Investment
Average rental period in UK is 18 months, new research shows
People renting a home in the UK spend an average of 18 months in the property before moving on with vacant properties being filled most quickly in Birmingham, new research has found. Birmingham has the lowest tenant turnover, with renters staying an average of two years and four months in the same property. Cardiff on the other hand, has the highest turnover, with the average property being vacated less than a year after being filled, according to the study by landlord insurance provider Direct Line for Business. Leeds at 12 months and Bristol at 14 months also have a high turnover of tenants, which could prove problematic for local landlords, the report says. The analysis also looked at the average time it takes to fill a vacated property revealing that on average, it takes a landlord 22 days to find a new tenant. This could result in an average loss of £547 in uncollected rent. When calculating the yield for a property, landlords need to take into account this void period and ensure they have sufficient resources to meet any mortgage, ground rent or other charges. Vacant properties in Birmingham are filled the quickest, with a landlord finding a tenant in just 11 days. However, in Liverpool and Aberdeen landlords struggle the most to fill their properties, taking an average of 33 days, to find a suitable candidate. Direct Line for Business's analysis estimates that this gap in rent could cost landlords as much as £761 in Liverpool and £913 in Aberdeen. Even with such a competitive rental market in London, letting agents in the capital claim that it takes 20 days on average to fill a property. With average monthly rents in central London surpassing £2,000 this could amount to a loss of £1,869 in income. The research also found that landlords can't always rely on occupants remaining in a property for the duration of their tenancy agreement, with 9% moving out early. The highest rate of tenancy turnover is in Aberdeen where 19% of tenants leave a property before the end of the tenancy agreement with Leeds and Sheffield both close behind at 13%. ‘This research highlights the pressure landlords are under to replace outgoing tenants in their properties. Vacant properties are obviously a worry for landlords but it's vitally important that they take into account void periods when calculating the affordability of owning a rental property,’ said Nick Breton, head of Direct Line for Business. ‘Staying on top of the on-going changes within the industry can be time-consuming and a battle for landlords and we fully appreciate the challenges they face when it comes to managing their rental properties,’ he added. The business has developed a Mobile Landlord app which can manage up to five properties aimed at alleviating some of the stress. The app can track income, calculate yields, set handy reminders such as when a tenancy agreement may be coming to an end and also keep landlords up to… Continue reading
March saw unprecedented lending levels in UK due to buy to let rush
Home owner house purchase lending was up by 60% year on year in the UK in March but the overall lending figures were affected by a rush from buy to let buyers seeking to beat a new stamp duty surcharge. Overall on an unadjusted basis, home owners borrowed £13.8 billion and first time buyers borrowed £4.5 billion, up 32% on February and 29% on March last year, according to the latest figures from the Council of Mortgage Lenders. Home movers borrowed £9.3 billion, up 75% on February and 82% compared to a year ago while remortgage activity totalled £4.7 billion, down 2% on February but up 7% compared to a year ago. Landlords borrowed £7.1 billion, up 87% month on month and 163% year on year but CML director general Paul Smee pointed out that activity was distorted in March due to a rush to beat the introduction of changes to stamp duty on second properties in April, alongside the seasonal uptick in activity before Easter. ‘While the increases are substantial, these supercharged levels of activity are likely to be temporary and will fall back over the summer months,’ he added. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), suggested that while activity has picked up among home movers, the leap in landlord lending makes it clear that price inflation has been fuelled by the Government’s stamp duty changes for buy to let properties and second homes, incentivising many buyers to bring their purchases forward where possible. ‘A policy move that aims to manage long term demand has therefore created short term tremors in the market and made it hard to predict how things will look when the dust settles. The Government’s hope is that first time buyers will find their prospects improved and lenders are certainly doing their bit with first time buyer lending up 29% year on year,’ he explained. ‘Continuing access to high loan to value (LTV) mortgages is an important part of this equation, and should not be frowned upon given the rigorous affordability checks in place,’ he pointed out. ‘Nevertheless, the UK needs a balanced housing market to prosper and playing politics across tenures cannot compensate for the underlying short supply of property. Added uncertainty from the upcoming EU referendum vote means the market is in urgent need of time and space to draw breath. Now is not the time to consider further tinkering under the bonnet after a rollercoaster start to the year,’ he added. According to David Whittaker, managing director of Mortgages for Business, it wasn’t just March which was exceptional. ‘The first quarter as a whole was strong as landlords reacted to tax changes. The dust will begin to settle in this part of the mortgage market through the second quarter of the year,’ he said. ‘Landlords have a new status quo and it’s not just the additional stamp duty that needs to be factored into… Continue reading
UK vote on future in EU could have major impact on housing markets
If the UK leaves the European Union there is a risk that the move could have a long last and damaging effect on the country’s residential property markets, according to a new report. It could affect current plans to build hundreds of thousands of new homes, compromise London’s position as a safe haven for property investment, but could also have positive effects for first time buyers. The report from the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) compiled with the Centre for Economics and Business Research (Cebr), highlights a number of short and long term implications potentially arising from the upcoming vote. While the impact Brexit will have on migration policies is unconfirmed, imposing greater restrictions on foreign workers coming into the UK may compromise the UK’s ability to build homes with the Government having pledged to build one million new homes by 2020. It points out that construction based jobs are decreasing in popularity among UK nationals, and as 5% of current construction workers were born in other EU countries and workers from the are becoming more important than ever in filling the skills gap to boost housing stock. A leave vote could mean that in 10 years’ time there would be a severe skills shortage of construction workers, according to Mark Hayward, NAEA managing director. ‘Even if we then had planning permission, investment and materials to build more housing, we simply wouldn’t have the resource to put the bricks and mortar together. It has the potential to have a very damaging effect on the future housing market,’ he explained. But he added that a leave vote could provide first time-buyers with breathing space as demand for housing would be expected to ease off. The report also says that non EU businesses are currently attracted to the UK’s status as a gateway to the single market as it allows them to establish and grow their presence across Europe. In 2014 some 19% or £5.3 billion) of total FDI inflow into the UK came from EU sources and in 2013 some 17% of sales in London’s prime property market made to non-UK buyers were to European nationals. It suggests that in the event of Brexit, a portion of FDI would be re-directed to EU countries, freeing up housing units, particularly in London, previously purchased through FDI for British buyers. Also, if the UK does not maintain free movement of labour, the total population of the UK could decrease by 1.06 million and the report argues that with fewer people, demand will ease, making the market more accessible for first time buyers, as well as second steppers and last and last time buyers and this is will be especially apparent in London. Reduced migration would also affect the private rental sector. Currently, private renting is a more… Continue reading
