Year: 2020

According to the latest findings from a newly commissioned survey by Aldermore, the UK’s 2.5m active landlords have spent an average of £1,443 using local tradesmen in the last 12 months – contributing to boosting local economies by billions.

Aldermore’s new buy to let research, which surveyed 1,000 UK-based active landlords, reveals the important contribution landlords make to their local economy via services such as plumbers, builders, letting agents and other tradespeople.

Of the total amount paid to local service providers, landlords spent the most on letting agents coming to £879m in the past twelve months, followed by £442m on general handy-workers and £396m on plumbers. Also, landlords spent £375.4m on electricians, £377.3m on builders, and £243.2m on cleaners.

Using local provides peace of mind for landlords

Over a third (39%) say trust is the main reason why they turn to someone local, while one quarter (26%) say, due to not living close to their rental property, having local people do maintenance is reassuring to them. Furthermore, one in three (31%) want to support their local economy by using local tradespeople and one in four (24%) say they tend to be cheaper to alternatives which helps keep their business costs down.

The report found that landlords are happy with the services local tradespeople provide and two thirds (65%) will continue to use them, with a further quarter (25%) intending to use them even more in the future. Only 7% of landlords say they haven’t used local services for their properties, mainly due to being able to do the jobs themselves or having a family member who can service the property.

Damian Thompson, Group Managing Director of Retail Finance at Aldermore, said: “Landlords are an integral part of local communities across the UK, providing investment and fulfilling the demand of the expanding Private Rented Sector. Around every landlord is an ecosystem, in which they pay local tradespeople, like plumbers, builders, decorators, for jobs and those companies in turn train up employees and pay their own local suppliers for services also. The contribution landlords make to local communities extends much wider than merely providing rental accommodation.

“Our findings show supporting local economies also brings benefits to landlords own businesses. Local workers bring a lot of value to landlords with respondents to our survey citing, in particular, the quality work, cost-effectiveness and the understanding of local areas as key benefits.”

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One of the growing number of deposit replacement providers claims that there could be £1.2 billion in deposit monies that are not protected by letting agents or landlords.

Hamilton Fraser’s Ome service says there are an estimated 3.5m deposits protected across the entire market, totalling some £3.9 billion – based on the typical tenant deposit of £1,139 on average.

Ome compared these statistics with the latest English Housing Survey report which shows an estimated 4.6m tenancies in the private rental sector in 2019.

With only 3.5m of these tenancy deposits accounted for in protection schemes, Ome claims there are potentially 1.1m tenancies that either have not had a deposit protected, do not have deposits, or are using deposit replacement providers products.

“At worst, there could be as much as £1.2 billion in deposit monies that are not protected” it claims in a statement.

The service also quotes a report by the Centre for Economics and Business Research which produces a different figure.

It estimates that 14.5 per cent of all deposits held are not protected by landlords or agents. This means of the estimated 1.1m tenancy deposits that are unaccounted for, just over 500,000 cash deposits could currently be unprotected, putting £578m at risk.

“It’s impossible to tell just how many deposits are still sat unprotected in the bank accounts of either rogue landlords or agents but based on market data we can make a conservative estimate that this total value runs into the hundreds of millions of pounds” says Ome co-founder Matthew Hooker.

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London’s asking rents hit a new record average of £2,119 per calendar month as the ongoing shortage of property for tenants continues to increase rents.

Data from Rightmove suggests that rents in the capital are up by 4.2 per cent over the last year and 45 per cent up over the past decade.

In comparison, the rest of Great Britain sees rents up 2.4 per cent year-on-year and 24 per cent over the last 10 years.

“We’ve seen a lack of rental properties coming to market in London over the last 18 months and that keeps feeding through into rising rents and another new record this quarter” explains Rightmove’s commercial director and housing market analyst Miles Shipside.

“New supply coming to market is constrained by a lack of new landlords, and existing tenants staying longer. Tenants are less likely to swap their existing rental for another as their other options on the open market are likely to be more expensive than sticking with their current landlord” he continues.

