Belvoir Q2 2020 index studies lockdown rental trends and reveals robustness of sector during pandemic

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The Belvoir Q2 2020 rental index, which contains two months of data within the UK’s lockdown period, reveals that average rents for Belvoir offices in England, Scotland and Wales decreased in Q2 2020 by around 3.5% versus Q2 2019. When comparing Q2 2020 to the 2019 annual average this shows a smaller, almost insignificant fall of around -1%.

“Belvoir’s Q2 rental index, which is prepared for us by TV property expert Kate Faulkner, shows that on average rents fell during lockdown by very small numbers,” says Belvoir CEO Dorian Gonsalves.

“This is interesting, bearing in mind that two months of the Q2 data fell during the lockdown period. Unlike other indices, Belvoir looks at advertised rents provided by our offices that have been trading for more than eight years, which makes the data extremely robust. Clearly, due to the impact of lockdown, offices were advertising less properties compared to the same period last year, but the overall picture when compared to Q2 2109 shows that rents did not fall dramatically, and there was no evidence of landlords pushing prices up. These findings are remarkable, confirming how robust and sustainable the market is, both from a Belvoir franchisee’s perspective and that of a landlord and BTL investor.

“It is, however, important to note that there are always variations across the country, both in terms of rents and tenant demand for certain types of properties. For example, Nick Horan from Belvoir Dundee reported increased rents for houses due to high demand, and also for one and two bed flats. Over in Moray, Andrew Campbell reported that rents remained stable with demand increasing for flats and houses, but static for HMOs, and a general shortage of properties due to post lockdown demand, and people wishing to move. Over in Wales, Ben Davies from Belvoir Swansea confirmed an increase in rents and demand, with a shortage of one bed flats and an oversupply of two bed flats. In Northern Ireland rents and demand increased for all properties during Q2 2020 and Trevor Burns, owner of Belvoir Newtownards forecasts that unless supply increases there will be an increase in rents.

“In London the average rent recorded in Q2 2020 was £1,550 per month, which is on a similar level to rents reported for Q1, Q4 2019 and Q2 2019. According to Tom Wang of the Belvoir Westminster office, rents for flats decreased during Q2 2020, whilst house rents remained unchanged. Tenant demand was static for houses but increased for flats and HMOs. Rents are expected to remain static during Q3 2020, with demand increasing across the board.

“Tim Hughes from Belvoir Newbury reported a decrease in flat rents during Q2 2020, with an oversupply of two bed flats pushing prices down – especially following lockdown, although, house rents increased, and tenant demand fell. Over the next quarter, it is anticipated that flat rents and demand will decrease, with an increase in demand for houses, specifically properties with outdoor space. There was a similar picture over in Tadley, where Robert Forsyth confirmed that flat rents decreased during Q2 2020 due to a decrease in interest for properties with no outdoor space. Although tenant demand for houses increased, rents remained unchanged.

“The Belvoir Q2 rental index contains in-depth information on rents and tenant demand across the country, as well as predictions for the rest of the year, making it an extremely valuable resource for landlords and investors. Variations in rents and tenant demand for property types confirms the importance of landlords having accurate information and of course it is also advisable to talk to a reputable local agent with expert knowledge of their area.”

To view the Belvoir Q2 rental index in full visit: https://www.belvoir.co.uk/pages/rental-index

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LATEST research: How a CGT tax increase would hit landlords hard

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The changes to capital gains tax (CGT) predicted in July are becoming more likely to kick in this autumn as the Chancellor looks to fill the trillion-pound hold in the UK’s finances.

But new research shows how it would hit landlords hardest in those parts of the country that have seen the biggest historic property price rises.

London and the South East are also the areas where rental yields are lowest, and where landlords are likely to have focused on capital growth rather than annual income, according to new research from Hamptons International.

It says the average higher rate taxpayer landlord in London could see their bill rise by nearly £27,000 to almost £90,000 as a result of the proposed changes.

The Treasury proposes increasing the CGT rate from 28% to 40% for higher-rate taxpayers and from 18% to 20% for a basic taxpayer. 

For a higher rate taxpayer, the proposals would see the capital gains tax bill (excluding allowable expenses) go up from £15,880 to £22,680 – assuming the landlord can make use of their £12,300 CGT allowance. 

Landlords around the country would be affected differently; at least 89% of landlords in London pay capital gains when they sell their property, compared to 31% in the North East, where the average profit on the sale of an investment property is just £5,000, well within the allowance.

The estate agent’s research found that the average landlord who sold their buy-to-let property in England and Wales this year made a £69,000 gross gain, having owned it for almost ten years. 

