Lettings news – November 2015

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Rents to rise by 4.5% in 2016 says JLL Report
10/11/15

In a new residential research report entitled “Building Foundations” property consultants JLL say of the UK rental market: “Fundamentally…we believe that a strong UK economy will prove the solid bedrock from which the housing market can move forward. Improved employment and wage conditions, together with a more prosperous and secure outlook, will instil greater confidence in household finances.” “All agree that there is no silver bullet to the housing supply challenge. For that reason ideology must not get in the way of determined initiatives to support not only build for sale, but also affordable and private rented initiatives.” JLL is forecasting that average rents across the UK will rise by 4.5 per cent next year, followed by a 4.0 per cent rise in 2017, another 3.5 per cent in each of the following two years, and by a more moderate 3.0 per cent in 2020. “Demand for rental accommodation has accelerated quickly over the past decade and there is little to suggest this trend will run out of steam anytime soon. With supply constraints possible in the medium-term, we believe there will be additional upward pressures on rents over the next five years”, the report says.

Extracts from the report say: An Expanding sector: The UK’s private rented sector continues to expand. Figures from the latest English Housing Survey suggest that 4.4m of the 22.6m households in England, 19.4%, are privately rented. Significantly, the number of rented households has escalated from just 2.3m, or 11% of all households, ten years ago. The situation is even more acute amongst younger age groups. It is astounding to think that almost half of all 25-34 year olds now privately rent in England. This has risen from just over 20% ten years ago (see chart). Current trends also suggest that the number and proportion of private renters are set to rise further in the medium-term, despite political rhetoric in support of more owner-occupation. Housing un-affordability and onerous deposits are the main drivers of this trend. Government initiatives such as 20% discounted starter homes offer some hope for would-be young home buyers, but this is unlikely to reverse, or even notably alter the strong upward march of the private rented sector.

Active PRS

Unsurprisingly, given both the high moving and buying costs in the owner occupier market and the greater number of renters, the most active part of the national housing market is households moving within the private rented sector. Of the 2m or so household moves in England in 2013-14, as estimated by the English Housing Survey, around half were moves within the private rented sector. If households new to the sector are added in,… 65% of all house moves were to private rented accommodation.

Tenant demand to rise

We are also expecting economic influences as well as demographic and social trends to lead to greater private rented demand over the next five years. A strong and stable UK economy, including higher employment and salaries, is anticipated in the medium term, albeit with some international risks. These conditions will undoubtedly lead to greater demand for rental accommodation from young people starting work or wanting to move out of the parental home. An increasingly pertinent point is whether there will be enough rental accommodation to house this considerable demand, especially given the recent tax relief changes for buy-to-let investors.

Rental ownership changes

The vast majority of private rented properties across Britain are owned by private landlords, but many of these have been dealt a blow in the Chancellor’s budget in July 2015. In an initiative that was aimed at levelling the playing field with owner occupiers, it was announced that higher rate mortgage tax relief on private rental income was going to be phased out by 2020. As the vast majority of private landlords are higher rate tax payers, the impact could be significant, leading to a sizeable sell-off of properties, especially those which are highly geared and therefore most affected by this tax change. However, it should also be noted that approximately 65% of rental properties are owned outright, rather than being reliant on a buy-to-let mortgage, meaning that the Budget changes make no difference to them. All-in-all, there is unlikely to be any meaningful sell-off of private landlord rental property over the next few years, especially as we see both prices and rents rising steadily. However, there may be slightly less exuberant enthusiasm from new investors, which may have a longer-term impact on rental supply.

Article kindly shared by Landlord Zone

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Landlords – do you know about changes to electrical safety and carbon monoxide alarms?
11/11/15

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Landlords have a legal duty to protect their tenants from dangers within their rental properties. Failure to do so can result in serious financial penalties and in some cases legal action.

Aside from the well known annual gas safety certificates there is now the legal responsibility to ensure rental properties have a legionella risk assessment carried out plus working carbon monoxide and fire alarms fitted. Whilst carbon monoxide alarms are only required to be fitted to rooms where there are solid fuel burning appliances fitted, most reputable landlords and letting agents fit carbon monoxide alarms to all properties regardless of fuel type as best practice.

There have also been recent changes to electrical protections. Here are the key facts that landlords and letting agents need to know:

Electrical equipment provided by Landlords must have a safety kite mark such as the CE logo which shows that a product meets EU standards.

Landlords must not carry out work themselves unless they are a registered electrican. All work must be carried out by a qualified and registered electrician.

