News from the rental sector
Where house prices have been either stagnating or falling, rents are rising. Homelet’s rental index shows rents rose by 1.3% between July 2017 and July 2018, with the average hitting £937pcm. Some of the biggest growth occurred in London where rents were up 3.3% on an annual basis, but an impressive 8 out of ten regions saw rises. The biggest faller, however, was the East of England (-1.1%), with the others below 1%. The general upward trend began at the back end of last year and with demand rising and landlords selling up and it is a trend that is likely to accelerate during the course of this year.
ARLA’s members (Association of Residential Lettings Agents) are reporting there were 79 new prospective tenants registered per branch in July 2018, up from 71 tenants in June. During the same period, the average number of available properties per branch fell from 191 to 184. Over last twelve months, demand has risen by 13% and the supply of rental property has fallen by 4%.
There is no doubt we are entering a new era of rising interest rates and, with an uncertain political landscape, many borrowers are now considering longer taking out longer term fixed rate mortgages of up to ten years. Such loans used to be considered too inflexible and were not traditionally available to landlords. But, with what could be the start of a new trend in the sector, Investec have just launched a ten-year fixed rate BTL mortgage at 3.69%.
HMOs: The rules for mandatory licensing for Houses of Multiple occupation (HMOs) are about to change. HMOs are defined as properties housing at least three people in two or more households with shared facilities. However, currently only those larger HMOs with 5 or more people in at least two households across three storeys must register. From October 1st smaller HMOs will be included – ie any properties with five or more people in two or more households with shared facilities will require a Mandatory Property Licence, regardless of the number of storeys. There are fines of up to £30,000 for any breaches of the new regulations and the number of registered HMOs is expected to rise from 60,000 to 220,000.
Tenant Fes Bill: The bill that will ban lettings fees is going through parliament now. It also includes such things as limiting deposits to 6 weeks and holding deposits to 1 week, capping fees for changes of tenancy to £50 and adding restrictions to the use of Section 21 notices. An amendment has also been tabled limiting the amount of money landlords and agents can charge for damage and repairs.
And some breaking news:
Property portals, Zoopla and OnTheMarket, have announced they have done a deal with facebook to advertise rental listings on the Marketplace. Facebook is already doing a similar thing in the US and they claim there are 14 million users of Marketplace in the UK, so the service should have substantial marketing reach. Zoopla have said they will list up to 300,000 properties. OTM hasn’t given a precise number but have said their listings will be in the tens of thousands. For the time being, Rightmove is not involved.