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Average city rents up almost 5% in the US in 2014
Americans paid out $20.6 billion more in rent in 2014 compared to 2013 as nationally average rents in cities increased during the year, new data shows. Cumulatively, they paid $441 billion in rent in 2014 compared to $420 billion last year, an increase of 4.9% as both the number of renting households and the average rent rose, according to an analysis from real estate firm Zillow. In California the Bay Area, consisting of the San Jose and San Francisco metros, saw the largest jump in cumulative rent paid in 2014, up 14.4% and 13.5% respectively. Rent per household in the San Jose metro rose by $197 per month, while rent in the San Francisco metro rose by $163 per month. Out of the top 50 largest US metro areas, the largest amount of cumulative rent was paid in the New York/Northern New Jersey and Los Angeles metros at $50 billion and $34 billion respectively. The smallest amount of cumulative rent was paid by renters in Birmingham, Alabama, at $1 billion, Louisville, Kentucky at $1.2 billion and Buffalo, New York at $1.2 billion. Nationally, the total number of renters is estimated to have grown 1.9% in 2014 and over the same time period, the median rent paid increased by 2.9%. ‘Over the past 14 years, rents have grown at twice the pace of income due to weak income growth, burgeoning rental demand, and insufficient growth in the supply of rental housing,’ said Zillow chief economist Stan Humphries. ‘This has created real opportunities for rental housing owners and investors, but has also been a bitter pill to swallow for tenants, particularly those on an entry-level salary and those would-be buyers struggling to save for a down payment on a home of their own,’ he explained. ‘Next year, we expect rents to rise even faster than home values, meaning that another increase in total rent paid similar to that seen this year isn't out of the question. In fact, it's probable,’ he added. Continue reading
Significant increase in new lending for UK commercial property markets
There was a significant rise in new lending to the UK commercial sector in the first half of 2014 but the recovery has been uneven across the country. Overall outstanding debt held against UK commercial property fell to £171 billion in the six months from £180.3 billion at the end of 2013 as lenders continued to reduce their loan books following the 2009 financial crisis, according to a report from academics at De Montfort University. The report, the most comprehensive analysis of the UK’s commercial property lending market, also found a significant drop in the volume of old loans that were distressed or in breach of financial covenants. However, it noted that organisations much more willing to lend against assets in London than elsewhere, and also more inclined to lend against investment properties rather than new development. New lending accelerated during the period with £19.6 billion of new lending, the highest total recorded by the study since 2008, compared with £13.4 billion in the first half of 2013 and £29.9 billion for the whole of 2013. However, the report points out that the increase in activity generally in the commercial property market was not debt fuelled to the same extent as occurred before the financial crisis when, for example, some £49.2 billion of loan originations were completed in the first half of 2007. It is initially, therefore, most probably equity driven, it explains. The report also found the lending market becoming more diverse, with UK Banks and Building Societies representing 36% of new origination at the mid year point compared with 43% of new lending in 2013, and a share of 54% of the existing stock of outstanding loans. It also outlined significant differences in lending activity and appetite remain across the country. For example, 80% of organisations active in the market reported that they would lend on prime investment projects in London, compared to 46% who would do so in Northern Ireland. While lenders’ appetite for development risk is also improving, it remains a preserve for the specialist, particularly where the project is speculative: 26% of lenders were prepared to provide senior debt to finance such projects at the mid point of 2014, compared to 12% at the middle of 2013. Liz Peace, chief executive of the British Property Federation, said that the outlook for debt finance to support the commercial property market is very positive. ‘The steady reduction of outstanding debt, and of loans with dangerously high loan to value ratios, is very encouraging,’ she explained. ‘Although new lending is growing at a significant rate, the fact that the market seems to be mainly equity driven means that we are unlikely to be living through another 2007. However, we are concerned about the potential implications of the lack of debt finance available for speculative development,’ she pointed out. ‘While lender caution in this area is totally understandable given events in the past few years, there are parts of the country where new, high-quality… Continue reading
Fair compensation calculations needed for good lettings relationship
Calculating the right compensation charges at the end of tenancies is the holy grail of lettings and getting it wrong can lead to unnecessary disputes with tenants, it is claimed. Many landlords and agents are responsible for calculating the cost for compensation charges against a tenant and in doing so, should ensure it is reasonable and fair. However, everyone’s expectations are different. If landlords and agents have to calculate compensation charges themselves, it vital that they have a working knowledge of accepted principles, if they are to avoid a dispute, says the Association of Independent Inventory Associations (AIIC), adding that landlords and agents should also explain to their tenants how they have worked out the compensation deductions. ‘If agents and landlords can prove how they arrived at the proposed deductions from their tenants’ deposits, all parties involved will be happier to accept the decisions. Fewer disputes cause less headaches in terms of wasted time, money and effort all round,’ said Pat Barber, chair of the AIIC. ‘There are a few bits of information that agents and landlords need from the start to aid their calculation, namely the original cost of an item, the age and condition at time of check in, the length of tenancy, average life expectancy of the item and any extenuating circumstances,’ she explained. She pointed out that floor coverings are major bone of contention for landlords, agents and tenants and recent research also shows that accidental damage to flooring is the main cause of insurance claims for tenants at 42%. ‘So for example, if a tenant damages vinyl or laminate flooring with drag marks, deep scratches or scrapes, burn marks and stains, these are considered to be chargeable issues. A small number of surface scratches, nicks and minor indentations are considered to be consistent with fair wear and tear depending on the length of tenancy and original condition,’ said Barber. ‘It is always recommended that care instructions for surfaces such as vinyl and laminate floors be provided to the tenant by the landlord or agent. Laminated flooring can vary in quality from surface ‘photo’ coatings to a thicker laminate top layer. Laminates with a thin surface coating are prone to edge lifting, although excessive washing can also exacerbate the problem and could be chargeable if this can be proved,’ she added. She also pointed out that household circumstances, location, environment, quality, pets, previous wear and so on will all have an effect on the final compensation amount. ‘Landlords and tenants need to put all the evidence together to reach a safe conclusion, one which can be justified in writing at some point if required. Landlords should be able to provide written evidence of the original cost and age of the laminate flooring, or anything else in the property, to enable proper compensation to be calculated,’ Barber concluded. Continue reading
