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Tenant finances getting worse in the UK private rented sector
Tenants in the UK have felt a financial setback with the number falling into serious rental arrears rising on an annual basis for the first time since 2012, according to the latest tenant arrears tracker report. The data from the estate agency chains Your Move and Reeds Rains, part of LSL Property Services, shows that in the fourth quarter of 2014 there were 68,100 tenants in severe rent arrears of more than two months, an annual rise of 7.2%. However, on a quarterly basis the setback is less severe, with 1,700 more cases of severe arrears in the quarter compared with the last quarter of 2013, a quarterly increase of 2.6%. Despite this recent deterioration, the longer term trend for tenant arrears remains positive, the report suggests as improvements seen in 2013 and at the start of 2014 remain overwhelmingly large in comparison. As a result, since reaching a peak of 116,600 tenancies in the third quarter of 2012 the number in severe arrears has dropped by 48,500 as of the fourth quarter of 2014, an improvement of 42%. In terms of the proportion of all tenants now in severe arrears, there was no significant setback in the last quarter. As a percentage of all tenants, 1.4% owed rent arrears of more than two months in the fourth quarter, the same as in the third quarter of 2014 and the fourth quarter of 2013. This leaves a remaining 98.6% of tenants who have consistently avoided serious rental arrears. A slight deterioration in the most serious rental arrears is consistent with figures for overall levels of late rent including shorter lapses on payments. According to the latest Buy to Let Index from Your Move and Reeds Rains, overall tenant arrears of any duration stand at 7.5% as of November, up from 6.6% of rent late in November 2013. However, as with severe arrears, even after November’s slight deterioration, rent arrears remain considerably lower than in previous years, since peaking at 14.6% in February 2010. ‘Escaping the worst deprivations of the financial crisis has taken half a decade and even now, for so many households every month is still a difficult month,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. ‘But just as the occasional setback is inevitable, the long term trend is increasingly clear. Since the sharpest pinnacle of tenant difficulties in 2010 the number in serious rent arrears has practically halved,’ he pointed out. ‘As rising wages start to combine with much lower levels of unemployment, the fundamentals of the economy have started to turn in favour of tenants. If that can continue, then so can the trend away from arrears, as renting becomes more affordable,’ he added. The report also shows that eviction rates have improved. In the third quarter of 2014 some 28,400 tenants faced a court… Continue reading
UK property markets set to see slowing of growth in 2015 says CBRE
UK property sectors are set to continue to expand, in 2015 but the overall trend will be a slowing of growth to more sustainable levels, a new analysis suggests. Prime London markets will continue to grow in 2015, but confidence and investor interest will encourage growth in prime regional markets and secondary housing markets will fare better than in recent years, according to real estate advisor CBRE. It points out that in 2014, total returns to property averaged nearly 20% and in 2015, there will be a slowing of growth rates with average returns just under 13%. The general election in May will bring some uncertainty into property decision making but year on year there is expected to be significant rental growth for most sectors but a further improvement in yields as investment inflows continue into the UK market. Prospects for retail properties remain among the most uncertain, with few sure signs just yet that stable growth is returning to consumer spending, and cost pressures and distractions across the sector, particularly in grocery retailing, although in 2015 as in 2014, prime retail destinations will remain a safe bet, the report explains. Industrial property will continue to be attractive for investors due to a dearth of quality supply but price growth in the housing market will ease in 2015 to around 6% with transaction levels having peaked for the time being. ‘This has been a year of extraordinary expansion across the property sector and while this will continue into 2015, overall there will be a return to more sustainable levels of growth,’ said Miles Gibson, head of UK research, CBRE. ‘Rental growth will continue in all sectors and we expect investment yields to continue to improve as levels of capital flows into the UK market remain high. In terms of where growth, we forecast a ripple effect next year as property investors shift from London out to the regions,’ he explained. ‘Global economic factors, most notably the falling price of crude oil, in 2015 will benefit the UK. The likely effects of pushing down inflation and boosting consumer spending, means we should expect to see a knock on benefit for retailers which in turn could stimulate growth in the retail property sector,’ he added. ‘Although there positive signals for the property market, we recognise that there will be uncertainty caused by the imminent general election. The combination of these trends makes 2015 an intriguing prospect for property markets,’ he concluded. Continue reading
Auckland property market sees record sales, record prices and low listings
December’s residential property sales in Auckland were the strongest they have been for the final month of the year for the past decade, the latest data shows. Sales numbers were up significantly, prices reached all-time highs, and the number of available listings reaching an all-time low, according to independent agency Barfoot & Thompson. ‘It was our busiest December in the last 10 years with demand never being higher, or choice lower. Even though December was the shortest selling month of the year we sold 1,050 properties, our fourth busiest month of the year,’ said managing director Peter Thompson. He pointed out that sales in December were 28.5% higher than in December 2013 and the average sales price in December 2014 was $758,891, some $1,982 higher than November’s average price. The median price increased to $720,000 in December, which was $28,500 or 4.1% higher than November’s, and it is the first time the median price has moved above $700,000. ‘At the same time the number of properties on our books at the end of December was 2,500, our lowest number for any month end in the past 10 years. For us, this represents less than two months’ stock, and indicates that in the first quarter of this year, buyer choice will remain severely limited,’ explained Thompson. He believes that in part, December’s strong activity was a flow over from October and November, which were catch up months following a relatively low period of activity during September caused by the General Election. Although the year ended with record prices and sales activity, overall prices in 2014 rose slower than they did in 2013. The average price increased by 10.3 % in 2014, compared to 11.1% in 2013 while the median price increased by 11.1% compared to 12.7%. ‘The past two years of strong price growth is reflected in the significant change in sales volumes in both the higher and lower price segments of the market. In 2014 some 29.5% of all homes sold for under $500,000,’ said Thompson. ‘A year earlier, 38.6% of all sales were in this price category. The same trend is found at the top end of the market, with sales of homes in the $1 million and above category in 2014 representing 17.2% of all sales. A year earlier it was 12.4%,’ he added. Continue reading
