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UK landlords predict slower annual rent rises
Landlords in the UK expect rent rises to slow over the next 12 months to below the target rate of inflation, according to a the latest survey from lettings agent network Your Move and Reeds Rains. On average, landlords estimate that rents will increase by 1.8% in the next year. This is lower than the Bank of England’s 2% target for inflation, and would also represent a slowdown on the current pace of annual rent growth. The latest Buy to Let Index from Your Move and Reeds Rains reported that average residential rents across the UK are rising at an annual rate of 2.4%. The majority of landlords polled do not intend to raise their rents in the next year, however 43% expect to raise rents and of those 57% cite covering the cost of inflation as their main motivation. Paying for maintenance work is the second most significant reason, listed by 31% of landlords. Over the last six months, 41% of landlords report seeing a rise in tenant demand. This comes as lettings activity has been growing, with new tenancies agreed across England and Wales up by 6.9% compared to August 2013. Tenant demand has helped reduce average void periods in the private rented sector, ensuring greater stability of income for landlords. In the past year, 18% of landlords have already added to their portfolio of rental properties. This appears to be inspiring confidence among property investors with 21% of landlords believing that now is a good time to invest in buy to let. Of those who report it is currently a prime time to purchase a rental property, 55% cited tenant demand as a key motivation for investment. Attractive property prices are the second biggest driver, reported by 54% of landlords, while 45% pointed to better capital returns on offer compared to other forms of investment. The proportion of landlords who expect tenant demand to increase further now stands at 63%, up from 56% in January. Only 5% of landlords currently anticipate a fall in demand for rental properties over the coming years. As a result, 22% of landlords intend to expand their portfolio over the coming year, an increase from 18% in January 2014. ‘Demand for rented accommodation is climbing, and there’s little sign of this stopping. While Help to Buy and higher LTV lending are enabling first time buyer activity, strong house price growth this year has lifted homeownership a few steps out of reach for many, and the private rented sector remains the safety net supporting those still saving for a deposit. This is in addition to the thousands of people who rely on renting to offer them flexibility and freedom in their working lives,’ said David Newnes, director of Your Move and Reeds Rains. ‘This demand is also powering more supply. Secure house prices and spirited tenant demand are encouraging budding buy to let investors and existing landlords to add to the number of available homes to… Continue reading
Latest data from UK estate agents shows younger buyers priced out of market
People aged in their thirties are dominating the first time buyer market in the UK with those who are younger prices out of the market, according to a new report from the National Association of Real Estate Agents (NAEA). Overall the number of first time buyers is up from previous month sales, from 20% in July 2014 to 28% in August, the highest percentage of FTBs recorded since April 2014 but the number of buyers aged 18 to 30 remains at an all-time low at just 3% of recorded sales for August NAEA agents agree prospective interest rate rises will affect demand in the property market which will not help younger buyers who are already out of the housing market. While the number of sales made to those aged between 18 to 30 remained low, sales to those aged 31 to 40 were the highest recorded for the month, with almost half, 45%, of homes sold being bought by those in this age bracket. The figures suggest that the majority of first time buyers fall into the latter group, as high house prices price the younger generation out of the market. The report also found that most buyers, some 90%, bought as couples, with just 7% buying alone. Although the overall rise in the first time market is a positive, nearly 90% of NAEA agents believe the foreseen rise in interest rates will affect the demand for property in some way, with another 39% of members already claiming to see signs of demand dropping off. ‘Reports from our members suggest that the high house prices of the current housing market are still proving a barrier for the younger generation. It is evident that first time buyers are indeed getting older,’ said Mark Hayward, NAEA managing director. ‘With the majority of home buyers this month aged 31 to 40, this suggests some correlation between the increase in the first time buyer market and this age group. It is concerning at the lack of young people unable to buy their first home before the age of thirty, having to rent or stay at home for longer in order to save,’ he pointed out. ‘While the increase in first time buyers is a positive, what could be a worry for home buyers is the prospective interest rate rise that’s on the horizon. If interest rates do rise, the majority of NAEA members agreed that this will affect the demand for property, as prospective buyers are discouraged by the cost of borrowing,’ he explained. ‘In addition first time buyers need to be careful they can afford their mortgage, as interest rates could significantly push-up repayments, putting pressure on household budgets,’ he added. The report also shows that in terms of housing stock for August, this month saw a decrease in the average number of properties available per NAEA member branch. Available properties decreased to an average of 49 per NAEA member branch, compared to 51 in July 2014. At the same time, the average… Continue reading
Studies show more people in UK planning to downsize to fund retirement
Some 12% of the UK’s retired population are planning to downsize their property within the next five years, potentially unlocking an estimated £136.5 billion of housing equity in the process. This equates to 1.36 million people planning to move to help fund their retirement, according to the data from retirement income specialists MGM Advantage. The data also shows 18%, or 1.99 million retired people, have already downsized. By analysing house price data, calculating the amount of cash released through moving from a detached property to a bungalow, allowing for stamp duty and moving costs, MGM Advantage has worked out the UK average is £102,851. This figure represents an 18% increase in cash released compared to just a year ago when the average was £84,776, and is due to the relative increase in the value of a detached property compared to a bungalow. The data shows there are significant regional variations, with Greater London releasing the most cash at £295,593, while Wales didn’t fare anywhere near as well with a figure of £54,301 released after moving costs. ‘People often refer to their property as their pension, and these numbers show that many are considering downsizing to provide an income boost in retirement. However, the downsizing dream could turn into a retirement nightmare, as some areas of the country fare much better than others. This is simply a reflection of the housing market in the UK,’ said Andrew Tully of MGM Advantage. ‘Banking on your own home to provide an income in retirement does not come without risk. The old adage of all your eggs in one basket still holds true. Careful planning and consideration should be given before making the move, and with returns available from the cash released still very low, it is likely the capital will also be consumed over time,’ he pointed out. ‘If people want to stay in their homes to avoid the upheaval of moving, then solutions like equity release can provide an alternative route. A professional financial adviser will be able to help you navigate the retirement income maze and decide what is best for your personal circumstances,’ he added. Meanwhile, separate research from Baring Asset Management shows that 7% of non-retired people, the equivalent of around 2.5 million individuals, admit they are planning on selling their primary residence to fund their retirement. This is up 2% from last year. In total, 16% of people, nearly six million, say they are planning to rent or sell property to fund their retirement, up from 13% last year and the highest such figure since 2009. The survey found that the economic climate continues to have an impact on people looking to use property to fund some or all of their retirement: the number saying they now plan to sell or downsize a property to fund all of their retirement has risen to 4% from 2% in 2012. While the research found that a third (33%) of people that last year said they are planning on either… Continue reading
