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Average rent for a two bed home in London set to surpass £2,000 a month
Average monthly rents for two bedroom homes are expected to reach £2,000 by the late summer of this year, according to new research. It currently stands at £1,867 per calendar month, up 2% already since the beginning of the year, according to the London Rental Market Report from estate agents Portico. Given that tenancies which begin in September are typically 11% higher than tenancies that begin in December, Portico is predicting that two bedroom rents will reach £2,008 per calendar month by September this year. And with two people sharing the cost of a two bedroom home, that is £1,004 per calendar month each, this shared rent figure will use 46% of the average London monthly net salary. The report shows that Ealing has seen the largest increase in rent at 6.9%, taking the rent for a two bedroom home to £1,825 per calendar month, followed by Richmond-upon-Thames at £1,934 for two bedrooms per calendar month, a rise of 6%, and Lambeth at £2,051, a rise of 5.8%. However, average rents have fallen for two bedroom homes across seven London boroughs, including Westminster and Kensington and Chelsea where they are down by 5.7% and 1.1% respectively. Bromley has recorded the greatest decline in monthly rents for all properties with a reduction of 6.3% over the first quarter of this year, followed by Hillingdon with a fall of 4.4% and Kingston-upon-Thames down 4.1%. ‘The majority of London boroughs are seeing rent increases anywhere from 1% to almost 7% so for landlords who may be feeling under particular pressure given recent government announcements, this may provide some welcome news,’ said Robert Nichols, Portico managing director. ‘But our latest report also shows some significant rent drops. Bromley is down over 6% with Kingston and Hillingdon also experiencing 4% falls. All in all, these declines won't prevent the average two bed rent tipping over the £2,000 mark later this year,’ he added. A breakdown of the figures show that the largest increase in rent for all home types was in Hammersmith and Fulham along with Lambeth with a rise of 4.7%, followed by Ealing at 4.6%, Westminster at 4.3% and Kensington and Chelsea at 4.2%. For two bedroom homes the largest rent increase was in Ealing at 6.9%, followed by Richmond-upon-Thames at 6%, Lambeth at 5.8%, Lewisham at 5.2% and Wandsworth at 5.1%. The largest decrease in rents for all home types was in Bromley with a fall of 6.3%, while rents were down by 4.4% in Hillingdon, by 4.1% in Kingston-upon-Thames, by 4% in Haringey and by 3.7% in Enfield. For two bedroom homes the largest fall in rents was in Westminster with a decline of 5.7%, followed by Harrow which fell 3%, Bromley down by 2.6%, Redbridge by 1.3% and Enfield by 1.3%. Continue reading
UK’s Home Counties prime property rents seen as competitive
Prime rents across the Home Counties in the UK rose by 0.9% in the first three months of 2016, and on an annual basis rents were 1.7% higher than a year previously. The annual figure is down from 4.7% in March 2015, according to the latest Knight Frank index report which says that this moderation in annual rental growth reflects a desire from landlords to remain competitive in what is increasingly becoming a tenant’s market. The index report also shows that the number of tenancies agreed between January and March was nearly 10% higher year on year and there was a 31% rise in enquiries from individuals relocating for work both from London and internationally. However, the rental market has continued to be location specific with Guildford and Beaconsfield seeing the highest levels of rental growth so behind these headlines a number of submarket trends exist. While activity has been focused on the sub £4,000 per month price bracket so far in 2016, with such tenancies accounting for over 50% of deals over the year to date, there has also been a pick-up in interest for lets of £10,000 and above after a fairly subdued 2015. The report says that landlords of larger properties have been more willing to negotiate on rents which reflects the relatively high levels of prime stock on the market, and a desire to keep void periods to a minimum. ‘This greater flexibility at the top end of the market, and the continued demand for smaller family homes close to good schools, underpinned a 9% increase in the number of tenancies agreed across the Home Counties between January and March compared to the first quarter of 2015,’ said senior analyst Oliver Knight. He pointed out that there was also an uptick in demand from individuals relocating for work both from London and internationally, with 31% more corporate enquiries compared to the previous three months. ‘However, more volatile economic conditions and a weaker financial services industry mean corporate budgets have been reduced. The European Union referendum in June is likely to heighten this mood of uncertainty in the short term,’ he added. Continue reading
Mortgage lending in UK boosted by buy to let frenzy due to stamp duty change
Gross mortgage lending reached £25.7 billion in the UK in March, a rise of 43% compared with the previous month and up 59% year on year. The surge in lending was driven by a dash by buyers to beat the 3% property stamp duty surcharge on additional homes that was introduced on the 01 April, according to the latest report from the Council of Mortgage Lenders. The data also shows that lending was the highest March figure since 2007 when gross lending reached £30.9 billion. Gross mortgage lending for the first quarter of this year was therefore an estimated £62.1 billion. This is the same level as in the previous quarter, but 39% higher than the first three months of 2015. ‘Against a backdrop of a recovering market, the substantial jump in lending in March was significantly influenced by a late surge of activity to beat the government’s stamp duty change on second properties, which came into effect at the start of April,’ said CML economist Mohammad Jamei. ‘The distortion caused by this stamp duty change appears to be larger than any previous stamp duty change we’ve seen. As a result, we expect there will be about 10,000 fewer mortgaged transactions each month in the second quarter of 2016 than would otherwise have been the case, offsetting the increase in activity seen in March,’ he added. According to Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), although the initial buy to let lending rush has passed, repercussions will continue to ricochet through the market. ‘Other efforts to manage demand among landlords, like reductions to mortgage tax relief, will impact on those looking to expand their portfolios. At IMLA we expect the tax increases to spur more remortgaging as landlords look at other ways to keep costs down,’ he said. ‘However, importantly, the changes will mean the sector then shrinks, the private rental sector will continue to grow perhaps more slowly to meet the demand of a rising population, continued affordability problems and the dearth of new housing supply,’ he pointed out. ‘While the failure to constrain price rises and to build more homes has been the biggest block to increased homeownership, other factors have also taken their toll. Areas beyond the mainstream market have been less well served in the more tightly regulated environment that has emerged post-financial crisis, and more consumers are falling into this category,’ he explained. ‘For example, we have seen a substantial lift in self-employment in the last five years as the labour market has evolved, but those working for themselves have had fewer tailored financial support products to choose from,’ he added. ‘However, lenders are expecting mortgage availability to improve for these types of clients in 2016. First time buyers in particular are identified as the segment of the market with the biggest growth potential. In the near future, lending levels may look lower after the buy to let rush, but over the long… Continue reading
