Many residential landlords in Britain are more positive about the buy-to-let sector’s prospects in 2011, according to new Young Index figures measuring the overall mood in the rental market. The proportion of landlords who felt optimistic about what the New Year had in store for them rose 16 percent during the last three months of the year, compared to figures from the third quarter.
Nearly nine out of ten respondents (89 percent) predicted that they expected property rates in the London area to increase next year or, at the very least, remain at their current high levels. At no point since the start of the financial crisis more than two years ago has the level of optimism in terms of property price increases been this high among landlords. The average buy-to-let investor anticipates a 4.5 percent rise in property prices in the capital.
The situation outside London, however, is more varied, with investors expecting property prices to either stagnate or decline slightly by around 0.6 percent. Approximately 44 percent of all respondents believe that rates outside of London will remain at current levels or are likely to increase, while the majority predict a modest drop.
Two factors may subdue Britain’s residential property market next year. Most importantly, a lack of mortgages and financing options for many first-time buyers will remain a problem. But in addition to this, demand among buyers continues to stagnate.
Many residential landlords in Britain are more positive about the buy-to-let sector’s prospects in 2011, according to new Young Index figures measuring the overall mood in the rental market. The proportion of landlords who felt optimistic about what the New Year had in store for them rose 16 percent during the last three months of the year, compared to figures from the third quarter.
Nearly nine out of ten respondents (89 percent) predicted that they expected property rates in the London area to increase next year or, at the very least, remain at their current high levels. At no point since the start of the financial crisis more than two years ago has the level of optimism in terms of property price increases been this high among landlords. The average buy-to-let investor anticipates a 4.5 percent rise in property prices in the capital.
The situation outside London, however, is more varied, with investors expecting property prices to either stagnate or decline slightly by around 0.6 percent. Approximately 44 percent of all respondents believe that rates outside of London will remain at current levels or are likely to increase, while the majority predict a modest drop.
Two factors may subdue Britain’s residential property market next year. Most importantly, a lack of mortgages and financing options for many first-time buyers will remain a problem. But in addition to this, demand among buyers continues to stagnate.
Neil Young, however, warned that generalizing about Britain’s property market produced a skewed picture, as areas outside London that are nonetheless connected to the capital by a good public transportation network would likely experience modest growth.
Residential property management is not simply about finding a suitable tenant for your property. Full property management can be about ensuring the upkeep and maintenance of the property to a decent standard. It is also about ensuring that the mundane, but vital tasks are administered in a correct and timely manner.
Property Management can take the strain out of letting your property. Amongst other things property management services can include:
- Arrange building insurance and negotiating premiums.
- Administering insurance claims and subsequent rectification work.
- Organise communal gardening.
- Administering the payment of ground rent (if applicable).
- Arrange regular cleaning of communal areas.
- Organise the collection of resident’s contributions each month.
- Administer the accounts and deal with Companies House.
- Organise regular meetings with residents or their representatives.
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RLA News Service reports that residential landlords across much of the country are worried about the number of tenants falling into arrears, according to statistics and a poll released by Upad, a rental website. Upad found that while confidence among landlords was quite high, monthly rental arrears were among the top concerns for those in the buy-to-let sector.
Six out of ten landlords in Britain feel a higher level of confidence now than they did just one month ago, when this figure stood at just 54 percent. The key factor behind this significant increase in confidence is the strong demand for buy-to-let properties among tenants, including young professionals seeking to rent over the long term.
But confidence among landlords is also related to low interest rates on buy-to-let loans, as well as relatively low property prices in much of the country. Many of the landlords who indicated that their confidence boiled down to these two reasons may be inclined to expand their portfolios at a time when rates remain at near historic lows and property values are also stagnant.
James Davis serves as Upad’s chief executive officer and he noted that his company’s own experience in the buy-to-let sectors suggests that there is good reason for optimism among landlords. Davis suggested that Upad has seen an almost 200 percent rise in the volume of inquiries among tenants seeking assistance in their search for a flat or house to rent over the past six months. But arrears do pose a risk to landlords and Davis predicts that with high unemployment and government cuts, the number of tenants who will be unable to pay their rent on time may increase in the coming year.
Winter weather is one of many health and safety issues for landlords, who need to ensure their properties can withstand the severe conditions.
As snow and ice continues to affect many parts of the country, insurance provider Santander is highlighting the importance of preparing homes for the winter.
It pointed out that the estimated cost of storm and snow damage during the current cold snap is £1.1 million.
With further severe weather forecast in several areas, this figure could continue rising in the weeks ahead.
As well as physically preparing properties for wintry conditions, Santander also recommended that property owners secure landlord insurance to cover against any damage that does occur.
