Record levels reached for rents

Over the past year getting a mortgage has remained difficult for the many non-homeowners who are desperate to get onto the property ladder. This has led to an increasing number of people that may normally have opted for a mortgage to buy their own place having no other option but to rent. The demand for rental homes has rocketed as a result of this, which has pushed up rental costs.

It has now been revealed that rents are at their highest level since they last reached record highs back in November of last year. The average rent being paid has now soared to £692 per month, reflecting an increase of 0.8 percent compared to the previous month and a rise of 4.4 percent compared to the same period last year.

The landlords of private rented properties are, on average, raking in around £30 per tenant more each month as a result of these increases. Whilst the rent increases are good news for landlords, as they have a huge demand for their properties, it is not so good for tenants who are already struggling financially and do not have to option in many cases of being able to invest in their own property because of the financial restrictions in the mortgage market.

There are concerns amongst landlords about increased levels of arrears and missed or late payments recently. One official said: “The final bank holiday of the month delayed many rental payments, but on top of this, thousands of tenants took advantage of the opportunity and booked holidays, which has impacted on the timely payment of rent. Nevertheless, despite the short-term factors, landlords need to remain especially vigilant over the medium-term. We are yet to see the true picture emerge from public sector spending cuts, and changing employment situations will hamper many tenants’ ability to meet their monthly rent cheque on time.”

Tags: result, mortgage, Record levels, landlord, opportunity, payment, top, Renting

Rental arrears still on the rise

It has been claimed by a property firm that the level of rent arrears amongst private tenants has increased again. According to LSL rental arrears for the month of December increased compared to November, rising from 10 percent to 12 percent. The data was collated as part of a monthly survey that was carried out by LSL, and showed how financial problems were impacting on the abilities of private tenants to keep up with their rent.

According to LSL the level of rent that was either paid late or not paid at all increased by 2 percent between November and December of 2010. In addition, the value of unpaid rent increased to £276 million. Officials from the company said that rising unemployed had impacted severely on the ability of private tenants to pay their rent, and that continued increases in unemployment levels following government cutbacks would see the problems with rent arrears continue.

The data also showed that in the month of December the average rent charged by private landlords actually decreased slightly by 1.2 percent to £684 per month on average. This was because they wanted to try and tempt prospective tenants during the cold winter period, and many prospective tenants did not venture out in the cold weather to look for property.

An LSL official said: “Arrears have been rising since October as public sector spending cuts start to bite in many areas of the country. With unemployment set to increase this year, and rents likely to rise once more in the spring, more tenants will be at risk of falling behind with rent payments.” He added: “Landlords offering properties during the holiday season often lower the asking rent to avoid a costly void period. If a landlord cuts the rental price by 5% to fill a property immediately, he will save £275 over the year rather than seeing their property vacant for the duration of the month. Nevertheless, with the supply of mortgage finance to both first-time buyers and would-be landlords still constrained, we are likely to see rents re-start their upwards march before the spring.”

Tags: private landlords, landlord, sector spending cuts, costly void period, december, Renting, Leasehold estate, average

Half of young Brits think renting is a waste of money

It has been revealed in a recent survey that around half of young Brits believe that renting a property is a waste of money. However, despite this opinion many are being forced to rent because they are unable to get a mortgage in the current climate to get onto the property ladder and get a place of their own.

Recently released figures have shown how restrictions in the mortgage market are driving up the cost of renting, and whilst many non-homeowners believe that renting is a waste of money more and more are having to do this and pay more for the privilege. With so many would be first time buyers unable to get a mortgages the demand for rental properties is high, and this is driving property rental prices up further.

Recent research has shown that the amount that buyers are now expected to pay out by way of a deposit is unmanageable for many people, and whilst buyers may have no problem affording the repayments on a mortgage, especially with the base rate at an all time low, many simply cannot raise the deposit required by lenders, which is running into tens of thousands of pounds in some cases.

The level of deposit required in London has reached nearly £30,000 for first time buyers, which means that many are relegated to renting or living with friends and family. However, with the cost of rents having also rocketed some people in the London area would be looking at paying close to £1000 a month just for a one bedroom flat, with the average rent across the UK having now increased to nearly £700.

Tags: climate, property, research, mortgage, tens of thousands

Is renting more viable than getting a mortgage?

 

Homeownership is a dream that many people hope to achieve, but over recent years many have experienced a range of hurdles when it comes to getting onto the property ladder. First time buyers in particular have experienced many difficulties from sky high property prices to lack of mortgage available, crippling deposit demands, and more.

