Labour’s lack of understanding shows through in dystopian right to buy policy – Goodall
You would likely see some enterprising folk hiring and then purchasing a car in this way – something that would have quite an impact on the broader second-hand car market.
Values of second-hand cars would almost certainly fall as demand for non-rental second-hand cars plummeted. It’s hard to imagine car rental firms not struggling with profitability if they’re forced to sell their assets at a discount.
This would likely lead to the knock-on effect that Hertz, Avis and co. would pull out of the UK, or at least dramatically increase prices to stay buoyant.
Of course, they may find more creative avenues such as changing their fleets to cars that people might be happy to rent but not to own. These would be lower quality cars with a greater ongoing costs and maintenance requirement.
Broadly speaking, it would become much harder and more expensive to hire a decent car.
You’d be forgiven for not labelling this idea as a positive development, regardless that there would clearly be a few early winners, perhaps snaring a one-year old BMW at a bargain price. But it’s clear that this implausible, somewhat dystopian future would be damaging in the longer-term.
With that in mind, I ask you this: how, when the above scenario is applied to the housing market, can the idea ever be touted as positive and progressive?
Yet this is exactly what the Labour Party is proposing with its recent right to buy suggestion.
For the UK’s 2.6 million landlords, there would be zero incentive to invest in rental properties knowing that they could be forced to sell at a discount. And how would this be good for those that want to rent or cannot afford to buy?
The private rented sector is crucial to the UK economy and by undermining it, and neglecting its importance, the Labour Party shows a real lack of understanding of the housing market.
Foreign investment dry up
On a broader point, how does this serve to reassure businesses in other sectors or overseas investors that Britain is open for business?
If a government is prepared to force owners of houses to sell at a discount, what is to stop them doing it with any other form of asset? The reality is that we’d see foreign direct investment in the UK dry up almost overnight.
It is extremely likely that we will face an election in the coming months where we will no doubt hear various policies related to housing that are aimed to win votes rather than to improve the housing market.
What is clear is that we need more thinking to ensure that there is sufficient quality housing for both those who want to rent and those who want to own.
HMOs are in, terraced houses out with landlords – Precise
The survey of 738 members of the National Landlords Association showed that 21 per cent of landlords who plan to buy property in the coming year want HMOs.
Some 50 per cent of landlords who plan to purchase would buy a terraced house, the property type featured high on the list for a sale. Among landlords who aim to sell, 40 per cent would offload terraced houses.
The research pegged average rental yields at their lowest level since 2010 for all property types. Average yields dropped to 5.5 per cent in Q2, down from 5.8 per cent in Q1.
HMOs achieved the highest average yields at 6.3 per cent.
Of the landlords who own HMOs, only 8 per cent plan to sell. Landlords were looking favourably on blocks of flats too, with 8 per cent aiming to buy compared to the 5 per cent who want to sell.
Landlords whose portfolios count between 11 and 19 properties reported the highest average yields at 5.9 per cent. Regionally, the North West generated the highest average yields, also at 5.9 per cent.
“HMOs are an attractive option for professional landlords looking to maximise yields at a time of market uncertainty,” said Alan Cleary, managing director of Precise Mortgages (pictured).
“HMOs attract multiple tenancies, therefore gross rental income tends to outstrip single lets and income is more secure if one tenant leaves a void.”
“The expansion of the HMO sector underlines how experienced landlords are rebalancing their portfolios. There is an opportunity for brokers to work with lenders that have expertise across a wide product set and to support clients who are reassessing their portfolios,” he said.
In May, Precise Mortgages extended top slicing across its buy to let range.
“We also offer Refurbishment Buy to Let for works being completed under permitted development rights, provided there are no structural alternations or change to the footprint of the property. This is a really exciting development enabling landlords to change the use of a property from a C3 dwelling house to a C4 HMO of up to six bedrooms,” Cleary added.
Agency BDRC surveyed 738 members of the National Landlords Association online during June, on behalf of Precise Mortgages.
Landbay secures £1bn funding line to bolster buy-to-let lending
The BTL lender has declared an ambition to grow market share and to boost the number of professional landlords it reaches through intermediaries.
Landbay has increased lending volumes by 200 per cent over the past 12 months, doubled headcount and taken on additional office space.
The latest move followed the increase in its loan ceiling to £2m and the rise in its maximum loan term from 25 to 30 years.
The mortgage lender has focused on the professional segment of buy to let with a range of fixed and tracker deals for standard properties, small and large homes in multiple occupancy (HMOs)/ multi-units and expat lending. The products are available through brokers and Landbay’s network and club partners.
“The new funding is a huge vote of confidence in Landbay and in the private rental sector, particularly given the current political and economic situation,” said John Goodall, chief executive of Landbay (pictured).
“Demand for quality rental property is high and is unlikely to slow soon. Many tenants want to distance themselves from the hassle and cost of ownership—renting is increasingly seen as a lifestyle choice rather than the default option.
