Rents for new tenancies rise as demand ramps up, say letting agents

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The rental market continues to show no sign of slowing, as demand for properties increased yet again and landlords raise rents for new tenancies.

ARLA Propertymark’s Private Rented Sector Report reveals that the average number of new prospective tenants registered per branch continued to rise to 82, up from January’s figure of 81 – the same as February 2020 but a big leap from the 65 recorded in 2019.

Regionally, West Midlands branches recorded the highest number of new tenants, with an average of 126, followed by the East Midlands with 123 new tenants. Northern Ireland and The Isle of Wight both recorded the lowest number, with an average of 26.

Healthy demand meant more landlords were able to increase rent, with 49% of agents reporting that they had done this in February compared with 39% in January. Year-on-year this figure is also up from 40% in February 2020. Meanwhile, the number of tenants successfully negotiating rent reductions remained at 2% – the same as during February 2020.

Management drop

ARLA says the number of properties managed per letting agent branch fell for the third month in a row, from 196 in January to 195 in February.

Branches in the North East had the highest number of properties with 284, while those in London – with an average of 94 properties – had the lowest stock per branch.

Four landlords at each branch sold their buy-to-let properties, the same for the fifth month in a row but slightly lower than the five recorded a year ago. 

Chief policy advisor Mark Hayward (pictured) says: “Letting agents have continued to support landlords and their tenants throughout the ongoing Covid-19 difficulties and it is essential that tenancies are maintained wherever possible to ensure rent keeps flowing.”

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Are flats or houses best for Buy To Let investors?

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It can make a massive difference to your bottom line whether you choose to invest in flats or houses. It can also make a massive difference depending on where in the country you are.

Watch this video for a full breakdown on the pros and cons

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March house prices down 0.2% month-on-month

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The latest Nationwide House Price Index for March with prices down 0.2% month–on–month, after taking account of seasonal factors.

Commenting on the figures, Robert Gardner, Nationwide’s Chief Economist, said: “Annual house price growth slowed to 5.7% in March

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What can tenants do about noisy neighbours?

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Many people have spent more time than ever before at home over the last year. Some have been trying to work from home with children, dogs and cats to look after. And what of the neighbours? Perhaps your tenant has only just realised how noisy or disruptive they are but what can they do about it?

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Will Legal & General will soon be poaching your tenants?

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Build to rent or BTR developments, funded by institutional investors such as insurance companies and pension funds, have been growing in numbers dramatically in recent years.

And this sector of the residential property market will become a force to be reckoned with in the future and a challenge to the small-scale buy-to-let landlord.

But so far this segment of the market is quite small – it occupies less than 2% of the private rented sector.

Out of approximately 24 million households, over one fifth (20%) are now in private rented accommodation and this market is growing – demand still outstrips supply, which means, despite the Covid effect, there is considerable upward pressure on rents.

The potential size of the market and the relative security of asset values and rental cash-flow returns makes the industry an attractive proposition for institutional investors for the long-term.

To take one example, Legal and General (L&G), the insurance company, is becoming a major investor in build-to-rent.

L&G’s existing presence in the build-to-rent sector has over 5,000 rental homes in operation or currently under development across the UK’s major towns and cities.

1k homes a year

Their latest announcement says it plans to build 1,000 family rental homes per year as part of its recently launched “suburban build to rent business”.

This will be focused on family rental communities, by developing family homes in areas connected to schools, transport infrastructure and key amenities.

L&G says it has identified a gap in the market, a need for single family homes which are professionally managed, offering a high level of flexibility and security of tenure largely unavailable in urban centres. It is basing its planning assumptions on a forecast growth which will result in a UK residential market of well over £200bn.

L&G’s investment will go into a mix of houses and low-density apartments, with facilities meeting today’s needs.

Some will incorporate home offices with more extensive outdoor space designed to meet the changing needs of home renters, changing patterns of work and the increasing desire for a better home-life balance post the pandemic.

Built into the planning is the need for increasing environmental efficiency, both in the build requirements, home running and management. L&G says it has a sustainability commitment throughout its business and plans are to make its build-to-rent operations carbon net-zero by 2030.

David Reid who is joining managing director on the build-to-rent management team (pictured) says they will collaborate with housebuilders to develop some large-scale sites, as well as pursuing a direct delivery programme.

He adds: “As we gear up towards the acquisition of our first sites, our major focus has been to put together a stellar team to match and support our growth ambitions. With working practices and demands changing rapidly in light of the pandemic, it’s more important than ever that we deliver high-quality homes to meet societal demand.”