In cash terms, average rents have risen by nearly £160 per calendar month nationally outside London in the last 10 years.

In the capital the figure is much higher, with London now £658 pcm more expensive than a decade ago. Conversely, the North East is where rents have risen the least, with average asking rents increasing by 8.4% to £601 pcm since 2009.

Shipside adds: “London, in particular, has some rent increase hotspots due to a shortage of stock with existing and new landlords deterred by the additional three per cent stamp duty when buying rental investments. On top of London’s high purchase prices this is a substantial extra sum. The lack of reasonably priced choice and rising rents for London’s tenants looks set to continue. At present, the only growth in supply is coming from the institutional Build To Rent sector.”

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Nearly half a million properties could be removed from the long-term lettings market as disenchanted landlords move to short-lets.

A survey by the ARLA Propertymark, in partnership with research consultancy Capital Economics, has been published to take the lid off the UK’s short-term lets sector and its implications for the private long-term lettings market.

Highlighting the huge growth in the short-term lets sector, the number of active listings on Airbnb in the UK rose by a third (33 per cent) to 223,000 in 2018 from 168,000 in 2017.

As to be expected, London has the largest market in the UK, with the number of active listings rising four-fold from 18,000 in 2015 to 77,000 in 2019.

Edinburgh has seen growth in short-term lets triple, with 32,000 active listings in the Scottish capital in 2019, up from 11,000 in 2016.

The report reveals 16 per cent of adults have let out all, or part, of their property at least once in the last two years – equating to 8.2 million people.

This suggests 4.5 million properties, the equivalent of 19 per cent of the UK’s housing stock, have been used for short-term lets.

ARLA says a key concern with the increase in short-term lets is the impact it’s having on the private rented sector and the tenants who will suffer due to a fall in the number of properties available to the long-term lettings market.

Ultimately, if supply in the private rented sector continues to fall, a rise in rent costs will be inevitable warns the association.

The findings show 16 per cent of landlords said they only offer short-term tenancies and a further seven per cent offer both short and long term lets.

Of the overall landlord population, 2.7 per cent have changed from long-term tenants to short-term lets. This equates to 46,000 properties that have already been made unavailable for local people looking for a home.

London saw a larger share of people (four per cent) who stated they had offered short-term lets on properties they previously used for longer term rentals.

Nearly half (46 per cent) of landlords that offer short-term lets do so to enjoy more flexibility in how they use their property.

What ARLA describes as the assault on the private rented sector over recent years and the burdensome regulations in the long-term letting market was cited by two-fifths (38 per cent).

Over a quarter (27 per cent) were encouraged to move to short-term lets because they thought they could achieve higher rents.

One in 10 landlords is likely to consider a switch to short-term lets, which will have a significant impact on the country’s already stretched housing supply.

Landlords with more than five properties in their portfolio are considerably more likely to reduce their offering of long-term lets and replace with the short-term letting model.

Based on the number of landlords considering a move to short-term lets, up to 230,000 properties could be left unavailable for tenants if landlords who said they were ‘very likely’ to move to offering short-term lets were to do so.

If this included landlords who stated they were ‘fairly likely’ to make the move, the number of properties rises to 470,000, which is a huge concern, particularly for vulnerable or low-income tenants, who are reliant on the private rented sector.

“The growth in short-term lets is particularly concerning for the traditional private rented sector. As landlords are continuously faced with increased levels of legislation, it’s no surprise they are considering short-term lets as a chance to escape this. Unless the sector is made more attractive, landlords will continue to exit the market resulting in less available properties and increased rent costs” explains David Cox, the chief executive of ARLA.

