RITA4Rent Latest News – Weekly Round Up 13 May 2016
Posted 13 May 2016
It has been a busy week, and we round up the week’s property news in today’s blog.
It feels as if you cannot avoid the EU referendum in the news these days, with the big day only just over a month away now. Whilst we have been promised a consultation on the Government’s so called “Making Tax Digital” initiative, the EU referendum has been cited as the reason for delaying this. We shall report on this when we know more, but for now, an HMRC spokesman simply said: “The consultations will be released after the referendum giving plenty of time for review and feedback.” Watch this space!
It was reported last Friday by the Daily Telegraph, that it was Rental freedom day on 5th May. Although, it is not quite as exciting as it sounds. Rental freedom day is the point in the year where tenants had earned enough to pay off the entire annual cost of renting their home. This comes two weeks after mortgage freedom day which fell on April 19th. Figures from Halifax reveal that, on average, buyers spend 29% of their average disposable income on their mortgage, compared to 34% spent by renters. With data from HomeLet showing that the average bill has increased by 4.9% for new renters in the past year, rental freedom day arrived a day later this year than in 2015. London-based tenants will have to wait to mark the occasion, with the point where renters in the capital have earned enough to pay their rent for the year not coming until July 13th. The date for mortgage freedom in the capital comes sooner, however, on June 25th.
Also last Friday, The Times reported on research from consultancy firm McBains Cooper, which revealed that housebuilders do not believe Government plans to build a million homes by the end of the decade are realistic. When questioning directors and owners from almost 400 building firms, more than half said the target is unachievable because of a shortage of skills and land. Planning permission delays were cited as a barrier by 40% of those polled, while 29% highlighted the inability to generate a profit and just under a third blamed skills shortages.
On Monday, The Daily Telegraph reported that half of household income is spent running the home, according to a new report by home insurers More Than. The average monthly cost of household bills and mortgages for UK homes with three bedrooms is £1,634 on average, while renters pay £1,576 per month. For households where two working adults take home the average yearly salary of £27,600, this means homeowners spend 45% of post-tax earnings on running costs. The report also found that, on average, the cost of the regular bills for running a three-bedroom home exceeds the average mortgage or rent payment. The Cost of Running a Home Report shows, however, “significant variation” in the costs of running similar-sized homes in different regions. More than 70% of households in the highest region of Greater London cost more than the monthly average take-home pay of £1,827.90 per month to run, but in Northern Ireland this figure fell to just 3%.
Also on Monday, The Independent ran a story regarding the student rent strike which was gathering momentum. Strikers at the University of Roehampton and the Courtauld Institute of Art have joined those from Goldsmiths and University College London in what’s being described as “the largest student rent strike in British history,” with the move said to be a protest at “soaring” accommodation rates.
Tuesday’s big story was regarding the stamp duty surcharge, which is starting to affect a lot of property landlords and investors. Both the Guardian and the Financial Times reported that the buy-to-let stamp duty rates are beginning to cause ‘distortion’ in the property market. The Council of Mortgage Lenders says March saw 162,000 property transactions, compared to a normal average of just over 100,000. Buy-to-let house purchases showed the biggest proportional change at 180%. There were 28,100 first-time buyers, compared with 29,000 who used B2L mortgages, and another 63,190 who bought with cash. The CML said the spike in sales was “larger than expected, and we can now see that this was mainly as a result of a marked increase in cash transactions”. Alex Gosling from HouseSimple.com said: “With fewer buy to let investors looking to buy in April, the slack was expected to be picked up by homebuyers, and that doesn’t appear to have happened – largely due to the impending [Brexit] vote, a huge black cloud looming on the horizon.”
Tuesday also included reports on latest house price figures from many outlets including the FT, the BBC, Telegraph amongst other broadsheets. The Halifax reported that house price growth is slowing down. Further evidence has emerged of a slow-down in UK house prices in April, as the Halifax said growth eased to 9.2% compared to last year. Compared with March, prices actually fell in April, by 0.8%, and a month ago, the Halifax said house prices were rising by 10.1%. Dr Howard Archer, chief economist at IHS Economics, said that uncertainty over the EU referendum was also likely to “rein in” housing market activity for the next few months. Martin Ellis, Halifax’s housing economist, said current market conditions remain very tight as the severe imbalance between supply and demand persists: “This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months,” he added. A record 165,400 UK properties were sold in March ahead of the tax changes, which was 11% more than the previous peak in January 2007, according to HM Revenue and Customs.
