Majestic margins? Rents and values surge near Elizabeth Line stations

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Properties around stations on the new Elizabeth line have seen a huge surge in value and rents, according to new Rightmove research.

It reveals that Maryland Station in Newham, which serves commuters near well-connected Stratford, has seen the biggest jump in asking prices, more than doubling from £233,480 to £486,235 compared to ten years ago. The average London property has increased by 55% in the same time.

Twyford, at the end of the western section of the line and the next stop along from better-connected Reading, has seen the biggest jump in the number of buyers contacting estate agents, more than tripling compared to ten years ago (+245%).

It’s a similar story for renters, with Southall seeing the biggest increase in the number of prospective tenants contacting letting agents, more than quadrupling (+372%). Asking rents have increased the most in Slough (+44%) and Burnham (+43%).

Staggering

Custom House, one of the new stations built for the Elizabeth Line, with significantly lower travel times into central London, has seen competition increase by a staggering 33 times (+3,270%) compared to ten years ago.

Tim Bannister (pictured), Rightmove’s director of property science, says many of those areas near stations that are now either better connected, or have seen their journey times into central London significantly slashed, have received a lot of new attention from buyers and renters.

He adds: “Areas further out from central London which have lower asking prices or rents, but are now more easily commutable will be attractive to new buyers and tenants in search of somewhere affordable to live near the capital.

“Not only this, but new working from home patterns will have many people weighing up whether they are prepared to commute from further away if they need to do so less often.”

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British Land returns to profit after three years of substantial losses

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The British Land Co PLC is a real estate (REIT) investment trust owning, managing and developing a portfolio of properties across the United Kingdom.

Specialising in offices, retail and leisure, its strategy now is to leverage its core strengths in property development, active management and re-purposing assets to focus on its two key themes: Campuses – Retail & Fulfilment.

Campus Development is the current term used to describe developments that contains a number of buildings with supporting ancillary uses, operated as a total integrated package with facilities including outdoor space, parking, access, building design, landscaping and design aesthetics.

The company sees its campuses as differentiators, providing high quality, sustainable space, benefiting from “excellent transport connections, an engaging public realm and an authentic sense of community.” The firm’s bets on office-led campuses on the one hand, and retail parks and logistics on the other appear to be paying off for BL.

Employers are increasingly using office space to attract and retain key talent, says the company, so buildings that promote health and productivity are an important part of this approach. BL’s developments and refurbishments aim to incorporate wellbeing principles by design. These include a focus on active design and air quality – a recognition that businesses need to use space efficiently, to balance the need for a personal and collaborative workspace.

BL is also looking beyond its campuses, it says, to invest in local communities with events and activities designed to bring people together and enliven space for everyone who uses it.

Its three London campuses, Broadgate, Regent’s Place and Paddington Central are located in some of London’s growing neighbourhoods and account for around 70.0% of the REIT’s property portfolio. These are well-connected with transport hubs, high build-quality environments aimed at creating work innovation, collaboration and creativity.

Encouraging signs

The return to profit of such a high profile component of the UK commercial property industry, in retail, office and leisure represents a sure sign of optimism, sorely needed as the economy is being battered by a number of headwinds: continuing supply chain and labour shortages, inflation reaching nearly 10%, and significant signs of a slowdown, if not recession.

So far the commercial property market has shown significant signs of recovery following on from the depths of the pandemic lockdowns, as the firm reports a pre-tax profit of £958 million from a loss of GBP1.05 billion last year, and a portfolio recently valued at nearly £7 billion.

BL CEO Simon Carter has said:

“Operationally, our leasing volumes across Campuses and Retail & Fulfilment were the highest in ten years and were ahead of estimated rental value. In London, demand continues to gravitate towards the best, most sustainable space where our Campuses are at a distinct advantage.”

Our “Higher land values mean that returns from London development are more insulated to cost inflation than development in other parts of the country and we anticipate being able to achieve the modest increase in rents needed to offset any further cost inflation above our base case.” he says.

Whilst Retail leasing volumes were strong, the company has prioritised having strong occupancy rates at the expense of rent levels, which were 21% below previous passing rent.

Looking ahead, British Land expects strong demand for its Campus developments to continue, and thinks that “overall market trends are positive.” Construction cost inflation is likely to be between 8% and 10% this year, but BL expects this to moderate to 4% to 5% over the next 18 months.

Further West End developments…

Meanwhile, further welcome signs of optimism return to the London scene: two leading retail and leisure landlords are threatening to create a West End giant, with the proposed merger of Shaftesbury and Capital Counties Properties (Capco).

The two landlords have confirmed they are in merger talks in a deal that would not only bolster their shareholders, the two companies would dominate the hospitality centre at the heart of London.

However, initial reaction from the stock market was negative, with Capco shares down 8 per cent before recovering to 3 per cent down on day one. Shaftesbury’s shares likewise fell 5.5 per cent before recovering to just 2.5 per cent down.

