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UK Property Investment Increases 8% In A Year

UK Property Investment Increases 8% In A Year

UK Property Investments Rise By 8% During 2014

UK property investment is booming again, thanks in part to the Government changes to the way pensions are controlled. The changes allow interested property investors to release pension funds for property purchases early, because bricks and mortar continue to offer a greater return than pension funds currently provide.

Property investment in the UK is becoming even more popular with the number of property investors increasing by 8% during the past year, according to data recently released by letting agent, Ludlow Thompson, with landlord numbers rising to approximately 1.63 million controlling approximately 3.1 million private rental sector (PRS) properties in the UK. 

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More Home Owners Move To Private Rental Sector

More Home Owners Move To Private Rental Sector

Many new tenants in the private rental sector are former home-owners who have opted to become tenants due to the increasing financial pressures associated with home ownership.

In fact more people are quitting home ownership to become private tenants, than are leaving the private rental sector to become home-owners.

The “Generation Rent” trend was identified by the English Housing Survey, which estimated that there were 22 Million households in England in 2011/12.

The trend underlines the fact that home ownership levels in the UK have continued to fall over recent years as the number of households in private rental sector accommodation has increased.

  • 65% of property in the UK is owned by the occupiers
  • 17% are private rental sector properties
  • 17% are social housing

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The number of owner-occupied households has continued to fall, according to the latest English Housing Survey.

The EHS 2010/11 survey says there were 14.45 Million owner-occupied households, compared with a peak of 14.79 Million in 2005.

By contrast, the number of Private Rental Sector (PRS) households has dramatically increased to 3.62 Million, compared with 2.45 Million in 2005.

In 2010-11

  • 66% of households were owner occupiers
  • 17% were private renters
  • 17% were social tenants.

The biggest shift towards renting in 2010/11 was in the 16 to 34-year-old age group.

  • 36% of this age group were in owner occupation
  • 18% were social renters
  • 46% were renting privately.

When compared with 1991, 60% of this age group were owner occupiers and 18% were renting privately.

The average household size for all households was 2.3 people, with 29% of all households containing just one person.

Owner occupiers were richer than private tenants, but paid less on a mortgage than tenants did on rent. An owner-occupier household had an annual income of £40,900 (GBP) compared with £29,000 (GBP) for private tenants. Owner occupiers made average weekly mortgage payments of £143 (GBP), compared with average weekly rent of £160 (GBP).

On average, weekly mortgage payments were 19% of home owners’ income, while weekly rent payments were 43% of tenants’ income. Private tenants had the highest housing costs of all three groups – owner occupiers, private tenants and social tenants.

The English Housing Survey also noted a significant fall in the number of households with a mortgage, down from 8.3 Million in 1996-97 to 7.1 Million in 2010-11.

There has also been a major change in the type of mortgage: in 1996-97, 33% of mortgages were repayment loans, while in 2010-11 this had increased to 73%. Only 3% of mortgages were interest-only in 1996-97, but the proportion had increased to 13% in 2010-11.

The survey found that 59% of private tenants and 23% of social tenants expect to buy a residential property at some point, and 16% had considered buying a home in the previous 12 months.

However, there was not much confidence about UK property prices: in nearly every region other than London, a larger proportion of households thought their property value had decreased rather than increased in value over the previous year. Around 1% believed they were in negative equity.

The Chief Executive of the Tenancy Deposit Scheme,(TDS) Steve Harriott, has blasted the coalition government over continued disinterest in the UK private rental sector, (PRS) in terms of regulatory measures, and urged all landlords to form their own self-regulatory organisation.

The TDS Chief Executives comments emerged following the sudden closure of another letting agent who closed their doors without notifying the landlords or tenants on their books.

Many hundreds of tenants were left wondering if their tenancy deposits were secure in one of the 3 official Government schemes (TDS, TPS or MyDeposits) or if the agent has closed taking their deposits with them, leaving tenants with no way of reclaiming their deposit monies.

Mr Harriott said he was “Sick of crooked and inept letting agents getting nothing but a slap on the wrist and a fine that can, in most cases, be easily paid for potentially putting tenant lives at risk. There needs to be proper regulation of the private rental sector, and if the government aren’t intending to impose regulatory measures then members of the PRS must band together and organise their own”.

The comments from the TDS Chief Executive come at a time when the latest English Housing Survey (EHS) released data from questioning private sector tenants about deposit protection.

Despite deposit protection being a legal requirement for the last five years,

  • 47% of private tenants said their deposit had been protected
  • 24% said their deposit had not been protected
  • 28% did not know.

70% of private tenants whose deposits were protected had the money returned in full at the end of their tenancy but only 17% of private tenants received only part of their deposit back due to damage or poor maintenance and a further 12% received none of their money back for a number of reasons.

While more than half of tenants were given particular reasons for retention of some or all of the deposit, 40% were not told why their deposits were withheld at all.

Almost 40%, (four in ten) properties in the UK Private Rented Sector, (PRS),  have Buy-To-Let mortgages on them.

The estimate was made by Communities and Local Government (CLG) minister Andrew Stunell in response to a question from campaigning Labour MP Graham Jones asking about “The effects of buy-to-let mortgages on the size of the private rented sector”.

Stunell replied: “Based on data drawn from the English Housing Survey for 2010/11 and the latest figures from the Council of Mortgage Lenders, (CML), we estimate that buy-to-let mortgages currently support some 39% of private rented sector stock. The Government’s Housing Strategy outlines our support for a thriving private rented sector, (PRS), as well as taking a series of measures to build more affordable homes and support home ownership.”

Graham Jones has repeatedly called on the Government to tackle the problem of rogue landlords.

Mr Jones is the MP for Hyndburn in Lancashire, whose council is currently making a second attempt to regulate private landlords by introducing selective licensing.

The authority’s first attempt was blocked when a legal challenge by a collective of landlords was upheld by the courts

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