In London, investors sold their buy-to-let for £236,000 more than they originally paid for it, having owned for 11.1 years. It also finds landlords see less capital growth than the average seller – £88,000 – usually because they buy homes that cost less than the local average and because they prioritise yield.

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Tenants on Benefits – The Conservatives are making you homeless!

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The biggest Housing Benefits Landlord in Nottingham here. So I know what is happening and I want to take you, but I can’t.

Another reason here why landlords won’t accept you.

The house that you want

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London landlords could face significant capital gains tax bills

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Despite the Chancellor Rishi Sunak’s reassurance to the recently-elected back-bench Tory MPs yesterday, that there will be no “horror show of tax rises with no end in sight”, as the government deals with the astronomical costs of coronavirus, it’s inevitable that taxes will rise.

Just where the hammer blows fall remains to be seen, but capital gains tax (CGT) would seem one obvious target, an easily calculated and collectable tax, and London landlords having the biggest gains will have the most to lose.

One estimate is that an average London landlord selling under the proposed new tax regime would have to pay around £90,000 in CGT, that’s if the rumoured proposals come to fruition.

It has been reported that CGT could be brought into line with income tax, which would mean that a higher rate taxpayer, a buy-to-let investor in the capital, according to Hamptons International estate agents estimates, would be paying an extra £26,840 in tax (excluding any deductions for improvements). This would bring the total bill to £89,480, that’s according to research from the firm – it equates to 42pc more than under the current regime, which would currently be a bill of £62,640.

The leaked information has indicated that the Chancellor was considering aligning the CGT rates to income tax, a simplifying change which would mean for a basic rate taxpayer rising from 18pc to 20pc, and for higher rate taxpayers a much more considerable increase from 28pc to 40pc.

Property investors who decide to sell, if these proposed changes are brought in, would be hit most if they have owned rental proprieties for a substantial period in those parts of the country that have seen the highest property price increases. This would inevitably be London and the South East, in the main, though there have been decent gains across the board if you take a 10 to 20 year period.

Agents are anticipating that if the changes were introduced in the Autumn Budget there could be a rush to sell-up before the introduction deadline. Already London has seen falls in rents as a result of the Coronavirus pandemic, and property prices too have fallen as a result of workers considering a move away from the capital, as firms become more relaxed about flexible work routines.

Other factors that, at least in the short term, are affecting the city are the rapid fall in the numbers of international student and the collapse in demand for short-term lettings from tourists. Many landlords who had discovered a lucrative market for short-term Airbnb type lets are now looking for long-term tenants again, increasing supply and therefore reducing prices.

Hampton’s research shows that London landlords have held their rental properties for an average of 11.1 years before selling this year, these being the longest holding periods of any other region across the country. These landlords made a capital gain over the full period of £236,000.

Capital gains tax is calculated by subtracting the buying price from the selling price, assuming the latter is higher, and then deducting buying costs and selling costs (legals and agents fees etc). The owner can also deduct any capital expenses paid out during the period of ownership, such as improvements and structural repairs and other costs which could not been claimed over the years as expenses. Finally, the owner/s can deduct from the gain their CTG allowances of (currently) £12,300. Spouses therefore can together claim up to £24,600 relief if the own the property jointly.

If the rumoured changes are implemented they will be just one more disincentive for landlords to offer much needed rental accommodation and will follow several years of punitive tax changes on landlords. The 3pc stamp duty surcharge on second homes and rentals, a phased-in reduction in mortgage interest tax relief and the removal of the wear and tear allowance have all amounted to a serious attack on the attractiveness of buy-to-lets as an investment for private landlords.

While in other parts of the country outside of the South-east where the gains have been less dramatic, the impact of the proposed changes would be much less, but it is likely that the impact of the changes on London landlords will only go to accelerate the exodus of landlords from the capital to other regions, where income yields are higher.

Capital Gains Tax

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Britain’s biggest landlord and its 55,000+ tenants to feature on TV tonight

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Southwark Council has given a TV crew access all areas for the new Channel 4 series, Council House Britain, airing tonight.

The six-part show promises to be a revealing look at the state of the country’s social housing market from the inside. Two years in the making, cameras follow housing officers, pest controllers and cleaners around the south London borough, the largest social housing landlord in the country, with 10,000 people on its waiting list.

As nearly 40% of Southwark’s population live in 55,000 properties managed by the council, there should be plenty of material, and the series is set to highlight a range of issues from hoarders and environmental health officers dealing with an empty flat with a fridge full of cockroaches, to families fighting eviction.

Show producers say that with behind-the-scenes access to both council workers and their tenants, the series is bursting with characters and their stories, and “provides a warm, uplifting and at times jaw-dropping glimpse into what it takes to find and keep a place to call home”.

Councillor Peter John, leader of Southwark Council, says he’s excited to share the documentary with the world.

