Landlords ARE quitting as regulation ramps up, says insurance giant AXA

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More than a third of landlords (37%) are considering offloading their rental portfolio in the next few years, with 30% citing the pressure and cost of too much regulation.

New research by AXA UK reveals that 15% are thinking about reducing their portfolio, with younger landlords most likely to consider this (24%).

Its poll of 1,000 landlords found that 48% name red tape as the biggest challenge – with electrical safety measure checks (34%) and tax changes (30%) seen as the biggest concerns – closely followed by increased maintenance costs (42%).

But despite a tricky year, two thirds (66%) of landlords still think the role is profitable, and more than half (56%) enjoy it, while 49% feel positive about the future and 31% feel neutral, leaving only 20% feeling negative.

For 43%, steady income and having a long-term investment for the future are considered the top benefits of being a landlord.

Female landlords are more likely to view their rental portfolio as a long-term investment (49% compared with 40% of men), while those aged 55 and over are more interested in the steady income than younger landlords (54% compared to 24% of those aged 18-34).

When it comes to the most common disputes landlords have with their tenants, 29% put damage to property at the top of the list, matched only by paying rent on time.

Deepak Soni (pictured), director of commercial at AXA UK, says: “It’s encouraging to learn that despite these challenges, landlords are still reaping the rewards of a profitable business and will continue to grow their portfolios.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Landlords ARE quitting as regulation ramps up, says insurance giant AXA | LandlordZONE.

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Evictions to jump by 40,000 this year, expert tells industry panel

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The number of evictions is likely to jump by up to 40,000 to 150,000 this year, a leading expert has predicted as landlords catch up after months of restrictions.

Speaking at the recent Property Investor Show in London during a panel debate led by Russell Quirk, Paul Shamplina told the audience that his company had employed three additional solicitors in recent months as the number of landlords seeking to evict tenants has ramped up.

He also revealed that companies like his and their landlord clients also face two other principle challenges – an ongoing shortage in the number of bailiffs and many potential candidates shun the low pay and high stresses of the sector, and that many tenants are still ‘playing the Covid card’ to delay convictions.

“We had one tenant who delayed his eviction five times by claiming he had Covid before the judge eventually granted a warrant to evict,” said Shamplina.

But nevertheless more and more landlords are moving to both evict tenants and chase them for rent repayment via money orders.

“We received 20 instructions on a single day last week,” said Shamplina, who predicted that England will see 150,000 possession claims going through the already clogged court system, up from 110,000 in 2019.

“The courts are getting better at processing possession cases, but even now the eviction restrictions have been lifted, it will take a landlord the best part of six months to get their property back.”

Russell Quirk (pictured) adds: “Despite headwinds for landlords around regulation, slightly leaner yields and uncertainties deriving from Covid and not to mention the spectre of rising interest rates, the upshot of our panel debate was that landlords should stick with property investing because on balance, they’re still pretty well off.

“Capital appreciation on their portfolios has added over £200bn in value in the last five years and given the that the FTSE 100 and other asset classes have fallen in value recently, property remains, well, ‘safe as houses’ as they say’.”

The panel included Eddie Hooker, CEO of Hamilton Fraser, Marc von Grundherr from Benham & Reeves, Chris Norris from the NRLA and David Cox of Rightmove.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Evictions to jump by 40,000 this year, expert tells industry panel | LandlordZONE.

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How we’re tripling the value of shop & uppers with Serviced Accommodation

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Today I’m in Henley On Themes for a property investment tour with past course delegate, Satnam Bhuller, as he plans to convert a shop and uppers into serviced accommodation which in turn transforms his pound per square foot from £200 to £600.

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UK’s build-to-rent industry continues to attract more institutional investors

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With property prices continuing to rise unabated, home ownership levels are beginning to fall, creating a demand – supply unbalance. The renting market sees a steady increase in the number of renters chasing fewer rental.

