Landlords want new PM to be more positive towards private rented sector

Sheffield is popular with students, meaning high rental demand

Landlords want the candidates to lead the Conservative Party and be the next British Prime Minister to adopt a more positive approach to the private rented sector.

In a letter sent to Jeremy Hunt and Boris Johnson the Residential Landlords Association warns that the interests of tenants are not being well served by policies which are reducing the supply of homes to rent.

According to Government data, 10% of landlords representing 18% of all tenancies in the sector plan to reduce the number of properties they rent out whilst 5% of landlords representing 5% of tenancies plan to leave the sector altogether.

Indeed, recent RLA research suggests that 46 per cent of landlords are planning to sell some or all of their properties and the organisation points out that this comes following a raft of Conservative policies aimed at dampening investment in the market, including an extra 3% stamp duty on landlord investment in new homes to rent.

It adds that most recently the Government has proposed limiting the ability of landlords to repossess properties when they need to and as a result of the fall-off in investment, the Royal Institution of Chartered Surveyors has warned that expectations for increasing rents are now at their highest point for three years.

The RLA is calling on the leadership candidates to back its five point plan for the sector which calls for pro-growth taxation to ensure enough homes to rent to meet growing demand.

It also includes a call for a fair system for repossessing properties that protects tenants from unfair evictions whilst retaining the confidence of landlords to regain possession of their property where there is a legitimate need. The RLA says this needs to be coupled with a dedicated, housing court to settle disputes swifter and easier.

The plan says there should be support for vulnerable tenants which could be done by ending the Local Housing Allowance cap, stronger action against rogue landlords by providing councils with more resources to better use the powers they already have and a commitment to rejecting all forms of rent controls which serve only to dry up the supply of homes to rent, reducing choice for tenants and thereby increasing rents overall.

‘The new Conservative Prime Minister needs to reconsider the approach to the private rented sector. Otherwise the situation for tenants will just get worse as they face less choice and higher rents because of a growing shortage of properties,’ said David Smith, policy director at the RLA.

‘We need a raft of changes that will encourage more investment in high standard homes rather than efforts to scapegoat landlords for failures by successive governments to build enough homes,’ he added.

(c) Property Wire, July 2019

Investment in Build to Rent sector reaches a record high

Parliament Square Liverpool

Investment into the Build to Rent (BTR) sector in the UK reached a record high in 2018 with almost £4 billion of new funds allocated to a new analysis.

The research by Bidwells found almost two fifths of these transactions were forward funded as investors seek scale in key investment locations and the firm has indicated that the total funds committed over the past two years will reach up to £6 billion.

With the focus of investment in the year in the London market, accounting up to £1.6 billion of total funds committed, the South East and Eastern regions have revealed a further £417 million had been invested in the area.

When it comes to the residential market, the annual house price growth rose marginally in April to 0.9% from 0.7% in March, driven by the largest monthly increase in values since November 2018.

However, price growth remains weak despite a continued shortage of stock as both buyers and sellers choose to sit out the current political and economic uncertainty. This said, first time buyer activity continues to rise, assisted by Help to Buy, low mortgage rates and improved affordability.

Across the Oxbridge Growth Corridor, the report says that capital values for apartments in city centre locations generally remained stable in 2018. Highly accessible locations with quality city centre environments continue to record premiums. Recent evidence in the analysis underlines the positive impact of an improved town centre offer and the delivery of quality residential stock.

In all locations, values slip back sharply away from the city core, although this discount is particularly marked in Oxford and Cambridge. In the latter city, capital values are around £550 per square foot in the city fringe offering greater BTR opportunities for investors.

With the recently announced introduction of the East West Rail Route, it says that this presents long term opportunities in the Growth Corridor, providing locations along the route easy access to Cambridge, helping to address business concerns concerning the availability and affordability of housing.

Bedford, for example, will be within a half hour commute of the science and tech hub of Cambridge. However, new home capital values in the town currently stand less than half that those of the central Cambridge, while rents are amongst the most affordable across the Growth Corridor region at just 24% of average net incomes.

As always with new infrastructure, the investment impact takes time, but the commercial opportunity across the Growth Corridor region will quickly focus minds on future opportunity locations, it adds.