The group suggested keeping insurance documents in water-tight containers and having a photographic record of the contents of the property as evidence for claims.
Colin Greenhill, director of Santander Insurance, said: “The British weather is as unpredictable as it is uncontrollable but we can all ensure that should the worst happen we are correctly insured.”
Health & Safety News
Landlords hoping to maximise rental yields and returns in London may be well advised to limit the size of any increase in rents from existing tenants, an expert has said.Mark Garner, founder and director of LettingZone, said that landlords may find a better option to rent increases is ensuring that existing tenants remain in a property and stay happy.
If rents are currently below full market price, then keeping them at this level may help to ensure a tenant stays in a property, negating the risk of having an empty home, the expert suggested.
“Obviously put it up to the full market rate if the tenant moves out, but to keep the same tenant there, it is worth just increasing it by half the increase in the market [rate],” he said.
Doing this can make tenants believe they are receiving a good deal, Mr Garner added.
He suggested that the risk of losing a tenant would be greater if the rent on a property increased from a discounted rate to full market rate in one move.
His comments follow research from Paragon which found that around 40 per cent of landlords saw an increase in tenant demand during the third quarter of the year.
Landlord and Tenant News
The RLA report that according to research conducted in the third quarter by the Young Group, residential landlords in Britain generally have a positive impression of professionally managed property solutions and believe that this approach often leads to higher rents, longer tenancies and better maintenance of the rental units. Seven out of ten landlords responded to the Young study by noting that they believed that professionally managed properties attracted tenants who were willing to pay higher rents.
Additionally, a slightly smaller proportion of landlords (68 percent) also maintain that professionally rented properties often result in longer tenancy agreements, thus cutting down on vacant periods, especially in areas where the supply of properties is somewhat higher than the demand.
While only 34 percent of respondents indicated that they managed their own properties, the vast majority of those who did (87 percent) found this more hands-on approach to be a worthwhile experience and nearly as many (85 percent) added that saving on rental and administrative costs was the key motivating factor in their decision not to turn to professional management firms or letting agencies.
The Young survey also explored the investment and business atmosphere in the buy-to-let sector. Nearly all respondents (97 percent) indicated that they were not looking to sell properties over the course of the next year, while 54 percent anticipated keeping their real estate for an entire decade.
London’s buy-to-let market also seems to attract many landlords and other buy-to-let investors. More than one third of all respondents (36 percent) are seriously considering buying real estate in the London area.
Landlords in England could be caught out by new tenancy legislation that became law on the 1st of October, reports the RLA.
The change raises the annual rent threshold for common ‘assured shorthold tenancies’ from £25,000 to £100,000. But the move is backdated to include all existing tenancies … not just new ones.
And that will bring thousands more higher-end properties in England – the new order does not apply elsewhere – under the tenancy deposit protection schemes.
So the Residential Landlords Association is warning that landlords are at risk from any unregistered deposits, taken after 6 April 2007, for properties with an annual rent up to £100,000. Deposits taken before that date, however, do not have to be protected unless the tenancy agreement has been renewed.
And these properties also now fall under different legal procedures for termination of a tenancy or breach of contract.
The Rla News Service is reporting that a group called Exercise Watermark has decided to offer local businesses and residential landlords first-hand training in how to prepare and react to major flooding in England and Wales. The campaign is the result of cooperation between the Bank of England, the Department of Environment, Food and Rural Affairs, the Ministry of Defence, as well as a wide range of private sector companies and organizations, including Vodafone. Each of these groups have committed to testing how they would react in the event of a flood. A number of hospitals have also become involved, as has the Welsh Assembly.
But the campaign’s organizers are now also looking to attract a growing number of entrepreneurs, including private sector residential landlords. Buy-to-let real estate is often impacted by floods and many fear that extreme weather conditions may become the norm in the future, especially as England finds itself dealing with more serious and frequent flooding caused by climate change.
Few property owners realize that more than 2.4 million homes and buildings in England alone may be damaged by flooding from either rivers or the sea. Recently released statistics show that the damage caused by floods to both residential and commercial properties exceeds £1 billion per year.
The coalition government’s decision to cut back on social housing payments may impact private sector residential landlords, with some observers concerned that the change may lead to a larger number of tenants falling into arrears. The new rules will limit the maximum amount that tenants can receive in payments.
The landlords who may be the most heavily impacted by the housing allowance changes are those in London and England’s southeast. According to the Upad survey, nine out of ten landlords in the capital and southern cities believe that the housing allowance change will impact their business. The proportion in Scotland is 25% of all landlords, while a third in northern England expect to be effected by the change.
The vast majority of landlords will not decrease their rents, as a result of the changes to the LHA. In fact, only 12% indicated that they would be willing to consider a decrease.