If the merger goes through it will give shareholders in both companies an opportunity to own shares in a much bigger real estate investment trust (REIT), and given the outsider (foreign) interest in companies like this, it could be highly beneficial.

A Stifel analyst, John Cahill says, “If you are bigger, it’s harder for people to take you out because there’s strength in numbers. That said, with some of the overseas capital, their pockets are so deep that they could even take over the expanded company.”

The merged company would have greater cash reserves, giving it the opportunity to expand further and faster. According to Investors Chronicle their latest results show that the two companies have a combined £530mn in cash and cash equivalents in their coffers, yet this firepower might not get them very far in the West End real estate market.

“Assets in the West End don’t come to the market very often, And if they do, there are a lot of people who are prepared to pay very high prices,” says Mr Cahill.

If the deal goes ahead there will be moves for steady hands at the top: Shaftesbury chief executive Brian Bickell is to retire on completion of the deal, while executive directors Simon Quayle and Tom Welton, who have also been with the company for over 30 years, would leave the business.

Despite the similarity between the two companies as West End landlords, Mr Cahill does not believe that the Competition and Markets Authority (CMA) will be against it. “The CMA could get involved. But actually, when you look at what they own, the only overlap is in Covent Garden. The rest of the assets, although they are near each other, don’t particularly overlap. If it did get referred to the CMA, I think ultimately it would be approved.”

[Image – Regent’s Place, London]

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The 3 most important things landlords should do when selling rental properties

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The current economic situation has landlords across the UK making the decision to sell their whole property portfolios, or at the very least, downsize. With property market risks, rising interest rates, Section 24 legislations and refurb costs overtaking rent, it seems that the golden era of buy-to-lets is well and truly over.

View Full Article: The 3 most important things landlords should do when selling rental properties

NEW: Shelter claims more landlords ‘kicking out’ tenants via no- fault evictions

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Shelter has published its interpretation of the latest Government landlord possession statistics, claiming they show the courts have seen a 41% rise in Section 21 notice eviction notices as more landlords ‘kick out’ their tenants.

The organisation says the claim, which is based on data covering the first three months of 2022 vs the same period of 2020 before the pandemic hit, shows landlords are turning to no-fault evictions in ‘soaring’ numbers, or approximately 6,000 Section 21 evictions in England during the period.

The figures also show that evictions of all types increased by 32% to 18,626 during the period compared to the previous quarter in 2021. Section 21 ‘no-fault’ eviction notices mean that landlords do not have to give a reason for the eviction and renters can be given eight weeks’ notice.

Shelter is calling on the government to urgently bring forward legislation that will scrap Section 21 no-fault evictions to give renters greater security in their homes during a time of uncertainty – something Ministers have promised to include within the looming Renters Reform Bill.

Polly Neate (pictured), Chief Executive of Shelter, says: “It’s alarming that as the living cost crisis rages more landlords are kicking tenants out of their homes. These are real people whose lives are being turned upside down and simply cannot afford to lose their homes right now.

“While scrapping Section 21 evictions alone won’t solve the cost-of-living crisis for renters, it will at least give them some much-needed security in their homes.”

But Paul Shamplina (pictured), founder of Landlord Action, says the figures quoted by Shelter ‘need clarifying on several fronts’.

“If the government’s quarterly figures continue like this throughout 2022 then some 24,000 evictions will take place using a Section 21 notice, approximately 5,000 more than 2019 and, if you compared the two quarterly periods year-on-year, some 41% more, as Shelter point out,” he says.

“But the trend since 2015 has been downwards when 34,000 Section 21 evictions took place.

“After that, changes to the eviction rules greatly diminished S21 evictions as new rules over gas safety certificates and other mandatory tenancy requirements kicked in.

Read more: How to handle the eviction process.

“But the rise that Shelter now refers to is not because landlords want to suddenly evict tenants unnecessarily, but because either Covid has delayed possession actions [for tenants who have stopped paying the rent] or the government’s tax and regulatory changes have driven more of them to quit the sector, and they want to sell up.

“Remember, many are using Section 21 notices to achieve this, rather than the more complicated Section 8 route.”
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Spiralling finance costs in turbulent times?

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I’m looking to remortgage and fix for 5 years but I’ve found that 4 of my properties are being classed as commercial which is dictating higher interest rates and ‘setup fees’.

The four freehold properties each contain two self-contained flats and lenders are treating them as ‘Multi-Unit Blocks’ which is commercial lending.

View Full Article: Spiralling finance costs in turbulent times?

EXCLUSIVE: Expert questions official claims that eviction courts backlog ‘improving’

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Claims by a Ministry of Justice (MoJ) minister that possession case delays are being addressed have been questioned by leading evictions specialist Landlord Action.

In response to a question from Conservative MP Theresa Villiers, MoJ Parliamentary Under Secretary of State James Cartlidge revealed that both his department and HM Courts and Tribunals Services had introduced efficiencies to address the delays.

This includes the increased use of Warrant of Control Support Centres to reduce the administrative tasks undertaken by bailiffs.

