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Rents in England and Wales fall 1.2% month on month
Rents across England and Wales fell in October, taking the average to £806 per month, down 1.2% from the all-time high recorded the previous month, according to the latest buy to let index. Despite this, rents are considerably higher than a year ago and in the 12 months since October 2014, average rents have risen by 4.7%. After negative CPI inflation of 0.1%, this represents real terms annual rent rises of 4.8%. The index from Your Move and Reeds Rains also shows that four out of 10 regions in England and Wales have seen local rents defy the more general monthly slowdown. In the lead, the East of England has seen rents rise by 0.7% between September and October. Following this, rents are up 0.4% on a monthly basis in the North East, up 0.3% in the neighbouring Yorkshire and Humber region, and rents in the East Midlands have seen 0.1% month on month growth. On the back of these rises, rents in the East Midlands are now at the highest level on record, at £604 per month, while Yorkshire and Humber has also witnessed a new all-time record, with rents reaching £552. By contrast, rents in the South East lead the generally downwards monthly trend, dropping by 2.5% between September and October. This is followed by the South West with a 2.1% monthly dip and by London where rents are 1.1% lower than in September. On an annual basis, London still leads the field with rents now 10.7% higher than in October last year, followed by annual rises of 8.9% in the East of England and 5.7% in the East Midlands. At the other end of the spectrum, recent falls take Welsh rents to levels 6.7% lower than a year ago. According to Adrian Gill, director of estate agents Reeds Rains and Your Move, the very peak of the lettings season has now passed which means better deals are possible for tenants looking to rent later in the autumn. ‘However, there has been no huge change in the fundamentals pushing rents higher than in previous years. Whether or not the sharpest mismatch between supply and demand lasts into October, the fact remains that the private rented sector is growing rapidly, driven by demand and new properties coming onto the rental market are letting quickly,’ he said. ‘Many tenants are earning more, and while buying a home is still an unrealistic stretch for millions, renting a home is luckily still within reach. The private rented sector is much more closely connected to what people earn than the property purchase market, which has the financial insulation of mortgage payments and interest rates. By contrast, rents are more fundamentally limited by monthly budgets and now that ceiling is being lifted, average rents are likely to continue to rise rapidly on an annual basis,’ he explained. … Continue reading
UK private rented sector stable with voids at historic lows
The private rented sector in the UK is a stable market where yields have seen modest improvements and void periods, the average amount of time PRS properties spend unoccupied, are at historic lows. More than half of those landlords surveyed in the latest trends data report from Paragon Mortgages report steady tenant demand over the quarter, while 40% said tenant demand was either ‘growing’ or ‘booming’. The percentage of respondents expecting tenant demand to remain stable over the coming 12 months, or grow, has also increased from 85% to 89%. The latest data also shows that average yields have grown over the last three months from 6.3% to 6.4%. This improvement is in line with steady growth seen throughout 2015. In another key indicator of confidence that the PRS market will remain stable, landlords indicated that they expect yields to remain stable and maintain current levels over the coming 12 months. On the direct question of whether or not landlords intend to purchase properties over the coming 12 months, the figures again show a steady market, and a slight increase in optimism. Those intending to buy are up from 16.8% to 18.4%. Reflecting the overall stability of the market, however, landlords on average expect the number of PRS properties in their portfolio to be the same as they are currently in 12 months’ time. Void periods remain historically low at just below 2.6 weeks. This could be a reflection of the changing demographics of those choosing to live in the PRS. The most recent data shows an increase in the numbers of families with children moving into the PRS, and a corresponding decrease in young couples without children and single professionals. But despite the changing makeup of the tenant population, demand for longer term rental agreements remains relatively low, the research shows. These demographic changes also appear to be reflected in the ongoing buying intentions of landlords who are investing more in traditional family housing. On the question of how landlords view their portfolios compared with three months ago, levels have remained stable throughout 2015 and continue to do so in the latest data. Those feeling a little more optimistic are up by 1.6% and 58% report that optimism levels are unchanged since the last quarter. ‘This quarter’s results present a picture of a PRS sector that is neither booming nor contracting, but rather growing steadily,’ said John Heron, managing director of Paragon Mortgages. ‘There is room for improvement and it will be interesting to see, in future reports, if macroeconomic concerns about the stock market and the Eurozone, and changes in tax and regulation such as those recently announced by the Chancellor, have an impact on sentiment,’ he explained. ‘For the time being however, landlords are seeing steady growth and they expect to see this continue as demand for quality PRS accommodation remains buoyant,’ he added. Continue reading
Latest data shows remortgage activity in the UK soared in 2015
Remortgaging activity in the UK has soared over the past year with the total number of valuations some 53% higher than in October 2014. The data from the latest research report from Connells Survey & Valuation says that this is despite the seasonal fall, which saw activity from remortgaging in October drop 21% compared to September 2015. Those looking for cheaper rates have likely been tempted to remortgage to take advantage of the rock-bottom interest rates while they last, according to John Baghsaw, the firm’s corporate services director. ‘Many are also taking this opportunity to remortgage in order to release equity and so upgrade their current property. That said, it’s still a great time to move house. Home sales continue to climb and the Government is improving the liquidity in the housing market by kick starting the construction of starter and mid-range homes. In addition, low interest rates are not just a remortgagors dream, they also make it easier for home movers to climb the property ladder,’ he explained. Despite home mover valuation activity falling 27% between September and October of this year, growth on a 12 month basis remains solid. The sector registered 14% growth in October 2015, when compared to October of last year. Valuation activity for all purposes remains strong, climbing 28% between October 2014 and October 2015, despite dropping back by 21% compared to last month, the data also shows and Bagshaw pointed out that home movers, traditionally the bedrock of the housing market, have experienced more steady activity in October compared to previous months. ‘But with home values continuing to rise solidly and mortgage rates remaining low, this seems like more of a seasonal blip than the start of a trend. By most measures, it’s still a great time to buy. The housing market’s forward indicators remain strong. Activity in all sectors is up on last year, a reflection of a positive combination of economic growth, rising consumer confidence and increasing real terms wages,’ he added. Both the buy to let and first time buyer sectors recorded strong year on year activity in October. Valuations carried out for buy to let investors grew by 25% between October of this year and October 2014, while first time buyer valuations increased by 20% over the same period. However, both sectors also experienced a slight monthly downturn, with October activity in the buy to let sector down by 9% on September. Meanwhile, first time buyer activity saw a 17% dip over the same period. The buy to let sector continues to thrive, albeit it at a steadier pace than in previous months. The fundamentals of its profitability have remained intact. Demand for housing still exceeds supply and very low mortgage rates remain in abundance. Moreover, the Bank of England announced recently that any rate rise is off the cards for the immediate future, meaning the field is still open for many more investors to acquire a portfolio and become a new… Continue reading
