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Confidence among UK private sector landlords remains subdued
Confidence remains low among UK landlords as a result of recent government interventions in the buy to let market but buyers are slowly returning to the market, says a new survey. Overall, landlords report improved buying intentions, growth in tenant demand and yields and confidence is stable but remains at subdued levels, according to the research by BDRC Continental on behalf of Paragon Mortgages. Following an increase in the rate of stamp duty payable on buy to let purchases, and with a staged reduction in income tax relief available on rental income due start next year, landlord confidence remained low in the first quarter of 2016. Asked about expected business in the next three months, just 41% of landlords rated their prospects as being either ‘good’ or ‘very good’. This is down from 65% during the same period last year, prior to the government’s clampdown on buy to let. Indicating that falling levels of confidence may have stabilised however, the figure is just 2% down on the fourth quarter of 2015. Reflecting this, the survey also saw landlords’ property purchase intentions edge above selling intentions, reversing the situation seen in the final quarter of 2015 when more landlords were looking to sell property than were looking to buy. Some 19% of landlords indicated that they intend to purchase a property in the coming year, up from 17% in the fourth quarter of 2015 while 16% of landlords indicated that they intend to sell a property, down from 19% in the previous quarter. Driving this trend was an increase in tenant demand, with 39% of landlords reporting demand as increasing either slightly or significantly, up from 34% in the fourth quarter of 2015. Reflecting this increase, landlords reporting tenant demand as being stable declined from 40% to 36%. The research also shows that yields in the first quarter of2016 also grew slightly on the previous quarter, averaging 5.7%. Despite negativity persisting around business expectations over the short term, rental property as an asset class is still viewed favourably by landlords. Some 38% of landlords polled believe investing in the PRS to be ‘much better’ than other investment options such as stocks and shares. A further 33% believe investing in the PRS to be a ‘little better’ than other investments and just 10% believe an investment in the PRS is worse than other investments. ‘Increased stamp duty, as well as reduced levels of income tax relief for landlords due to come into force next April, have undoubtedly impacted landlord sentiment. Confidence by some measures is down by around a third when compared to the same period last year. That said, this data does suggest that confidence is stabilising,’ said John Heron, director of mortgages at Paragon. ‘In the previous quarter we saw more landlords respond very negatively to the announcements on stamp duty and tax on rental income with more intending to sell rather than buy property, this trend is now reversed and purchase… Continue reading
Rental supply in the UK continues to fall, latest analysis report shows
The supply of residential rental properties in the UK has continued to fall but this comes at a time when rental costs are expected to rise. Overall the number of rental properties managed per lettings agents branch increased by 8% in April to the highest level this year but is down from April 2015, according to the data from the Association of Residential Lettings Agents (ARLA). The jump from March this year follows a rush from buy to let landlords pushing to complete sales ahead of the April stamp duty increase deadline, the ARLA report says. But supply still stands at 5% lower than in April last year and continues to fall year on year. In April 2015, the average number of properties managed per branch was 193, this year it stands at 183. Demand is also falling year on year: In April, the number of prospective tenants per branch was 34, down from 33 the previous month and down from 36 April of last year. Meanwhile, rent costs expected to rise following buy to let stamp duty rise. Some 66% of ARLA agents predicted that the stamp duty reforms will push rent costs up for tenants down the line. ARLA agents also reported an increase in the number of landlords selling their buy to let properties. An average of four, up from three in March, are pulling out of the market, showing an increase for the first time in a year. ‘It’s likely that this increase in supply is only temporary. At the end of April we saw a flurry of landlords seizing the last few moments before the stamp duty rise to complete sales, triggering an increase in the supply of empty rental homes to be filled this month,’ said David Cox, ARLA managing director. ‘However, we expect that fewer investors will be taking on buy to let properties over the next six months, following the price hikes, meaning that once these properties are filled we’ll see supply nose dive once again,’ he added. Continue reading
Research reveals UK house hunters like a more personal service from estate agents
Some 58% of UK house hunters want life long, personal relationships with estate agents with an accumulative understanding of their property needs, new research suggests. The study from cloud based estate agency software provider Dezrez, looks at the attitudes, perceptions and expectations that UK home buyers have towards estate agents and online tools. It found that the majority of respondents, 93%, search for properties online, while 54% said that they would use a mixture of online tools and estate agents to deal with the entire property buying process. Some of home buyers said they would actually prefer to have a personal agent who can deal with the whole management of the home buying process. Those surveyed also admitted to relying heavily on estate agents’ expertise for key parts of the home buying process including with 72% for conveyancing, 62% to arrange viewings and inspect properties, 53% to make an offer and 42% for financial negotiations. ‘Buying or selling a home can be an extremely stressful and daunting process and good quality customer service still carries a huge amount of weight. Estate agents are well placed to offer sound, expert advice. They can help to alleviate some of the pressures and concerns that consumers have with managing the process themselves,’ said Justin Morris, chief executive officer of Dezrez. ‘What we are experiencing in the property market is some interesting trends that are mirroring consumer activity on the high street. Whilst many people like to be able to search online, they clearly value the customer experience and human touch of face to face interactions. However, without the personal touch online only services aren’t necessarily going to be in the position to replace traditional agents,’ he explained. The research also highlights consumer frustration with agents who are slower to adopt newer digital technologies. Some 67% of respondents believe that estate agents are not fully using technology to their advantage and 44% strongly agree that estate agents need to adopt, and embrace technology, in order to survive in the future. ‘There is a real appetite for change from both estate agents and consumers, especially when it comes to the use of technology. Advancements in technology, from mobile devices to cloud based software offer some amazing opportunities for the estate agent of the future. It gives them greater accessibility and freedom, and helps them to alleviate some of the pressures experienced by home buyers and sellers,’ Dezrez pointed out. ‘ There’s a breadth of technology that can help transform the property industry and enable agents to deliver a professional and personal service across human and digital touchpoints. In order to survive, and thrive, estate agents must recognise and remain confident, that they too have the tools available to remain competitive and keep customers satisfied,’ he added. Continue reading