“Landlords are vital to the economy. This sizeable injection of capital enables us to support even more landlords and their brokers,” he said.
Scotland rents and yields rise as London slows down England
Rents in England and Wales rose by 0.5 per cent to £861 per calendar month (pcm) in the year to end-April 2019. In Scotland, rents grew by 1.7 per cent to £581 pcm.
London remains the UK’s most expensive place to rent at £1,262 per calendar month, although the average fell by 1.1 per cent year-on-year. In Scotland, the most expensive region is Edinburgh and Lothians, where rents rose by 3.1 per cent to £693 annually.
The fastest-growing rents were recorded in the West Midlands, with growth at 4 per cent to £641 pcm.
Landlords’ yields remained flat on average at 4.3 per cent across England and Wales during April compared to March.
The northern regions continued to offer the highest yields. Typical yields were five per cent in the North East, 4.8 per cent in the North West, 3.2 per cent in London, and in both South East and South West, 3.3 per cent.
The average yield in Scotland rose month-on-month for the first time since March 2017, up to 4.7 per cent.
‘Rogue’ private landlords must stop exploiting students, says universities minister
The Homes (Fitness for Human Habitation) Act 2018 targeted to drive up standards in rented homes in both social and private sectors. The act provides an alternative way for tenants to seek redress from their landlord if their rented property presents a risk of harm to the health and safety of the occupiers.
Tenants are empowered to hold their landlord, including registered providers such as housing associations, to account without having to rely on their local authority to do so.
This is a power for tenants and does not alter any existing local authority powers.
The Minister will hit out at private landlords who do not fulfil their responsibilities, resulting in some students encountering poor conditions such as a lack of heating or hot water. Some figures have even suggested that one in five students live in ‘squalor’ and reported mice, slugs, and other vermin infesting their accommodation.
Damp and mould in 40 per cent of properties
A survey by NUS and UniPol found that in 2018, 40 per cent of UK students who rented privately lived with damp and mould on their walls. The same survey found that over a third of students said poor living conditions made them feel anxious or depressed (36%).
Universities minister Chris Skidmore said: “Students’ time at university should be some of the best days of their lives and yet I have heard appalling stories of students living in terrible conditions, which can affect their studies and even their mental health.
“Now the time is up for these landlords making a profit from shoddy accommodation. These new regulations make landlords more accountable, helping to improve standards, and students should use their powers to make sure landlords face justice where they’re not fulfilling their responsibilities.
Minister for housing Heather Wheeler MP said: “For the last year, we have worked tirelessly to ensure all tenants, including students, have access to a fairer private rented market across the country.
“From cracking down on unnecessary costs through our Tenant Fees Act, extending HMO regulations to offer protections to more tenants than ever before and giving councils the funding they need to tackle rogue landlords, we are determined to make renting of the standard it should be.”
Unipol and Universities UK have created codes to set standards for practice and conduct, which landlords can sign up to, to make sure standards are met with the government calling on private landlords to sign up to these standard-raising codes.
Better data key to improving rental sector – Citizens Advice
That’s the conclusion of Joe Lane, principal policy manager at Citizens Advice. Writing a blog for the Office of National Statistics, Lane noted that the data already available suggests there are significant problems within the rental sector.
He cited the recent English Housing Survey, which found that a quarter of private rented homes in England weren’t decent, while around 14% of homes had a category one hazard, meaning there was an immediate risk to people’s health and safety.
However, Lane argued there are also large gaps in the data collected about the rental sector.
He said: “One gap – or at least challenge – in the data is the lack of comparability between nations. For example, the Welsh Housing Conditions Survey ran in 2018 for the first time in 10 years, so there has been a lack of comparison for findings from the other UK countries’ housing surveys.”
Lane suggested that more comparison would allow all stakeholders to learn from policy successes and mistakes.
The data is also insufficiently granular, particularly when it comes to geography, he argued.
“In reality, people’s experience of private renting is driven by relatively small local markets. So when discussing affordability or how well housing stock meets demand, the notion of a national or even regional market often doesn’t reflect local experiences of landlords or tenants,” Lane concluded.
Calls to scrap deposits for renters
A report for the right-wing Centre for Policy Studies said forcing tenants to come up with enough cash for deposits – which average around £1,041 – meant many people struggled to move between properties.
It also found the average renter lost more than £300 per tenancy due to missed interest and inflation.
The report suggests introducing a new deposit replacement insurance system, which would allow renters to insure against potential damage or missed rent payments without having to find up-front deposits.
Under such a scheme, renters would retain more of their own money when moving into a property, earn interest accrued during the tenancy, and avoid borrowing from friends, family, or payday lenders.
They could also build up a reputation as a good tenant through a ratings system similar to no-claims bonuses for motor insurance, while landlords would still receive protection against property damage and missed rental payments.