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Short lets boom: Channel 4 TV show rides huge surge in Airbnb market

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Landlords could be tempted to invest in short-lets by witnessing the rush to book staycations and a new reality TV show where designers revamp holiday homes.

As hosts starts to welcome guests back from 12^th April, Channel 4’s Hire My Home is sparking more interest in the sector. It features two interior designers – Anna Campbell-Jones (above) and Zeena Shah (left) – who transform bland rentals into unique holiday destinations, with budgets provided by their owners, anxious to increase custom.

The end results are then judged by a panel of 100 people via the Hire My Home app, based on the pictures and listing info.

After the government announcement in February that self-contained accommodation could open up in April, searches by guests or potential guests in the UK nearly tripled, according to Airbnb.

Visits to the platform’s landing page for new hosts were also up in both January and February compared with December.

An Airbnb spokesman says: “As we prepare to be able to travel once again, where previously, our Most Wishlisted homes have been dominated by far-flung and exotic destinations, this year it’s all about the rural retreats to explore on domestic shores.”

Shomik Panda (pictured), director general of the Short Term Accommodation Association, agrees that self-contained accommodation is likely to be very popular this year because they let people comply with Government guidelines and stay safe from COVID-19.

He adds: “Staying in self-contained accommodation has the added benefit of supporting the hospitality sector and local economies in which they are located which will help them to recover some of the lost income from the last 12 months.”

Watch the first episode.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Short lets boom: Channel 4 TV show rides huge surge in Airbnb market | LandlordZONE.

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BREAKING: MPs join chorus calling on Ministers to help tenants pay off rent arrears

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MPs have added their voices to a growing chorus calling for urgent action by the government on the looming tenant rent arrears and debt crisis due to hit the sector as the pandemic eases.

The parliamentary Housing, Communities and Local Government Select committee, which scrutinises the ministry of housing, has today issued a report into the private rented sector and how it has been impacted by Covid.

The report calls on the government to publish an ‘exit plan’ as a matter of urgency for the private rented sector in the same way it has published a roadmap for the easing of Covid.

Financial package

And crucially, it also calls on the government to provide a specific financial package – the government has so far relied on its non-specific support via Universal Credit to claim it is supporting the sector – to help tenants repay rent arrears caused by Covid.

“Helping tenants pay their rent arrears is the simplest and most straightforward way to avoid evictions and help landlords receive income,” it says.

The MPs say a scheme of specific discretionary housing payments or interest-free government loans would be its preferred methods.

“We received an estimate that this package will likely cost between £200 and £300 million,” the MPs say.

“Given the number of potential evictions this would prevent, it would likely save the Exchequer a substantial amount in homelessness assistance.”

They also warn that the government has been ignoring the looming ‘cliff edge’ of rent arrears as the pandemic has dragged on.

Ben Beadle, Chief Executive of the National Residential Landlords Association, says: “At the heart of that plan needs to be action to tackle rent debts built as a result of the pandemic.

“The Committee is right to express disappointment at the lack of a clear strategy from the Government to deal with this pressing issue.

“We whole heartedly support the Committee’s call for action to support tenants to repay rent arrears to be a top priority, including consideration of making payments direct to landlords. As the report notes, this would be the best way to sustain tenancies and help landlords receive income.”

Read the report in full.

Read more: Shamplina calls for government to tackle looming evictions avalanche.

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BREAKING: MPs join growing chorus calling on Ministers to help tenants pay off rent arrears

admin    Uncategorized     agents

MPs have added their voices to a growing chorus calling for urgent action by the government on the looming tenant rent arrears and debt crisis due to hit the sector as the pandemic eases.

The parliamentary Housing, Communities and Local Government Select committee, which scrutinises the ministry of housing, has today issued a report into the private rented sector and how it has been impacted by Covid.

The report calls on the government to publish an ‘exit plan’ as a matter of urgency for the private rented sector in the same way it has published a roadmap for the easing of Covid.

Financial package

And crucially, it also calls on the government to provide a specific financial package – the government has so far relied on its non-specific support via Universal Credit to claim it is supporting the sector – to help tenants repay rent arrears caused by Covid.

“Helping tenants pay their rent arrears is the simplest and most straightforward way to avoid evictions and help landlords receive income,” it says.

The MPs say a scheme of specific discretionary housing payments or interest-free government loans would be its preferred methods.

“We received an estimate that this package will likely cost between £200 and £300 million,” the MPs say.

“Given the number of potential evictions this would prevent, it would likely save the Exchequer a substantial amount in homelessness assistance.”