Wednesday brought an interesting report from the Telegraph, where it named 5 UK towns where renting is cheaper than buying. They stated that a report from insurance group More Than, found that renting a one-bedroom flat is cheaper than buying for first-time buyers in only five UK towns: Cambridge, Norwich, Croydon, Richmond and Westminster. The Cost of Running a Home Report analysed 72 towns, comparing the cost of rent and mortgage payments plus household outgoings. The research suggests tenants could make more significant savings in larger properties – £374.45 renting a four bedroom property in Enfield, north London, for example, and £919.44 in Cambridge.
New London mayor Sadiq Khan was the focus of another news story on Wednesday via the Financial Times. It stated that he has found support for rent controls in London. Members of the property industry, including JLL’s Adam Challis and Hometrack’s Richard Donnell, have backed Sadiq Khan’s proposals for a “London living rent”, capped at one-third of the local average income.
Yesterday, it was reported by both the Guardian and the Evening Standard that London has broken the 600,000 price barrier. The average price of a home in London broke through the £600,000 barrier, and has almost doubled since 2009, according to figures from property firm LSL, which owns estate agents Your Move and Reeds Rains. It said the average across England and Wales had risen 8.9% since April 2015 to £298,030 in March. The figures, based on analysis of Land Registry data, showed property values hit new peaks in nine out of 10 regions – only in the north-east were they lower than before the downturn. In London the average was up 11% year-on-year. Waltham Forest had the biggest increase in house prices, with the average up 113% to £430,704. LSL said the average house price in England and Wales had risen by 1% in March and by 50% in the past seven years. The Standard highlights Bedfordshire, which has become a hotspot with prices up 13.4% year on year, only just bettered by London’s 13.5%.
Fewer new-buyer enquiries was also reported yesterday, in the Guardian, the Herald and the Scotsman. Demand for homes fell back for the first time in more than a year last month, as a stamp duty hike and uncertainty over the looming EU referendum meant housing market activity took a pause, according to surveyors. Rics said a net balance of 22% of surveyors reported a fall in new buyer inquiries, with the cooldown in interest seen across most of the UK. Scotland and East Anglia were the only areas to see some modest growth in buyer inquiries. Price momentum remains “firm”, with a net balance of 41% of surveyors seeing prices edging higher in April. The only regions which were an exception to these solid price increases were London and the North of England.
And in today’s news, reported in pretty much every newspaper, it is said that tenant evictions are up and homeowner repossessions are down. The number of households evicted from rental accommodation in England and Wales rose by 5% in the first three months of the year, while the repossession rate for homeowners fell to a record low. Non-seasonally adjusted figures from the Ministry of Justice show 10,636 evictions in England during the first three months of the year, of which 4,942 were by social landlords such as housing associations. Private landlords are listed as making 1,567, with the rest “accelerated claims”. Separate figures from the Council of Mortgage Lenders show that the repossession rate among mortgage customers has fallen to its lowest level; 2,100 properties were repossessed by its members between January and March, made up of 1,500 homeowners and 600 buy-to-let borrowers.
Finally, today the Independent reported that a large majority fail to research potential landlords. It stated that around 80% of renters do no research on potential landlords before renting a property. The survey by Kiwi Movers also shows that one in five people believes renting from an agency means they don’t need to worry about landlord credentials. However, 18% of those who did find useful negative information on a landlord say it affected their decision to rent from them. Overall, women are more likely to do a background check than men, and one in four prefers to rent from a woman. People in London are the least likely to research a potential landlord, citing the highly competitive property market as the number one reason for not doing so.
So there we are! All up to date with property news, and we wish our readers a very pleasant weekend.
For any of your property tax needs, please do not hesitate to contact RITA4Rent on freephone 0800 1 22 33 57 or via email by clicking here.