Tag Archives: affordability

Nearly a third of renters say they can’t imagine ever owning their own home

10/09/2017 National Renters Alliance Leave a comment

A new study has shown that 31 per cent of renters in cannot imagine ever owning their own home.

The research, commissioned by GoCompare Mortgages, also revealed that more than a fifth (21 per cent) of renters think that the removal of mortgage interest tax relief on buy-to-let properties, which came into force in April 2017, will reduce the supply of rented properties in their area.

Some of the tenants surveyed were also concerned that they will face rent hikes as buy-to-let landlords pass on the higher costs. Six per cent said that their landlord had already or will increase the rent as a direct result of the tax changes.

Unsurprisingly, affordability and access to mortgage loans were found to be the main reasons why many Brits rent. Just 14 per cent of tenants surveyed said that they rent out of preference. Half of the other respondents claim that they rent because they can’t afford to buy their own home and 11 per cent were renting because they were currently unable to obtain a mortgage.

In terms of demographics, the survey found that more women (57 per cent) rent than men (43 per cent); 39 per cent of rented properties were single households, 28 per cent were families with children and 23 per cent were couples. One in ten of people surveyed share their home with flat or housemates.

Analysis

Commenting on the research, Matt Sanders from GoCompare Mortgages said: “Our research reveals that half of all tenants are in rental accommodation because they can’t afford to buy their own home. It now looks like many have given up all hope of ever owning a home and, for some, the changes to buy-to-let regulations are likely to make renting more expensive. In turn, that makes saving for a mortgage even harder.

“April saw profound changes to the taxation of buy-to-let properties which will reduce landlords’ profits and our survey suggests that there is a real concern among tenants that to protect their profits, over time some landlords will increase rents while others may sell-up – reducing the stock of available private rented homes.”

Worries about increased landlord costs due to elimination of mortgage-interest relief being passed to tenants through higher rents may be borne out by new statistics which show that 30 per cent of landlords have increased rents in response to buy-to-let tax changes.

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Affordability, Housing

Renters in the UK spend average of 62 per cent of income on rent

30/08/2017 National Renters Alliance 5 Comments

The extent of Britain’s housing crisis has been laid bare by a new report from the real estate consultancy Knight Frank.

Rising property prices and stagnant wages leave increasing numbers of people with little alternative to renting. Over the next five years the number of renting households is forecast to increase to around 5.79 million, or 24 per cent of the total, up from about 21 per cent today. More alarmingly, renters across the UK spend an average of 62 per cent of their income on rent.

A YouGov survey of more than 10,000 tenants and 26 major investors also found that while at least three-quarters of UK renters are living in homes owned by private landlords, they will increasingly rent from large-scale institutional landlords such as city firms and property companies investing in the growing Build-to-Rent or multi-housing sectors.

James Mannix, head of residential capital markets at Knight Frank, said of the report: “The strength of the UK private rented sector (PRS) has grown demonstrably in recent years. As consumer demand for affordable, flexible accommodation continues to rise, PRS is firmly establishing itself as a key opportunity for institutional grade investment, due to its long-term potential.

Informed by the survey of the key investors and operators in the market, Knight Frank estimates that by 2022, the private rented market will be worth in the region of £70bn.

Young professionals aged between 25 and 34 make up the largest proportion of households living in the PRS. However, there are also significant numbers of renting families along with 50- to 64-year-old sole-occupiers and couples in addition to retirees many of whom spend over half their incomes on rent. Overall, 40 per cent of renters pay more than 50 per cent of their incomes on rent, the report found.

Unsurprisingly, 68 per cent of renters still expect to be living in rented accommodation in three years’ time, with 30 per cent of respondents saying that the most common reason for renting was to saving for a deposit to buy a property, 21 per cent said renting allowed them to live in an area where they could not afford to buy, while 18 per cent calculated that renting was more affordable than paying a mortgage.

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Affordability, Housing, Uncategorized

Thirty per cent of UK landlords have hiked rental prices as tax increases bite

30/08/2017 National Renters Alliance 1 Comment

Thirty per cent of landlord have hiked rents in response to tax and regulatory changes according to a new survey of the rental market.

The study conducted by BDRC Continental on behalf of Foundation Home Loans revealed that 30 per cent of landlords have hiked rental prices, with the greatest proportion doing so in the East Midlands (41 per cent).

More than a third – 38% – of landlords said they had reviewed the size of their portfolios to ensure they could withstand any creeping costs, while 7% have sold off properties to either reduce portfolio sizes or diversify.

Furthermore, 19 per cent of landlords with 20 or more rental properties have reduced the size of their property portfolios by selling off property.

