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Number of tenants seriously behind with rent reaches two year high in UK
The number of tenants seriously behind on rent has risen to the highest level in the UK for two years in the second quarter of 2015, according to the latest tracker report. There are now 74,000 tenants owing more than two months’ rent which means 5,000 more households are in significant arrears than a year ago, or an annual increase of 7.2% since the second quarter of 2014, when this figure previously stood at 69,000 across the UK. On a quarterly basis, the number of cases of severe arrears has risen by 4.4% or 3,100 households, since standing at 70,900 in the first quarter of the year, the report from estate agency chains Your Move and Reeds Rains, part of LSL Property Services, also shows. However, the report points out that the recent worsening in the number of tenants in serious difficulties remains relatively mild by historical comparison. Compared to the worst peak of serious rent arrears, seen in the third quarter of 2012, when 116,600 households owed more than two months in late rent, this has moderated significantly. The report also points out that the chance of a given tenant falling seriously behind on rents is still extremely low. As a proportion of all tenancies, those in severe arrears represent just 1.4% of all tenants, stable compared to the previous quarter and the same as was seen a year before in the second quarter of 2015. This compares to 2.9% of tenants in the first quarter of 2008, twice the current proportion, even before the worst of the financial crisis and recession. ‘Across the UK most households are beginning to earn more, and it is this majority of tenants who are able to bid up the price of rented homes in the face of constricted supply. Rents are accelerating in response, rising by more than 5% over the last year according to our separate research,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. But he warned that behind this headline buoyancy, there is a less positive story. ‘For a small minority there has been no transformational boost to household earnings, and it is this more marginal population of tenants who are feeling the squeeze of rising rents most sharply,’ he explained. ‘Severe arrears are still much lower than their previous peaks but a lack of further progress highlights the underlying and fundamental supply shortage. Tenants need more available properties on the market, and landlords should be encouraged to invest further in order to keep up with growing demand,’ he added. The data also shows that eviction rates have improved. In the second quarter of the year a total of 27,910 tenants faced a court order for eviction, on a seasonally adjusted basis. This represents a 3.9% improvement since the first quarter of 2015 and is 5.9% lower on an annual basis compared… Continue reading
Gap between property prices in London and rest of UK widens
The gap between London house prices and the rest of the UK has continued to reach new highs with the latest index showing the regional divergence is growing. Overall UK house prices increased by 0.5% in September and annual house price growth increased to 3.8% in September, the data from leading lender the Nationwide shows. But on a quarterly basis London house price growth increased to 10.6% in the third quarter of the year, up from 7.3% in the second quarter of 2015. This compares to an average house price rise in England of 1.8% in the third quarter. There was a mixed picture across the regions. The rate of annual house price growth accelerated in Southern England, particularly in London, but continued to slow in the Midlands and most Northern areas. London was the strongest performing region and annual price growth also accelerated in the neighbouring Outer Metropolitan region from 6.8% to 9.5%. The price of a typical home in London at £443,399 is more than double the UK aggregate and more than three and a half times the price of the typical property in the cheapest UK region which is the North of England. The North West was the weakest performing English region, with prices down 0.6% year on year. House prices continued to recover in Northern Ireland, with annual growth of 6.5% in the third quarter although average prices are still 44% below their pre-crisis peak. Wales saw a 1.9% year on year increase in average prices, a slight improvement compared with recent quarters. Scotland was the weakest performing region for the second quarter in a row, with a 1.3% year on year fall, similar to the 1% annual decline recorded in the second quarter. Price growth in the South exceeded that in the North for the 26th consecutive quarter. Prices in Southern England were up 8% year on year, whilst in Northern England prices rose by just 1%. In cash terms, the gap in average prices between the South and the North of England is at a record high, exceeding £150,000 for the first time, with average prices in the South now twice as high as those in the North. ‘The data in recent months provides some encouragement that the pace of house price increases may be stabilising close to the pace of earnings growth. However, the risk remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability,’ said Robert Gardner, Nationwide's chief economist. ‘Indeed, in recent months surveyors have reported historically low levels of properties for sale and increased new buyer enquiries. Therefore it is unsurprising that most surveyors expect a pickup in house price growth in the months ahead,’ he pointed out. ‘The slowdown in house price growth since the middle of 2014 has not been confined to, nor has it been driven primarily by, developments in London. The capital has continued to see price growth at or above… Continue reading
Over half of UK home borrowers will struggle if interest rates rise, says new poll
Some 52% of borrowers in the UK believe they will struggle or fall behind with mortgage repayments when interest rates rise, according to new research published by the Building Societies Association. The survey has revealed that one tenth would experience real financial problems. A further 14% said they would be able keep up with repayments, but it would be a constant struggle, while almost a quarter, 23%, said that they would experience difficulty from time to time. When questioned about the impact on their lifestyle, 18% of borrowers said they will have to cut back on essentials such as food or clothing in order to make their monthly repayments. A further 15% said they will have to work more hours in order to keep on top of their mortgage commitments. ‘Concern from borrowers is natural when it comes to interest rate rises. There are at least 1.85 million home owners that have never experienced a rate rise, we have a record low Bank Base Rate for so long, it is unsurprising that some people are concerned that a rise in rates will affect their lifestyles and ability to make mortgage repayments,’ said Paul Broadhead, head of mortgage policy at the BSA. ‘Clearly some of the actions borrowers say they would take may not be within their control, for example working additional hours. Our advice to those concerned about interest rate rises is to start thinking about how they will manage the increased costs. This could include creating a household budget, to taking a look at mortgage calculators and rescheduling unsecured loans such as credit cards. Free money advice is available for those that are concerned,’ he explained. ‘The good news is that the results of our survey show nearly a quarter of borrowers will not have to make any changes to their lifestyle when interest rates rise. With the economy more stable than it has been for years, this is a positive result,’ he pointed out. ‘That said, with inflation near zero and the Monetary Policy Committee voting by a majority of eight to one to maintain the Bank Rate at 0.5%, it is looking unlikely that things will change before well into 2016,’ he added. Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, said that after years of low rates, borrowers’ minds are beginning to focus on the prospect of higher interest rates, and what this will mean for their finances. ‘Nevertheless, many mortgage payers are still in for a big financial shock when rates do start to climb and we remain concerned that many will fall into problem debt as a result. We must not forget that renters, too, are likely to be affected as extra mortgage costs are passed on by landlords,’ she explained. ‘Households now have a window of opportunity to re-assess their budgets, look again at their borrowing and think about how they will cope with higher interest rates. It is crucial… Continue reading