A nationwide shortage of housing stock has seen U.K. house prices rise at their fastest rate for 15 years, up 10% in the year to September that’s according to the building society, Nationwide. First-time buyers have struggled, with mortgage approvals for these buyers down 6% in the year to March, according to Savills.

Meanwhile, private landlords who rent out buy-to-let properties with mortgages have been leaving the market in droves after tax changes have made buy-to-let a less attractive option. According to Savills, over 180,000 BTL mortgages have been redeemed since early 2017.

Mass migration

Lockdown’s effects on work and home lives caused a mass migration of residents looking to move from cities to the suburbs, looking for more space to work in and with outdoor space as well.

Now, as renters drift back to the cities, along with students returning to universities, demand is such that even tenants are getting gazumped. Rental properties in some city locations are being snapped up in minutes, and prices soaring – the rental market’s seldom been so hot.

The build-to-rent drive

Build-to-rent is seen as one solution to this problem, a major issue for the Government. It’s a fast way to provide new rental housing on a mass scale both for city centre living and to satisfy the market’s newfound desire for suburban living, and strongly encouraged by Government.

According to one report build-to-rent investment has led to rapid growth in the number of planning applications submitted, with an increase of over 50% during the Covid pandemic. Tenants have been increasingly happy to move from smaller city centre accommodation to larger suburban homes, and this demand continues even as there is new demand for those city centre locations.

Institutional Investment

Build-to-rent institutional investors such as Lloyds bank, L&G and Goldman Sacks are committing to large investments in an industry they now see as providing perfect inflation-proof returns with strong dependable cash flow incomes.

The Lloyds Banking Group has published its strategy of branching out into rental housing provision with a plan to build 50,000 homes within the next ten years. That sort of growth could turn the bank into one of Britain’s largest residential landlords.

Goldman Sachs along with others in the build-to-rent drive such as The Legal & General Insurance Group are surging ahead with new investments as Britain’s limited amount of housing stock continues to spur on rental demand.

According property agents Savills, these financial investors could end up owning one-third of the nation’s rental housing stock as the currently ultra low interest rates enhance the appeal of these housing assets, assets that are able to generate rising income over many years to come, while maintaining and growing capital valuations.

Large potential market

Dan Batterton, head of build-to-rent at Legal & General’s LGIM Real Assets arm has said of their buy-to-let strategy:

“Similarly to banks like Lloyds, we’re looking at really long-term stable cash flows. Ultimately, we want income that we can match against pension fund liability and, in the U.K. rental market, over the long term, the rents go up by something similar to inflation.”

Batterton said that so far, financial institutional investors own only just over 1% of Britain’s rental housing stock.

William Chalmers CFO at Lloyds has said the institution plans to build 10,000 properties by the end of 2025 and sees the controversial move into the rental sector as complementing its existing housing market skills as well as it’s insurance business. Low interest rates are forcing all banks to consider alternative income sources as they continue to face pressure on their profits from their core lending activities.

Another bank, the Australian Macquarie Group, intends to invest £1 billion in the build-to-rent sector, teaming up with developers in a new vehicle, Goodstone Living, planning to build 1,000 build-to-rent homes in the north west of England.

Simon Hampton, real assets leader and partner at PwC has said there is “an enormous amount of capital” now chasing the residential housing market.

For these institutions build-to-rent could provide an ideal hedge for their mortgage books when over the long term mortgage applications are likely to fall as people cannot afford to get on the housing ladder. Other traditional property investments for these institutional investors such as offices and shopping centres now look too risky.

Some caution the banks however that key to their success lies in providing high quality housing in what is traditionally a market notorious for poor quality, and that there is considerable reputational risk involved with this abrupt change of direction.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – UK’s build-to-rent industry continues to attract more institutional investors | LandlordZONE.

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mydeposits – Rent to Rent Guide

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Guaranteed rent, or rent to rent, is becoming more and more common in the private rented sector as it offers a lower barrier to entry into the property market for would-be investors and a guaranteed rent with no hassle for landlords.

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