‘Given accelerating demand for globally mobile talent by knowledge based industries across the Oxbridge Growth Arc, we have seen growing investor demand across the region. Higher yield locations such as Bedford, with good access to the region’s universities and science parks, offer opportunities to investors, particularly given forthcoming transport infrastructure improvements,’ said Colin Summers, capital markets partner at Bidwells.

New research finds UK landlords are optimistic despite Brexit

The city centre is home to Liverpool's most prominent postcode.

Landlords in the UK are still optimistic about investing in property despite Brexit uncertainty with two thirds positive about investment growth and yields, new research shows.

Some 64% are optimistic about the outlook for the residential buy to let sector over the next three years and of this, 13% are very optimistic, according to research commissioned by specialist property lender Cambridge & Counties Bank.

Indeed, the survey also suggests that a significant number of landlords are using the current market volatility to grow their portfolios with 19% looking to grow their portfolios by a third and 11% want to double it over the next three years. Just 19% of landlords are looking to sell.

However, despite the strong level of optimism, Brexit remains a key uncertainty for property sector professionals 40% of landlords conceding that it is top of their list of concerns. Brexit is seen as a bigger risk than rising interest rates, cited by 32%, a lack of confidence in the stability of lenders at 32%, and rising levels of tax also 32%.

While the buy to let sector is viewed most positively, a similar number of landlords, some 61%, are equally optimistic about student accommodation in terms of growth with 16% being very optimistic. Office buildings and properties are viewed positively by 41% of respondents, although almost a third are not optimistic.

In addition to growing their property portfolios, a significant number of landlords say they will be refurbishing their buy to let and investment properties, with an average of £10,000 set to be spent. Some 11% said they would spend more than £20,000, with 4% forecasting they would invest more than £50,000 in their property.

‘In spite of Brexit worries, it is great to see that the overall outlook for the commercial property sector is one of optimism,’ said Simon Lindley, chief commercial director of Cambridge & Counties Bank.

(c) Property Wire, June 2019

Annual UK price growth in the year to April 2019 was 1.4%, official data shows

Leeds-City-Center-800x534

House prices in the UK increased by an average of 1.4% in the 12 months to April 2019 and were up 0.7% month on month to £228,903, the latest official figures show.

The figures published by the Office for National Statistics (ONS) reveals that prices in England increased 1.1% year on year to £245,128, in Wales they increased by 6.7% to £163,902 and in Scotland the annual rise was 1.6% to £150,825.

A breakdown of the figures reveals that prices are varied in England on a monthly basis, up by 5% in the North East, by 2.4% in London, by 0.9% in the East Midlands, by 0.6% in the North West and by 0.3% in Yorkshire and the Humber and the East of England.

Month on month prices fell by 0.2% in the West Midlands and by 0.1% in both the South West and the South East.

Year on year the biggest annual prices rise was 2.9% in the East Midlands while London recorded the largest annual prices fall with house prices down by 1.2% where the average price is now £471,504.

In Scotland the biggest price increase was in Stirling, where prices increased by 8.4% year on year to £192,000. The biggest fall was recorded in Aberdeen, where average prices fell over the year by 6.2% to £150,000.

Meanwhile, in Wales prices increased over the last year in all local authority areas. Blaenau Gwent showed the strongest growth, increasing by 17.0% to £99,000 but it is stull the cheapest place to buy a house. The most expensive is Monmouthshire where the cost of an average house was £260,000.

In Northern Ireland the figures cover the first quarter of 2019 and show that prices increased by 3.5% year on year and fell by 1% month on month to an average of £134,811.

Jamie Durham, Economist at PwC, pointed out that the national slowdown in price growth is driven by negative growth in London and the South East area and it is the tenth month is a row that prices in London have fallen on an annual basis, suggesting that uncertainty in the capital’s housing market is still a problem.

According to Jonathan Harris, director of mortgage broker Anderson Harris, there is still a significant premium to pay to buy property in London and the South East with first time buyers increasingly having to call upon the Bank of Mum and Dad for help with the deposit.

‘Lenders continue to cut mortgage rates so there is no upwards pressure on pricing and the biggest challenge is meeting lenders’ affordability criteria and pulling together that all-important deposit,’ he added.

Prices continue to be supported by lack of stock, improving affordability and almost record low mortgage rates and unemployment, according to Jeremy Leaf, north London estate agent and a former RICS residential chairman.