ARLA has issued a series of recommendations to limit the impact of short-term lets:

– Carefully consider the impact of any future regulation that may incentivise landlords to start using their properties for short-term lets and thereby reduce housing supply for local people trying to find a home;

– Ensure a level regulatory playing field between short-term and long-term lets including protections for tenants and health and safety requirements;

– Ensure a level taxation playing field between short-term and long-term lets so there are no advantages for commercial landlords using their properties for short-term lets;

– Identify ways to improve enforcement of cases in which commercial landlords are not complying with local planning laws or the 90-day limit for short-term lets in London;

– Recognise that the impact of short-term lets on housing supply is not uniform across the country and ‘one size fits all’ regulations are unlikely to be optimal;

– Distinguish between using one’s primary residence for short term lets when the property is being under-utilised and commercial landlords renting out entire properties on a full-time basis;

– Monitor and track the number of entire properties on sharing platforms by hosts with multiple listings in different areas to inform future policy;

– Consider introducing limits on short term letting activities in areas in which there is a demonstrable impact on private rented housing supply.

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A prominent member of the House of Lords has given a surprising insight into how the fiscal and regulatory clampdown on letting agents and landlords began – and it’s all down to MPs’ own experiences dealing with the private rental sector for the first time.

Lord Richard Best, a cross-bencher, is chair of the Regulation of Property Agents Working Group, which has produced proposals for mandatory qualifications for agents.

In an address to conveyancers earlier this week, Lord Best – who over almost half a century has worked with housing trusts and associations, the Joseph Rowntree Foundation, The Property Ombudsman and other housing industry organisations – said the biggest change in his lifetime has been the expansion of the private rental sector.

In just two decades it’s grown from housing nine per cent of households to 20 per cent across the country, and 40 per cent in larger cities including London – he described this as “a phenomenon.”

And he went on to say that until recently ‘regulation’ was seen as an unpopular process with politicians, especially those of older generations who were almost wholly owner occupiers. But as owner occupation has dropped, so rental regulation has increased.

“That’s because MPs for the first time came into contact with agents, landlords and the private rental sector. They weren’t very aware of it before. But as their sons and daughters cannot always afford to buy, so MPs became aware of the private rental sector – and the same for the House of Lords, in relation to their grandchildren” he told the conveyancers.

“Lots of MPs and their children, and Lords and their grandchildren, have encountered the private rental sector in a way they hadn’t before. Did it go well? Sadly, for many, it didn’t.”

Lord Best, who was speaking to the Council for Licensed Conveyancers’ annual conference, reiterated the ROPA recommendations that there would be mandatory qualifications and a code of conduct – the latter being tougher than that which exists now through trade organisations like The Property Ombudsman.

There would be two key phrases that would be “vital” to the industry: every agent would have to be “a licensed agent” and a member of “a regulated body.”

He said there would be no exceptions.

Best said that all government ministers, trade bodies, political parties and consumer groups were in favour; legislation is likely to be completed within two years.

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A new survey of 800 UK landlords, commissioned by landlord insurance provider, Simply Business, has revealed which cities they are most keen for BTL Investment during 2020.

According to the study, which assessed the buy-to-let market, London and Manchester came out top as the cities where landlords expect the buy-to-let market to be most robust this year. Combined, the two cities received over a third of votes when asked which city represents the best BTL Investment opportunity.

While the capital’s housing stock usually retains strong value, London house prices fell 1.8% in 2019, ending the year as the weakest performing region in the UK. But today’s figures suggest that existing landlords may now be recognising the opportunity to acquire more properties in the capital.

London shares the top spot with Manchester, whose own buy-to-let market is supported by the city’s strong student population and burgeoning media scene.

The research also suggests that UK landlords believe buy-to-let prosperity will be well spread across the UK’s regions in 2020. Liverpool and Birmingham came in as joint second with both cities securing 10% of the vote among landlords when considering where their next investment in 2020 lies.

The top 10 cities that UK landlords feel offer the best investment opportunities in 2020 are listed below:

1. London and Manchester (joint first)
2. Birmingham and Liverpool (joint second)
3. Edinburgh
4. Bristol
5. Leeds
6. Oxford
7. Glasgow
8. Cardiff
9. Southamptom

10. Sheffield

Bea Montoya, Chief Operating Officer at Simply Business commented: “Buy-to-let landlords are crucial to the UK economy, contributing a combined £16.1 billion through pre-tax spending. The sector also now houses 20% of British households and has a huge presence up and down the country, so it’s wholly encouraging that landlords view a broad spread of regions as attractive areas to invest this year.

