UK average rent stabalises with small increase – Homelet

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The Latest Homelet rental market report indicates the average UK rent has continued to stabilise with the December 2021 figure showing a £2 increase to £1,060pcm and excluding London, this figure is £893.

Greater London sees the most significant year-on-year price rise in the UK with a 12.6% jump in the last year

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Cost of little know stamp duty niche to high value rents

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London lettings and estate agent, Benham and Reeves, has highlighted how the nation’s high-value renters could find themselves paying significant penalties due to a little-known law that may require them to pay Stamp Duty Land Tax (SDLT) despite not actually owning their rental property.

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LATEST: Investors give green initiative £5.5m to kickstart PRS ‘upgrade revolution’

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Energy technology firm Sero has been given a multi-million-pound cash injection to develop products and services to help landlords and building societies provide low carbon solutions for new-build and existing homes.

Cardiff-based Sero aims to create more net zero homes throughout the UK using a £5.5 million investment from Legal & General Capital and Hodge, a specialist in mortgages, commercial finance and savings.

It currently has links with 30 social landlords but has anambition to work with private landlords – both individuals and institutions – in the near future.

To achieve the UK’s target of net zero by 2050, almost every home will need to be improved or retrofitted with a combination of enhanced energy efficiency and low carbon heating, according to Sero, which has forged relationships within the housing sector, creating tailored net-zero energy retrofit plans for homes.

CEO James Williams (main pic centre, under letter ‘R’) says improving the energy efficiency of the UK’s homes can provide long term economic benefit and comfort to residents, as well as reducing carbon emissions.

Huge milestone

He adds: “This investment is a huge milestone for Sero as we grow and bring new products to market to help the UK in its delivery of net-zero.

“We look forward to now working together to create strategic opportunities for the business, in particular expanding our presence within new and emerging sectors, such as working with banks and building societies to support the development of green finance products.”

Later this spring, Sero will launch its Building Passport, a digital app that gives homeowners a better understanding of the carbon footprint of their home and how they can make it more energy efficient, tracking its progress.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Investors give green initiative £5.5m to kickstart PRS ‘upgrade revolution’ | LandlordZONE.

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Why tenants prefer wooden flooring

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Laminate flooring or engineered wood flooring is the ideal choice for a rental property.

There are several reasons why this is the case, so if you need persuading then… read on.

Affordability

As well as cost, most landlords want flooring to be a balance between durability, aesthetics and ease of cleaning – because that’s what most tenants want too.

Happily, both engineered wood flooring and laminate flooring achieve this balance.

Aesthetic appeal

Laminate flooring helps to provide the natural look that most people love about wood, but it is considerably cheaper.

Rental properties tend to need a more neutral-looking floor that most people would be happy with.

Vibrant colours and extensive patterns may suit some, but most tenants prefer to have something that looks a lot more neutral.

There are not many people who do not like the natural look of wood either.

Another bonus of laminate flooring is that printing technology has made it very difficult to tell laminate apart from a real wood floor.

And tenants who want to opt for a much more vibrant look can easily place a rug of their choosing to brighten up the space.

Easy to install

Laminate planks are easy to install. The best thing about them is that they essentially click together.

A local floor company will not usually charge a lot for the installation. If you opt for flooring such as tile or even carpet however then you may end up paying more for them to put it down for you, and you will probably need to replace it sooner too. This is the last thing that you want, as it’ll eat into your profits.

The seamless installation process also helps you to get a clean finish, every time.

Long-lasting

If you opt for a good quality laminate, then this can last between 15 and 20 years.

Some laminate floors have been known to last up to 30 years if there are not many tenants and if they treat it very gently.

If you buy a good-quality laminate floor from a trusted company then you may find that they come with a very solid protective coating.

This means that the floor is far more scratch-resistant when compared to other types of flooring and it is also stain-resistant too. If an area does become damaged, then it is very easy to replace it if you buy a few extra planks.

Convenient to clean

Laminate flooring is preferred because it just needs a quick sweep and mopping. If tenants leave and they have not kept the floor clean, it doesn’t take long to rectify the situation. It doesn’t stain easily and, should it get overly wet, it is very easy to dry.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Why tenants prefer wooden flooring | LandlordZONE.