Aside from political uncertainty, many landlords have been deterred by recent tax changes, including the phasing out of tax relief for higher-rate taxpayers and the introduction of a 3% stamp duty surcharge.

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Jeff Knight, marketing director, Foundation Home Loans, said: “Landlords have been met with a raft of changes, from stamp duty charges to shifts in tax policy, and the lack of certainty on the political front has clouded the picture somewhat. The response has been to ‘batten down the hatches’, streamlining larger portfolios and protecting income by increasing rents – decisions that can be reviewed once the buy to let market is more accommodating.

“The fact remains that, whether it’s as a stepping stone to home ownership or a longer term lifestyle decision for tenants, the rental sector is an increasingly important part of the housing mix. This will ultimately be best served by a wide choice of property, and good landlords who can have confidence in decent returns.”

Percentage of UK landlords who raised rents, by region

UK	30%
East of England	33%
East Midlands	41%
London (Central)	24%
London (Outer)	24%
North East	23%
North West	35%
Scotland	15%
South East	33%
South West	31%
Wales	23%
West Midlands	31%
Yorkshire	31%

Percentage of UK landlords who reviewed portfolio size, by region

UK	38%
East of England	40%
East Midlands	50%
London (Central)	45%
London (Outer)	40%
North East	43%
North West	34%
Scotland	35%
South East	40%
South West	38%
Wales	32%
West Midlands	35%
Yorkshire	28%

The Renters Alliance helps renters with bad landlords and letting agents. If you have a story you would like to share, please contact the National Renters Alliance through our website or email us at contact@nralliance.co.uk

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Affordability, Housing Standards, Renters rights

Majority of London renters spend over half of salary on rent

25/05/2017 National Renters Alliance Leave a comment

Most single tenants renting privately in London are now paying more than half of their monthly salary on average to rent a one-bedroom property.

Research undertaken by the property website Sellhousefast.uk which analysed the latest data from the Office of National Statistics (ONS) found that the average rent for a one-bedroom property in London is now almost £1,330 per month.

Percentage of salary spent on rent by London borough

Despite having the highest costs of any housing type, the private rented sector has the worst property standards. In February 2016, it was reported that 60% of London renters are forced to live in unacceptable conditions. Private renters are also one of the most deprived groups with almost 25% of households at risk of fuel poverty.

ONS data revealed that single tenants in 25 of London’s 32 boroughs are spending more than half of their monthly salary – after income and council tax deductions – on rent for a one-bedroom property.

Unsurprisingly, housing affordability is worst in prime areas of the capital, with those renting a one-bedroom property in Kensington and Chelsea paying the equivalent of 85% of the average London monthly salary on rent.

The cheapest accommodation for single tenants was in the boroughs of Bromleywell and Havering with the average rental cost for a one-bedroom home coming in at 42% of monthly salary.

Robby Du Toit, managing director of Sell House Fast commented: “As demand has consistently exceeded supply over the last few years, Londoners have unfortunately been caught up in a very competitive property market where prices haven’t always reflected fair value. This notion is demonstrated through this research whereby private rental prices in London are certainly overstretching single tenants; to the extent they must sacrifice over half their monthly salary.

“For those single tenants with ambitions to climb up the property ladder – their intentions are painfully jeopardised, as they can’t set aside a sufficient amount each month to save up for a deposit or explore better alternatives. It’s not only distressing for them but worrying for the property market as a whole – where the ‘generation rent’ notion is truly continuing too spiral further.”

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Affordability, Housing

Parliament report: Young Brits will be ‘priced out of housing for years’

27/04/2017 National Renters Alliance Leave a comment

The housing crisis for young people is likely to continue for years and the government lacks the ambition to address the need for affordable housing according to a Parliament report produced by the Public Accounts Committee

The report states that England’s housebuilding numbers have fallen well below targets for decades. Consequently, there has been a long-running shortfall in the number of houses for sale which inflates house prices putting them beyond the reach of first-time buyers.

In order to address this, the Department for Communities and Local Government has put in place a target that could see one million homes constructed over the next five years.

However, it has admitted that England’s housing market is “broken” but has not made steps to improve the market, which is dominated by a select few private developers and could cause issues with meeting this target.

The Department also admitted that even if the one million homes were completed, a large shortfall would still exist to meet current demand. This means that issues relating to availability and affordability are likely to remain for several years beyond this five-year period.

A spokesperson from the Department said: “The Housing White Paper published in February includes measures to deliver more homes. On top of this, 112,338 households have used the Help to Buy: Equity Loan scheme since its launch.