“London usually comes out on top for being the most expensive city to invest in property in the UK, but falling house prices are making it an attractive place to invest once again.

“We know a quarter of landlords are planning to sell at least one property this year, largely due to government reform and tax changes, so it’s reassuring to see that landlords are still eying up investment opportunities up and down the country.”

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The Association of Residential Letting Agents says the number of tenants successfully negotiating rent reductions has hit an all time low – another likely manifestation of landlords’ resolve after the fees ban.

The latest Association of Residential Letting Agents market snapshot shows the number of tenants negotiating a rent reduction fell to 1.1 per cent last month from 1.6 per cent in November; the December tally was the lowest figure since records began.

And the number of agents witnessing rent increases remained at 32 per cent in December; year-on-year, this figure is hugely up from 16 per cent in December 2017 and 18 per cent in December 2018.

Meanwhile demand from prospective tenants fell last month with 56 prospective tenants registered per member branch, down from 67 in November. Demand from prospective tenants has now fallen for the third consecutive month.

However, the number of properties managed per branch rose last month from 203 to 206; annual supply is up from 200 in December 2017 and 193 in December 2018.

“Since the tenant fees ban came into effect, our data shows that rents reached an all-time high last year. While we have seen a slight drop in the number of agents witnessing landlords increasing rents since then, overall rents remain high and now it seems that tenants are finding it harder than ever to negotiate a reduction in rent” explains David Cox, chief executive of ARLA.

“As rents continue to rise, tenants will find it even more difficult to find suitable accommodation. Now that we have a new government in place, it’s important that long overdue legislative changes are implemented to make the market attractive again for both tenants and landlords.”

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Private renters are enjoying greater landlords security in their homes than at any time over the last decade according to new official data.

The government’s English Housing Survey for 2018-19 published today shows that the average length that a private sector tenant lived in their current rental property was 4.4 years, up from 4.1 years in 2017-18.

This is the highest average length of time tenants were staying in their current homes over the last decade.

With growing numbers of families with children now reliant on the sector for a home, the figures show that the market is responding by ensuring tenants remain in properties for longer periods of time, enabling them establish roots in a community.

John Stewart, Policy Manager for the RLA said: “The vast majority of landlords who do a good job welcome good tenants staying in their properties long-term and today’s figures bear this out.

“They clearly refute the picture some create that landlords spend all their time looking for ways to evict their tenants and it is time to end this scaremongering.

“The market is meeting the ever-changing demands on it without the need for legislation.

“It is vital that the government continues to support and encourage this with pro-growth policies that support good landlords to provide the long-term homes to rent to meet ever growing demand.”

Other findings

The survey also found that in 2018-19, the private rented sector accounted for 4.6 million or 19% of households. While the sector has doubled in size since 2002, the rate has hovered around 19/20% since 2013-14.

It also found:

In 2018-19, 10% of 55-64 year olds lived in the private rented sector, up from 7% in 2008-09.
Over the past decade, there was a significant increase in the proportion of households with children in the private rented sector, from 30% in 2008-09 to 37% in 2018-19. Between 2008-09 and 2018-19, the number of households with dependent children in the private rented sector increased by about 765,000.
56% of private renters (2.4 million households) stated they expected to buy a property at some point in the future. This has fallen from 61% of private renters who said the same in 2013-14.

Rents

In 2018-19, the average (mean) rent (excluding services but including Housing Benefit) was £200 per week in the private rented sector.
The average private rent in London was £341 per week, about twice the average rent outside London (£162 per week). Between 2017-18 and 2018-19 there was a £30 increase in private rent in London, from £312 to £341 per week.
The proportion of household incomes spent on private sector rents (including housing benefit) was 32.8% in 2018-19, down from 32.9% the year before and the lowest it has been since at least before 2010-11.
In contrast, the proportion of household incomes spent on private sector rents (excluding housing benefit) was 37.3% in 2018-19, up from 36.8% in 2017-18.