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UK’s biggest secret landlord reveals why he’s selling up most of his portfolio

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LandlordZONE sits down with one of London’s most prolific but little-known landlords who has spent 30 years amassing a huge portfolio in the East End and West End areas of the capital.

For reasons of privacy, and a desire to remain ‘behind the scenes’, he doesn’t want to reveal his identity.

But his story – and worries over the future of the private rented sector, will ring bells with many of the other landlords who set out on their buy-to-let journey during the ‘boomtime’ 1990s.

Why did you get into property?

“My brother and I ran a company operating in the house building sector which went bust during the post-1990 recession, so it was time to try something new and we bought our first property using personal credit cards – a one-bedroom flat for £6,500.

“We then bought approximately six properties using this method. In those days that meant assuming low or no capital growth, because we didn’t believe flats in Hackney would ever rise in value so instead, we relied on the rent to provide the profit.”

How did you grow so fast?

“We discovered that the local council was offering landlords £5,000 a year to rent a one-bed apartment to tenants on benefits and on that basis we turned to a major bank, Allied Irish, who appreciated the opportunity and helped us finance further purchases – although we paid 30% annual interest on what were essentially bridging loans. But with figures like that it didn’t matter.

“Not for the first time we then ended up being in the right place at the right time – during the mid-1990s the first buy-to-let mortgages came out, so we transferred the whole portfolio over and, because the properties had shot up in value as the East End became gentrified – or yuppified as we used to say – so the LTV ratios worked. We reduced the interest we paid from 30% to 10%.

“We then carried on, gathering 250 properties.”

What happened next?

“The portfolio became a monster but happily many of the properties had gone from £10,000 to £200,000 in 10/15 years, so we sold a lot of the East End ones and bought more upmarket properties in the West End – so fewer properties but higher value.

“We took advantage of the weak sales market at the time in central London just after the 9/11 event in the US.

“Developers had unsold off-plan units that often came with the deposit paid by investors who had then withdrawn – so in return for taking the deposits we took on the contracts.

“It was a huge gamble, but by the time they were completed, the flats had doubled in value. Again, in the right time and in the right place.

“Then we had 100 properties in the East End, and 50 in central London – the beast had been tamed!”.

What next?

“I went to a meeting just before the Covid pandemic began that revealed how government’s plans to ban Section 21 which scared the hell out of me – our model of finance and operation was based on being able to evict tenants who caused problems or didn’t pay their rent relatively easily.

“If that process is going to become more difficult then our business model doesn’t stack up, so I began selling off some of the portfolio. My aim is to have around 40 mainly in the West End. That way I can keep a more personal tab on the tenants.

“Saying that, over the past 30 years the portfolio has always achieved 99% of its income and we’ve had few problems with bad debt because we’ve stuck to what we know and where we know – as soon as you get out of your comfort zone you are exposed.”

What would you say to the next generation?

“I’m going to be in my mid-sixties soon, so I feel it’s time for the next generation to pick up the reins. I believe that the future of landlording is more corporate and ‘professional’ and the bigger portfolios be increasingly funded via investment finance.

“These days you couldn’t start up as we did – the extra regulations and other responsibilities mean it’s a much more serious commitment now, and self-management on a large scale is much more of a challenge. Instead, I am going to invest in art and continue my philanthropic projects.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – UK’s biggest secret landlord reveals why he’s selling up most of his portfolio | LandlordZONE.

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Rent being held back by agent after slipping on to periodic tenancy?

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When starting out as a landlord 10+ years ago, I used letting agents to find tenants. One extreme annoyance was having to carefully read through (and often modify) each agent’s own tenancy agreement. After a year, I stopped using agents and worked with my own template agreement that I drew up with the help of a solicitor

Fast-forwarding to late 2020

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Welsh landlord faces huge fine over multiple HMO regulation breaches

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A landlord and ‘property investor’ has admitted a string of housing offences relating to his Newport HMO after previously denying he had done anything wrong.

Robert Evans, 51, of Cefn Tilla Road, Usk, appeared before Gwent magistrates charged with three offences over the management of the Redland Street property in the Crindau area of the city (pictured).