“The Autumn Statement also included an extra £1.4 billion for affordable housebuilding, taking the total to over £7 billion to deliver more than 200,000 homes. And £550 million has already been allocated to tackle homelessness and rough sleeping, with a focus on prevention.”

The positive statement from the Department for Communities and Local Government spokesman stands in stark contrast to the testimony given to Parliament by one of the country’s top civil servants charged with housing.

In February, the Permanent Secretary to the Department for Local Government Melanie Dawes admitted that Theresa May’s new policies will not stop the country’s housing crisis from continuing “as it has done for decades.”

Miss Dawes added that she was “simply being honest” when she revealed that houses prices are set to stay out of reach of those who cannot offered a property and that homelessness will continue to rise.

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Affordability, Renters rights

Manchester’s looming housing crisis set to worsen sharply as population growth outstrips new build

25/03/2017 National Renters Alliance Leave a comment

Manchester housing cris — Manchester’s brewing housing crisis set to worsen over next five years.

Manchester’s growing housing crisis is expected to worsen sharply over the next five years. New analysis reveals that the city’s population is growing almost 15 times faster than new homes are being built.

Property adviser JLL predicts that house prices in Manchester are expected to increase by 28.2% due to growing demand from a surging population and insufficient supply.

In 2016 alone, Manchester residential property capital values grew by 16%. Overall prices in the North West are predicted to rise 18.1% until 2021.

Low levels of new-build

The North West’s and Manchester’s imbalance between supply and demand is the main reason property value growth rates are currently outpacing the rest of the UK.

According to the latest official figures, just 290 homes were built in Manchester in 2015-16. This brings the total number of dwellings (houses and flats) to around 218,500. At the same time, the city’s population increase by 10,000 according to population projections based on 2014/15 figures.

The imbalance between population growth and new-build is now one of the worst across the whole of the UK. Only Westminster and Kingston upon Thames in London saw a bigger gap between the rate of population growth and new houses being built.

Greater Manchester

The housing crisis is not confined to the city center alone. In Oldham the population is growing at five times the housebuilding rate. Meanwhile, the populations of Stockport and Salford are both growing three times faster than new homes are being built in the area.

Across the conurbation only two boroughs, Bury and Wigan, saw the number of new homes grow faster than the population increase.

Manchester’s housing shortfall is now publicized widely on property investment forums. In January, the letting agent Martin & Co identifed Manchester, Cardiff and London as the most lucrative places to invest in buy-to-let properties. Rental demand was cited as one of the strongest indicators for profitable buy-to-let locations.

Once again renters will be the biggest losers. According to John Goodall, CEO of Landbay: “Tenants will have little choice but to compete for what properties are on offer. As a result we expect rents to rise faster than the pace of inflation next year, with growth tripling to 3% by the end of 2017.”

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Affordability, Housing

Rents fall for first time in six years

13/03/2017 National Renters Alliance Leave a comment

The average monthly rent for newly let properties has fallen for the first time since late 2010 according to the estate agency Countrywide.

The fall in rents is believed to be caused by a large recent increase in the supply of properties becoming available. This was possibly attributable to some landlords rushing to buy last year before a 3% stamp duty surcharge came into effect.

In contrast to the usual pattern of rent rises in London and declines in the rest of the country, nationwide rents have continued to rise. Rents fell by nearly 5% in the past year in the capital to an average of £1,246 a month. In South East England they fell by nearly 3% to £1,152. The average cost of a new tenancy in England, Wales and Scotland is £921 a month, down by 0.6% in the year to February.

Brexit effect

According to Countrywide’s research director Johnny Morris, “Rents are growing in most of the country but falls in London and the south east are dragging down the national growth rate. Early signs point towards 2017 being a rare year where rents rise faster in the north of the country than in the south.”

Morris also added that brexit and economic uncertainty also appears to be weighing on London house prices. “Economic and housing sentiment – both in sales and rental markets – has been affected by our vote to leave the EU, in London more than anywhere else. This uncertainty causes tenants to be more cautious, meaning less likely to move and more likely to look for cheaper accommodation, eg sharing. With the private rented sector home to around three-quarters of new migrants, any future substantial shift in migration patterns would likely have a knock-on effect on rents.” Morris said.

Countrywide’s data does conflict however with the most recent figures from the Office for National Statistics (ONS).
Its latest figures for the year to January 2017, the ONS showed that across the UK rents for private tenants had risen by 2.2.%.
When the figures were published last month, the ONS commented that “inflation in the rental market is likely to have been caused by demand in the market outpacing supply.”

