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Green Party Leader Blames Landlords For UK Housing Crisis

Green Party Leader Blames Landlords For UK Housing Crisis

Green Party Leader Under Attack For Demonising
Private Rented Sector Landlords

The leader of the Green Party, Natalie Bennett has attracted a great deal of criticism after she attacked buy-to-let landlords operating in the private rented sector (PRS) blaming them for helping to cause the UK’s housing crisis.

Ms Bennett cited extremely high rental returns for landlords with property in the UK private rental sector in the recent television debate between the opposition leaders.

She referred to a report published by the Wriglesworth Consultancy and lenders Landbay stating that there had been a 1,400% return for buy-to-let landlords since 1996.

But the report’s authors suggested that the calculations and methodology involved were far more complex than the Green Party leader had portrayed.

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UK PRS Expanded By 1 Million Households In 5 Years

UK PRS Expanded By 1 Million Households In 5 Years

One Million More Rented Households In UK
Since 2009 With More To Come

It has been well documented over recent years that there has been a cultural and generational shift towards renting in the UK with “Generation Rent” emerging as the dominant force in the UK property market.

The shift towards the continental style of living in rented property has been largely influenced by the difficulty for people to raise the necessary deposit and finance for property ownership.

CBRE believe that significant activity by UK Buy-to-Let property investors and foreign nationals acquiring property in major towns and cities within the UK has also contributed significantly, and the influence of these interested parties is still growing.

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Local Authorities Urged To Build More Private Rental Sector Properties

Local Authorities Urged To Build More Private Rental Sector Properties

Local Authorities Urged To Promote Institutional Investment In Private Rented Sector Over Home Ownership

According to the report “Making Renting Viable“ commissioned by the British Property Foundation (BPF) and conducted by a leading London law firm; more UK local authorities should focus on building new residential properties for the private rented sector to encourage institutional investment instead of promoting local homeownership.

The British Property Foundation and Addleshaw Goddard who conducted the survey, reckon that UK local authorities should earmark land within their council boundaries for private rented sector (PRS) properties and set housing development targets to encourage pension funds and other institutions to invest more in the private rented sector.

Partner at Addleshaw Goddard, Marnix Elsenaar, said: “It’s vital councils recognise both the need for an institutional private rented sector that’s not the same as buy-to-let, while ministers should update planning guidance to make building for rent economically viable. Residential property was seen as more difficult than renting out a commercial office block, but the landscape has changed. Institutions want reliable, long-term returns and they should see a good degree of income growth in the private rented sector.

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Buy-To-Let Remortgaging Eclipses Property Purchase Borrowing

Buy-To-Let Remortgaging Eclipses Property Purchase Borrowing

Buy-To-Let Remortgage Surge

Buy-to-let remortgages have witnessed a huge surge in demand during the second quarter of 2013, as existing landlords refinance to raise capital for further rental property purchases.

Remortgaging activity has eclipsed all other types of mortgage transactions covering multiple property types, other than granting new mortgages for buy-to-let property purchases.

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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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Rightmove Doubles UK Property Values Forecast As Property Prices Increase Again

Rightmove Doubles UK Property Values Forecast As Property Prices Increase Again

UK property values increase for seventh month in a row

UK property values have reached a new five year high, according to property portal, Rightmove, who revised their forecast of UK residential property values, and now reckon that residential property prices will increase to double their previous property value forecast for 2013.

As Spotlight reported last week, residential property values have already increased by 0.3% to average £253,658 (GBP), and now Rightmove reckon property values will now climb by up to 4% this year instead of the 2% previously predicted. However, it wasn’t good news for the whole country as residential property prices in London remained unchanged, holding at a record average of £515,379 (GBP).

The economic incentives introduced by the Government and the Bank of England (BoE) to increase overall lending and credit supply has boosted the demand for residential property ownership from first time buyers.

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Government Help To Buy Scheme Set To Boost

Property Ownership

40% Of Trapped Tenants Could Become First Time Buyers With Help To Buy Scheme

40% Of Trapped Tenants Could Become First Time Buyers With Help To Buy Scheme

Almost 40% of tenants trying to escape being part of Generation Rent could become homebuyers when the Governments 95% Help to Buy scheme is implemented in January 2014.

New research released by Rightmove found that very few trapped renters, tenants who would like to buy but can’t afford to, are currently saving for a deposit.

39% of tenants feel they will never be able to become property owners unless they strike it rich, which Rightmove reckon could come in the form of the Government’s Help to Buy scheme, which will enable people with only a 5% deposit to get on the housing ladder.

The research, conducted among 3,214 current private rental sector (PRS) tenants, last month, between April 9th and April 25th, shows that while 42% of trapped tenants are trying to save for a deposit, currently less than 10% of tenants are on course to meet their deposit goal , with the majority not in a position to start saving.

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Home Ownership Down As PRS Numbers Continue To Rise

Home Ownership Down As PRS Numbers Continue To Rise

Census Reveals Change In UK Property Ownership

The level of home ownership in England & Wales has dropped, as the number of PRS properties increase, according to data obtained from the 2011 census results.

