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Arrears cause most stress to UK residential landlords, new research has found
The majority of landlords in the UK find managing their properties more stressful than their full or part time jobs, with arrears causing the most worry, new research has found. They are having to deal with complex issues such as new regulations, rent arears, and tax as well as the everyday issues of repairs, insurance and void periods, according to a study from Property Let By Us. The research reveals that rent arrears causes the most stress, cited by 87% of respondents while 80% said dealing with tenant complaints was the main stress, followed by 43 for repairs to properties, 40% the new immigration laws and 28% securing finance to expand their buy to let portfolios. A quarter of landlords cited tax and inland revenue as a major reason for getting worried and anxious, while a third said it is void periods while 23% of landlords blame having a partner that doesn’t understand or appreciate the amount of work involved in being a buy to let landlord as a major cause of stress ‘The good news is that finding new tenants is near the bottom of the stress list, which brings some relief to the plight of landlords,’ said Jane Morris, managing director of Property Let By Us ‘The increasing regulation and the added responsibility that goes with it, is weighing heavy on the shoulders of landlords, along with rent arrears and tenant complaints,’ she explained, adding that one way that landlords can help to avoid rent arrears is by conducting thorough tenant reference checks. ‘These background checks on tenants are so important. Picking the right tenant can save a long, costly eviction process further down the line. Be thorough in conducting background checks and reference gathering, including bank statements for the past three months, previous landlord references to check the tenant paid rent on time, credit checks, incorporating fraud indicators and employer references. It’s important to also check identity and proof of current address, ideally tax or insurance documents, and talk at length to a prospective tenant,’ said Morris. She also pointed out that landlords should also take the time to compare addresses shown on the application with those shown on the identity documents. ‘Feel free to ask for previous utility and telephone including mobile phone bills and statements, and check if the name and address and other information matches up with the information on the application form. The more information collected on the tenancy application the better, because if the tenant subsequently absconds or leaves owing money, this can be used to give vital tracing information,’ she explained. She added that should an applicant make false statements, document provide evidence for eviction. ‘Applicants who are reluctant to produce their identity documents represent a higher risk to the agent’s obligations for customer due diligence under the Money Laundering Regulations,’ said Morris. Continue reading
UK spending on home maintenance at highest since 2008
Household spending on DIY in the UK reached £5.5 billion in 2014, a rise of 10% to reach the highest levels since 2008, new research shows. Meanwhile, total spending on home maintenance, that is DIY and tradesmen's services, increased by 8% to £6.9 billion in 2014, according to the study from Lloyds Bank. The £5.5 billion spent on DIY in 2014 was equivalent to around £200 per household. Whilst this was the highest annual total for six years, it was still 19% below the peak of £6.8 billion and 9% lower than a decade ago when it was £6.1 billion. Spending on tools and equipment for home improvements, ranging from plumbing tools to lawnmowers, increased by 9% from £4 billion in 2013 to £4.4 billion in 2014. Real spending on DIY materials rose by 10% from £1 billion to £1.1 billion. However, there is little change in spending on tradesmen Expenditure on tradesmen's services, at £1.4 billion, increased very slightly by 1% between 2013 and 2014. This means that for every £1 spent on tradesmen some £3.92 is spent on DIY tools and materials, showing how important DIY is to UK households. Total spending on home maintenance increased by 8% to £6.9 billion in 2014 from £6.4 billion in 2013. This was the third successive annual increase, taking overall spending on home maintenance to its highest level since 2008 when it was £7.2 billion. This decline has been entirely due to a fall in expenditure on materials, which declined by 35% over the decade. In contrast, spending on tradesmen’s services rose by 20% whilst spending on tools in 2014 was at the same level as in 2004. The reports says that the past 10 years have demonstrated how spending on home maintenance has a strong link to the performance of the housing market. Spending reduced by around 36% between the height of the housing market in 2007 when it was £8.3 billion, and the bottom of the market in 2011 when it was £6.1 billion. Then, as the housing market picked up between 2011 and 2014, spending on DIY increased by 13% again to bring home maintenance spending closer to 2004 levels. ‘The latest figures provide further evidence that people are continuing to increase their spending on DIY and home improvements as the economy and housing market pick up, with DIY spending increasing by 10% in the last year,’ said Andy Hulme, Lloyds Bank mortgages director. ‘This followed a sharp fall in spending between 2007 and 2011, which reflected the worst of the economic and housing downturns during this period,’ he added. Continue reading
Rents overtake home values in the US, latest index shows
Residential rents in the United States grew 4% year on year in April, overtaking home values growth which was at an annual rate of 3%, the latest data shows. It means that rents grew at their fastest pace in two years in April, and surpassed home value growth in 20 of the 35 largest US housing markets, according to the data from real estate market report firm Zillow. Rents reached $1,364 and home values reached an average of $178,400 and growth in home values is expected to slow further in the second half of the year as the for sale housing market stabilises. The switch comes after years of rapid home value increases and has been boosted by the improving economy. The Zillow report points out that US home values peaked in 2007, and then crashed during the recession between 2008 and 2010. Since then, they have risen rapidly, returning to their peak levels in many markets. Home values have both risen and fallen over the past decade, but rents have been steadily rising. Indeed, rental growth has been outpacing home value growth for several months in some of the nation's hottest markets. In San Francisco, rents started rising faster than home values in July 2014, and have been growing faster ever since on an annual basis. In Boston, annual rental growth has outpaced home value appreciation since August 2014. The report points out that low mortgage rates have helped make buying a home much more affordable than renting. On average, US home buyers can expect to spend about 15.3% of their income each month on a typical house payment. Renters can expect to spend about 30% on a monthly rent payment. ‘There are tremendous incentives to get into home ownership these days: mortgage access is improving, interest rates are low, and home values remain below prior peaks,’ said Zillow chief economist Stan Humphries. ‘But it will be increasingly difficult for many renters to realize these benefits as this country's growing rental affordability crisis continues to worsen. More income going to rent means less going to savings for a down payment and other costs, keeping renters renting longer and feeding into the high demand that is contributing to rising rents in the first place,’ he explained. ‘This cycle will be difficult to break, and is a symptom of the imbalances that still exist in the housing market as we struggle to get back to normal. New construction and rising wages will help, but neither is coming very quickly,’ he added. Over the next year, home value growth is expected to slow even further, to 2% annually, according to the Zillow home value forecast. In 2014, home values rose 4.9%. Continue reading
