Tenant demand for rental accommodation continues to soar…

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According to new research from Paragon Bank, almost one-third of landlords (32 per cent) reported increasing levels of tenant demand during the final three months of last year. That means demand hit the highest level for almost five years – the highest since the first quarter of 2016.

Paragon says that the level of tenant demand is up from 29 per cent over the previous quarter and well above the 25 per cent recorded in the same period a year ago, but the data showed some stark regional differences in the proportion of landlords reporting higher demand.

In something of a reversal in demand patterns, central London showed just 10 per cent of landlords reporting an increase, a figure which which compares unfavourably with a whopping 58 per cent of landlords reporting growth in the South West.

Other regions that are showing good growth in demand included the West Midlands at 48 per cent, Wales at 44 per cent and the South East at 42 per cent of landlords reporting growth.

Given the hardships people are facing with the pandemic, landlords appear to be taking the view that it’s better to have a tenant in a property than achieving the highest possible rent. The healthy levels of tenant demand are not enough to persuade most landlords to risk an increase in rents at this time; most landlords plan to keep rents at the same level for at least the next six months.

Only 15 per cent of the landlords who Paragon Bank surveyed said they would increase rents, whereas around two-thirds (64 per cent) said they would keep their rents the same, and 9 per cent said they were actually planning to decrease rents.

Richard Rowntree, Paragon Bank Managing director of mortgages told MortgageStrategy.co.uk:

“We saw a clear upturn in tenant demand in the second half of 2020 after restrictions on the housing market were lifted. The strong levels of people looking for rented property continued during the final quarter, which may be related to renters wanting to secure a new property ahead of any new lockdown restrictions, which of course came from November onwards.

“The housing market is also reporting high levels of tenancy renewals, so good quality rental property is at a premium in desirable markets. I would expect that to continue into the new year and throughout 2021,” Mr Rowntree said.

“Despite the pressures on landlords due to volatile economic conditions and rising unemployment hitting tenants’ income, confidence is strong and robust. Tenant demand is playing a key role in that,” he said.

Again, despite lockdowns, landlords entered 2021 in a largely confident mood about the year ahead, and the recent success of the roll-out of the vaccination programme just compounds that.

Paragon found that landlords are feeling more confident about their business, rental yields, and capital gains in their portfolios in the UK private rented sector, than they did 12 months ago. The only indication that landlords are somewhat concerned is in their answers in the area of the economy generally, the financial markets, which could suffer economic damage because of Covid-19 and possibly Brexit.

The overall conclusion from the Paragon study was that just over one-third (35 per cent) of landlords saw the future prospects for their lettings business as good to very good when asked during the final three months of last year. This compared to just under one-third in the previous quarter and 31 per cent during the same period in 2019.

The Paragon commissioned research was carried out by BVA – BDRC and the results based on a survey of 846 landlords between December 2020 and January 2021.

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The best way to sell properties with awkward tenants

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You may have heard of us here at National Residential, we’re the property company who pride ourselves with our “any problem we can fix” formula. In these current times, there are a few challenges landlords may face when trying to sell their properties.

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Be careful what notes you leave for tenants – they may end up going viral on social media!

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An ‘over-bearing’ landlord has sparked disbelief on social media for enforcing draconian house rules on his four professional tenants and turning up each weekend to do admin.

One of the tenants posted his rules on Reddit, which included instructions to turn lights off when not in the room and closing the front gate behind them.

Incredulous social media posters immediately criticised the landlord for breaching government guidelines that mean landlords have to give at least 24 hours’ notice of proposed visits – but then only for repairs – and that tenants have a right to ‘quiet enjoyment’ of a property.

He was also flouting lockdown rules.

The tenant, who said he and his friends were a mix of senior project managers and GPs in their mid-20s, explained that the landlord didn’t live with them, but kept a locked room in the house and visited each Saturday to work in the living room and office.

Despite paying for their own gas and electricity, his ‘Simple House Rules’ gave orders about turning off lights and not touching the thermostat, as well as where to wear shoes.

Patronising

The tenant said: “In all honesty we just find it incredibly patronising. We’re adults and we haven’t displayed any ridiculous behaviour. But once our respective six-month tenancies end, we doubt we’d each renew as he’s overbearing.