Countrywide said it expected the apparent over-supply of rental properties to be flushed out of the market in the coming year. Average national rents are then expected to start to grow again after that.

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Affordability, Housing

One in ten young Britons would leave the UK to buy an affordable home

10/03/2017 National Renters Alliance Leave a comment

One in 10 people aged between 18 and 34 are prepared to move out of the UK in order to be able to buy an affordable home, a survey by Halifax reveals.

Underlining the generational home-ownership divide, a quarter of young people think they will never be able to own their own home, while a further quarter believe the only way they will be able to get on the property ladder will be through an inheritance windfall.

Forty-eight per cent of 1,500 young Britons surveyed said they think buying a home is now harder than ever. Eight out of 10 felt a lack of affordable property was keeping home ownership out of reach, while 14 per cent believe they will end up renting forever Halifax said.

Despite the gloomy picture, the number of first time buyers rose at the highest annual level since 2008 in the year to January, separate figures from the Council for Mortgage Lenders reveal.

Martin Ellis, Halifax’s housing economist, said: ‘Even with the highest number of first-time buyers in the last decade in 2016, many young people still feel they are running financial gauntlet – saving for a deposit, finding an affordable property in the right area and managing to fund living in the meantime.

‘It’s never too early to do some research to help build a better understanding of how much is affordable, the borrowing options available and calculating what’s achievable to help make owning a property more of a reality.’

Affordability

The average age for buying a starter home has risen to 30, pushed higher by ever increasing deposit requirements.

On average, deposits for first time buyers come in at around £32,321, but can be as much as £100,000 in London, Halifax said.

It is not just sky high property prices and hefty deposits first time buyers are worrying about. Over a third are concerned they don’t meet mortgage eligibility requirements, Halifax said.

While many struggle to get on the housing ladder, Halifax claimed first-time buyers typically end up £651 a year better off than when they were renting.

Although the buy-to-let market and number of people moving up the property ladder stalled in the year to January, the number of first time buyers increased to 340,200 according to data from the Council for Mortgage Lenders.

The CML estimated that gross mortgage lending reached £18.2billion in February, which is 8 per cent lower than January’s total of £19.8billion and just above the £18.1billion lent in February last year.

February’s estimated lending total is the lowest seen since May 2016, which is the month after the Government’s stamp duty hikes on buy-to-let lenders and second home-owners kicked in.

As has been the case since 2013, the number of existing home owners looking to move has stalled, remaining ‘subdued’ at around the 360,000 mark in the last year, the CML said.

In London, the number of existing home owners looking to move has fallen to a 25-year low. Meanwhile, remortgaging activity has increased sharply across the country, rising 20 per cent year-on-year, as people take advantage of competitive rates, the CML’s data showed.

Mohammad Jamei, a senior economist at the CML, said: ‘Mortgage lending is holding up well, but under the surface buyers face mixed fortunes.

‘First-time buyers and customers who are re-mortgaging are driving total lending, while home movers and buy-to-let remain weak.

‘The weakness in home movers means few properties are coming onto the market for sale, which is aggravating a supply demand imbalance that has characterised the market since late 2013.

‘This looks set to continue at least over the next few months, posing an obstacle for would-be borrowers.’

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Affordability, Housing, London

Seven disgraceful statistics about renting in London

09/03/2017 National Renters Alliance Leave a comment

1. London Renters spend 60% wages on rent

The English Housing Survey reports that Londoners spend an eye-watering 60% of their gross earnings on rent. Excluding housing benefit this figure rises to 72%.

Even more shockingly, 16-24-year-olds are forced to pay 88% of their income on rent in the capital. When housing benefit is included this falls to 81%. However this age group is particularly vulnerable to reductions in housing benefit.

2. It is cheaper to commute from Madrid each day than rent in Camden Town

Renting a flat in Camden Town and working in Liverpool street will cost a Londoner £2,128 monthly or £25,532 yearly.

If the same Londoner rented a flat in Madrid’s city centre and booked return flights from Madrid to Stansted from Monday to Thursday, he or she would spend £1,725 a month or £20,708 a year.

3. The average rent on a two-bedroom flat is £707 a week or £100 a day

Figures from property investment firm London Central Portfolio (LCP) show that the average rent on a two-bedroom flat in central London is a whopping £707 a week.

Average rental prices of rooms in a flat-share in Paddington (Zone 1), can cost around £1100 a month.

Council taxes are also a significant consideration. Areas like Richmond and Kingston tend to be the most expensive at around £1929 a year. Cheaper areas include Wandsworth where council tax averages £823 a year.

