TSI
Most UK landlords are part time with just one property
Most landlords in the UK still consider renting out a property to be a part time activity and the majority own just one property and manage their portfolio as private individuals, new research show. However, there is an apparent trend towards larger portfolios even although rents make up less than half of a landlord’s total income, according to the report from the Council of Mortgage Lenders (CML). But the research, carried out with BDRC and the London School of Economics, does show there is evidence that rent is increasingly becoming a significant income stream for part time landlords. In 2016 some 87% of landlords sampled manage their portfolio as an individual or as a couple, roughly unchanged from the 89% reported in 2010. The proportion operating as a company or other group comprises 14%, roughly on par with the 11% reported in 2010. Likewise, the vast majority of respondents in 2010 and 2016, 92% and 95% respectively, do not consider letting to be their main business or occupation. While most landlords still own just one property, there is an apparent trend towards larger portfolios. Between 2010 and 2016, the proportion of respondents who manage only one property fell from 78% to 63%. At the same time, the share managing two to four properties rose from 17% to 30%. The report suggests that this could be due to the difference in the samples of the two surveys. However, the sharp contrast between the 2010 and 2016 data is likely to reflect to some degree an underlying increase in average portfolio size. Such a finding would be consistent with CML data on the number of loans for buy to let house purchases, which has increased by about 19% a year since 2010. Generally, rental receipts make up less than half of a landlord’s total income. However, evidence suggests that rent is increasingly becoming a significant income stream. For about 90% of landlords, rental income is less than half of their total income, virtually unchanged since the 2010 survey. However, the share receiving no rent, typically due to a property being unoccupied, has dropped substantially from 21% to 5% over the past six years. At the same time, the share receiving up to one quarter of their income from rent has risen by about seven percentage points, and the share claiming between one quarter to one half of the income from rent has grown by 10 percentage points. The report suggests that this apparent shift may be attributable to differences in sample sizes. However, if it reflects an underlying trend, this would be consistent with the apparent increase in portfolio sizes, as it is easy to see how owning a larger portfolio would allow a landlord to draw a bigger chunk of their income from rent. Overall the report says that while it looks like the typical landlord is still an individual running a rental business on the side, there appears to have been a gradual expansion of… Continue reading
No signs yet of Brexit creating a UK housing recession says new analysis
Since the European Union Referendum the number of residential properties advertised for sale in the UK has increased and average asking prices have reduced by 0.2%, new research shows. While the number of properties with a reduced asking price has increased from 29.3% to 34.5%, mortgage availability remains broadly unchanged, according to the analysis report from global investment banking firm. The early conclusion from the industry note from the firm’s UK Building and Residential Services team of analysts is that UK households have the confidence to try and move house and accept that prices may need to soften to make it happen since the decision to leave the EU while there is no sign of a property recession. The research says that listings volumes, for example, do not suggest a slowdown and an analysis of residential property listings on major UK property portals and have found that since the EU referendum the number of listings has increased by 3.6%. It also points out that in the two previous UK recessions housing transactions were, with hindsight, a lead indicator, falling for more than 18 months ahead of the recession. In the absence of current transaction data we view listings activity as an early look towards housing transactions. With listings increasing, it appears UK households are prepared and ready to move. Before the vote there were headlines suggesting that Brexit would result in a steep fall in house prices but according to the analysis the trend in asking prices is only just downwards. On average asking prices have reduced by 0.2% since the EU referendum, somewhat less than the movement in the prices of the shares of the companies which service the UK housing market. ‘Perhaps more interesting is the movement in the number of properties which have reduced their asking prices. Before the EU referendum 29.3% of listings had reduced their initial asking price, this figure has now increased to 34.5%, overall a move of 520bp or 18%. This suggests to us that UK households remain keen to move and are adjusting their price expectations,’ the report explains. In the two previous recessions London house prices were the first to fall and the first to rise but the research show that so far 76% of London postcodes have seen an increase of listings, 22% a reduction and 1% unchanged. With respect to asking prices 70% of London postcodes have seen a reduction in asking prices and 30% an increase. A breakdown of the figures show that in East London 35% of postcodes have seen asking prices rise and 65% fall, in the North of the city 30% have risen and 70% fallen, in South London the split is 27% up and 73% down and in West London 25% up and 75% down. ‘London has the largest rental market in the UK and we believe that asking rents provide the most cutting edge data point with respect to the health of the underlying… Continue reading
Rents up 1.5% in UK, but growth is slowing across the country
Rents in London fell by 0.5% in July compared to the same month in 2015 as growth in the lettings market in the city stalled, but they increased across the UK by 1.5%, the latest index shows. However, a breakdown of the figures from the Countrywide Lettings Index shows that rental growth slowed across every region of the country and the drop in London was the first annual fall in rents for six years. In July the average rent in the UK was £951 a month, up 1.5% on last year, but rising half as fast as in July 2015. Rents fell by 2% in Wales, by 1% in Scotland and by 1.1% in the South East of England but in the North of England and the Midlands, the rate of rental growth hit the highest level for two years. The highest rents are in Central London at an average of £2,638, up 2.1% year on year, followed by Greater London at £1,280 and the South East at £1,173. In the East of England they are £963, up 3.8%, in the South West £856, up 3.3%, in the Midlands £703, up 4.8%, in the North of England £694, up 4.7%, in Scotland £689, down 1% and in Wales £671, down 2%%. The report points out that while tenant demand has increased nationally, the volume of homes coming onto the rental market has slowed or in some cases reversed rental growth. In July there were 23% more homes available to rent in the UK than at the same time last year, while the capital saw a rise of a third. Some of this increase has been driven by purchases rushed through to beat the stamp duty deadline, however the number of homes available to rent has continued to rise in recent months, particularly in London and the South East. An increase in the number of homes on the market has meant less deals are agreed above asking rents. In July 2015 16% of tenants paid over the asking rent to secure a home compared to 7% in July 2016. In London the fall was larger, 11% of homes let for more than the asking price in July, down from 32% in July 2015. ‘The large rise in numbers of homes available to rent has certainly slowed rental growth, even with tenant numbers increasing. Stock levels were already running higher than usual due to investors bringing forward purchases in the rush to beat the stamp duty deadline in April,’ said Johnny Morris, director of research at Countrywide. ‘Added to that, uncertainty in the sales market in the run up to, and after the European Union Referendum has caused more discretionary sellers to turn to the rental market. While rental price growth has slowed, current market dynamics are likely to accelerate the growth of renting. It seems that with more stock and demand from tenants we will… Continue reading
