TSI
Demand for rental properties in UK increased in first quarter of 2016
Despite attempts by the UK Government to dampen the buy to let market and stimulate home buying, the first quarter of 2016 saw demand for properties to rent continue to rise, new research shows. The number of landlords reporting tenant demand as either increasing slightly or significantly stood at 39%, up from 34% in the fourth quarter of 2015. A further 36% of landlords described tenant demand as being stable. According to the latest survey by BDRC Continental for Paragon Mortgages, the sector is also witnessing high levels of tenant satisfaction. Some 79% tenants surveyed said they are satisfied with their current landlord. The research also found that 85% of tenants consider their current rental property to be their home and 69% believe the level of rent they pay to be good or very good value for money. Reflecting the changing balance in housing tenure, the average length of time tenants are spending in their current properties now stands at nearly seven years. The average length of time spent in the Private Rented Sector (PRS) in total was reported to be nearly 13 years. Landlords also agree that the PRS plays an increasingly important role in housing the UK. With the social housing sector having lost around one million homes since 1991, some 78% of landlords polled agreed the PRS compensates to some extent for the decline of the social housing sector. An overwhelming majority, 89%, of landlords also stated the PRS has an important role to play in accommodating those who are priced out of home ownership, while 74% agreed the PRS plays a role in accommodating those excluded from social housing by dwindling supply. ‘The rise of the PRS and the decline of the social housing sector have been the predominant trends in the UK’s changing housing tenure over the last 20 years. This data gives an interesting insight into how both tenants and landlords perceive these trends,’ said John Heron, director of mortgages at Paragon. ‘It’s good to see tenant satisfaction at such high levels. The sector often suffers from negative PR and the good work done by the vast majority of landlords to provide homes for those who cannot or do not want to buy goes unremarked,’ he explained. ‘This survey clearly demonstrates that the PRS is increasingly providing longer term solutions in housing and that responsible and professional landlords are supporting the provision of housing to those that rely on the PRS for their home,’ he added. Continue reading
Rents remained unchanged in capital cities in Australia in May
Overall rental prices in Australian capital cities were unchanged in May but rates fell everywhere apart from Melbourne and Hobart, the latest index shows. Weekly rents were unchanged but year on year they were down 0.3% taking the average rate to $489 a week for houses and $469 a week for units, according to the data from the CoreLogic Rent Review report. The firm’s research analyst Cameron Kusher expects that the weakness in the rental market will persist and on an annual basis rents will fall further over the coming months. The data also shows that over the 12 months to May several capital cities saw a rise in rents. In Sydney they increased by 0.9%, in Melbourne by 2.3%, in Hobart by 3.7% and in Canberra by 0.1%. But falling rents pulled the combined capital average lower with a drop in Perth of 8.8%, a fall of 16.9% in Darwin, and down 0.9% in Brisbane and Adelaide 0.9% year on year. ‘Since we started tracking annual rent changes back in 1996, the May 2016 results represent the lowest annual change on record. The rental market slowdown has been rapid over the past year with rents increasing by 1.5%,’ said Kusher. ‘A number of factors such as the softest wages growth on record have contributed to this slow down. At the same time, we also saw unit construction hit record high levels and a lack of population growth which has contributed to a lesser demand for rentals,’ he explained. He pointed out that with rental rates easing over the year and home values continuing to rise rental yields continue to sit at record lows of 3.3% for houses and 4.2% for units. However, gross rental yields for houses are now at record lows in Sydney, Melbourne and Canberra while unit yields are at historic lows in Sydney. Continue reading
Call for UK to drop tax on new prime property developments
The UK Chancellor George Osborne should pause housing tax at the top end of the market or risk distorting the wider market, it is claimed in anew analysis report. Up to a 100% rise in stamp duty on high luxury homes has seen buyer interest drop at a time when there has been a 40% rise in prime properties planned in London, according to the report from design and consultancy firm Arcadis. It points out that the unintended consequences of successive stamp duty rises means projects in development for a number of years have been disproportionately affected and the delivery of affordable homes could be threatened as a result. Despite initially encouraging investment in prime residential property as a means of stimulating wider economic growth, the government has since changed policies mid-cycle, the report suggests. It says that this is regardless of the fact that many developers have already committed to major schemes. Since the end of 2014, the stamp duty alone on a £6 million home has almost doubled, rising from £420,000 to £810,000 when bought as a second property. The timing of these reforms has come just when certain parts of the market had already begun to slow. In order to ensure sales, some developers who had committed to schemes before 2014’s reforms have been forced to discount prices or resort to ‘stamp duty paid’ deals. These sales discounts have hit margins by as much as 4% on prime homes and up to 7% on super prime properties. Meanwhile, others have opted merely to delay construction, meaning that a significant number of affordable homes, planned as part of the original development, are not being built as quickly. Furthermore, with fewer would-be purchasers willing to pay such high rates of tax, many investors are eyeing homes under the £1.5 million price threshold. This additional wave of interest risks distorting the mid-market and inadvertently pricing out those people who would typically be looking to purchase these as family homes, the research adds. According to Mark Cleverly, Arcadis head of commercial development, to accelerate the delivery of affordable housing currently in the pipeline and ensure the construction sector remains sustainable, the Chancellor must impose a temporary reduction in stamp duty on new build properties. In tandem with this, he must better focus the debate onto ensuring acceptable levels of affordable housing are delivered as part of new developments. Cleverly suggests that this approach would get the market moving again, meaning both a steady flow of affordable homes coming onto the capital’s market and making schemes viable again for developers, safeguarding jobs and ensuring development can proceed as planned. ‘The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations. This has prompted a drop in buyer interest at the very top of the market, creating… Continue reading
