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TODAY'S OTHER NEWS

Huge drop in number of homes to let across the UK

Landlords exiting the market because of tax and red tape have led to “an acute shortage of available properties to rent” across the country. 

Analysis by property website Home says the dearth of rental properties is a UK-wide issue but is now particularly severe in London where there has been a 20 per cent drop in the number of properties available to rent over the last 12 months.

Over the same period there has been a 12 per cent fall in the number of available rental properties across the UK.

This reduction in supply is leading to a surge in rents, especially in the richest parts of London.

In the London borough of Westminster the average monthly rent now stands at £5,292, up 24 per cent on June 2017’s figures. Over the last 12 months the number of properties available to rent in this borough has fallen by 447 to 2,673.

Rents have also rocketed in Kensington and Chelsea, where the average monthly rent is £5,502, an increase of 14.7 per cent over the last year. This borough has also seen a dramatic fall in supply of 427 properties over the same time, taking June 2018’s tally to 1,584.

Home says strong demand and falling supply is ensuring that properties in such areas are still highly sought after, even at their premium rental prices. In K&C and Westminster the latest data shows that the typical rental property is on the market for just 39 days, a day less than the same month last year.

So far such price hikes have not yet translated into high yields for landlords. 

The gross rental yield in Westminster is still only around 3.0 per cent but Home says the trend is upwards and those landlords that continue to let their properties in these boroughs will soon start to benefit from improved returns as rents keep shooting up.

However, as has been well documented on Estate Agent Today, underlying capital values are falling - so much so, in fact, that real yields in central London are negative overall. 

The typical asking price for a flat in Westminster has dropped 7.0 over the last year and this negative trend is a clear driver for landlords to exit while they still can.

Since April last year individual buy to let investors have been unable to offset all their mortgage interest against their profits and within the next two years none of this interest will be tax deductible.

Stamp duty changes came into force in 2016, which means anyone purchasing a buy-to-let property or second home must pay an extra 3.0 per cent in stamp duty.

Right to Rent legislation, also rolled out nationally in 2016, now means that landlords must check the immigration status of their tenants or face unlimited fines or even a prison sentence.

“The current situation is particularly dire for tenants, who are set to continue to face increasing competition for good quality properties and rising rents” says Home’s director Doug Shephard.

“Government red tape and higher taxation in the lettings market has triggered forced sales by landlords. Moreover, this additional supply is now negatively impacting on capital values. Vendor landlords have done their maths and they know that if they continue to let the property, even with a rent hike, they will be losing money overall. Conclusion: time to sell,” he says.

Poll: Have you seen a drop in homes to let in your area?

PLACE YOUR VOTE BELOW

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    Well we didn’t see this coming did we. This is going to get worse and worse what are this government doing ?

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    Your confusing this Government with someone who gives a s**t!

     
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    Where are the tenants going to go? The government have merely moved the problem.

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    See my previous comment

     
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    The government better start building...oh I forgot the Build to Rent blocks of flats are the future of the private rented sector...ans so efficiently managed...relax everybody.

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    No doubt this will be spun to be all the landlords doing ... nothing a good bit of landlord bashing can’t solve

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    Can't keep putting up rents. No-one will be able to afford them. Time this exploitation was dealt with propertly. A roof over someone's head is not a commodity, it's a necessity. Profiting from someone else's predicament is unethical and obscene.

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    Landlords are not a charity.

    Most are trying to supplement their retirement income and because of the increased regulations and tax burden the only option is to put the rent up.

    If the government (past & present) really wanted to help they would build more housing specifically for rent.

     
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    Which is why Gordon I believe housing should be provided through charities - or subsidised as with council and social housing. There are lots of ways to make money but expecting to make it through high rents is not the answer. In fact, don't many landlords buy property as they expect it to increase in value and they will make money when they sell it? I'm aware that this is a gamble but so are many investment strategies. If landlords raise rents to unaffordable levels then they risk tenants falling into arrears - and that causes headaches for everyone concerned.

     
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    Presumably you have the same opinion of supermarkets, water companies,electricity companies, gas companies, your local butcher, grocer. Get real!

