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Research signals the end of the reluctant landlord
A rise in property sales in the UK is leading to a reduction in potential rentals which could mean the end of the reluctant landlord, according to lettings agents. The latest research from the Association of Residential Letting Agents (ARLA) reveals that the number of people letting out properties because they have been unable to sell has dropped to a record low. According to ARLA’s latest quarterly report, the percentage of letting agents seeing an increase in rental property entering the market because it cannot be sold has fallen to just 13%. This figure represents the fourth consecutive fall, and is far below the 94% high recorded when the question was first asked at the start of 2009, during the post credit crunch property crisis. The association points out that the renewed ability to sell property is having a significant effect on the overall shape of the residential investment market. The proportion of ARLA members who think landlords are currently decreasing their net investment by selling properties is up sharply, from 15% to 20%. This is while the proportion of respondents who think landlords are increasing their net investment by buying properties declined from 43% to 42%. Of the landlords who are retaining their property interests, the vast majority now appear to be investing for the long term, with the average time between purchase and sale now standing at 19.8 years. Again, this contrasts significantly with the comparable figure recorded at the start of 2009, when the average period was 16.4 years. Additionally, only 1.5% of respondents said that they had become a residential landlord in order to make a short term capital gain over a period of less than five years. The majority, 45%, said that they had let their property to achieve a combined yield from rental income and capital appreciation while 37% had done so in order to create a ‘nest egg’ for their long term future. ‘The resurgence of property prices and buyer demand in many areas is reducing the number of so called accidental landlords. Despite the reduction of landlords in this situation, wider investment in rental properties remains strong across the market. The shape of the private rented sector is changing once again, with long term landlords returning to the fore,’ said Ian Potter, managing director of ARLA. ‘As investment landlords make decisions that can affect their income for years to come, quality advice and information becomes ever more important. I would always advise choosing an ARLA agent to ensure you are getting the best possible advice about a rental property, whatever stage you are at,’ he added. Continue reading
Scottish prime property market sees strongest year start since 2008
The prime residential market at £400,000 and above across Scotland experienced a strong performance last year, with a 22% annual increase in activity. In this sector there were 2,536 transactions during 2013, according to the latest analysis report from Savills which shows that the market was robust from spring 2013 onwards with deals being done throughout the winter period. A further 188 prime transactions were registered in January 2014 across Scotland, making it the busiest start to the year since 2008. Savills says that the prime market is being boosted by the hubs of Edinburgh, the Aberdeen area and Greater Glasgow, where prime activity increased annually by around 25% in each location. The prime market in Edinburgh was heavily supported by the hotspots of Grange, Morningside and Merchiston. Prime transactions in this combined area increased by 29% last year. The West End of Edinburgh and the northern suburb of Trinity also enjoyed a better market in 2013, following slightly lower activity in the previous two years. Similarly, the prime southern Glasgow suburbs of Pollokshields, Newlands, Giffnock and Newton Mearns experienced a strong market last year with a 31% increase in activity. These areas continue to be supported by top quality education facilities and excellent transport links. ‘We have noticed a change in the buyer age group over the course of the last year. In previous years there was an over reliance on those aged 50 and above driving the market. However, the prime market in the city hotspots of Edinburgh and Glasgow is increasingly being driven by younger professionals aged from 30 to 39, comprising around 40% of Savills sales last year,’ said Faisal Choudhry of Savill’s research team in Glasgow. ‘This target market had been somewhat subdued following the housing market downturn, mainly due to affordability issues. However, there was an ever present pent up demand among this age category aspiring to upsize. This age group is now more active and is enabling the whole of the market to move again following low levels of sales during 2011 and 2012,’ he pointed out. ‘The market strength in the core locations of Edinburgh, Aberdeen and Glasgow has spilled out to some of Scotland’s provincial locations, such as Tayside, where prime transactions increased last year by 19%. The prime markets in Ayrshire and the Borders also improved The analysis report explains that prime values across Scotland have fallen over the last few years due to the high levels of stock available on the market. However, the significant increase in prime sales has created a net reduction in stock levels. ‘Supply in some hotspots in Edinburgh and Glasgow has been decreasing, resulting in a slight rise in values, particularly towards the end of last year. The rebalancing of supply and demand has started in the country locations of Scotland with values beginning to stabilise during the last quarter of 2013. We expect a gentle rise in Scottish prime values during 2014 when supply and demand eventually rebalance,’ added Choudhry. Continue reading
Rents in England and Wales rise for first time since October
Rents across England and Wales increased by 1.6% in the 12 months to February, the first month on month rise since October 2013, taking the average rent to £743 a month. Overall seven in 10 regions saw higher rents in February than January when the rate of increase was 1.4%, according to the latest Buy to Let Index from LSL Property Services. The firm, which owns the UK’s largest lettings agents network including Your Move and Reed Rains, also pointed out that February was the second best month on record for tenant finances as proportion of late rent falls to 6.9%. Landlords have earned an average annual return of 9.7%, or over £16,000, over the last 12 months. ‘Property to rent remains in high demand. Despite great improvements in the prospects of many first time buyers, there are still millions of households who rely on a healthy private rented sector for their homes,’ said David Newnes, director of LSL Property Services. ‘February’s annual increase remains below the rate of wider inflation. However, this latest uptick and the high level of demand in the lettings market emphasise the importance of ongoing investment. Landlords have invested heavily in expanding their portfolios and need to continue to do so to keep pace with demand from tenants,’ he added. The sharpest monthly rises were seen in Yorkshire and the Humber and the West Midlands, where in both regions rents rose by 1.2% on a monthly basis. The next fastest monthly rise was in Wales with a 1% increase, while the East Midlands saw rents rise 0.6% between January and February. Of the three regions to see a monthly fall in rents, the fastest drop was in the South East, down by 1.5% since January. Meanwhile rents fell by 0.6% on a monthly basis in the East of England, and by 0.1% in the North West. A majority of regions also saw higher rents on an annual basis. The South West saw the quickest rise, up 4.7% from February 2013. This was followed by 3.3% in London and annual rent increase of 2.2% in the North West. By contrast, rents in the East of England now average 3.1% less than a year ago, followed by a 2.3% annual drop for Wales and a 1.9% annual fall in the West Midlands. ‘Across the UK there has always been a huge level of variation between different local markets. But in the last year some of these differences have become more apparent as the property market has witnessed such a rapid shake up and improvement,’ explained Newnes. ‘Those looking to rent, or to let a property should look into the intricacies of their local market, which can have at least as much bearing on the level of rent as the property itself,’ he pointed out. The index also shows that gross yields on a typical rental property remained steady on a monthly basis, standing at 5.2% in February, the same as in January 2014. However, yields have fallen… Continue reading