‘Overall, despite renewed interest from buyers there are too many sellers still wedded to the idea that prices will increase perhaps when Brexit is resolved and/or some political stability returns. The reality is that only those sellers who are realistic enough to recognise new market conditions are proving successful,’ he explained.

‘While prices are falling in the South East, prices elsewhere are growing. The East Midlands had the strongest annual growth regionally in England, at 2.9%, but the West Midlands and North of England all performed similarly,’ he added.

(c) Property Wire, June 2019

Rents increased by an average of 2.6% in Britain in year to May 2019

Manchester town hall

The average cost of a new let in Britain increased by 2.6% year on year to £977 per calendar month with growth driven by areas in the south of the country, although Scotland also recorded a strong rise, the latest index shows.

The biggest annual rise in the year to May 2019 was 4% in the South West to an average of £814, followed by a rise of 3.2% in Scotland to £651, then a rise of 3.1% in Greater London to £1,716, according to the lettings index from Hamptons International.

The data shows that rents increased by 2.4% in the South East to £1,061, by 1.6% in the Midlands to £686 and by 1.1% in the North of England to £628. But rents fell by 0.5% in the East of England to £945 and by 0.1% in Wales to £666.

The monthly index also shows that more people aged 50 and over are renting to reach a record high. So far this year over 50’s accounted for 15% of rented households, up from just 11% when Hamptons International’s records began in 2012 and nearly a third of this group are pensioners.

Hamptons International estimate that this year over 50’s rented 791,580 homes in Britain, 61% more than in 2012 and 8.2% more than last year. As a result, over 50’s will pay £9.2 billion on rent this year, up from just £5.1 billion in 2012 and £8.5 billion in 2018.

The South East has the highest proportion of older renters with 19% of tenants aged over 50, followed by the South West and the North West both with 16% and Wales with 15%. The East of England, London and Yorkshire and Humber have the lowest proportion of tenants over 50, all at 11%.

Most tenants over 50 live in two bedroom properties, accounting for 44%, with 26% renting a three bedroom home and 19% a one-bedroom home. Across Britain some 48% of tenants over 50 live alone.

‘The number of over 50’s renting in Britain has reached a record high. With younger generations much less likely to be homeowners, tenants are getting older, and an ever more diverse group of people are calling the rented sector home,’ said Aneisha Beveridge, Head of Research at Hamptons International.

(c) PropertyWire, June 2019

Changes announced to proposed HS2 route will link it with Northern Powerhouse Rail

Leeds City Skyline view

Changes to the proposed HS2 route have been announced to connect the line with Northern Powerhouse Rail (NPR).

Plans published by the Department for Transport would allow for a potential new route between Manchester and Liverpool to also be used for services between London and Liverpool.

It involves creating two junctions at High Legh, Cheshire, linking the HS2 line with NPR, which is a proposed scheme to improve rail connections between some of the North’s largest cities.

This would allow NPR trains to use the HS2 line into Manchester, and HS2 trains to use the NPR line into Liverpool.

The plans are among 11 proposed “refinements” to the route for Phase 2b of HS2, which have been put to a 13-week public consultation.

This is the section running from Birmingham to Leeds via the East Midlands, and from Crewe to Manchester.

Transport Secretary Chris Grayling said the launch of the consultation “marks the first step towards fully integrating HS2 and Northern Powerhouse Rail”.

He went on: “NPR is being developed in close co-ordination with HS2, and is intended to make use of HS2 lines where that makes sense.

“This consultation includes proposals for infrastructure that would one day allow NPR trains to use the HS2 route and vice versa.”

The Confederation of British Industry’s regional director Damian Waters said: “The new consultation, announced today in Parliament, is a massive opportunity for the North and one we must grasp with both hands.

“Linking up HS2 and the Northern Powerhouse will unlock a series of connections knitting together Manchester, Liverpool and London to a high-quality transport network fit for the 21st century.”

Phase 1 of HS2 is due to run between London and Birmingham from 2026, while Phase 2b from Birmingham to Crewe is scheduled to launch in 2027.

HS2 trains will also serve destinations on conventional lines beyond the new high-speed network, including York, Newcastle, Liverpool, Glasgow and Edinburgh.