     
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    Rents have to rise because the Government is increasing Landlords costs. Without substantial increase in rent Landlords woul face rates of tax in excess of 100%. Yes that's right the Government takes all the profit and more esides. You are getting State control in all but name! The Government has set up landlords as the whipping boy for their tax grab.

     
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    Barryin Wilts... I do think that utilities - electricity, gas, water and the railways should be nationalised and that foreign investors shouldn't be making huge profits at our expense. As far as supermarkets, butchers, retailers are concerned, you have a more varied choice of where you shop and what you buy. If you need to rent a house near where you work and your kids go to a local school you might find that there are only a only a handful of affordable homes available. If they are all unaffordable do you give up your job and hope you'll find another in another area every time your rent increases? Do you move your children from school to school chasing rental property you can afford? Would you expect poor, disabled and elderly people to suffer from hypothermia in the winter months because they can't afford to heat their homes and cook nutritious meals? And do you think that we should continue paying for a substandard rail service when we've no other way of getting to work/school etc.? I think it is you who needs to "get real".

     
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    I didn't know Karl Marx was still alive

     
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    State run utiities tend to be so inefficient, that private companes are able to do a better job, more cheaply and make a profit.

     
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    The only necessity is someone working and educating themselves to a level where they can afford a roof. The government does not need to provide houses, it needs to cut taxes and make sure wealth generating business can thrive. NB "Wealth Generating and not UK based service industries."

     
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    More than 20% of workers in the UK earn less than the so-called living wage of £8.45 an hour. We will always need people to carry out jobs that do not require a college/university education but these people should be paid enough to afford a roof over their head. As should single parents who can't work full time due to childcare responsibilities. I agree with a lot of what Richard says. The financial systems across the world need mending but that's unlikely to happen any time soon. Money was spent by Jo Public prior to the crash but I believe the blame firmly lies at the door of greedy bankers and their wealthy clients who have salted billions offshore in tax free havens. Young people prior to the crash were pushed into home ownership by "financial advisers" desperate for commission offering loans at 7 times annual salary with no deposit. Of course they defaulted because the mortgage was unaffordable and the homes they'd bought dropped in value and left them with negative equity. Credit card limits increased three or four times a year to levels that were totally unsustainable. That's where a lot of the money went. Yes people spent money they couldn't afford but they didn't take the country to the brink. Massive funds were spent bailing out the greedy bankers followed by quantitative easing. Some of this did find it's way back to those that really needed it to compensate them for mis-sold financial products and PPI. And getting back to wages... many employers have paid ridiculously low wages for years expecting the government to make up the difference through in-work benefits. If employers can't afford to pay employees a real living wage then they shouldn't be in business. The same goes for landlords who charge extortionate rents for substandard housing. Where they have very little equity in the property they need to understand that they are merely middle men creaming money off those least able to afford it. That doesn't mean that there are no ethical landlords out there. I know there are many. They've also been conned into believing that the pension hits and dire savings rates they've suffered can be replaced by money made from property investment and letting property. Many are finding out this is a flawed investment strategy as they're perpetually at the mercy of whatever government is in power. Austerity doesn't work and isn't necessary and it's time the poorest amongst us were not made to suffer in the name of a political ideology that has shown time and time again to be deeply flawed. Feel better having got that off my chest :-)

     
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    The problem is that people like Sue Kelly expect to be paid more money without earning it.

    You don't need a University degree to go out there and get a good job. You just need the right attitude and to work smart! When people create wealth it also creates more jobs and wealth for others.

     
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    I'm a little confused by your statement Gordon. What makes you think that I want to be paid more money without earning it? I thought that was what I was arguing against - landlords and letting agents charging extortionate rents for doing little to merit ever increasing charges. It seems you've missed the point entirely. I believe in a fair day's pay for a fair day's work. I also believe that everyone should be able to afford to put a roof over their head and food on the table. If that makes me a bad person then so be it.

     
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    Sue, I'm not sure if you just don't understand or if you're purposely contradicting yourself.

