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Number of tenants Renting Property Set To Overtake Number of Home Owners By 2025

 

Renting To Overtake Home Ownership By 2025

According to a new prediction from the professional services network – Price Waterhouse Cooper, (PwC), the number of tenants in rented properties will outnumber the overall number of property owners with mortgages in less than a decade.

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UK PRS Rents Highest In EuropePRS Rents Still Increasing

Rent paid by tenants in the UK’s private rental sector, (PRS), increased by 2.1% in the 12 months up to and including March 2015, according to the latest published figures released by the Office for National Statistics (ONS), drawing claims from the National Housing Federation (NHF), that the UK is the most expensive country to rent property in within the European union.

In the 12 months to March 2015 UK PRS rents increased by:

  • 2.1% in England
  • 2.1% in Scotland
  • 0.8% in Wales

UK PRS rents are the highest in Europe, taking up 40% of tenant income despite having the shortest length of secure tenancies. In comparison our European counterparts only pay an average of 28% of their income on rent.

The NHF analysed the ONS data and found that on average UK PRS rents of approximately £750 per month for properties were almost double the rental costs of dwellings in countries like Germany and Holland, where average earnings are similar. However, it is worse for tenants in shared UK properties, who typically spent around 55% of their income on rent.

Across Europe, 43% of tenants had moved property in the last five years while in the UK this figure was more like 77%.

When the figures are analysed more closely it works out that approximately 23 minutes of every hour worked by UK PRS tenants is spent on rent; elsewhere in Europe, it is more like only 17 minutes.

The NHF also showed that the UK has repeatedly failed to invest in its own housing stock when compared to European standards, between 1996 and 2011 only 3% of the national Gross Domestic Product (GDP) was invested in UK housing, compared to 6% in Germany and 5% in France.

Other findings from the analysis include the fact that 72% of tenants renting in the UK private rental sector are employed compared to 62% of residential owner-occupiers.

NHF chief executive David Orr commented on the findings, stating: “UK tenants get a raw deal in comparison to their continental counterparts. High rents are just one symptom of the UK’s housing crisis, as a nation, we are simply not building enough houses due to under investment and problems with the land market.”

Red Ed Calls For Rent Controls As Part Of Election Campaign

Red Ed Calls For Rent Controls As Part Of Election Campaign

Red Ed Calls For Rent Controls As Part Of Election Campaign

Labour leader Ed Milliband has called for a European style rent indexation to be introduced as part of the political party’s election rhetoric.

The re-introduction of rent controls under the new guise of a newly titled Rental Price Index, designed to stem excessive rent increases, is intended to be one of Labour’s biggest vote magnets

The current coalition Government decided late last year that they wanted private rental sector landlords to act as unpaid members of the UK Border Agency, controlling and reporting on the immigration status of tenants, in order to avoid excessive financial penalties. This legislation is due to come into effect later this year after passing through Parliament and the House of Lords without too much fuss from MP’s, despite lobbying from landlord associations and heated debates with lettings industry professionals. 

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Landlords expected to do UK border agency's job for them

Landlords expected to do UK border agency’s job for them

Private landlords are set to become an extra line in UK Border Control as they will be legally responsible for ensuring that they only let rental properties to people allowed to be in the UK under immigration laws announced in the Queen’s Speech.

This means that Private Rental Sector (PRS) and social housing landlords will have a responsibility to make sure their tenants are in the country legally

Over 3 million buy-to-let landlords are rental property owners in the UK private sector and will be responsible for checking the immigration status of all potential tenants, with fines running into thousands of pounds for those breaking the law.

Employers will also face more substantial fines for employing on illegal immigrants.

It appears that UK landlords and employers are expected to police the immigration system as unpaid members of the UK Border Agency.

Landlords are being given additional responsibility with no recompense other than the threat of heavy fines for failure to comply. Why are we expected to do the UK Border Agency’s job for them when they are paid handsomely for failing to do the job they are employed by the Government to do?

Does this mean that Landlords will be given a financial incentive to turn informant?

