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Research suggests many UK buy to let landlords plan to sell up
The proportion of landlords in central London who intend to sell property has quadrupled since last year’s Budget, according to new research. Just 4% of landlords in central London had plans to sell property when surveyed before last year’s Budget but new figures from the National Landlords Association (NLA) show that has risen to 19%. The 15% increase in intention to sell property is the highest witnessed across the UK over the last six months. Landlords with property in the North East have seen the smallest increase compared to other regions of the UK, rising from 17% in June to 24% in January. According to the NLA the restriction to mortgage interest relief for individual residential landlords announced during last year’s Summer Budget will leave many landlords worse off, forcing some basic rate tax payers into a higher tax bracket and leaving higher and additional rate payers with considerably bigger tax bills. The NLA has labelled the changes the Turnover Tax, because landlords’ tax will be calculated on the rental income they earn, rather than their profits. ‘Local property markets vary greatly across the United Kingdom, but we are seeing a loss of confidence across the board as many landlords realise they won’t be able to remain in the market,’ said Richard Lambert, NLA chief executive officer. ‘If landlords follow through with their intentions over the coming months this could lead to a massive sale of property, as we have previously warned. However, this may not be a straightforward process, especially for those with stock in low demand areas,’ he pointed out. ‘We urge those considering selling up to think about when they will need to do so, and to plan ahead now in order to minimise the risk of losing money as a result of a failure to sell,’ he added. Separate research shows that 59% of landlords are shelving plans to make further investments in buy to let or even selling their existing properties with tougher mortgage rules, the stamp duty change and mortgage interest tax relief behind their thinking. The research by property crowdfunding platform Property Partner also found that 27% of landlords had little or no awareness of the changes which are likely to affect their financial circumstances. Some 41% of those questioned say they plan to continue buying properties for rent, 38% say they are switching strategies. Continue reading
Private sector tenants in London pay over 100% of asking rent
The average home in the UK is let for 99.9% of the asking rent, the highest such value since 2007, just before the global economic downturn, new research shows. Overall the average UK rent is up 3.2% to £926 per month but the rate of growth is down from February 2015, the latest Countrywide monthly lettings index shows. The report has identified a fall in tenants’ negotiating power when renting a new home. It has found that 12% of lets were agreed at more than the initial asking price over the last year, with the average tenant paying 99.9%. But this figure is highest in London where the average let was agreed at 100.9% of the asking price while it was lowest in Wales at 98.7%. One in five of those renting in London pay more than asked for to secure a home of their choice, far more than those outside of the Capital. This works out at an extra £94 a month over and above the asking rent against a UK average of £44 which, over the course of a typical 17 month tenancy, this equates to an extra £1,578 in rent for the average Londoner. London has seen the largest growth in rents anywhere in the country since 2007, with rents 34% above their pre-recession record compared to12% across the UK as a whole. Despite these increases, the proportion of lets agreed at more than the asking price has risen in every year since 2008 demonstrating the continuing balance of power towards landlords. In 2008 just 3.5% of deals were agreed at above the asking price while 23.5% of tenants were able to negotiate money off the asking rent. By 2016 the proportion of tenants able to renegotiate prices down has plummeted to 8%. As was the case in 2015, rents are growing at the fastest rate across the South of the UK. The South East saw growth of 5.8%, the South West up 4.8% and Greater London up 4.2%, all above the UK average. While the Midlands saw growth of just 1.1% and the North 3.8% with the report data also showing that there has been a slowdown in the top end as central London rents fell 8.4% year on year. ‘The combined effect of growing numbers of people renting and a lack of supply has seen tenants’ ability to negotiate diminish. Tenants are having to compete more often and with more people in order to rent the home they want, meaning they need to offer more money in order to push ahead of the crowd,’ said Johnny Morris, research director at Countrywide. Continue reading
Downsizing in UK could bring windfall of up to £200,000 on average
Nearly half of home movers in the UK plan to downsize in the next three years and on average realise up to £200,000 by doing so, according to new research. Some 46% plan to sell and buy a smaller property and by downsizing from a detached to a semi-detached home they could realise a windfall of £117,230 of £200,000 in London. Downsizing was cited as the single most popular factor for moving, according to data provided by Lloyds Bank with research showing that the popularity of downsizing has grown in recent years, buoyed by the anticipated returns. The figures show that average age for a downsizer is 53, at which point the greatest number, 37%, of downsizers had lived in their home between 11 and 20 years. The main reason people cite for downsizing is to move somewhere which better served their circumstances with 53% wishing to do so while 39% want to reduce bills or free up equity and 31% to provide extra cash for retirement. A fifth say that they are downsizing earlier than they had anticipated, citing reasons such as health, changes in relationship status and a need to be closer to better local amenities. A third also say that they are planning to move to a more affordable area. Some 72% of those downsizing said they expected to profit from their move, with 35% saying that they planned to reinvest their additional capital in a new property, 29% said that they would invest in other financial products, whilst 21% planned to invest in their pension or pass the earnings on to their family. ‘People may consider moving home for a variety of reasons, often tied to their next big step in life whether that’s getting married, starting a family or children growing up and flying the nest,’ said Mike Songer, mortgage director with Lloyds Bank. ‘We typically think of people moving to bigger houses as they move up the housing ladder, but people are increasingly looking to downsize their home because their circumstances or priorities have changed. Whilst financial gain may not be the main driver for those looking to trade down their property it is clearly a factor, with three quarters of downsizers expecting to profit from such a move,’ he explained. ‘There are definitely financial benefits to be gained from trading down, with an average potential windfall of £117,230 when moving from a detached home to a semi-detached house. Downsizing is also healthy for the market, as it helps keep it moving and frees up larger properties which could be perfect for young families about to take their next step up the property ladder,’ he added. A breakdown of the figures show that house prices in the capital mean that London home owners could make the most from downsizing, as they stand to free up an average of £201,052 from trading down from a detached to a semi-detached home. Downsizers from the South West saw the highest rise over… Continue reading
