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UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

UK Rental Market Remains Healthy Despite PRS Rent Falls

Rental price increases in many UK regions have slowed according to the latest data gathered by the latest Buy-To-Let Index conducted by LSL Property Services group.

The data showed that UK PRS rents increased by 1.5% in the 12 months to December 2013, less than half the 3.2% growth observed in 2012 and on the whole, UK PRS rents fell by 1% in December 2013, (around £8), reducing the average private rental sector rent to £745 (GBP) per calendar month.

The largest drop in PRS rental prices was observed in the South East, with rents down 2% since November 2013, rents also fell 1.9% in both London and Wales.

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Average PRS Rents Hit New High

Average PRS Rents Hit New High

Buy-To-Let Property Investors Benefit
From PRS Rent Increases

The average rent in the UK’s private rented sector has increased to approximately £757 (GBP) per month, the highest level ever recorded, as rental prices increase by 1.8% on the previous month.

The data is from the latest Buy-To-Let Index, published by LSL property services.

PRS rents are 2.1% higher than they were in September 2012 and tenant demand is still strong with lettings activity growing by 9.2% over the last 12 months.

Average PRS rents are now £13 (GBP) per month higher than the previous all time record set in October 2012, when monthly PRS rents averaged £744 (GBP) per month.

Nine out of 10 UK regions saw rents rise between August and September 2013 with the fastest monthly rise observed in the South East, where PRS rents are 3.3% higher than they were a month ago.

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Countrywide’s Quarterly Lettings Index Results

Survey Reveals Favourable Rental Market For UK Landlords

Survey Reveals Favourable Rental Market For UK Landlords

Results from the latest Countrywide Quarterly Lettings Index has revealed a favourable UK lettings market for buy to let landlords.

Countrywide’s Quarterly Lettings Index analyses rental prices, rent arrears and gross rental yields in the UK private rented sector and is the UK’s largest national lettings index based on over 50,000 properties across England, Scotland and Wales and the latest survey has uncovered a number of interesting statistics:

  • Average monthly rents in Inner London are the highest in the UK and four times more than in Scotland
  • Scotland has the cheapest rental accommodation in the UK and is the only region where arrears have increased
  • Average monthly rents increased the most in Wales and the East of England at 5.5%, followed by Outer London at 5.4%
  • Average UK rental yields of 6.2%, with Wales topping list at 6.7%
  • Rising rents, falling arrears and fast letting times provide perfect recipe for buy-to-let investors
  • Average rents have risen and rental payment arrears have fallen in Q1 2013 compared to the prior year.

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Gov Insist Direct Payment Deal Is Bringing PRS Rents Down

Lord Freud, the Government welfare reform minister, has claimed that the majority of UK landlords of benefits tenants have dropped their PRS rental prices in return for getting direct payments.

Government Out Of Touch On PRS Rents

Government Out Of Touch On PRS Rents

The “out of touch” statement does not reflect what is really happening in the UK Private Rental Sector or the rise of PRS rents and is giving misleading information to existing landlords.

The Government temporarily extended the discretion of local authorities to make direct payments to landlords last April when caps to Local Housing Allowance (LHA) were introduced, paying a maximum of £400 a week for a four-bed property.

Private sector landlords were told that they could only receive direct payment for tenants claiming benefits if they lowered their PRS rent. This simply is not true!

According to the essential landlords handbook written by theLHAexpert.com – UK Landlords can still receive direct rent payments for tenants claiming benefit if the tenant is classed as vulnerable.

Speaking at the National Landlords Association (NLA) annual conference, Lord Freud said “The measure has been very successful. In London alone, a third of claimants who tried to renegotiate their rent received a rent cut. This arrangement will stay in place for housing benefit claimants, prior to the move to Universal Credit. There has been no mass exodus of people moving out of city centres or widespread homelessness because of our housing reforms.”


Hmmm… I was under the impression that some local authorities had been criticised for shipping families out of their boroughs, in a bid to avoid local authority overspending on PRS rents…and London is the worst culprit!

In a report titled “Between A Rock And A Hard Place: The Early Impacts Of Welfare Reform On London”,by the Child Poverty Action Group and Lasa, a welfare rights charity, found that many councils are actively considering obtaining accommodation elsewhere, while others believe that making up private rent shortfalls will leave the authorities with gaping holes in their budgets. The report also predicts that 124,480 London residential households will be hit by a combination of cuts to Local Housing Allowance, the new benefit cap which means no household can claim more than £26,000 a year in total, and under-occupation penalties.

According to a survey in the Guardian, some London councils are already acquiring properties in Kent, Essex, Hertfordshire, Berkshire and Sussex, and are considering accommodation in Manchester, Hull, Derby, Nottingham, Birmingham and Merthyr Tydfil in South Wales.

This is despite guidance issued by former government housing minister, Grant Shapps telling councils in May 2012, that they must “as far as is reasonably practicable” offer accommodation for homeless families within the borough.

Prime Minister David Cameron told MPs last January at Prime Minister’s Questions that housing benefit reform had brought private rent levels down, a claim repeated last month by, newly appointed, government housing minister, Mark Prisk.