Landlords in England and Wales are required to provide electrical installation certificates to show new equipment is safe. There is no legal requirement to have electrics in a property regularly inspected but again most reputable landlords and letting agents have an Electrical Inspection Condition Report (EICR) carried out once every 2 years or at the change of each new tenancy.

Under the changes to the Landlord and Tenant Act, landlords must respond to any requests for repairs. A claim could also be brought under the Consumer Protection Act if a property is found to be unsafe.

Tenants reporting concerns about electrical equipment to the local council would lead to an enforcement officer visiting the property and making an order for changes. Landlord’s failing to make the changes could receive fines or bans and will have a harder time if theye should try to evict the tenants.

In Scotland Landlords must now have a compulsory Electrical Installation Condition Report (EICR) conducted every five years as a result of changes to The Housing (Scotland) Act 2006.

Tenants moving in from 1st December 2015 must be provided with Electrical Installation Certificates for any new fixtures or fittings that are installed. These must be obtained from a fully registered electrician. Tenants must also be provided with a Portable Appliance Test (PAT) for movable objects such as microwaves.

Existing tenants must receive a copy of the EICR by 1st December 2016.

The charity Electrical Safety First has put together a checklist or landlords to monitor the equipment they provide. It can be accessed here: http://www.electricalsafetyfirst.org.uk

Our sister nationwide property services site: http://www.lmemove.com supplies and fits carbon monxide alarms for landlords throughout the UK.

LME Move also provides EICRs. PATs, EPCs, gas safety certificates, boiler services, building, plumbing and electrical works to landlords and letting agents nationwide. info@lmemove.com . www.lmemove.com . 01709 877 924 . 0845 2410073

Parts of this article have been kindly shared by Property118

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Landlords should be wary of winter void periods
11/11/15

Landlords should be wary of leaving their homes empty in the winter as the weather could lead to problems such as damp and mould, the Association of Independent Inventory Clerks has warned.

Condensation is the main cause of damp, and when windows are left unopened for too long the chance of mould developing increases.

Moreover the longer a property remains unoccupied and unchecked the higher the chances are of drain blockages, pipe problems and clogged gutters.

The AIIC said that during this time of year leaves are the main cause of blockages and clogs, while pipes should be checked for cracks and leaks as these can escalate into more serious problems, especially if the water freezes.

Patricia Barber, chair of the AIIC, said: “Winter weather can cause havoc with people’s properties and now the clocks have gone back, we are advising landlords – particularly those with empty properties – to carry out thorough checks and regular inspections this winter in order to minimise the risk of serious property damage.”

“As well as benefitting both the landlord and tenant when it comes to the return of deposits at the end of a tenancy, a detailed inventory carried out by an independent inventory clerk also allows a landlord to identify what needs repairing between contracts,” she added

Article kindly shared by Discount Landlord

Our sister nationwide property services site: http://www.lmemove.com provides a winter central heating system-drain down service for landlords with void properties throughout the UK. This helps reduce emergencies such as burst pipes.

LME Move also provides EICRs. PATs, EPCs, gas safety certificates, boiler services, building, plumbing and electrical works to landlords and letting agents nationwide. info@lmemove.com . www.lmemove.com . 01709 877 924 . 0845 2410073

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Average rent of newly let homes now approaching £1,000 per month
10/11/15

Newly let homes in the UK are currently going for an average of £941 per month, a 3.6% increase on this time last year, according to new figures.

Countrywide’s latest rental market index illustrates that the gap between where people can afford to rent and where they can afford to buy has widened in every year since the market downturn in 2008.

The index also suggests that people are moving further away if they buy a home, with 51% who took their first steps on the housing ladder in 2015 buying outside the town or city where they had been renting, compared to 39% in 2008.

Tenants in the South of England tend to move the furthest to get on the housing ladder, as rising house prices mean an increasing number of individuals and families find themselves renting in places where they couldn’t afford to buy.

Across London and the South East house prices have increased by 42% since 2012, rising from £218,000 to £375,000. Rents however have only increased by 19% to reach £1,234 a month over the same period.

The report suggests that the increasing number of renters moving further away to buy is both a product of stretched affordability and first time buyers getting older.

Tenants are increasingly willing to compromise on location in order to own their own place, the report suggests.

Across the UK as a whole, two thirds of tenants bought in a cheaper area, but this figure was even higher in the most expensive housing areas.

In London, some three quarters of tenants who bought in the last year, ended up living somewhere cheaper than where they had been renting, with an average price gap between the two places of £93,000.

Article kindly shared by Discount Landlord

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One thought on “Lettings news – November 2015

  1. Pingback: Landlords – do you know about changes to electrical safety and carbon monoxide alarms? | lm experts News

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