4. London professionals are being forced to live “12 to a house”

According to Ealing Central and Acton MP Rupa Huq, London professionals are being forced to live “12 to a house”, thanks to the soaring rents.

In a House of Commons debate Huq said: “Renting is no longer just a transitory thing for those who are in their twenties. It’s becoming routine for people further up the age scale.

“Many in my constituency in their 30s on good money find themselves sometimes 12 to a house with shared sitting room and kitchen.

“At that age, ‘who stole my cheese?’ should not be a way of life.”

5. By 2025, more than half of people under 40 will be living in property owned by private landlords

Over half of 20 to 39-year-olds will be renting from private landlords by 2025, according to accountancy firm Price Waterhouse Coopers.

PwC economists state that: “For 20-39 year olds, we would expect over half to be renting by 2025, implying a continuing rise in the size of ‘Generation Rent’.

The report suggests that home ownership levels will continue declining to dramatic new levels, dropping below 60% by 2025, as the rise of ‘tenant nation’ looms.

6. The UK has the highest private rents in Europe

A study by British Housing Federation found that rents in the UK are the highest in Europe.

In countries like Germany and Holland, private rents are around 50% cheaper than in the UK.

David Orr, chief executive at the National Housing Federation, said: “British renters get a raw deal in comparison to their continental counterparts. Not only do they face crippling rents, but renters in the UK have almost no certainty about whether they will be able to stay in their home from one year to the next.”

7. One in three rented homes are “not fit to live in”

One in three British three homes do not meet the government’s decent home minimum standard, according to 2014/15 English Housing Survey.

A Parliament report published last year admitted that there have been no minimum property standards for private rented housing in England since 2006.

Furthermore, more than 170 tenants are being evicted every day according to 2015 Ministry of Justice figures. In total 42,728 evictions recorded in England and Wales in 2015.

According to Gillian Guy, CEO of Citizens Advice, “It’s hard to feel at home in the private rented sector. People can struggle to lead a normal life when their home is in a state of disrepair and they could be told to leave at any time. But many feel powerless to speak out.”

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Affordability

London Homeowners Slashing Prices As Political Uncertainty and High Prices Impact Demand

04/03/2017 National Renters Alliance Leave a comment

London home sellers are having to cut asking prices for their homes and are offering greater discounts as high house prices and brexit uncertainties impact demand.

Lucian Cook, residential research director at Savills claims that price cuts seen in prime central London following the Brexit vote are now filtering through to outer boroughs. “Affordability issues are now a problem after a decade of house-price growth, and buyers are finding they increasingly come up against mortgage-lending limits.”

The latest slowdown in London house price growth comes after home prices in the capital have surged by around 86 percent since 2009. London house prices are now 14.2 times the average buyer’s gross salary according to the research firm Hometrack. This is the highest house price to salary ratio on record and more than double the rate for the UK as a whole.

Data released by the Council of Mortgage Lenders also shows that there has been a fall of 12 percent in the number of mortgages advanced to first-time buyers in London. High London asking prices have in many cases now exceeded lending limits allowed to banks under rules set by regulators in 2014.

Central London hit hardest

The house price decline has been most notable in central London. Average prices were cut by 8.2 percent in Kensington & Chelsea on an annualized basis compared with 7.8 percent in July. Westminster and Wandsworth have been similarly affected recording 7.7 percent and 7.1 percent declines respectively.

In an apparent reversal of typical trends, outer boroughs have been less affected than prime central London. The percentage of sellers cutting asking prices in January rose in all but two of the capital’s 33 boroughs compared with July.

Listings reductions

According to the property website Zoopla, 37.1 percent of property listings in Merton have been reduced. John J. King, managing director at broker Andrew Scott Robertson added that sales are down “about 25 percent in the past six months, as they were already affected by stamp duty and the referendum made things worse.”

In Kensington and Chelsea 35.4% of listings have been reduced. Estate agents attribute the fall to changes in stamp duty and the effects of the Brexit vote. However, the house price declines may already be leading to greater interest in buying in the borough. Toby Whittome, a broker at real estate agent Jackson Stops & Staff, claims that “applicants looking to buy are up nearly 40 percent in January, but that doesn’t necessarily result in sales, as people are hoping and waiting for some good news about stamp duty and clarity over the possible impact of the referendum.”

Ealing has also seen a considerable number of price reductions. Following five to six years of steep price increases, 35.4 percent of listings are now reduced. According to Alex Jerram, a broker at Dauntons, a two-bedroom new build in the borough now costs the same as one in Pimlico. “You cannot justify asking the same price for a property in greater London as one in central London. If sellers really need to sell, they have to reduce prices.”

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