I don’t think so…

The new measures are included in an amended Immigration Bill will also limit the ability of European migrants to claim UK state benefits and ensure that the right to residence in the UK on the basis of family commitments is not abused by criminal elements. The UK judicial system will be expected to balance the nature and seriousness of the crime committed against the right to remain resident in the UK.

Temporary migrants will be charged for use of NHS services and only those who have lived in an area for at least two years will qualify for social housing. Regulations will also be amended to ensure that European immigrants cannot claim benefits for more than six months if they do not actively seek legal employment and show they have a genuine chance of obtaining work.

The legislation has been drawn up as the Coalition Government struggles to contain the electoral threat posed by the UK Independence Party (UKIP), which has hard-line immigration policies.

The details of how the measures will be implemented will be set out later in the year. The plans will be the subject of a formal consultation in the coming months.

Ministers expect the legal requirements on landlords will affect those letting rooms in houses of multiple occupancy (HMO) properties. However, the measure will be universal and it will be the responsibility of all landlords to seek copies of passports and appropriate visas.

It is unclear how landlords are supposed to verify the authenticity of documentation, as many employers have already discovered to their cost since the tightening of employment rules surrounding immigrant workers, as falsified information has no way of being checked and is only up to the diligence of the employer to ascertain the true identity of their employees.

The limit of the financial penalties set to be levied on landlords who fail to comply is also yet to be decided but is expected to be severe and may run into thousands of pounds.

UK attracting Overseas Property Investors

UK attracting Overseas Property Investors

High Rental Yields Producing Property Profits

Chinese, Malaysian and Far East property investors are buying large swathes of investment properties in the UK as they are being drawn in by strong rental yields and weak economy as the price of Sterling (GBP) is overshadowed by the strong Yen.

This influx of Far Eastern property investors is driving the demand for new build investment properties in the UK’s major regional cities and their appetite for property profit is outpacing demand from Greek, Italian, German and other European property investors who are also keen to snap up property bargains.

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Migrants Expected To Make UK Housing Shortage Worse

A fresh wave of UK immigration is expected when quotas on work permits for migrants from Romania and Bulgaria are dropped under EU freedom-of-movement rules.

Government ministers face an increasing amount of pressure to disclose their official estimate of how many immigrants will pour into Britain next year from Eastern Europe, after remarks were made by Communities and Local Government Secretary Eric Pickles on The BBC’s Sunday Politics Show.

Mr Pickles conceded on TV that a wave of immigrants from Romania and Bulgaria will cause problems in the UK housing supply and admitted that Government officials had already made a forecast of the numbers expected to arrive when border controls are relaxed with the two nations in January 2014 but refused to reveal figures.

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EU Decision Good News for UK Buy-To-Let landlords

EU Decision Good News for UK Buy-To-Let landlords

The decision by MEP’s to remove Buy-To-Let mortgages from the scope of a new EU Directive has been welcomed by a host of property professionals including the Residential Landlords Association (RLA) and Legal 4 Landlords.

Under the original European plans, mortgage lenders would no longer have been able to take account of rental income when considering whether to lend to a landlord for a new property, despite the fact that there are specialist insurance products that can guarantee the rent.

The European Parliament committee looking at the Directive has decided that buy-to-let mortgages would be taken out of its scope altogether, after a great deal of high pressure lobbying from a number of sources including the RLA.

Alan Ward, Chairman of the RLA responded to the EU announcement saying: “Today’s decision by MEPs represents a common sense solution to a measure that would have crippled the private rental market in the UK. With a chronic shortage of properties in the sector, the initial proposals would have exacerbated the problem still further, causing further difficulties and higher rents for those looking for rental accommodation.”

Sim Sekhon, spokesman for specialist landlord services provider, Legal 4 Landlords also commented on the decision “It’s good to see that sense has prevailed within Europe, now landlords can get on with providing quality housing for tenants in the private rental sector without worrying that they were going to lose the right to expand their property portfolios. The EU decision to exempt Buy To Let mortgages from the firing line is good business for UK landlords. Rental income is the lifeblood and there are steps for landlords to take to ensure that cashflow remains constant, such as using comprehensive tenant referencing services to make sure you accept the right tenant and rent guarantee insurance to provide a guaranteed income. Having a secure income is vital for any business and property is no exception”.

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