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UK lettings agents see surge from buy to let landlords ahead of April tax change
New tenants and rental housing supply fell in the UK in December but agents are seeing buy to let investment demand rise ahead of new tax changes. Overall the number of prospective tenants in the private rental sector dropped 15% last month with agents registering an average of 29 per branch, down from 34 in November. The data from the monthly report from the Association of Residential Letting Agents (ARLA) also shows that a quarter of agents saw an uplift in buy to let investments as landlords rush to get in before the April stamp duty change deadline. It also points out that letting agents expect to see decline of buy to let properties once the extra 3% stamp duty is charged from April. Supply also decreased marginally in December, with an average of 182 properties managed per branch, down from 189 in November. Those looking for rental properties in London in particular continue to struggle, with an average of just 108 properties managed per branch, some 43% less than the national average. Alongside supply and demand, the number of tenants seeing rent hikes also dropped in December with 18% of ARLA letting agents reporting a growth in rent, a drop of 5% compared to November and the lowest reported in 2015. ‘As we’d expect in December, the UK saw a lull in activity, with people putting off any moves until January. The supply of housing stock was down, and fewer tenants were on the hunt for new properties,’ said David Cox, ARLA managing director. ‘It’s reassuring to see the number of agents reporting rent increases is still on the decline, which is some encouraging news for tenants as we start 2016,’ he added. The stamp duty reforms to buy to let properties are causing concern amongst ARLA letting agents. Some 62% of agents predict that the changes from April will push up rent costs, and a further 65% predict the new reforms will push landlords out of the market after April, and decrease supply. However, the announcement is already having an effect on landlords as 24% said that they have seen uplift in interest from buyers looking to invest in buy to let properties before the new changes come into play in April. ‘Buy to let landlords determined to complete purchases before the changes come into force in April are storming the UK housing market, meaning the lull we’d usually see is less significant,’ Cox explained. ‘But subsequently, after April, we’re very likely to see the number of buy to let properties on the market begin to decrease, and this will most certainly have a detrimental effect on renters across the country,’ he added. Continue reading
Modest house price growth expected in UK in first months of 2016
UK house prices increased by 0.3% in January and annual growth is broadly stable at 4.4%, according to the latest residential index to be published. This takes the average price to £196,829 but the monthly rate of increase slowed from 0.8% in December which was unseasonally high, the report from the Nationwide Building Society says. Robert Gardner, Nationwide's chief economist, pointed out that annual house price growth has remained in a fairly narrow range between 3% and 5% since the summer of 2015. This annual trend was maintained in January, with house prices up 4.4% over the year, broadly in line with the 4.5% increase recorded in December. ‘As we look ahead, the risks are skewed towards a modest acceleration in house price growth, at least at the national level. The labour market appears to have significant forward momentum,’ said Gardner. ‘Employment has continued to rise at a robust rate in recent months and, while the pace of earnings growth has slowed somewhat, in inflation adjusted terms regular wages continue to rise at a healthy pace,’ he added. He also pointed out that this trend expected to continue and with interest rates also likely to stay on hold for longer than previously anticipated, the demand for homes is likely to strengthen in the months ahead. ‘The concern remains that construction activity will lag behind strengthening demand, putting upward pressure on house prices and eventually reducing affordability. Indeed, the market is already characterised by a shortage of stock, with the Royal Institute of Chartered Surveyors reporting that the number of properties on estate agents’ books remains close to all-time lows,’ Gardner added. Continue reading
UK housing supply halves in 10 years and first time buyers still struggle
The supply of available housing to buy in the UK has almost halved in 10 years and first time buyers are still struggling to get on the housing ladder, according to estate agents. The average number of properties available per branch in December 2015 fell to 37 properties, the latest housing market report from the National Association of Estate Agents (NAEA) shows. It is the joint lowest figure for 2015 with September, and almost half the number available in December 2005 when there were an average 72 houses per branch. There were 45 houses available in December 2014. While the number of house hunters registered per branch fell to 374 in December from 403 last month, an expected seasonal trend, the number of house hunters per branch has gradually increased year on year. In December 2014, there were 360 potential buyers registered at each branch, up from 302 in December 2005. Low supply affected the number of sales in December, as NAEA members reported an average of seven sales per member branch, an expected seasonal dip, and the lowest recorded in 2015. ‘Whilst we expect figures for supply and demand to be seasonally low in December, 2015 overall does not paint a positive picture for the housing market. Supply of housing is half of what it was 10 years ago,’ said Mark Hayward, NAEA managing director. ‘Yet the number of home buyers on the books has been gradually increasing. When there is such a huge and widening gap between supply and demand, a level playing field seems further out of reach for many would be house buyers,’ he added. The report also suggests that the Government’s recent efforts to help first time buyers enter the property market such as Help to Buy and plans to build new starter homes are yet to take effect. The number of sales to first time buyers stands 24%, a 2% drop from December 2014. It also reveals that the recent 3% increase to stamp duty on buyers’ second properties has created movement in the market. Some 44% of NAEA agents have seen an increase in house buyers trying to beat these reforms, and snap up their properties before they come into force in April. ‘The issue of lack of supply needs to be solved, but it isn’t going to be done anytime soon. We are still waiting to see new homes being built and whilst we wait, house prices continue to rise,’ said Hayward. ‘There is some potential light for first time buyers however, once the new tax rate increase in April is in place we may see less investment from buy to let or second home investors, which may mean less competition for first time buyers,’ he added. Continue reading
