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Rent rises in Scotland tumbled during 2014, latest index shows
The pace of annual rent growth in Scotland dropped by two thirds in 2014 with average rents now just 1.2% or £6 higher than a year ago, the latest index figures reveal. This follows a monthly drop in average residential rents, down 0.4% in December to £536 per month, according to the Scotland Buy to Let Index from Your Move, one of Scotland’s largest lettings agent networks. It means that growth has slowed from a 3.9% annual jump in rent prices seen in 2013 but Edinburgh and the Lothians has bucked the trend with annual rent growth over the past year from 2.5% in December 2013 to 4.5% in December 2014. ‘Annual rent growth braked sharply over 2014, reducing the speed of rent rises to a sustainable and affordable pace. This is providing some welcome relief to the thousands of renters itching to jump on the housing ladder, who are already faced with enough hurdles to saving a deposit,’ said Christine Campbell, regional managing director of Your Move. ‘This wider downturn in growth during 2014 marks a return to the natural market rhythm. Scottish rents were holding fast on an even keel throughout 2011 and 2012, until the abolition of tenancy fees in November 2012 sparked a new tide of unnaturally steep rent hikes,’ she explained. ‘This should act as cautionary tale for policymakers considering further constricting changes to lettings legislation. The rental market is thriving by its own hand, and too much undue intervention may poison the current climate of affordability,’ she pointed out. ‘Scaring landlords out of the rental market would exacerbate the current housing shortage, and wound thousands of tenants as competition hots up. Buy to let investment is a vital remedy for the current housing shortage, and for the health of tenant finances,’ she added. A breakdown of the figures shows that overall, rents are higher than a year ago in three out of five regions of Scotland. After a strong acceleration in the pace of growth during 2014, average rents in Edinburgh and the Lothians have seen the fastest year on year increased at 4.5% in the 12 months to December. A 2.2% annual rise in Glasgow and Clyde takes the average monthly rent to £559, however this still represents a significant deceleration in the pace of annual rent growth, declining from 7.3% a year previously. While rents climbed consistently across all regions of Scotland during 2013, the slowdown in rent growth witnessed during 2014 has been more severe in some cases with two regions experiencing annual falls in rent prices. Average monthly rents in the Highlands and Islands are now 2% lower than December 2013. The South was the only other area of Scotland to experience an annual fall, with average rents down 1.8% over the past 12 months. The average monthly rent in the South of Scotland now stands at £484, down from £493 a… Continue reading
UK asking prices up 1.4% this month, latest index shows
The price of property coming to the market in the UK increased by 1.4% in January at a time of year when prices usually fall, according to the latest index from Rightmove. It takes the average national asking price to £273,275 and means prices have increased by 8.2% in the last 12 months. But it points out that even although the number of properties on sale has increased by 2% this if failing to replenish agents’ historically low stock and currently levels are 10% below the same period last year. Sales activity has been boosted by Stamp Duty savings of up to £1,250 for some first time buyers and average property prices in this sector are down by £1,132 this month. However the firm reckons that despite continued low mortgage and inflation rates, sellers will have to work harder in 2015 than in 2014 due to election jitters and mortgage restrictions. It believes that lenders are selecting buyers who are good risks to lend to, and in turn buyers are very selective with the properties they choose. A closer look at the figures show that prices and activity both cooled in the second half of 2014, though there are signs of a New Year bounce back. More people are looking for property than last year, and more sellers are putting their property up for sale. ‘Early 2015 statistics currently point in the right direction for home movers, with the Chancellor’s Stamp Duty reform perhaps being the spur for people to get on with moving. There are more positive signs of early bird activity rather than pre-election jitters or economic worries deterring prospective movers,’ said Miles Shipside, Rightmove director and housing market analyst. ‘The unseasonably high 1.4% jump in new sellers’ asking prices suggests that there are more rises in the pipeline for the next few months. Early-bird buyers, including trader-uppers, can potentially catch a good deal by getting off the mark quickly in 2015, and get a better pick of the housing crop,’ he explained. Rightmove’s updated House Price Index now tracks typical property prices and supply for the main market sectors, including first time buyers, second steppers and the top of the housing ladder. It says that with the average first time buyer property coming to the market at £163,251, the reform to Stamp Duty announced in the Autumn Statement could mean potential savings of up to £1,250. ‘Should prices rise, as they look set to over the next few months, potential Stamp Duty savings will diminish, but they will still be helpful to first time buyers struggling to save enough to cover the Stamp Duty bill as well as the mortgage deposit,’ said Shipside. ‘First time buyers are in a potential win-win savings window this month with the price of property coming to market in this sector being over £1,100 cheaper, coupled with up to £1,250 in Stamp Duty savings. This is a welcome boost given that the price of property coming to market… Continue reading
Multi freehold blocks provide highest gross yields in UK for landlords
Multi-unit freehold blocks have overtaken houses in multiple occupation and now provide UK landlords with the highest gross yield at 9.3%, new figures for the fourth quarter of 2014 show. This compares to 8.6% in the third quarter and is the highest yield on record for this property type, according to the latest complex buy to let index from Mortgages for Business. Houses in multiple occupation (HMOs) saw rental yields rise to 9% in the fourth quarter of 2014, from 8.9% in the previous quarter, slightly lower than the yields recorded earlier in the year where HMO yields stood at 9.6% in the first three months of the year. However, the index report points out that compared to vanilla and semi-commercial property, houses in multiple occupations still provide one third more than standard buy to let investment. The only exception to this trend is semi-commercial property which saw yields fall to 6.4% from a high of 9.7% in the third quarter. Gross yields on vanilla buy to let properties have returned towards the levels seen in early 2014. For a standard buy to let property the equivalent figure is now 6.3%, up from 5.9% in the third quarter. ‘Rental yields for HMOs and MUFBs are typically higher than those for vanilla buy to let. For a multitude of reasons, not least stagnant wage growth for half a decade, many tenants simply can’t afford an enormous flat with a spare bedroom. As such, the attraction for many of renting a room rather than whole property will ensure that there is a steady yield-boosting demand for HMOs over 2015,’ said David Whittaker, managing director of Mortgages for Business. Across all types of buy to let property landlords have seen loan to value ratios (LTV) fall. The average LTV on a vanilla buy to let mortgage in the fourth quarter was 63%, considerably down from 68% in the previous quarter. Loan to value ratios for HMOs have fallen the most, from 71% in the third quarter to 64% in the fourth quarter, while both multi-unit freehold blocks and semi-commercial properties have fallen by four percentage points each to 64% average loan to value in the fourth quarter. ‘While property prices have slowed a little in recent months, landlords have on the whole seen enormous price growth compared to the indecisive direction of property prices a few years ago,’ explained Whittaker. ‘Looking ahead, this might spur some landlords to expand their existing portfolios further and diversify as a result of the high yields on non-standard properties,’ he added. Continue reading
