State funding for private tenants to buy their homes? It’s ‘pie in the sky economics’

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The recent report from the Joseph Rowntree Foundation (JRF) calling for the Government to provide private renters with a right to buy the property they live in is a further example of ‘pie in the sky’ economics says a leading property firm.

DJ Alexander, the largest estate and letting agents in Scotland, says proposals such as this do nothing to help people get on the property ladder and are more likely to exacerbate housing shortages rather than relieve them.

The report suggests the government should be “supporting renters to buy the home they live in, including through a Right to Buy for private renters.”

It also calls for the Government to intervene in the mortgage market and discourage lenders from providing funds to landlords and property investors – something one building society has already taken up.

“This makes no sense at all,” says David Alexander, chief executive of DJ Alexander.

He argues that tax payers should not subsidise renters to purchase the property they live in because then everyone who “wasn’t a renter should also be supported to buy their home. You can’t subsidise one part of the market and not the rest”.

 “Aside from being hugely inflationary it also fails to understand that a lot of people are happy to be in the private rented sector.

“The private rented sector is an essential element of the housing market and any proposals to reduce its scale should be looked at with caution.

Key mistake

“The other key mistake in the logic of this JRF report (pictured) is that they misunderstand the role of landlords.

“These are people who own properties which they rent to tenants. They are not obliged to provide this service but do so as an investment. They can just as easily withdraw from the market and invest their money elsewhere.”

“A tenant buying a property from a landlord doesn’t need government intervention as it can already happen, it just requires a willing landlord and for the tenant to pay the market value. The JRF seem to be assuming that market conditions don’t exist in property but exist in all other aspects of life.”

View Full Article: State funding for private tenants to buy their homes? It’s ‘pie in the sky economics’

Do we need a database of rogue tenants?

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Hello everyone, I am going to respond to the government’s White Paper consultation.

Firstly, there appears to be less support for PRS landlords than we had been led to believe the new Bill would offer.

As someone with a small portfolio

View Full Article: Do we need a database of rogue tenants?

Properties Urgently Required – Exclusive P118 members deal

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Lettingsupermarket.com™ urgently requires stock having let 80 properties in the last 4 weeks.  We have huge tenant demand and a list of 1000+ tenants who have registered their interest in the last 4 weeks.

Exclusive to new property118.com clients Lettingsupermarket.com™ is offering 3 months of free management on all properties let on the full management package at just 5% + Vat (£6%).  

View Full Article: Properties Urgently Required – Exclusive P118 members deal

TRENDS: Landlords in Outer London and South report surge in demand for rental property

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The UK economy might be on the verge of tanking, but London and the South’s private rental sector is on fire, latest figures show.

Landlords with properties being marketed for rent in suburban London have reported a big surge in demand over the past three months, a survey has reported.

Lender Paragon says a survey of landlords in outer London it underook revealed that 85% said tenant demand had stiffened, up from 79% during the previous three months.

The survey also suggests that London’s rental market is recovering in the more affordable outer suburbs, and has caught up its Home Counties counterparts where 90% of landlords told Paragon they had seen ‘strong’ demand among tenants.
The research, carried out among some 700 landlords by BVA BDRC, also reveals that the incidence of voids has fallen dramatically since the same period a year ago.

Voids avoided

In Q2 2021, 35% of Outer London landlords said that they had experienced an empty property within the last three months, the second highest region behind the North East.

A year on, Q2 2022 has seen this figure fall to 21%, with only landlords in the West Midlands less likely to have reported a void.

Richard Rowntree, Paragon’s mortgage MD, says: “We know that the private rental market in London was hit particularly hard by the Covid pandemic but has rebounded strongly since and these latest figures provide further evidence of this.

“As one of the world’s greatest cities, London is extremely dynamic, constantly evolving as a diverse mix of people come and go, calling it home as they study, work, travel or raise families.

“This is why it is important for the capital to have a thriving PRS, enabling people to benefit from the flexibility that rented homes provide.”