Results of the 2011 census, published on Wednesday 5th December 2012 have underlined the falling levels of property ownership in the UK.

Many more people are choosing to live in private rented sector (PRS) properties rather than have the responsibilities and financial headaches of property owners, according to the data supplied by the Office for National Statistics (ONS).

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Homelessness is a real threat for young families in the UK

Homelessness is a real threat for young families in the UK

An extra 1.5 million 18 to 30-year-olds are expected to apply for private rented sector (PRS) properties over the next eight years.

The influential Joseph Rowntree Foundation says that one risk is that pressures on private rental accommodation could force young families out of the sector and into homelessness. The foundation forecasts that around 310,000 more young families will be looking for private rented housing in 2020 compared with today.

In a new report, ‘Housing options and solutions for young people in 2020’, it warns that the influx of youngsters chasing a private rental home will see young families, poorer and vulnerable people finding it hardest to compete for tenancies.

As previously reported by Legal 4 Landlords News on Friday 15th June 2012, an additional 500,000 young people will be forced to stay with their parents into their thirties, taking the total number of young people still at home to 3.7 Million by 2020.

Read the full story here

The report is just the latest in a series of similar documents warning of the growing pressures on the private rented sector as increasing numbers of people are locked out of residential property ownership.

It warns of a three-tier race to find rented accommodation, with those at the top who can afford to pay rents, a ‘squeezed middle’ group who struggle to pay, and a bottom rung of 400,000 who risk being excluded completely.

However, there is hope for the lower tiers as leading landlord services provider Legal 4 Landlords can offer Rent Guarantee Insurance to landlords and tenants providing that the applicants pass the L4L Tenant Referencing criteria.

Kathleen Kelly, programme manager at the Foundation, said: “Our badly functioning housing system will see those on the lowest incomes really struggling to compete in the competitive rental market of 2020. Renting is likely to be the only game in town and young people are facing fierce competition to secure a home in what is an already diminished supply of housing. With 400,000 vulnerable young people, including families, on the bottom rung of a three-tier private renting system, we need to avoid turning a housing crisis into a homelessness disaster.”

The Foundation wants to see more homes built, longer tenancies at affordable rents – with the incentive of tax breaks for landlords – and the expansion of local letting agencies to find suitable homes for vulnerable young people.

David Clapham, lead author of the report, added: “With 1.5 million more young people no longer able to become home owners by 2020, it’s vital we take the opportunity to make renting work better.”

We are now building fewer new properties than when the Queen first came to the throne in 1952!

While residential properties are smaller than in previous decades, property prices have increased and modern conveniences have changed beyond recognition.

The biggest change in the last 60 years has been in home ownership: this has more than doubled from 32% of all households in England in 1953 to 66% in 2010-11.

The Right to Buy scheme in the 1980s was a key driver of the rise, helping to lift owner occupation from 57% in 1981 to 68% in 1991.

However, owner occupation has been declining since its peak of 71% in 2003.

The Private Rented Sector (PRS) trend shows the reverse of the home ownership pattern. The proportion of rental accommodation in the PRS has fallen by two-thirds since the fifties, from 50% in 1953 to 17% in 2010-11.

However, the private rented sector has been rising again over the last decade, after being as low as 10% in 2001.

The proportion of social (council) housing has also risen and fallen over the same period. From 17% of all households in coronation year, peaked at 32% in 1981 and is now just 18%.

201,860 new residences were built in 1951, compared with an estimated 137,000 in 2011.

New house building reached record levels in the sixties with 425,830 new homes being built.

New residential properties have also been shrinking in size. Properties less than 538 sq ft in size accounted for just 9% of all new homes built before 1980, this proportion doubled after 1980.

The types of new properties being built has also changed. Semi detached houses accounted for 41% of new homes built between 1945 and 1964, but represent only 15% of homes built after 1980.

Flats used to account for 15% of newly constructed property between 1945 and 1964, but after 1980, accounted for 20% of all new housing stock.

There has been a dramatic improvement in the quality of residential property of all types since the end of WWII.

In 1947, 42% of households had no bath or shower and 64% had no basic water supply: by 1991, the proportion had fallen to 0.3% and 1% respectively.

Households in the UK with a second toilet have increased from 31% in 1996 to 41% in 2007.

Another noticeable trend has been the fall of the ‘traditional’ family unit household.

The proportion of households in England occupied by married couples has dropped from 70% in 1971 to 40% in 2011. Over the same period, the proportion of single person households in the UK has risen from 19% in 1971 to 33% in 2011.

Single person households are expected to replace married households as the most common form of household over the next decade.

Over the last 60 years the average UK residential property price has increased 7,278% from £2,200 in 1951 to £162,338 in 2011. This is three times the rise in retail price inflation over the same period (2,477%).

UK property prices have risen in real terms in nearly two out of every three years – 38 out of 60 – since 1951.

* Research compiled from a number of sources by Lloyds TSB

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