A YouGov poll carried out on behalf of the think tank found 43% of renters would support the introduction of an insurance system.
Robert Colvile, director of the Centre for Policy Studies, said: “This government has a real opportunity to rectify the damage done by Labour to the rental market.
“By endorsing an insurance-based model as an alternative to a rental deposit, the government would rectify an unfair system which polling shows is unpopular with hard-pressed tenants.”
UK set to lose 133,000 homes for private rent over the next year – RLA
Research by the Residential Landlords Association has found the country faces a net loss of 133,000 homes for private rent over the next year.
This follows government figures showing that between March 2016 and March 2017 England saw a loss of 46,000 private rented homes.
The RLA’s figures, based on questioning over 2,600 landlords, show that 84% of landlords have seen tenant demand increasing or remaining stable.
Much of the reason for the fall in supply has been the decision to restrict mortgage interest relief to the basic rate of income tax and the decision to add a 3% levy on stamp duty for the purchase of additional homes.
Whilst the government has been working to boost the supply of homes to rent by corporate developers, analysis by the RLA suggests that just 2% of all private rented households in the UK are in homes developed by corporate investors.
The majority of landlords are individuals and small businesses, best positioned to support small and medium sized construction firms, the RLA said.
The trade body is now calling for the government to end the 3% stamp duty levy on landlords investing in property.
The RLA policy director, David Smith, said: “The demand for private rental homes shows no signs of slowing up, despite efforts to encourage home ownership. The government was always mistaken to place homes to own and to rent in opposition to each other rather than seeking to supply more homes in all tenures.
“Corporate investors are failing to provide the new homes to rent at the pace and scale we need. They are also poorly equipped to meet the housing needs of towns and rural areas.
“The vast majority of landlords are individuals and small businesses, providing good housing to their tenants and supporting local economies. We need to support and encourage them to provide the long term homes to rent needed. The government should use taxation more positively and not penalise landlords who are contributing to badly needed homes to rent.”
Knight Frank profits down in ‘volatile’ environment
While turnover was up 3.3% to £476.2m, the group’s pre-tax profit was £145.7m, down on 2016’s profit of £152.6m.
However, the firm said all UK service lines performed well, with record years for new homes, residential lettings and Knight Frank Finance.
Chairman Alistair Elliot said Brexit, the impact of recent stamp duty changes and political and economic uncertainties around the world had affected performance.
He said he was “delighted” with the results as these factors had caused hesitancy in the markets and “there were moments when the outlook was bleak”.
The group will focus on its global network to drive growth, given the “volatile trading landscape”, and intends to retain its independence as a private company.
Knight Frank said residential markets in the UK have converged over the past 12 months, with regional price growth slowing to match weaker performance in London.
However, it said sales activity has experienced something of a recovery, with London in particular experiencing an uptick in 2017 compared with very weak trading conditions a year earlier following the Brexit referendum.
Rents have been rising modestly across the UK and, with a slowdown in buy-to-let lending, the growth in the professionally-managed private rental sector is an area of focus, with notable growth in construction activity in outer London boroughs and key regional cities.
“There is no doubting the significant uncertainties presented by the current geopolitical environment. That said, uncertainty drives change and the dynamic real estate world is presenting great opportunities centred on changing work patterns, differing lifestyle choices and a fitter, ageing population, increasingly gathering in key cities around the world,” said Elliot.
“Retirement living, distribution, hotels, healthcare and the private rental sector are just a few markets where the dynamics are greatest and which, combined, will continue to encourage a much greater need for flexible, mixed-used developments and to which we are responding.”
Surge in available rental properties expected to be short-lived
Research from property crowdfunding platform Property Partner found that there was an 11.5% increase in new properties being listed in April, compared to March, following the “stampede” to beat the Stamp Duty surcharge deadline, but chief executive, Dan Gandesha predicted that available rental properties will dry up.
“The rental market experienced a much-needed boost in April – unfortunately, this was created by investor frenzy to beat the Stamp Duty hike, and supply is unlikely to continue on an upward trajectory,” he said.
“If anything, options for tenants could become more limited in the next couple of months as traditional landlords balk at the prospect of paying the surcharge now, and losing mortgage interest tax relief from next year.”
The 3% Stamp Duty surcharge on buy-to-let properties was introduced on 1 April and landlords will no longer be able to claim 45% tax relief on their monthly mortgage interest payments. Instead they will only be able to claim the basic rate of 20%. The changes will be phased in over a four-year period from April 2017.
The Property Partner research found that there was an increase in the number of rental listings in 82% of 90 locations analysed between March and April.
The highest surge was seen in Worcester in the West Midlands, where listings increased by 48.9% month-on-month. Listings in London were up 9.1%.
“There is still strong tenant demand, but the government has changed the traditional buy-to-let landscape, and this will have ramifications for the rental market in the longer term,” said Gandesha.
“That demand will increasingly have to be met by professional landlords like Property Partner.”