They also warn that the government has been ignoring the looming ‘cliff edge’ of rent arrears as the pandemic has dragged on.

Ben Beadle, Chief Executive of the National Residential Landlords Association, says: “At the heart of that plan needs to be action to tackle rent debts built as a result of the pandemic.

“The Committee is right to express disappointment at the lack of a clear strategy from the Government to deal with this pressing issue.

“We whole heartedly support the Committee’s call for action to support tenants to repay rent arrears to be a top priority, including consideration of making payments direct to landlords. As the report notes, this would be the best way to sustain tenancies and help landlords receive income.”

Read the report in full.

Read more: Shamplina calls for government to tackle looming evictions avalanche.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: MPs join growing chorus calling on Ministers to help tenants pay off rent arrears | LandlordZONE.

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MPs call for urgent rent debts action welcomed

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Responding to a report published today by MPs on the Housing, Communities and Local Government Select Committee on the impact of the COVID-19 pandemic on the private rented sector, Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“We welcome today’s report which calls for a proper exit plan for the private rented sector from current restrictions.

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Severe shortage of affordable rentals causing housing crisis, says banker

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One view is that helping people to buy homes, as the government is doing, makes the crisis worse, not better

The government first needs to tackle the shortage of affordable properties to rent. That’s the view of Stuart Trow (main pic), a credit strategist at the European Bank for Reconstruction & Development.

Trow argues that Chancellor Rishi Sunak’s efforts to alleviate the UK’s housing crisis have focussed on boosting demand, rather than supply, which he says is more important.

The Chancellor’s strategy – which follows the Conservatives long held belief that increasing home ownership is good for the economy – is one of helping people get onto the housing ladder, whereas Trow argues that it’s more affordable rented property that’s needed.

In this month’s annual budget Rishi Sunak announced a government backed mortgage guarantee scheme that aims to help more people become homeowners.

Banks are to be incentivised to offer 95% mortgages at cheaper rates, and the government indemnifying them against some of the risks.

Prime Minister Boris Johnson’s stated aim is to turn “generation rent into generation buy.”

However, with the average home in the U.K. now costing over eight times average earnings it’s pretty much the only way many people will ever get onto the housing ladder.

So, unfortunately, Trow says, it won’t solve the real housing crisis in the U.K., which he says is a greater shortage of affordable properties to rent rather than to buy.

Given the government’s legislation which has made it less attractive to become a buy-to-let landlord, given the increases in taxation and sector regulations, it’s perhaps not surprising that the supply of affordable rental properties has been shrinking over the past three years.

Social rent

A recent parliamentary report published last year concluded that: “England needs at least 90,000 net additional social-rent homes a year for the next 15 years.” In London it says, the average rent consumes 59% of net monthly income.

The mortgage guarantee scheme announced by the Chancellor will undoubtedly increase demand for lower priced homes, but without a corresponding boost to supply.

Over the long term this will only give rise to higher property prices and leave fewer properties available to the rental market. This, argues Trow, matters because around 85% of spare rooms in London are in the owner-occupied sector, and the rental sector tends to house more people per property.

Any government scheme designed to solve the housing crisis should provide strong incentives for investment in building new, affordable properties to let, Trow says. And importantly, he thinks, that this means encouraging private property investors to be part of the solution.

Mortgage strategy

Trow does not condemn the strategy of guaranteeing mortgages, there might be a place for that he says, but there is a more urgent need to increase in supply, not demand.

The government should be guaranteeing new investment in affordable housing stock to both buy and to rent. The returns, he argues, could then be shared with investors.

There is a precedent to this approach says Trow: the one that government has used in seeking to raise funds to speed the U.K.’s transition toward a low carbon economy. The Chancellor’s new “climate savings bonds” will target retail investors backed by the security of the National Savings & Investments brand, plus a 100% government guarantee.

Trow says that “few of the U.K.’s army of buy-to-let property investors (and he admits to being one himself) have any great desire to be landlords and deal with all the practical difficulties associated with acquiring and managing rental properties.”

Most landlords he says “are simply trying to save for their retirement and provision for their elder care, and they believe that property is their only realistic investment option.”

One way to encourage more investment would be to provide a properly regulated, hands-off means of investing in property in a socially responsible manner in the form of a REIT – a real estate investment trust.

But REITs fail to provide sufficient housing units, especially in relation to affordable rented homes, so Trow says “a government-backed housing investment scheme could reach further and draw upon an investor base that would not normally have considered REITs.”

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