 

One recent report has now questioned whether first time buyers are better off renting a property rather than trying to buy in the current climate. In the recent emergency budget it was announced that the new government was looking into scrapping the stamp duty holiday extension for first time buyers, creating further financial difficulties for those that were looking to buy.

 

In addition to this the new chancellor, George Osborne, announced that the Financial Services Authority would no longer exist in its current form and that the Bank of England would be given greater powers to regulate the banking sector, which could mean that a cap is placed on the amount that banks can lend, creating further difficulties for first time buyers.

 

Officials have said that this means first time buyers could face difficulties in finding an affordable property, getting an affordable mortgage, borrowing the amount that they need for the purchase, raising a deposit, and affording the repayments. If they rented, on the other hand, they would only have to pay a month’s rent and a deposit upfront and would not have to worry about repairs because this would be dealt with by the landlord.

An official from the National Landlord’s Association said: “At a time when government funding is strapped, it is private investment that will enable essential housing needs to be met. Rather than being seen as a last resort, private tenancies are becoming the choice of many people who need the freedom to choose homes where they need and for as long as they need.”

Tags: first time buyer, home, property, mortgage, Renting

Lack of mortgages and increase in buy to let investors leads to increase in private renting

Over the past few years the mortgage lending market in the UK has become increasingly subdued, and whilst the recession may now be over and the economy on its way to recovery many people are still struggling to get a mortgage loan unless they have a very sizeable deposit to put down. At the same time the number of buy to let investors is said to have increased, which means that there is a rising number of buy to let properties on the market.

A combination of these factors is said to be affecting the number of people that are in private rented accommodation, and according to recent reports the number of people that are privately renting is set to rise, as more and more private investors come on to the market, making it increasingly easy for people to get a private rent accommodation compared to social housing, which involves going onto a waiting list or bidding on properties through council websites via the Choice Based Lettings system.

A study was recently carried out by the Building and Social Housing Foundation, and the results of the study indicated that one in five households could be living in private rented accommodation by the end of the decade. The foundation believes that there is going to be a boom in the number of people that are living in private rented accommodation, and this will make up one fifth of households by the end of the decade in ten years time.

One industry official said: “This research shows significant changes are taking place in the UK housing system. More and more of us are becoming private renters – 1m households since 2005 – some of them through choice, but many because they have no other option.”

Tags: buy-to-let, Financial economics, economics, Private rented sector, Renting, finance, uk, United Kingdom

FSA cracks down on sale and rent back schemes

Over the past few years an increasing number of people have had to turn to sale and rent back companies to try and get themselves out of a sticky situation with their homes. Read more

Tags: Financial Services Authority, Real estate, finance, Real property law, Renting, sale and rent back, Economy of the United Kingdom, home insurance

Weaker bargaining power for tenants reported

It has been reported that tenants in the UK now have weaker bargaining power when it comes to renting a property, and this is the result of fewer homes coming into the market for rent, according to industry officials. Read more

Tags: sector, Renting, difficult market conditions, RICS, fewer homes, Association, National, tenants

London rents fall faster than house prices

Recently released figures have indicated that rents in the London area have been falling faster than property prices, and this has occurred since the collapse of Lehman Bros earlier this year. Read more

Tags: house, Renting, house prices, london house prices, Lehman Bros, right time

Unsold homes results in decreasing rents

Recent reports have shown that the number of unsold homes in the UK are resulting in the amount of rent being charged on rental properties being driven down. Over recent months more and more homeowners that were hoping to sell their properties have found that in the current climate they are unable to secure a sale for their properties, and with many unable to keep on top of mortgage repayments a large number of these sellers decided to put their homes up for rent on the market. Read more

Tags: house market, Renting, Business Finance, Affordable housing, current accounts, landlord

You don’t have to sell up to make money from your home

The years of the property boom seem like they were a long time ago, but in reality it has only been a couple of years since the property bubble exploded with a resounding bang. During the years of the boom many homeowners in the UK made a killing on their investments, having seen the price of property soar in the UK. However, with property prices having plunged many have lost some or all of the equity in their homes, and this has left them unable or unwilling to sell their homes. Read more

Tags: Renting, Real estate bubble, Real estate, Loss mitigation, advertising boards, mortgage, home insurance

Homeowners are not as well off as tenants

Over the past year the benefits of owning a home as opposed to renting one have plummeted by 75% according to a recent report. This means that in many parts of the country people that are renting a home are actually better off than those that have bought their own home. According to the report tenants are actually faring better than homeowners in around 50% of the country’s regions.

This information was put together by the Abbey Bank in its latest Rent V Buy Index. The data indicates that those purchasing their property rather than renting a property saved around £24,000 last year. However, this year the figure has dropped dramatically to just £5800. Abbey official claim that this situation has been caused by rising property prices and sky high interest rates, which has resulted in rising costs for homeowners that have not necessarily affected those that rent.