“Council officers are often the unsung heroes of the public sector, but just as COVID-19 has revealed the important work our rubbish collectors and social care workers do, Council House Britain will show the country how passionate and committed our housing teams are,” says John.

“I’m grateful to Channel 4 for shining a light on the challenges councils and residents are facing after years of austerity and celebrating the many wonderful and unique people who call Southwark home.”

Southwark Council recently made headlines when it was the first council in the UK to set up its own tenant’ union.

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Belvoir rental index shows robustness of sector during pandemic

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The Belvoir Q2 2020 rental index, which contains two months of data within the UK’s lockdown period, reveals that average rents for Belvoir offices in England, Scotland and Wales decreased in Q2 2020 by around 3.5% versus Q2 2019. When comparing Q2 2020 to the 2019 annual average this shows a smaller

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The Law Society – Eviction notice extension comments

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Tenants in England facing eviction have been granted a notice period extension from three months to six in new government legislation.

This will apply to notices being served to both private and social tenancies from 29 August and until March 2021.

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Landlords can relax: rental market robust before and post lockdown

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There are lots of news stories about what’s happening in the property market – mostly with the aim of ‘talking it down’ or, of course, having a go at the so called ‘evil landlords’!

However, nothing could be further from the truth based on the latest information from the long running and in-depth Quarter Two Belvoir Index.

The index tracks rents in two ways. It looks at rental changes for Belvoir offices which have been trading since 2008, giving a like for like comparison on rents over time. We then secure individual feedback from franchise owners, which means that as an existing or new to letting landlord, you can find out what’s actually happening in your individual area, not just ‘on average’.

Knowing which area is oversupplied with one bed flats, and which is undersupplied is crucial for landlords both now and in the future. Without local knowledge about the rental market, it’s easy to make expensive mistakes which can mean your investment doesn’t deliver. Having the right information can mean you survive bad markets and can make the most of the good ones.

What’s the latest trends from the Belvoir Index? In the main there are three key trends to be aware of, but they don’t apply to every area, so it’s important to check out what’s happening in your local area too:-

1. House rentals – demand high, supply mainly low

a. Just over 26% of offices reported static house rents versus Q2 19

b. 66% of offices recorded increased rents compared to the previous year

c. 7% of offices reported falling house rents for Q2 20

2. Flat rents – demand static, slight oversupply in some areas

a. 40% of offices reported unchanged rents for flats versus Q2 19

b. Just under 43% of offices saw increased rents compared to the previous year

c. And just over 16% of offices reported falling rents during Q2 20

3. HMOs – tough market, oversupplied in many areas

The reality in the rental market is that when demand is high and supply low, if wages allow, rents can rise. When demand is lower than supply, the trick is to make sure you don’t have any voids and you can do this by ensuring your property is rented out at a great rate and in the best condition, as they are always the ones that survive.

What’s the ‘general view’ of the rental market according to Belvoir? Firstly the good news is for landlords letting through Belvoir, to date, rent collection has been very successful, with no more offices than pre-Covid experiencing rent arrears and, as a result, the number of evictions, usually very low anyway, has remained so.

Across the UK, as usual, rents are going up, down and staying the same, depending on the type and location of the property.

Despite the general trend of flat rents being static to falling, there are lots of offices which buck the trend including:-

Scotland Dundee Nick Horan of Dundee reported increased rents for houses due to high demand, and also for flats, with one and two beds remaining the most popular. Tenant demand also increased across the board. Nick expects both rents and demand to rise over the coming quarter due to a shortage of one/two bed flats and three/four bed houses.

Paisley According to Denise Rhodes, both rents and demand increased across the board for Q2 2020 and this trend is likely to continue over the coming quarter. Paisley has a shortage of all types and sizes of property to rent.

For a detailed rental report on Moray, please read the full report.

Wales Swansea For Q2 2020, Ben Davies confirmed an increase in rents and demand across the board, with this trend likely to continue over the next quarter. Swansea is currently experiencing a shortage of one bed flats and an oversupply of two bed flats.

Northern Ireland Newtownards According to Trevor Burns, rents and demand increased for all properties during Q2 2020 and confirmed that unless supply increases, rents will continue to go up. Demand for all properties is also likely to increase during the next quarter. The office has a shortage of all sizes and types of property.

England

South East

Milton Keynes Steve Tunney from Belvoir Milton Keynes has a wealth of lettings experience in this area having just completed 20 years of letting properties under the Belvoir brand. His view this quarter is that there has been a slight increase in rents of around 5% with tenant demand also increasing for all properties. Over the next quarter he expects rents to remain stable

for all properties with demand increasing. The Milton Keynes office is experiencing a shortage of one and two bed properties and an oversupply of three and four bed houses.

