It’s official – tenants are facing higher rents…

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Rent Increases:

Tenants higher facing higher rents because the demand for private rented housing is outstripping supply in most areas, that’s according to the Royal Institution of Chartered Surveyors (RICS) research.

Landlords are being discouraged from investing while others are selling their rental properties in what is already an undersupplied marketplace, driving up rent prices.

Government policy over the last three years, in the form of punitive taxation changes and a challenging regulatory regime for landlords, is leading to a scarcity of suitable accommodation at an affordable price.

In their latest survey of the housing market, as reported by the RLA, RICS says that demand for private rented housing has increased for an eighth month in a row. This comes as supply continues to fall, a trend which RICS says stretches all the way back to 2016.

RICS warns that: â€œGiven the consistent imbalance between rising demand and falling supply, rents are seen being squeezed higher over the next three months.â€�

The warning mirrors that of Professor David Miles, a former member of the Bank of England’s Monetary Policy Committee, who says in an exclusive article for the Residential Landlords Association that â€œrents are likely to be higher as supply gradually shrinks.â€�

David Smith, Policy Director the Residential Landlords Association, said:

“The Government’s approach to the private rented sector is hurting but it is not working. Despite its efforts to boost homeownership, demand for new rental properties is continuing to increase.

“It is plain wrong to be making landlords the scapegoat for the housing crisis. Ministers need to change tack and introduce a range of pro-growth measures to boost the supply of homes for private rent. If they fail it will be tenants who lose out as they face less choice and higher rents.�

·  RICS’ latest UK Residential Market Survey for August 2019 can be accessed here

·  Professor David Miles’ article for the RLA can be accessed in full here

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Property118 Landlord Insurance Achieves National Recognition

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Our landlord insurance partner – The Home Insurer – has been announced as a finalist in the 2019 Insurance Times Awards, marking it out as one of the very best landlord insurance brokers in the UK.

The Insurance Times Awards are the gold standard in the insurance industry and gaining a place as a finalist is reserved for the very best providers.

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Deep-dive interview with Mark Smith on landlord incorporation

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We will shortly be filming a ‘deep-dive’ interview with Mark Smith on all things to do with landlord incorporation.

If you have any questions on landlord incorporation or specifically about incorporation using BICT please let me know. I would also like to include questions from those who have already incorporated and are looking for pointers on any further restructuring which can be done.

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Gas Safety Week: What landlords need to know

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This week is Gas Safety Week, the annual awareness campaign run by the Gas Safe Register. To mark the start of Gas Safety Week, the Gas Safe Register has published six top tips for landlords and homeowners to follow to ensure that their tenants – and properties – are gas safe. These are: Only use […]

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Conference season: Lib Dem Peer says reform is vital for PRS

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Ahead of the Liberal Democrat Party conference, Peer and housing spokesman Lord Shipley shared details of the four reforms the party believes are vital to the future of the PRS in RLA members’ magazine Residential Property Investor. He said:  “One of my friends, who is a private landlord, recently asked me why so many politicians […]

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High Street landlords facing increasingly aggressive rents stance

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Commercial Rents:

High street
landlords are feeling the pain as retailers become more assertive
about the rents they are paying. An increasing trend is for retailers
to ask landlords for their rents to be linked to store turnovers.

Turnover rents are
rents payable by the tenant calculated either wholly, or partly, by
the actual turnover achieved by the tenant’s business, operated out
of the landlord’s premises. Leases based on this principle can be
used as an alternative to the more traditional forms of open market
rent leases, whereby the rent is determined by supply and demand and
a number of other local factors largely driven by market conditions.

To date turnover
rents have not been common in the UK, with most existing ones being
mainly confined to retail operations and almost exclusively used for
factory outlet centres, airports and railway stations.

However, with the
current battles on the high street, tenants are increasingly inclined
to demand rent reductions and in some cases are asking landlords to
bear some of their risks by demanding turnover rents.

On example of where
retail tenants are becoming much more assertive is the recent demands
made by H&M. The Swedish fashion retailer is not just asking for
standard turnover rent leases, it’s going a step further and
demanding that all sales items returned to store, including from
online purchases made, be deducted from that shop’s revenue.

The Swedish owned
fashion retailer group operates out of some 304 stores in the UK,
part of its global store estate, under names including H&M, H&M
Home, Monki, Arket and Weekday.

From Mike Ashley’s acquisition of House of Fraser to other leading brands, including Next, they are reportedly seeking rent reductions, some with turnover rent options.

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LTS claim 46% of London agents are not compliant

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London Trading Standards claim more than 46% of 1,922 agents inspected in the 15 months up to June 2019 by local council trading standards officers in London were non-compliant with either the Consumer Rights Act or the legislation on redress scheme membership.

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Student accommodation provider in takeover bid

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Student Lettings:

Student housing
provider Unite is set to acquire rival Liberty Living Group in a £1.4
billion cash and shares deal. It will see Canada’s Pension Plan
Investment Board take a 20 percent stake in the enlarged group, with
Unite also proposing issuing a tranche of new ordinary shares to help
finance the acquisition.