As part of the study twelve regions were studies, and out of these it was found that tenants were better off than homeowner in six of the regions. The Abbey made these calculations based on a 90% LTV mortgage at an interest rate of 6.5%. Essential home maintenance costs were also taken into account in the survey. Read more

Tags: home maintenance, homeowner, mortgage, renting a property, Abbey Bank, interest rate, LTV, Renting

Up to half of under-30s ‘aim to buy homes’

Around 50 per cent of young people in the UK regard buying a home as a realistic goal for them before they reach 30, new research has shown.

Findings from Alliance & Leicester reveal that the timing of achieving this milestone is pertinent with the average age of a first-time buyer being 29, a figure which has risen from 28 in the early 1990s.

Richard Taylor, head of mortgage products at Alliance & Leicester, said that reaching 30 is milestone for many as it is a deadline for certain ‘achievements’ such as owning a property, getting married or starting a family.

“Even in an uncertain housing market we’re seeing those under the age of 30 feeling confident and optimistic about the prospect of getting onto the property ladder before they say goodbye to their twenties,” he continued.

Renting is the option for those living away from home before attempting to climb the property ladder says the research.

Meanwhile, young people are being urged to should begin their savings “in the cradle” by savings experts with the Scottish Widows.

Tags: property ladder, age, Mortgage loan, Renting, mortgage products, first time buyer, option, leicester

Buy-to-let looking good

There is a continued high demand for rented properties and this is good news for people with a buy-to-let mortgage.

Figures published by Paragon show that rent has increased consistently over the last six months, as more and more people look to rent a home.

The average annual rent in England and Wales in May sat at £10,702, signalling a ten per cent increase of £1,037 compared to November figures when the average was £9,665.

A recent study shows that 63 per cent of residential property investors have seen tenant demand grow or remain stable and, as a result, they are looking to increase their buy-to-let portfolios.

“The private rented sector is buoyant as demand from tenants continues to be strong,” said Nigel Terrington, Paragon’s chief executive.

“Many parts of the community, such as students, migrants, people on housing benefit and first jobbers, rely on rented accommodation for their housing needs, and the sector is set to continue this growth over the next five to ten years.”

Mr Terrington went on to say that negative reports about the buy-to-let market are unfounded and said that affordability is playing a big part in keeping the market buoyant.

“Commentators forecasting a downturn in the buy-to-let market have overlooked the fundamental dynamic of the UK housing market – people need somewhere to live, and for many, house purchase is simply not an option,” he added.

Tags: United Kingdom, chief executive, Private rented sector, good news, mortgage

Buy-to-let landlords expanding their portfolios

As further evidence of investor confidence in the buy-to-let market, the average number of properties held by buy-to-let landlords has risen to over 11, according to new research.

In November last year, the average landlord owned 10.2 properties, but in February this had risen to an average of 11.1, a study conducted by mortgage lender Paragon has found.

Additionally, the average portfolio has increase in value by seven per cent over the past three months.

“Our buy-to-let index has shown that in recent months rents have been rising faster than house prices,” said Paragon’s managing director John Heron.

“Because of high tenant demand, landlords are able to achieve strong rental incomes and good yields – and are responding by extending their portfolios.”

Such confidence in the sector was mirrored in landlords’ expectations of an eight per cent rise in the size of their portfolios over the next year.

These results suggest that recent interest hikes have not deterred buy-to-let investors from entering the market so far, although they may be tested by next month’s expected quarter-point increase from the Monetary Policy Committee of the Bank of England.

Tags: Index, bank, increase, Renting, buy-to-let investors

New buy-to-let trend

A new trend is developing in the buy-to-let market, with people buying homes and renting them out then using the money to pay their own rent.

Many first-time buyers are finding it so difficult to buy a property in the south, and in particular London, that they have to rent, says website SpareRoom.com.

However, they feel as though they are wasting money this way, so they buy a house in a cheaper area and rent it out.

The rent they receive from this property then goes towards paying their mortgage and their own rent but, in the mean time, they are buying a home.

“We’re seeing a definite increase in young first-time buyers taking on a bigger mortgage than they can afford on their own and renting out a second room to pay for it,” said Rupert Hunt, founder of SpareRoom.

“Not everyone wants the risks that come with joint ownership. Until recently it has been tricky for people to get a big enough mortgage to buy somewhere with a second room to rent out, but things are getting easier.”

In response to this growing trend, many mortgage providers are now offering loans which take into account income earned through renting another property.

Tags: trend, Politics, Renting, Equity sharing, Mortgage loan, way, young first-time buyers