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New tenants in UK facing higher rents as demand increases
There is an increase in demand for property in the UK private rental sector with new tenants seeing a rise in monthly rents from a third of lettings agents. Indeed some 31% of letting agents saw an increase in the cost of monthly rent for tenants from January to February, according to the Association of Residential Letting Agents (ARLA) monthly Private Rented Sector Report. The South East of England saw the highest number of landlords increasing rent per calendar month with 41% of agents in the region reporting an increase whereas in contrast in Wales only 13% of agent’s reported uplift in rent prices. An increase in rents may be down to the fierce competition for rental property. ARLA licensed agents reported an average of 40 prospective tenants per branch in February, up from 38 in January. The report points out that whilst only 13% of Welsh tenants saw an increase in rents, they are facing the most competition for housing, with 46 tenants registered per member branch. Tenants in the East of England are also facing fierce competition with an average of 45 house hunters registered at each branch. Overall the report says that supply in the rental market remains steady, with an average of 184 properties managed per member branch, which is the same as last month. The East Midlands boasts the highest level of supply, with an average of 269 properties per branch, whilst supply in London has dropped to an average of 122 per branch, down from 140 in January, increasing already intense competition in the capital. According to David Cox, ARLA managing director, it shows that demand for rented accommodation is still on the increase, and monthly rents are following suit. ‘When demand is high then the premium for a home increases. House prices are still sky high and are unlikely to reduce anytime soon, which means that getting onto the property ladder is a challenging and unlikely task for many, so renting a property is the only option available,’ he explained. Looking ahead to the general election in A RLA Letting agents are strongly against Labour’s proposal to introduce three year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants The survey found that 70% of agents believe this would result in landlords pulling out of the market and creating a decrease in the supply of rental property, which would have detrimental effects on the industry. Just under half of agents, 46%, argue that three year tenancy agreements would cause them to lose flexibility over the duration of their tenancy agreements and 69% of ARLA agents think point blank that the proposal would not benefit tenants. When it comes to building new homes to help kick start the property market, some 37% of ARLA agents believe that the Conservatives’ pledge to… Continue reading
Research reveals concerns about new mortgage rules in UK
More than half of people who are either considering, or are in the course of applying for a mortgage in the UK believe that the obligation placed upon mortgage lenders to assess their ability to repay will slow down the application process. Overall 59% are in this position and 32% of those who have yet to apply also said they would find it fairly difficult to obtain evidence of all the expenditure information they believe a lender needs to assess a mortgage application. The research from Equifax, a credit information provider, also found that 69% who responded to the survey expressed concern that more detailed affordability checks would affect the amount they could borrow and 40% are worried about the time it will take to complete their mortgage application. The new responsibilities placed upon lenders, which came into effect in April 2014 as a result of the Mortgage Market Review, place even greater onus on the lender to assess an applicant's ability to repay. The applicant's credit history is likely to play a crucial role in that assessment, alongside other information gathered as part of the application process. ‘It is important to remember that lenders will take into account the information provided on the application form and will look at an applicant's income and outgoings to ensure they can afford the mortgage they are applying for, now and in the future. However, our research suggests that 22% are still unconvinced that the new affordability rules will help prevent home owners overstretching themselves in the long term,’ said Laura Barrett of Equifax Consumer Affairs. ‘We would recommend compiling any financial documents and expenditure information needed to support a mortgage application, as soon as the application process starts. Advance preparation will hopefully avoid any unnecessary delays,’ she pointed out. ‘A lender will typically look at an applicant's credit history when determining whether they meet eligibility criteria and may also use credit information during affordability assessments. Therefore, it is suggested that individuals check their credit report before making any applications to ensure that it is in the best possible shape for them,’ she added. Continue reading
European commercial property investment market seen as attractive
The European commercial property investment market enjoyed a strong end to 2014, according to the latest quarterly report from Knight Frank. It says that the outlook for 2015 has been boosted by the European Central Bank’s (ECB) announcement in January of a programme of quantitative easing which will help to maintain the attractive yield premiums offered by property over government bonds. Overall a total of €57.9 billion was invested in European commercial property in the fourth quarter of 2014, making this the strongest quarter since the second quarter of 2007 and investment volumes for the whole of 2014 came to €177.6 billion, 21% up on 2013. The firm says that investors have continued to show an increased appetite for risk, targeting a wide variety of non-core locations and sectors. Investment volumes increased strongly in Spain, Ireland, the Netherlands and the UK regions throughout 2014, while the Portuguese investment market finally revived in the final quarter of the year, having been one of the last of the peripheral markets to show signs of recovery. The report explains that the current strength of the investment market comes in spite of more modest and varied trends in European occupier markets. In 2014, office take up increased in markets such as London, Paris and Berlin, but fell in Frankfurt, Vienna and Moscow. However, the Knight Frank European Prime Office Rental Index rose by a modest 0.8% in the fourth quarter with London, Dublin and Lisbon being the only major markets to record increases in prime office rents. ‘The European investment market has continued to gain remarkable momentum. We expect 2015 to be another strong year, bolstered by the ECB’s QE programme,’ said Matthew Colbourne, international research associate at Knight Frank. ‘By leading to falls in European government bond yields, the QE announcement has further widened the spreads between property and bond yields. It will help to preserve the attractiveness of property as an asset class in 2015 and beyond,’ he added. Continue reading