His fine may be hefty – in 2020 a landlord in Newport was fined £20,000 plus costs for similar offences.

He had been in court last October when he pleaded not guilty but has now admitted controlling or managing an HMO without a licence in January 2020.

Evans was also charged with failure to comply with a housing notice and to produce the necessary documents.

The third charge was of failing to ensure that firefighting equipment and fire alarms were in good working order, it has been reported.

Sentencing

Evans is set to appear before magistrates on 28th January for sentencing and has been ordered to provide the court with the last three years’ worth of his accounts and tax returns.

Company House records show that Evans is a ‘property investor’ and ‘property consultant’ with three different companies registered. Two are involved in lettings and the third is involved in property development.

Newport has both a mandatory and additional licensing scheme that cover all HMOs in the city. Its HMO licensing scheme came into force on 1 July 2019 and expires 30 June 2024.

A property must have a licence if there are three or more unrelated people forming more than two households in the same building.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Welsh landlord faces huge fine over multiple HMO regulation breaches | LandlordZONE.

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BLOG: After a torrid pandemic, the capital is back

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London is the greatest city in the world yet in property market terms it’s rather been eclipsed by Liverpool, Manchester, Nottingham and Sheffield of late.

By way of both property values and rental prices, our capital has uncharacteristically been the poor relation (see graph).

In fact, during 2021 according to Zoopla, London saw the second-lowest house price growth of all UK cities at just +2.8% whereas the aforementioned northern enclaves recorded growth of 10.7%, 8.5%, 8.1% and 8% respectively and the UK as a whole by 5.2%.

Rentals were subdued. The most recent stats from the Office of National Statistics (November) show that monthly rents across the country rose by 2.5% last year, but those in London decreased by 0.1% as demand reduced.     

But now the good news – London is back.

While the data doesn’t show it yet, my experience at the coal-face via our 26 offices (18 in London and 8 overseas) is that demand from buyers and tenants is returning strongly. The number of applicants that we are registering is up over 150% compared to the same period in 2020 and up 47% versus 2019.

Resurgence

This resurgence in activity is thanks to a combination of things. We’re seeing overseas buyers return to the market – and when I say return, I mean they are physically back in town viewing and buying for the first time since early 2020 when they were last able to. Overseas tenants are back too, especially students.

In addition to this we have a whole new group of tenants and buyers – people from Hong Kong with BNO visas moving to the UK permanently. 

And, despite the ‘race for space’ that characterised headlines last year as a property backstory, many people who tried a more rural existence as their WFH base (working from home) have since decided that country living in the form of sparsely located shops, slow broadband and even slower tractors obstructing the school run, are not fun things to contend with after all.

Office proximity

As desks beckon once again, city workers are yielding to the age-old balance of being as close to the office as their budget will allow.

This observation is supported by Rightmove and the Halifax both of which report that interest in flats vs houses has surged, especially in cities.

In 2022 yields will begin to rise, as will asset prices. I forecast that rents will be boosted by between 3% and 4% and house prices themselves by more – a likely 5% increase between now and December.

London has always led the way historically and hence in the last decade it can still boast that its average house is worth 79% more over that time. By comparison, the UK as a whole added 60% to the typical home and, London prices being higher, the cash increase is more than double at £229,000 versus £101,000.

Our biggest city may have languished for a while but to write it off in favour of its smaller contemporaries would be a mistake. And in my opinion, no amount of ‘levelling-up’ is going to change that over the long term. 

Marc von Grundherr is a Director at Benham & Reeves, the London estate and letting agents.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BLOG: After a torrid pandemic, the capital is back | LandlordZONE.

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BLOG: After a torrid pandemic, the London rental market is back

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London is the greatest city in the world yet in property market terms it’s rather been eclipsed by Liverpool, Manchester, Nottingham and Sheffield of late.

By way of both property values and rental prices, our capital has uncharacteristically been the poor relation (see graph).

In fact, during 2021 according to Zoopla, London saw the second-lowest house price growth of all UK cities at just +2.8% whereas the aforementioned northern enclaves recorded growth of 10.7%, 8.5%, 8.1% and 8% respectively and the UK as a whole by 5.2%.

