords rush to get in before the April stamp duty change deadline. It also points out that letting agents expect to see decline of buy to let properties once the extra 3% stamp duty is charged from April. Supply also decreased marginally in December, with an average of 182 properties managed per branch, down from 189 in November. Those looking for rental properties in London in particular continue to struggle, with an average of just 108 properties managed per branch, some 43% less than the national average. Alongside supply and demand, the number of tenants seeing rent hikes also dropped in December with 18% of ARLA letting agents reporting a growth in rent, a drop of 5% compared to November and the lowest reported in 2015. ‘As we’d expect in December, the UK saw a lull in activity, with people putting off any moves until January. The supply of housing stock was down, and fewer tenants were on the hunt for new properties,’ said David Cox, ARLA managing director. ‘It’s reassuring to see the number of agents reporting rent increases is still on the decline, which is some encouraging news for tenants as we start 2016,’ he added. The stamp duty reforms to buy to let properties are causing concern amongst ARLA letting agents. Some 62% of agents predict that the changes from April will push up rent costs, and a further 65% predict the new reforms will push landlords out of the market after April, and decrease supply. However, the announcement is already having an effect on landlords as 24% said that they have seen uplift in interest from buyers looking to invest in buy to let properties before the new changes come into play in April. ‘Buy to let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant,’ Cox explained. ‘But subsequently, after April, we’re very likely to see the number of buy to let properties on the market begin to decrease, and this will most certainly have a detrimental effect on renters across the country,’ he added. Continue reading
US residential rents set to slowdown in 2016
Residential rent growth in the United States is expected to level off over the next 12 months, slowing to an annual rate of 1.1% by December 2016. The average at the end of 2016 is projected to be $1,396 compared to $1,381 in December 2015, according to the latest rent forecast from real estate data firm Zillow. The firm is forecasting a decrease in the rate of rental appreciation amid a rental affordability crisis that has renters in some markets spending almost half of their income on rent. Some of the fastest growing metros had double digit annual rental appreciation at the end of 2015 and Zillow expects rental appreciation to slow down most significantly in Nashville, San Francisco, Portland and Denver. Rents in San Francisco saw a 12.5% rise in 2015 and the Zillow forecast is for growth in San Francisco to be 5.9% in 2016, half as fast as in 2015. Even with the slowdown, rents will remain unaffordable in many of the major markets across the US, especially on the West Coast. Renters in San Francisco and Los Angeles can expect to spend 40% of their income on a rental payments. ‘Hot markets are still going to be hot in 2016, but rents won't rise as quickly as they have been. The slowdown in rental appreciation will provide some relief for renters who've been seeing their rents rise dramatically every single year for the past few years. However, the situation remains tough on the ground and rents are still rising and renters are struggling to keep up,’ said Zillow chief economist Dr. Svenja Gudell. She pointed out that the slowdown in rental appreciation indicates that supply of new multi-family homes is catching up to demand. Substantial new housing supply is becoming available in Atlanta, Denver, Portland, Seattle, and other markets. Continue reading
Rental prices in Scotland increased at end of 2015, latest index shows
There was a last minute end of year surge in Scottish rent growth with average residential rents up 0.4% in December, the highest monthly rise since June, the latest index report shows. This was uptick from a modest 0.1% rise the previous month and took the average monthly rent in Scotland to £548, just £1 below the summer peak reached in July, according to the data from lettings agent network Your Move. On an annual basis, rent growth is also starting to accelerate. Year on year rent rises had been steadily slowing since June when they stood at 3.1% but Scottish rents are now on average 2.2% higher than a year ago, up from 1.4% in the 12 months to November. The rise is due to a shortage of supply and an improvement in wages means that tenants can afford the rents, according to Brian Moran, lettings director at Your Move Scotland. ‘Outside of the summer months, the New Year often sees the second biggest cycle of new tenancies, and ushers in a busy time for the lettings market. It’s the period where people typically take up fresh career opportunities, and implement new life changes and this wave is already evident in the uptick of rents over November and December, as savvy tenants act quickly to beat the January rush,’ he explained. He pointed out that one major factor likely to affect the market in 2016 include the extra 3% property tax on buy to let properties from April. ‘It is likely to distort the natural flow of the market, with any further buy to let investment likely to be front loaded into the early months of the year. Once that deadline passes, and if investment into the private rented sector becomes more hesitant, tenants’ rents may become much more exposed to the problem of supply,’ added Moran. A breakdown of the figures show that in December, three of five regions saw month on month rent increases. The South saw the biggest with average rents rising 1.3% while Edinburgh and the Lothians saw a rise of 0.7% and Glasgow and the Clyde up by 0.5%. The Highlands and Islands saw the most significant monthly fall in rents in December with a fall of 0.9% while in the East of Scotland they fell by 0.3% month on month. On an annual basis, rents are higher across four of the five regions of Scotland. The biggest rise was in the Highlands and Islands with rents up 4.9%, Edinburgh and the Lothians they increased 4.8%, in Glasgow Clyde rents were up by 0.2% and in the East of Scotland rents dropped 0.7%. The report also shows that while there is typically a seasonal spike in arrears around the Christmas period, tenant arrears in Scotland dropped for the second month in a row in December, with the proportion of rent in arrears falling to 11.9% of… Continue reading
