Tag Archives: house
Private rented sector in UK seeing rapid growth, new tenant survey reveals
The private rented sector is continuing its rapid growth across the UK and is now well established as the second biggest form of tenure after home ownership, new research shows. It has overtaken the social rented sector and large scale investment into the private rented sector (PRS) by funds and other institutions is set to treble over the next five years boosting growth further, according to the new tenant survey from real estate firm Knight Frank. The Tenant Survey carried out by YouGov on behalf of Knight Frank estimating that total investment will rise to £50 billion over the next five years and large scale investors are operating an average gross to net yield of 26% for new Build to Rent developments. It also shows that some 53% of tenants favour a six month or one year tenancy for rented accommodation and 52% said living close to work or their place of study is a key priority while 30% said the main reason for moving between rented properties was to ‘upgrade’ to a nicer or larger property. The survey found that 38% of tenants have lived in five or more rental properties and while the majority of respondents had moved within a mile of their previous property, some 19% had moved more than 60 miles, indicating a relocation for work or study, highlighting the flexibility of PRS as a tenure. Some 24% of Londoners are prepared to pay 50% as a maximum amount of their gross annual income on rent, up from 22% last year and a quarter of those living in the PRS do not want to, or don’t know if they want to buy a home in the future. Of those that express a desire to eventually buy a home using a mortgage, less than half are currently saving towards a deposit. Also, a quarter of those living in the private rented sector live alone, while 34% live in a couple without children. Some 43% of 18 to 24 years olds share with other adults in a flat share. Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that the private rented sector is continuing to grow in size, with around 5.4 million, or 20% of households now being let out to private tenants. ‘There has been a generational shift in the private rented sector. More households are now living in rented accommodation for longer, and while housing affordability is certainly a factor here, rented accommodation is also becoming an established flexible form of tenure, an attribute welcomed especially among younger workers,’ she explained. Indeed, this was confirmed in last year’s Tenant Survey, with 38% of under 35s saying they didn’t want a mortgage or that renting suited their lifestyle, rising to 49% for those aged under 25. The number of under 45s living in the sector has more than doubled, to nearly 3.1 million over the last decade, and those aged 25 to 34… Continue reading
UK needs more home lending solutions for retirement, research suggests
More than one in three equity release customers in the UK are still paying off mortgages highlighting the growing need for retirement lending solutions, new research suggests. A study from national specialist Bower Retirement Services shows that 36% of over 55s seen by advisers are still paying home loans and advisers are seeing a surge of inquiries from customers with interest only loans. The firm’s quarterly Adviser Tracker Research report also shows that 68% of equity release specialists have seen a rise in customers with interest only loans looking for solutions. Advisers are also reporting an increase in customers who have considered downsizing as a solution but then decided not to go ahead. Some 23% of clients who looked at downsizing did not go ahead with key reasons including staying near family and friends and not being able to find a suitable home. Around 75% of those who did not go ahead said they wanted to stay near family while 54% could not find a suitable home. Bower believes the recent launch by Santander and Legal & General of a partnership to offer lifetime mortgages as an option to customers facing the possibility of repayment shortfalls demonstrates the growing need for new solutions. ‘The Legal & General and Santander deal is a significant move for the launch of retirement lending but much more needs to be done. Significant numbers of people aged over 55 are paying off mortgages but do not have the range of options they need,’ said Andrea Rozario, chief corporate officer at Bower Retirement Services. ‘Downsizing will be appropriate for many but it is also clear that many want to stay in their existing home for emotional and financial reasons and should be able to do so as long as it is in their best interests,’ she pointed out. She added that one potential problem for clients is their home not being worth what they thought and around 18% of advisers say clients who went ahead with equity release found their house was valued at lower than they had expected. Continue reading
Caution due to Brexit likely to affect UK housing market in short term
Caution is likely to affect sales in the mainstream housing market in the UK as a result of the decision to leave the European Union but low interest rates will underpin prices, according to a new analysis. The market is seeing initial caution, particularly among discretionary buyers, and this likely to curtail housing market activity as buyers’ willingness to commit to a major purchase weakens. Over the medium term, the analysis from real estate firm Savills, suggests that sentiment will improve but also fluctuate as negotiations to leave the EU proceed. It also suggests that buyer sentiment is likely to lead to lower sales volumes in the short term. Also, the possibility of tighter lending could pull transactions numbers further down from recent UK highs of 1.3 million a year. ‘However, at this stage, we do not expect sales volumes to decline to post credit crunch lows,’ said Lucian Cook, director of residential research as Savills. The report points out that so far it has been business as usual for lending. ‘Should downside risks persist, there is a possibility that lenders tighten lending criteria. If stricter borrowing rules come into play, first time buyers and second steppers will be the most affected,’ Cook explained. He believes that low interest rates will underpin house prices with the prospect of a cut in base rates and this may present opportunities for those on low loan to value mortgages. Overall, house price growth is likely to slacken as a result of weaker demand in the short to medium term but looking ahead, Cook said that the possibility of a slower economy could have an impact on price growth. ‘We do not rule out the possibility of price falls in weaker markets. Low levels of house building has resulted in a market that is fundamentally undersupplied. This has not changed,’ he added. The analysis report also points out that the short term impact on sentiment is also likely to vary geographically and between different buyer groups, in part dependent on the level of opposition to or support for Brexit. That would potentially indicate more caution in the domestic markets of London and among first-time buyers and second steppers but less among mature home owners. ‘While this short term sentiment effect is likely to take longer to feed into the house price indices, we would expect the first indications of this impact to come from consumer confidence surveys and mortgage approvals,’ Cook pointed out. ‘At this stage, it appears that the downside risks to the housing market are milder than the events that led to the 2008 financial crisis. However, political and economic uncertainty is likely to curtail housing market activity initially as discretionary buyers exercise caution,’ he said. ‘The potential for lenders to tighten lending criteria presents a longer term risk to market activity, especially among first time buyers and second steppers. This could mean that UK housing transactions, which reached a post credit crunch high… Continue reading
