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PRS Rental Prices Keep Going Up

PRS Rental Prices Keep Going Up

PRS Rents Increase 2.5% In The Past Year

According to the Office for National Statistics (ONS) latest Index of Private Housing Rental Prices, tenants in the UK’s private rental sector (PRS) have seen rents increase by an average of 2.5% in the 12 months up to June 2015,.

Private rental prices increased across the whole of the British isles with rents increasing by:

  • 5% in England
  • 1% in Scotland
  • 8% in Wales

PRS rents increased across all English regions during the year with rental prices increasing by 3.8% in London, while the overall Consumer Price Index (CPI) inflation stood at 0% over the same period.

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BoE Base Interest Rate Set To Remain Low Until 2015

BoE Base Interest Rate Set To Remain Low Until 2015

Base Interest Rates Set To Remain At
Low Levels Until The End Of 2015

A new economic forecast by Ernst & Young’s (EY) independent forecasting group, the Item Club, reckons that Bank of England (BoE) interest rates will remain at their historic low until the end of 2015 as wages start to outstrip inflation.

The Bank of England’s base rate has an impact on mortgage loans on property and savings returns and with the base rate remaining at 0.5%, it expects house prices to rise by 7.4% this year and 7.2% next year.

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Smaller Buy-To-Let Properties Provide The Best Rental Yields

Smaller Buy-To-Let Properties Provide The Best Rental Yields

Smaller Buy-To-Let Properties Provide

 The Best Rental Yields

A one-bedroomed rental property in Wales may not sound like the most glamourous of property investments but it could deliver the best rental returns for landlords according to a new in-depth buy-to-let report by the UK’s largest lettings agency Countrywide.

A survey of more than 50,000 Private rented sector property owners has revealed Buy-to-let landlords are getting excellent rental yields in Wales, the North of England and the Midlands from 1 and 2 bedroom rental properties.

Landlords in many parts of Wales are achieving an average 6.7% rental yield (rent measured as a percentage of the property price), beating the North of England and the Midlands, which both average a 6.5% rental yield.

These figures are substantially higher than the average 4.6% rental yield observed in parts of Central London, regarded as the red hot heart of the UK’s property market.

One and two-bedroom rental properties have seen the greatest increase in average monthly rental prices in April 2013, with a 1.4% and 1.3% month-on-month increase to £679 (GBP) and £766 (GBP), respectively.

The detailed report into buy-to-let rental returns was conducted by Countrywide, who found that average monthly rental prices in England, Scotland and Wales have continued to increase for six consecutive months to reach an average of £842 (GBP) in April 2013.

But rent increases remain below the increased cost of living, with an annual average increase of just 0.8% measured against Consumer Price Index inflation of 2.8%.

However, average monthly rents have fallen within Central London, the South East, Wales and parts of Greater London.

The biggest rental price drop of 6.3% was seen in Central London, where average monthly PRS rental prices average £2,371 (GBP), more than double the £1,106 (GBP) recorded in parts of Greater London.

Rental returns by location

 

Rental returns by location - Source: Countrywide

Rental returns by location – Source: Countrywide

 

Nick Dunning, from Countrywide, said: “With renting for longer now the norm for many people as they save for a deposit to buy their first home, we are seeing more young families looking to rent cheaper accommodation, hence the increase in demand for smaller rental properties. While prime Central London has seen the greatest fall at 6.3%, this is simply reflecting the fact that in April stock levels in prime Central London were very high compared to last year which benefited from the Olympics. As a result this April, tenants tended to view multiple properties putting in lower offers, which some landlords accepted. However, as demand picks up into the summer, and supply and demand becomes more balanced, the same property could easily rent for more in August than in April.”

Returns by property type

 

Rental returns by property type - Source: Countrywide

Rental returns by property type – Source: Countrywide

 

Source: Countrywide

New LHA Rates For 1st April 2013 Announced

New LHA Rates For 1st April 2013 Announced

The Valuation Office Agency (VOA) has published its new Local Housing Allowance (LHA) rates, which come into effect on the 1st April 2013.

LHA rates were frozen for a 12-month period until 31st March 2013. Future upratings, whilst still based on market rents, are limited to the rate of the September Consumer Price Index (CPI).

The LHA rates to be used in the first annual uprating in April 2013 were determined by rent officers and have been published on the VOA corporate website.

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Government’s Own Watchdog Warns Ministers Over Housing Mayhem

There will be a huge shortage of affordable Private Rented Sector (PRS) property for tenants claiming housing benefit if the Government Welfare reforms go ahead in the spring of 2013 as currently planned.

Welfare reform could lead to more Tenant Evictions

Welfare reform could lead to more Tenant Evictions

The warning has come from the Government’s own spending watchdog, the National Audit Office and has been backed by the British Property Federation (BPF), which says ministers should take action to stop UK Private Rented Sector (PRS) housing becoming unaffordable to tenants claiming benefits.

The National Audit Office says the danger comes from Local Housing Allowance (LHA), which is paid to benefit tenants in private rented accommodation, being calculated in line with the Consumer Price Index (CPI) rather than local market rent inflation.

The National Audit Office says this could lead to a divergence between local area rents and benefits.

The British Property Federation reckons that Government ministers are aligning rents with the price of sausages.

By 2017 the National Audit Office warns that 48% of all UK local authorities could expect to have double the number of benefit applicants, than at present, looking for two-bedroom properties that they will not be able to afford.

Tenants currently claiming benefits may face financial hardship or even eviction when the proposed changes come into force.

From April 2013, the Government is set to change the way LHA increases are calculated, shifting its sums away from the 50th percentile of local market rents to either the Consumer Price Index or the 30th percentile of local market rents, whichever is the lower.

But knowledge among tenants about the proposed housing benefit changes is minimal, warns the report. Surveys of tenants living in private rented sector properties show that 87% know nothing or very little about the changes.

The report, ‘Managing the impact of Housing Benefit reform’, makes a series of recommendations, in particular that the Government should increase awareness of housing benefit and Universal Credit changes, particularly among those living in the private rented sector. The report also underlines that the National Audit Policy only analyses policy impact, but makes no comment on the policy itself.

The British Property Federation said the Government cannot ignore this report. Policy director Ian Fletcher said: “Since the cap was announced, we have expressed concern that the measure will rapidly and relentlessly erode what Local Housing Allowance will be for. This is because market rents have historically risen with earnings, rather than the basket of goods such as sausages and net curtains.”

The full report is here:http://www.nao.org.uk/publications/1213/housing_benefit_reform.aspx

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