    Most full time landlords never increase rents on sitting tenants, period! Up until S24 was announced I had tenants that had been with me 10 years and not seen even one rent rise. So you see landlords understand very well that putting up rents whenever they can is just not the right policy. Most will (sorry.... would) only increase the price at the time of tenancy change. Indeed if you look at the measures of rent inflation they tend to look at advertised rents, and they basically keep in line with inflation overall.

    Now Government is forcing a different picture. It's starting with sitting tenants seeing rents rise substantially and will rise further over the next few years. There are now also 40k less properties in the rental market than this time last year. This restricts choice and further supports rent rises. This scenario is not something the rental sector wanted, and just to be clear, Government knew damn well that this would be the outcome.

    The issue is felt greatest by the lowest income individuals and families that are being forced out completely by Government meddling, and from what I glean this is where your particular concern is.

    What these measures will further do is discourage investment in housing. One major housebuilder is already reporting that they can't hit targets because of landlords no longer buying. Many landlords convert commercial buildings into resi, or bring back disused houses into use, or convert big houses into flats etc. This is now reducing, further exacerbating the problems.

    If you really believe that people should have somewhere decent to live then you're banging the wrong drum.

     
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    The government are creating this problem NOT letting agents!

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    Hardly surprising is it. Heavily taxed and heavily regulated. Of course landlords will look to offload as it is becoming less and less profitable

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    The government haven't got a clue about the rental market.
    Anybody with a bit of common sense could have seen this coming. Oh that's why they didn't see it coming !!

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    They did see it coming but their BTR buddies haven't taken up the slack! (Nor as yet handed out lucrative non-exec Directorships).

     
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    I suspect they knew full well what would happen. Maybe they hoped that property values would fall as landlords rushed to sell and the glut of properties on the market forced prices down. Not very clever though as there aren't enough people in the position to buy even if properties dropped by 20%. And they've not made any attempt to provide an alternative supply of homes to rent - unless they offer to buy properties off landlords for market value and take over the tenancies themselves. This is a problem that isn't going to go away until the government fixes our broken property market.

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    If properties were to drop by 20% or even anywhere close to it, you'd have lenders withdrawing products quicker than you can count them.

    Plus you'd also have people that have recently got on the ladder stuck with negative equity and this would be doubly worse for those that used the Help to Buy scheme. When they come to the end of their term they will not be able to remortgage and be stuck with their lender's SVR.

     
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    The property market isn't broken.

    If people cannot afford to buy then the problem lies somewhere else.

    Stop blaming landlords!

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    Gross 3% yield? Surely you mean net? You would not be able to pay a mortgage out of 3% yield.

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    An interesting exchange of views! Why do we find ourselves in this position? Why, because greedy financial institutions aided and abetted by a socialist administration headed by Gormless Gordon and his Incompetent Acolytes debased and destabilised the economy, producing a recession and a fall in interest rates to as near zero as makes no difference. Ordinary savers relying on interest to supplement income and pensions saw their money reducing in value as inflation exceeded rates of return and looked for alternative investments to keep themselves afloat, of which residential property was one. The private rental sector expanded.

    Meanwhile, GG & Co. devalued the currency and increased government debt hugely through quantitive easing so that it could not afford to build houses and so placed greater reliance on those people that it had driven into the residential letting market through its collective ineptitude. House prices still rose due to the supply/demand imbalance but also because insufficient curbs were put on the financial sector to limit the funds that have flowed into the housing market. Supply and demand are one thing, but if you cannot pay for a house, the price does not go up, much.

    Paradoxically, the attempts of the financial institutions to show they had changed (not) did impose restrictions on the buying power of those less able to afford housing (those who had not bothered to save) and increased the size of the renting sector.

    Now, the results of mismanagement cause our glorious leaders, charities and commentators to blame and punish the people that have been compensating for the results of administrative failure; namely private landlords.

    Oh, and where did all that money that caused the problem, handed out by the lenders go and who consumed it? By and large, we did, but of course we are not going to blame ourselves for our part in the resultant mess, are we? Far better to blame someone else and look for a socialist solution.

    It is not just the housing market that wants “mending”. It's the whole economy and financial system.

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    Buy around Barnsley , South Yorkshire & you should get a minimum 7% return .

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