For more detailed reports from offices in the South East, including: Thanet, Chelmsford, Rochester, Newbury, Brighton and Hove, Luton, Watford, Tunbridge Wells and Tadley, please read the full report.

South West

Gloucester According to Anthony Stick, all rents have increased together with demand for flats and houses but decreased for HMOs. Rents and demand for all properties is expected to continue increasing over the next quarter, with the exception of room rents which are likely to decrease. They are currently experiencing a shortage of two and three bed properties and an oversupply of room rents.

For more detailed reports from offices in the South West, including: Christchurch, Aldershot and Devizes, please read the full report.

Midlands

Stoke on Trent A popular area for landlords who let outside of where they live, Ramona Hirschi reported static rents for flats but increasing for all houses during Q2 2020, whilst tenant demand remained unchanged for flats, increased for houses and fell for HMOs. Over the next quarter, demand and rents for flats are expected to remain static, increase for houses and demand for room rents decreasing. The office is experiencing a shortage of three to five bed houses with an oversupply of all flats and room rents.

Shrewsbury Paul Wallace-Tarry recorded an increase in rents and demand across the board for Q2 2020 and this trend is predicted to continue over the next quarter. Shrewsbury is currently experiencing a shortage of all types and size of property to rent.

Cheltenham For Q2 2020, Neil West confirmed increased rents for all properties with demand for flats and houses remaining unchanged but falling for HMOs. Both rents and tenant demand are predicted to remain static during Q3 2020. Cheltenham has a shortage of most types and size of property.

Long Eaton and Beeston For Q2 2020, Francesca Barlow-Goodall confirmed that rents and demand for all properties

increased and this trend is likely to continue over the coming quarter. All property types and sizes are in short supply due to the speed properties are being let.

For more detailed reports from offices in the Midlands, including: Nottingham, Melton Mowbray, Newark, Telford, Rugby, Leamington Spa, Stafford and Stone, please read the full report.

Yorkshire

Skipton For Q2 2020, Daniel Johnson reported rental rises for houses and flats due the increased demand, with the exception of HMOs, where demand fell. Over the coming quarter, rents and demand are expected to increase for flats and houses but remain unchanged for room rents. They currently have a shortage of one through to four bed properties.

For a detailed report from the Harrogate office, please read the full report.

North East

Tynedale John Redden of Tynedale has reported steady but small increase in rents across the board as properties have become available for rent during Q2 2020. A few landlords have increased rents on periodic tenancies between 2% and 4%. Demand increased for houses but they are small numbers, however there appears to be a trend building to look for property with some outside space. Demand fell for flats. Rents are expected to increase across the board during Q3 2020, whilst demand for houses is likely to increase but decrease for flats. Tynedale is experiencing a shortage of two to four bed houses.

For a detailed report from the Newcastle-upon-Tyne office, please read the full report.

North West

Bolton According to Mike Stuttard, all property rents and tenant demand increased during Q2 2020. However, rents and demand are expected to remain stable over the next quarter. They are currently experiencing a shortage of all houses, whilst two bed flats are in abundance.

For more detailed reports from offices in the North West, including: Chester and Warrington, please read the full report.

What are Belvoir forecasting for Q3 rents in 2020 Each office that gives a detailed report on their rental market explains what happens to

rents currently but also gives a forecast of what they expect to happen to rents in Quarter Three.

In the main, the majority of Belvoir agents predict:-

1. Rising rents for houses

2. Flats rents are likely to remain static, with some rising

3. Room rents are predicted to remain static to falling

If rents are expected to rise in your area, then it doesn’t necessarily mean you can increase rents as this relies on tenants securing higher wages, which during this time is unlikely, however if supply is short, this may be possible.

If rents are expected to be static to falling, then it’s worth renting your property at a good rate to ensure you don’t suffer any voids going into Christmas, and remember, it’s better to rent for six months at £700 than lose £1,000 over two months hoping to achieve £750 a month.

For expert, honest, local advice on the rental market and help getting into buy to let or with what to do with your existing portfolio, do talk to your local Belvoir experts.

To read our rental index and receive it every quarter please sign up here.

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Friday 4th September: Important Property Market update

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Property 118 are delighted you invite you to join us online tomorrow (Friday 4th September) for a virtual property exhibition, organised by the property investors network, featuring 10 property industry experts.

This will be a full day of online property training

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Angela Davey is first new ARLA President from Wales

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Angela Davey, who was Head of Lettings and Property Management at Peter Alan in Wales, succeeds Phil Keddie as the new ARLA Propertymark President.

Angela raised the profile of ARLA Propertymark in Wales by advising the government on housing policy and consulting for Rent Smart Wales on training for landlords and agents.

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