“This has, and will, free up bailiff resources to focus on other enforcement activity which includes the enforcement of possession orders,” Cartlidge said.

Cartlidge also claimed that the most recent MoJ eviction figures reveal ‘a consistent improvement in timeliness since the enforcement restrictions lifted [at the end of June last year], enabling bailiffs once again to undertake enforcement activity’.

Court speed

But addressing his latter point, Landlord Action’s Paul Sowerbutts (pictured) says his staff report that although some courts are speeding up, those in London ‘are not’.

“Stratford Housing centre says it still has a 14-week backlog and Milton Keynes court is so overwhelmed with work it is outsourcing to Oxford County Court,” he says.

“Bromley is also overwhelmed and using various other places like Bexley Magistrates Court to hold possession hearings. Central London County Court is also super slow.”

The comments echo those by the Lord Chief Justice, Lord Burnett of Maldon, who told a House of Lords enquiry yesterday that all of the jurisdictions were ‘under pressure’ and that ‘overall we have problems… due to ‘capacity issues’.  

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Rental affordabilty in England – Average salary of £30,264 equated to 32.1% of average rent

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Paragon’s Rental Affordability Index takes recently published Government data, and by overlaying gross annual earnings with the average amount spent on rent, reveals an average rental affordability ratio for local authority areas across England with the average salary of £30,264 equating to 32.1% of the average rent

The least affordable local authorities in which to rent a home were all found in London.

View Full Article: Rental affordabilty in England – Average salary of £30,264 equated to 32.1% of average rent

Right to Manage (RTM) Formations Platform Looking For Beta Testers

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Do you lack control over your service charge or have difficulty getting your landlord to make urgent repairs? Are you thinking of RTM but keep on putting it off as the process seems laborious and overwhelming?

If so

View Full Article: Right to Manage (RTM) Formations Platform Looking For Beta Testers

Eddie Hughes, Minister for the Private Rented Sector, to address national landlords conference

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The Minister for the Private Rented Sector, Eddie Hughes MP, will be the keynote speaker at the inaugural National Landlord Conference on Tuesday 15th November.

Hosted by the National Residential Landlords Association in partnership with Landlord Law, the conference will focus on the future of the private rented sector.

View Full Article: Eddie Hughes, Minister for the Private Rented Sector, to address national landlords conference

EXCLUSIVE: How agents and landlords are ‘taking risks’ when sharing referencing info

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An investigation by LandlordZONE into data privacy within the private rental sector has revealed how many letting agents and landlords are sharing information about tenants’ referencing information in contravention of GDPR regulations.

In particular, many agents are getting caught out when there’s a problem with a tenancy and the landlord wants to see the referencing information on which an agent has based their decision.

In theory, they can only share what has been agreed between all parties and within their contracted agreement, usually just a copy of the reference summary confirming the check’s outcome. But when tenancies get into trouble, landlords often then ask to see more detail about a tenant’s background when they challenge the agency’s initial decision to approve a tenant.

Data protection law

Landlords and letting agents are likely to be data controllers under the UK data protection law and should be registered with the Information Commissioner’s Office (ICO), which advises they must be clear with tenants about what data they will collect, why they are collecting it, what they will do with it, who they will share it with, when it will be destroyed, and what the tenant’s rights are in relation to that data.

Vouch founder Simon Tillyer tells LandlordZONE that agents also need to make sure they’re not sharing the name and contact details of a referee as this is personal identifiable information of another individual – not the tenant – which they don’t have grounds for sharing with the landlord. Publicly available information relating to court judgements and bankruptcies would be ok to share.

Legitimate interest

For anything else, an agent must ensure they have a reason to share that information by making a legitimate interest assessment. Adds Tillyer: “Should there be a challenge, they will be able to demonstrate their justification to support the action they have taken.”

He says it is best to have clear T&Cs between agent and tenant which set out that any information used in their application for the property, including the tenant referencing, may be shared with the landlord.

In the case of rent guarantee insurance, it’s often a condition of the policy that satisfactory referencing has taken place; sharing a copy of the reference would be under the ‘performance of a contract’ lawful basis and therefore acceptable, says Tillyer.

“However, best practice would be to extend T&Cs wording to include that sharing the information with the landlord may include for the purposes of insurance.”  

Sensible view

Angharad Trueman (pictured), vice president of ARLA Propertymark, believes agents and landlords must take a sensible view about reference requests.

“The information is of legitimate interest to the landlord and the legal contract is between the tenant and the landlord,” says Trueman. “However, in practice, when information is requested I would always recommend reaching out to the tenant to inform them and have that conversation.”

As many agents may not be completely aware of their responsibilities, Ahmed Gamal, founder of Rentd, advises that one way to negate any breach of GDPR regulations is to allow technology to do the heavy lifting.

“With Rentd, the tenant shares information directly with the landlord and only the landlord,” he says. “Once their offer is accepted, the applicants are referenced based on the information provided with their offer.” 

The ICO’s data protection self-assessment checklist is here.

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