Benefit Claimants

20% (924,000 households) of private renters received Housing Benefit to help with the payment of their rent. Between 2008-09 and 2014-15, the proportion of private renters in receipt of Housing Benefit increased steadily from 19% to 27% before falling to the current proportion.

Deposits

In 2018-19, 77% of all renters paid a deposit when they moved into their current accommodation; 76% of deposits were registered with a government-backed tenancy deposit protection (TDP) scheme; 18% said that they did not know if their deposit was protected.
The estimated total proportion of private rented sector households covered by a TDP scheme has therefore increased from between 45% and 66% in 2014-15 to between 59% and 72% in 2018-198.

Standards

In 2018-19, 6% of private renters lived in overcrowded accommodation, up from 3% in 1998-99.
25% of private rented properties were classed as ‘non decent’ a higher proportion than both the social rented and owner occupied sectors. This has not changed since 2017-18.
While the private rented sector had the highest proportion of homes with a Category 1 hazard, there was a notable decrease in the proportion of stock with such hazards, from 31% in 2008 to 14% in 2018.
5.3% of private rented properties had an EPC rating of F or G compared to 19.4% in 2008.
87.7% of all PRS households had at least one working smoke alarm in them, down from 88.5% the year before. 29% of PRS households with a smoke alarm had never had it tested.

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The Ministry of Housing, Communities and Local Government has backed a five year licensing scheme extension for a massive London council landlord.

Waltham Forest’s selective licensing regime, covering 18 out of 20 wards, gets the go-ahead to commence on May 1.

The council claims that with over a third of its residents renting privately “and evidence that over 8,000 rented homes contain significant hazards”, licensing will enable the council to intervene effectively to help raise housing standards, reduce anti-social-behaviour, and allow the council to deal effectively with non-compliant landlords who exploit vulnerable tenants by letting out overcrowded, unsuitable, and dangerous properties.

A borough-wide selective licensing scheme was first launched in Waltham Forest in April 2015 and ends on March 31 this year.

The new licensing scheme extension will run for a period of five years and will end on April 30 2025.

Since selective licensing was first introduced in the borough over 27,000 property licences have been issued and the council claims to have:

– issued more than 149 Civil Penalties;

– issued more than 50 interim management orders;

– improved 3,100 privately rented properties; and

– pursued 94 successful prosecutions, resulting in more than £323,000 in court-imposed fines.

Additional licensing in the borough will launch on April 1 and will target HMOs that are privately rented but which do not come within the scope of mandatory HMO licensing and where households share one or more basic amenity such as a bath or WC.

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Whether a matter of choice or necessity, most private renters need long term security and the vast majority of private landlords are more than willing to meet their needs, new research shows.

Long-term renting is the norm in most European countries, where the law tends to favour tenants, and it would appear that lengthier tenancies are an emerging trend in the UK, suggesting that there is not a need for similar rental regulations in this country as landlords naturally look to safeguard their income.

According to the government’s English Housing Survey for 2018-19, published yesterday, the average length that a private tenant lived in their current rental property was 4.4 years, up from 4.1 years in 2017-18.

The data shows that private renters are enjoying greater security in their homes than at any time over the last decade, which is an indication that the market is responding by ensuring tenants remain in properties for longer periods of time, enabling them establish roots in a community.

John Stewart, policy manager for the Residential Landlords Association, commented: “The vast majority of landlords who do a good job welcome good tenants staying in their properties long-term and today’s figures bear this out.

“They clearly refute the picture some create that landlords spend all their time looking for ways to evict their tenants and it is time to end this scaremongering.

“The market is meeting the ever-changing demands on it without the need for legislation.

“It is vital that the government continues to support and encourage this with pro-growth policies that support good landlords to provide the long term security to meet ever growing demand.”

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