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Supply of homes to rent falls in UK as demand rises
The supply of rental accommodation in the UK is the lowest since records began a year ago, while demand for accommodation rose slightly in January 2015, the latest data shows. After a period of gentle decline, the number of properties registered per letting agent branch dropped by 5% to 172 in January, some 10 fewer than in December, according to the report from the Association of Residential Letting Agents (ARLA). A breakdown of the figures shows that supply in Scotland stands above the national average, with 280 properties available per member branch, while the supply of rental properties in London is 59% with only 116 properties per branch. However, London has seen a slight increase in the number of properties available over the last month, rising from 108 in December 2015. Demand for rental accommodation picked up in January following a seasonal lull in December, with an average of 31 prospective tenants now registered per branch. However, it has not returned to the high levels reported in January and February last year, when there were 38 and 40 tenants registered per branch respectively. In line with growing demand, the number of agents reporting rent increases for tenants increased in January, with 30% reporting an increase in rent, the highest since September 2015. ‘Supply of housing continues to be a problem and tenants bear the brunt of this with more people competing for properties at higher prices. The majority of tenants find that it is impossible to save very much at the end of the month to put towards buying their own home,’ said David Cox, ARLA managing director. He pointed out that ARLA’s recent Cost of Renting report found that a fifth of those renting in the UK do not expect to ever be able to afford to buy a home, and unless we act soon to build more properties, this number will only get higher. The report also reveals that 63% of ARLA members think the Chancellor’s stamp duty reforms for buy to let properties will push landlords out of the market, which will in turn cause supply to drop further and 58% believe the reforms will push up rent costs. However, 47% of ARLA agents reported that they have seen an uplift in interest from buyers looking to invest in buy to let properties before the 01 April, a rise from 24% from last month. ‘A few weeks into the new year and the April deadline for the stamp duty surcharge is looming and interest from buyers looking to invest in buy to let properties and beat the deadline is ramping up,’ said Cox. ‘The final details of the new tax will be revealed at the Budget in March but we are not expecting to see the Government back down on this policy. The findings from our members echo our concerns that efforts to penalise… Continue reading
Average rents in Scotland up 2.3% year on year
Average rents in Scotland increased by 2.3% year on year in January but remained static month on month at £548, according to the latest index figures. However, the average figure is being distorted by high increases in some regions such as Edinburgh and the Lothians where rents were up by 6.4%, the buy to let index from lettings agent Your Move shows. Meanwhile, rents in the East of Scotland were 1.7% lower than a year ago and they fell by 0.2% year on year in Glasgow. The index also shows that slower house price growth is hampering landlord returns with a fall of 5.8% in the year to January but arrears have improved with 11.1% tenants late paying, the lowest level since July 2015. Previously, arrears surged over the autumn to reach a record high of 13.8% in October 2015, before beginning to improve. However, tenant’s finances remain in worse shape than 12 months ago. In January 2015 as little as 7.1% of all rent due was late. A breakdown of the figures show that in January 2016, rents in Edinburgh and the Lothians were 6.4% or £38 higher than a year ago, the fastest annual rent rise on record. This is nearly three times quicker than average rent growth across the whole of Scotland. On average, across Scotland as a whole rents climbed 2.3% in the 12 months to January 2016, equal to £12 in absolute terms. This is only slightly faster than 2.2% in the 12 months from December, though represents an annual acceleration compared to the 1.3% annual lift recorded in January 2015. ‘In different parts of Scotland, powerful interplays between supply and demand are shaping the regional rent patterns that are emerging. In popular cities like Edinburgh where the jobs market is hottest the competition to find homes means tenants have to act quickly. As a result, we’re seeing exceptional rent growth in some parts of the country while in others, lettings market activity is much calmer,’ said Brian Moran, lettings director at Your Move Scotland. ‘However there’s also another ingredient added to the mix now. The private rented sector is in a state of uncertainty, as landlords wait with baited breath while the Private Tenancies Bill progresses through the Scottish Parliament. Nervous landlords may be acting now before their hands are tied, and they lose control of the rent they can charge. This could have prevented a seasonal dip between January and December instead of the steady picture we have seen,’ he explained. ‘Encouragingly, the latest rent rises are underpinned by good news. We should also be looking at tenants’ bottom line. Arrears are falling which speaks volumes for affordability right now. With rents below their price peak, many tenants have been seizing the opportunity to move out of season, while good deals are available,’ he added. On a regional basis three of the five regions of… Continue reading
Cost of housing in UK means more young people still living with their parents
Affordability issues mean that more young adults aged 20 to 34 in the UK are more likely to be sharing a home with their parents than any time since 1996, new research shows. There were 618,000 more young adults living with their parents in 2015 than in 1996 at 3.3 million compared with 2.7 million, according to the data from the Office of National Statistics (ONS). Nearly half of 20 to 24 year olds lived with their parents in 2015, compared with a fifth of 25 to 29 year olds. For 30 to 34 year olds, this figure was less than one in 10. The research shows that the percentage of young adult householders owning their home decreased from 55% in 1996 to 30% in 2015 for 25 to 29 year olds and from 68% to 46% for 30 to 34 year olds. The percentage of 25 to 34 year old householders renting their home has surpassed those who own their homes over the last decade. There has been a noticeable increase in renting since the early 2000s and the ONS says that this may be due to increased demand for rented housing as house prices increase and an increased supply of privately rented housing from a growing number of buy to let investors. The increase in renting has been largest for householders who are aged 20 to 24. In 2015 some 91% of householders aged 20 to 24 were living in rented accommodation; this is higher than all other age groups. Only 9% of 20 to 24 year old householders owned their homes either outright or with a mortgage or loan in 2015, down from 30% in 1996. Saving for a deposit is often seen as one of the biggest hurdles to home ownership and the report says that first time buyers’ deposits have increased from around 10% of the purchase price in 1996, to a peak of 27% in 2009. This was the height of the economic downturn, when mortgage lenders placed greater restrictions on the mortgage lending criteria used to assess applicants’ ability to afford a home loan. In recent years the size of deposits paid has fallen slightly but remained above 20% of the purchase price on average. The size of deposits paid by first time buyers has risen more than deposits paid by existing home owners. This is because prospective first time buyers who have smaller deposits saved were less likely to be approved for a mortgage, and therefore less likely to buy a home. That left only those with larger deposits who did buy their first home, which in turn pushed up the average deposit paid. Between 1971 and 1999, the amount paid for a house by first time buyers with a mortgage fluctuated between two and three times their annual income. After 2000, this ratio increased rapidly, driven by increasing house prices , reaching a peak of more than 4.5 times their annual income in 2004 and… Continue reading