“We worry about even going to the shared living room with a bottle of beer in case he comes around and says something.”

One Reddit poster replied: “Your landlord might want to read up on the rules about quiet enjoyment. If you pay the fuel bills it’s none of his business how often you leave the lights or heating on.”

Another added: “Time for ‘Naked Saturdays’ I reckon – see how long the Saturday visits go on for then!”

see the Reddit post in full.

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FEBRUARY FREEBIE 15-minute consultation with Caridon Landlord Solutions

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Caridon Landlord Solutions is a dedicated service provider specialising in Universal Credit and Housing Benefit advice for private landlords, letting agents and housing associations.

We understand that since the expansion of Universal Credit, some landlords have noticed a spike in rent arrears

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Average house price to rise by 17% to £400,000 over next decade

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UK house prices could surge by 17% in the next decade, based on historical data from the past 40 years.

Property buying firm Good Move has studied house prices in the UK since 1980 to predict what the market might look like up until 2050.

Although it admits it can’t do this with complete certainty, it’s come up with a ‘line of best fit’, which could give landlords an idea of how their assets will rise in value.

It predicts that by 2025, average house prices will rise by 5% to £251,476, increasing to £279,641 in 2030 and to £392,301 by 2050 – a total increase of 64% if this continues at the same rate.

Good Move based the calculations on data from Gov.UK to show how average house prices in the UK went from £19,273 in 1980 to £239,927 in 2020 – an incredible 1,145% jump.

The largest five-year increase came between 1985 to 1990, where prices soared by 109% to reach £58,250. What followed was the only dip to £55,437 in 1995.

Unprecedented increases

Director Nima Ghasri says house prices in the UK have increased at an unprecedented rate this year, up by 26% compared to 2015 and 7% compared to 2019.

She adds: “If our predictions are correct, we can expect house prices to soar in the future, nearly reaching an eyewatering £400,000 by 2025. However, many things impact house prices, and nobody can predict for certain what the economy and property market might look like in the future, so this doesn’t mean that our predictions are correct.”

Good Move sourced average house price data from 1980 to 2015 from Land Registry data with recent figures taken from The Guardian/Halifax.

Read more about house price rises.

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NRLA wants Holiday Lets to be hammered the same way as BTL?

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Rather than campaign against the unfair imposition of section 24 mortgage interest relief restrictions and the discrimination against BTL landlords the NRLA would prefer short term holiday lets and Airbnb to suffer the same fate.

The NRLA press release says it: “Wants to ensure the tax system encourages the provision of longer-term rental property over short-term holiday lets.

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BREAKING: ‘Scrap the 3% second-home stamp duty levy’, landlords tell Chancellor

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Landlords have called on the Chancellor to remove the 3% additional stamp duty they pay on property purchases in his next budget due on March 3^rd or risk a supply crisis in the rental housing market.

The National Residential Landlords Association (NRLA) is calling on the Chancellor to scrap the duty on the purchase of homes to rent where landlords invest in properties that add to the net supply of housing.

This would include new homes, converting large properties into affordable units, changing the use of a property from commercial to residential or bringing empty homes back into use.

Citing Rightmove and RICS figures, the NRLA says the market is already showing signs or rising rents and supply dwindling.

Ben Beadle, Chief Executive of the NRLA, says: “To have a tax on developing new housing is completely nonsensical at a time when more is needed.

“Supporting growth in the private rental market, alongside all other housing types, would provide a significant boost to the economy in the midst of the COVID-19 pandemic.

“Research published last year suggests that landlords inject over £3.5 billion into local businesses across the UK.”

Level playing field

Beadle (pictured) also wants a level tax level playing field between traditional landlords and Airbnb operators who, once the mortgage interest relief is finally abolished this year, will have a tax advantage over their longer-term renting counterparts.

“To be taxing long term homes to rent less favourably than holiday lets is simply bizarre. It completely undermines efforts by the Government to encourage the provision of long term, secure housing,” he says.

“It is time for the Government to realise that its tax policies have created a shortage of rented housing. This can only mean higher rents and reduced choice for renters. This is not going to do much for the levelling up agenda.”

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