View Full Article: TRENDS: Landlords in Outer London and South report surge in demand for rental property

Rental reform should not be distracted by leadership race

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Rental reform should be the focus of any debate about property in the leadership race to find the next Prime Minister, the Association of Independent Inventory Clerks (AIIC) says.

The AIIC’s chair, Daniel Evans, said: “The latest chaos to surround Westminster could overshadow and delay the introduction of rental reform

View Full Article: Rental reform should not be distracted by leadership race

EXPERT REACTION: What will the base rate rise mean for the property market?

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Yesterday’s decision by the Bank of England to raise its base rate to 1.75% has led many economists to predict a recession in the offing as the bank attempts to control rampant inflation.

While this will make some landlords’ variable rate buy-to-let mortgages more expensive, and impoverish some tenants who are heavily in debt, it should be noted that lenders do not always pass these rate rises on either immediately or directly.

Millions of landlords are protected from rate rises by their fixed rate mortgages, and recent rises in rents mean many have seen increased income from their properties.

But what might this rate rise mean for the wider property market. We canvassed some expert opinion from within the property industry.

Trevor Abrahmsohn of Glentree International

“Thank the Lord that the BoE has at last ‘woken up and smelt the coffee’ by raising the interest rate to 1.75%. 

“With inflation predicted to peak at 13.3% in October, even at this low rate by comparison, will not, I fear, have much effect on the inflation rate.  They are going to have to crank it to 4 or 5% in order to make a dent.

“But I have to say that despite the looming storm clouds of recession and stratospheric energy costs, the property market is still reasonably buoyant, and carries a shortage of supply which will underpin prices. 

“This latter data is the bellwether of the market and as soon as supply exceeds demand, prices will inevitably fall.

“I think the top of the market will be seen as the summer of 2022 and at best, values will level pay and at worst, will fall.”

Jason Tebb, Chief Executive Officer of OnTheMarket.com

“This latest rate rise was widely expected, given continued high inflation, but we don’t expect it to quash positive buyer and seller sentiment in the housing market. 

“As stock levels continue to tick up, we are gradually moving towards a more rebalanced market in terms of supply and demand. Yet this will take time and until then, the ‘new normal’, an elevated version of the pre-pandemic market, continues.”

Nicky Stevenson, MD of Fine & Country

“Previous interest rate rises have failed to dampen growth in Britain’s red-hot housing market — but today’s hike is the biggest in more than a quarter of a century and will of course be painful for many.

“For those on standard variable rates, the arguments in favour of switching to a fixed deal have never been more compelling. Fixing rates now will allow you to insulate yourself against further rises for years to come.”

Marcus Dixon, Director of UK Residential Research at JLL

“The Bank of England continues to walk a challenging tightrope, one which some say it stepped onto too late.

“Global economies continue to struggle with rising inflation, a combination of demand returning following the lifting of covid restrictions alongside the implications on food and fuel costs following the war in Ukraine.

“The Bank of England alongside many global banks is responding by increasing rates in an attempt to counter inflation.”

Anthony Codling, Twindig

“As widely anticipated, the MPC decided to raise Bank Rate by 50 basis points from 1.25% to 1.75% today as the Bank of England gets tough on inflation and the causes of inflation, seeking to control inflation through the use of monetary policy.

“We expect that this latest 50 basis point rise in Bank Rate will feed through to mortgage rates in September.

“These rises are likely to increase floating mortgage rates and standard variable rates by half of one per cent (50 basis points).

“If your floating rate is 2.50% today it is likely to be 3.0%in September leading to an additional monthly mortgage payment of £25 per month for every £100,000 borrowed.”

Walid Koudmani, chief market analyst at XTB

“We saw investors sell out of their pound sterling positions in reaction to the UK’s biggest interest rate hike in 27 years.

“The hike itself was widely expected but the moods of GBP investors dampened from the negative rhetoric from the Bank of England itself on the UK’s economic outlook.

“The UK central bank expects the UK economy to shrink in the final quarter of this year and suffer from a recession for all of 2023. This marks a stark turn in their projections.”

View Full Article: EXPERT REACTION: What will the base rate rise mean for the property market?