Rentals were subdued. The most recent stats from the Office of National Statistics (November) show that monthly rents across the country rose by 2.5% last year, but those in London decreased by 0.1% as demand reduced.     

But now the good news – London is back.

While the data doesn’t show it yet, my experience at the coal-face via our 26 offices (18 in London and 8 overseas) is that demand from buyers and tenants is returning strongly. The number of applicants that we are registering is up over 150% compared to the same period in 2020 and up 47% versus 2019.

Resurgence

This resurgence in activity is thanks to a combination of things. We’re seeing overseas buyers return to the market – and when I say return, I mean they are physically back in town viewing and buying for the first time since early 2020 when they were last able to. Overseas tenants are back too, especially students.

In addition to this we have a whole new group of tenants and buyers – people from Hong Kong with BNO visas moving to the UK permanently. 

And, despite the ‘race for space’ that characterised headlines last year as a property backstory, many people who tried a more rural existence as their WFH base (working from home) have since decided that country living in the form of sparsely located shops, slow broadband and even slower tractors obstructing the school run, are not fun things to contend with after all.

Office proximity

As desks beckon once again, city workers are yielding to the age-old balance of being as close to the office as their budget will allow.

This observation is supported by Rightmove and the Halifax both of which report that interest in flats vs houses has surged, especially in cities.

In 2022 yields will begin to rise, as will asset prices. I forecast that rents will be boosted by between 3% and 4% and house prices themselves by more – a likely 5% increase between now and December.

London has always led the way historically and hence in the last decade it can still boast that its average house is worth 79% more over that time. By comparison, the UK as a whole added 60% to the typical home and, London prices being higher, the cash increase is more than double at £229,000 versus £101,000.

Our biggest city may have languished for a while but to write it off in favour of its smaller contemporaries would be a mistake. And in my opinion, no amount of ‘levelling-up’ is going to change that over the long term. 

Author: Marc von Grundherr is a Director at Benham & Reeves, the London estate and letting agents.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BLOG: After a torrid pandemic, the London rental market is back | LandlordZONE.

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BLOG: Why more upmarket HMOs are the big growth opportunity

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HMOs are one of the key areas of the private rental sector experiencing strong growth.

Recent research revealed that 31% of landlords in this sector are looking to acquire more units. And yet they still have a poor public reputation.

The ‘problem’ with HMOs stems from the traditional demand. Tenants choose shared living as an economic decision, not a lifestyle one, and the properties are often in streets that traditionally have large family homes.

These HMOs also tend to be basic to keep them affordable, further reinforcing the idea that they are ‘low-rent’.

This has led to angry neighbours, council objections, and medium-income professionals staying clear.

To exacerbate this problem, HMOs’ higher returns attract some investors who put money ahead of ‘service’.

And a small number of unscrupulous HMO landlords, along with others who naively venture in without understanding the higher management load, also give the sector a bad name.

But this view of HMOs only reflects a small part of the market and is not representative of the post-pandemic world.

Rebirth

COVID has accelerated the trend of shared living – also known as co-living or flatshares, house shares all of which, though there are debates about how they differ, are similar.

And their popularity has been growing, particularly as many single young professionals look for ‘a community’ during their initial years living in a city or town.

Remote working

As more companies allow home working following the recent lockdowns so living in a small flat, alone, looks far less appealing.

Sharing a larger space with like-minded people is no longer just an economic response to housing needs, it is becoming the way to live.

Shared future?

More and more forward-thinking agents are recognising how much money is being left on the table by not grabbing the HMO market with both hands.

HMOs naturally require more services, and at a higher frequency too due to shorter average tenancy length and greater regulation.

But with higher returns, property owners are often less price-sensitive and recognise the specialist nature of the management.

Previously, the lack of management software suitable for HMOs has made their management daunting for many landlords and agents, but the introduction of management software such as ours which specialises in shared living has enabled a larger pool of agencies and self-managing landlords to capitalise on HMOs.

In many cities some of the most fashionable accommodation is, essentially, an HMO and good design and architecture mean the public’s perception of them is now changing, attracting more professionals tenants. The opportunities here, we believe, are endless.

Vann Vogstad is CEO and founder of COHO.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BLOG: Why more upmarket HMOs are the big growth opportunity | LandlordZONE.

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