The Unite Group plc
is the United Kingdom’s largest developer and operator of student
accommodation (capitalised at 2.96bn) providing homes for over 50,000
students in approximately 140 properties in over 28 of England and
Scotland’s University towns and cities. It rents its rooms both
directly to students and to approximately 60 Universities across the
United Kingdom.

Unite says it is
confident over future rental growth as the Competition Markets
Authority (CMA) starts its acquisition probe into the deal. The CMA
is to evaluate whether the takeover may be expected to result in a
substantial lessening of competition within the market. To assist it
with this assessment, the CMA invites comments on the transaction
from any interested party

The student
accommodation provider Unite says it remains confident of delivering
its rental growth targets for the next couple of years, as the CMA
starts a phase 1 probe into its proposed £1.4bn acquisition of its
rival.

The company says
that student intake in 2019/20 is projected to be in-line with the
record levels of the past few years, with the resultant continuing
growth in the university cities where it operates.

In-line with its strategy of focusing on the mainly Russell Group university cities, Unite says it has continued to see the strongest growth in student numbers at these higher tariff universities, which have risen by 1.8% compared to last year.

The group says it
remains confident in delivering rental growth of 3.0-3.5% for 2019/20
and 2020/21, including improved utilisation and cost synergies of £4m
in 2020 and £15m a year from 2021. It says it is achieving strong
accommodation performance across its estate, with a reported 98% of
rooms fully let. This has resulted in a strong sales performance this
summer, with revenue up around 40% on last year.

Chief executive
Richard Smith has said:

“Demand for UK
higher education remains robust, as reflected in the record share of
18-year olds choosing to attend University. Student demand also
supports our strategic alignment to mid and higher tariff
universities.

“Despite
increased political and economic uncertainty, we maintain our
positive outlook for the business, reflecting the strength of our
operational and letting performance and opportunities to drive
further improvements in utilisation and efficiency while investing in
further value-added services for our students.”

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Friday 13th Superstition

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Superstition stalls the property market as completions drop nearly 40% on Friday 13th

This coming Friday 13th could put the housing and commercial property markets on pause according to analysis by Search Acumen, which shows a double-digit drop in both residential and commercial sales on Friday 13th.

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Across the board fall in fixed rate buy-to-let mortgages…

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BTL Mortgages:

Research out today
(Thursday, September 12th) from online mortgage broker, Property
Master, has revealed another across the board fall in fixed rate
buy-to-let mortgage rates. The fall comes just as the Bank of
England meets for the last time to rule on the base rate ahead of the
October 31st Brexit deadline.

Angus Stewart,
Property Master’s Chief Executive said: “Once again we have seen
the cost of buy-to-let mortgages fall across all the categories we
track. At the moment lenders in this marketplace have a glut of
money to lend.

The current downward
pressure on rates in the money markets means they are able to source
funds cheaply at historically low interest rates. Secondly, some
lenders have also drawn in money from the consumer market by
launching headline-grabbing savings rates which whilst still low are
relatively attractive.�

Mr Stewart
continued: “More generally no-one really wants to predict the
outcome of Brexit but it may be that certainty, one way or another,
is just around the corner. Once the market is more certain about
what is happening this volatility and the bargains it has thrown up
will probably come to an end. Landlords may not have long to
benefit.

Even if a landlord’s
fixed rate is not yet due to expire it would be worth looking at what
is currently available. In some situations, it might be worth paying
to exit an existing fixed rate deal early. With some lenders willing
to hold a new product deal for up to six months there is an
opportunity to apply now and see what happens with rates. It will
pay most landlords to at least review their position while rates are
low.�

Property Master’s
September 2019 Mortgage Tracker shows the biggest fall in monthly
cost was for two-year fixed rate buy-to-let mortgage offers for 50%
of the value of a property. The monthly cost of this type of
mortgage fell by £24 per month August to September. Two-year fixed
rates for 65% of the value of a property fell month on month by £8.
Two-year fixed rates buy-to-let mortgage offers for 75% of the value
of a property fell by £3 per month.

The more popular
five-year fixed rate buy-to-let mortgages also fell across all
categories tracked. The monthly cost of a five-year fixed rate for
50% of the value of a property fell by £14 per month August to
September. Five-year fixed rate buy-to-let mortgages for 65% of the
value of a property fell by £11 per month and five-year fixed rate
buy-to-let mortgages for 75% of the value of the property fell by £6
per month.

The Property Master
Mortgage Tracker follows a range of buy-to-let mortgages for an
interest only loan of £150,000. Deals from 18 of some of the
biggest lenders in the buy-to-let market including Barclays, BM
Solutions, RBS, The Mortgage Works, Godiva and Precise (full list
below) were tracked. Figures for this month’s Mortgage Tracker
were calculated on deals available on September 1, 2019.

Property Master was
launched almost two years ago and aims to shake up the buy-to-let
mortgage market currently served by around 12,000 mortgage brokers.
It has already attracted financial backing from a broad range of
private investors including a minority stake being taken by LSL
Property Services, whose estate and letting agency brands include
Your Move and Reeds Rains.

Property Master has
automated what was a manual, complex process to provide landlords
with a free easy to use mortgage search tool which provides a
mortgage quote that is pre-screened against each lender’s specific
and changing criteria.

PropertyMaster. Com

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