Local councils in London say that because of buoyant demand, Private Rented Sector (PRS) landlords see no reason to drop rents for benefits tenants, and that many landlords have already refused to accept applications from tenant’s claiming benefits.

So Mr Cameron does refusing tenant’s on benefit qualify as reducing LHA rents?

Just because there has been a drop in Government and local authority spending on LHA payments, it does not support the Governments claims. The real truth is that the Government are putting the squeeze on the UK PRS as they fear that landlords will make more profit than the government can either control or even tax.

Such a shame that the people who are supposed to be in charge of our country are so out of touch with the real world, especially in the wake of Friday’s post about “Record Rental Prices”.

UK Buy-To-Let landlords experience a stable 3rd quarter of 2012

  • 91% of UK Buy-To-Let landlords think that tenant demand in the UK is either stable or increasing.

    Rental Yields Up, Tenant Demand Up - UK landlords Are Happy!

    Rental Yields Up, Tenant Demand Up – UK landlords Are Happy!

The findings come from the latest Paragon Mortgages PRS Trend survey and a huge number of landlords surveyed reckon that tenant demand was either stable or growing.

  • Only 6% of landlords who took part in the survey said that, in their opinion, tenant demand was declining.

Landlords also reported an average property portfolio size of 12.5 properties in the third quarter. In terms of expectations, landlords anticipate this will increase to 12.9 properties in 12 months’ time.

  • Stable and healthy yields were achieved in the third quarter, with a reported average of 6.2%.
  • Professional landlords achieved a higher average yield than smaller-scale landlords, 6.6% compared to 5.2%.
  • Landlords are expecting to retain a stable yield for the foreseeable future, forecasting an average of 6.2% in 12 months’ time.

68% of landlords who agreed to take part in the survey said that their rental income had remained the same during the third quarter, whilst 27% said that rents had increased, just 5% of landlords had experienced a decrease in rent.

The average void period slightly increased to 2.8 weeks compared to 2.7 weeks in the 2nd quarter of the year, however void periods continue to remain low and have not exceeded three weeks since mid-2010.

Landlords are set to continue expanding their property investments in the final quarter of the year, with 16% planning to expand their rental property portfolios.

  • 58% are expecting to buy flats/maisonettes or terraced houses
  • 30% semi-detached houses
  • 21% are looking to buy detached properties.

John Heron, Managing Director of Paragon Mortgages, said: “It has been a stable quarter for landlords. Yields have remained healthy and at a consistent level for the past 12 months. It is not surprising that landlords are continuing to see high levels of tenant demand and I suspect this will continue into Q4 and the coming year. The PRS is under increasing strain with the growing shortage of homes in the UK, housing policy needs to focus more on motivating private landlords to grow their portfolios to better meet demand.”

UK Has 3rd Highest Housing Costs In Europe

UK Has 3rd Highest Housing Costs In Europe

New data released by the European Union has been highlighted by the housing and homeless charity Shelter, showing that the UK is the third worst off country in Europe when it comes to housing costs behind Denmark and Greece.

The EU says that 16.5% of people in the UK are financially burdened by housing costs, spending more than 40% of their income on rent or mortgage payments and other property related expenses.

Chief Executive of Shelter, Campbell Robb, said: “These figures are the evidence that the UK housing market is deeply dysfunctional. With so many families spending huge amounts of their income on their rent or mortgage, people will be making daily trade-offs between food bills, filling the car tank with petrol, and paying their housing costs. And this is not set to get better any time soon. While the situation is bleak at the moment, a succession of governments failing to provide much-needed affordable homes means that the future facing our children and our children’s children is only set to get worse. Housing is the largest monthly cost for most people, yet the affordability of housing is not getting the same attention as the monthly costs of other essentials such as food or fuel. We believe all political parties must recognise that solving our housing crisis is as fundamental as health and education.”

Landlords of Buy-To-Let properties are urged to set realistic rental prices for their properties but even they have high running costs to pay for as well as the mortgage.

However, Private Rented Sector (PRS) landlords are in a position to help struggling tenants by offering them a safety net when it comes to being able to pay the rent.

Rent Guarantee Insurance offered by Legal 4 Landlords can ensure that the rental income can continue to be paid should the tenants financial or employment circumstances change.

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Buy-To-Let Boom Continues !

Buy-To-Let Boom Continues!

According to the Royal Institute of Chartered Surveyors, (RICS), latest Residential Lettings Survey, the UK Private Rented Sector (PRS) experienced sustained growth between February and April 2012, with houses in greater demand than flats.

13% of chartered surveyors reported that PRS rents had increased with tenant demand largely responsible for the growth.

15% of chartered surveyors also reported rises in the numbers of prospective tenants seeking rental properties.

Landlords with Comprehensively Referenced Tenants and Rent Guarantee insurance witnessed an increase in their gross rental yields during the first few months of the year, although the pace has now begun to slow slightly.

Unaffordable mortgage finance, high deposits and stricter lending criteria has also forced many potential home buyers to instead turn to the UK rental market.

PRS rental prices have been rising steadily in the UK since 2009 due to the high demand for suitable rental accommodation available to rent.

An increase in the supply of properties to the rental market has also been cited as a contributing factor of the success of Buy To Let, with 7% of surveyors revealing increases in the numbers of landlords looking to let their properties to private tenants.

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