LANDLORD NEWS
Rents rise at record rate in July
Rents in the UK have risen at their fastest pace on record, with a 5.3% increase in July compared to the previous year. Rents are increasing most quickly in Wales, having climbed by 6.5% over the past 12 months. In Scotland they have risen by 5.7%, while in England rents are 5.2% higher than where they were last July. In London rents have risen by 5.5% year-on-year, the highest level of annual inflation the ONS has recorded. The lowest annual inflation was in the North East (4.6%). Nathan Emerson, chief executive of estate agents’ body Propertymark, said: “There is a huge disparity in the number of properties available to rent compared to the continuously growing number of renters looking for a home, ultimately continuing to put pressure on rent prices. UK governments need to urgently look to adequately incentivise the provision of desperately needed homes rather than forcing landlords out of the private rented sector with unfair regulatory and financial hurdles.”
Financial Times The Times The Daily Telegraph I The Times
London rent increases by 12% in July
The amount Londoners pay for rent increased by 12% in July, reaching £597 per week. According to data from London estate agent Foxtons, the number of rental applicants per new home rose by 18% compared to the previous month, but decreased by 12% compared to 2022. East London experienced the highest increase in rental applicants, followed by south London. Flats and houses in central London had the highest average weekly rent at nearly £680. Rising living costs and limited supply have led to landlords increasing rent prices. “We’ve seen expected growth and are now into a more consistent busy market we normally see at this time of year. As such, the market will remain highly competitive through summer,” Foxtons said.
City A.M.
Government urges landlords to support childminders in rental properties
Claire Coutinho, the children and families minister, has urged landlords, housing associations and developers that bar tenants from starting a business in their homes to make an exception for childminders. Coutinho has written an open letter “urging them to better support prospective childminders who too often face restrictive clauses in contracts which stop them from working in their homes”. The government said this could present “unfair barriers to those who rent or have leasehold properties, compared with those who own their own home”. Coutinho said one in eight childminders gave up trying to register because they could not get permission to work from home. She said: “Too often prospective childminders are having the door slammed in their faces. However, parents tell us, time and again, how much they value the flexibility and quality that childminders bring, so we are making sure that we are supporting the workforce to deliver what parents need.” However, Neil Leitch, chief executive of the Early Years Alliance, said: “While property restrictions may be an issue for a small proportion of childminders, it will do little to prompt effective change. What childminders urgently need, is a long-term plan supported by realistic funding.”
The Times The Daily Telegraph
Graduates pay double the tax of property owners, study finds
A study by the Intergenerational Foundation thinktank reveals that a graduate earning £35,000 a year pays almost double the average tax of someone with the same income from property rent. The study highlights the combined effect of income tax and national insurance payments, which forces employed individuals to pay higher tax rates compared to those who benefit from lower capital gains tax (CGT) rates on property and shares income. The thinktank suggests that increasing CGT rates to the same level as earned income rates could raise £10bn a year, allowing the Government to reduce tax rates at each income tax threshold. Polling suggests the momentum for equalising capital and employment tax rates has been growing, the Guardian’s Phillip Inman asserts, with support across the political spectrum. The Office of Tax Simplification previously stated that aligning CGT rates with income tax rates would raise £14bn. The report’s authors say the current system allows for significant levels of avoidance by those with income from capital gains, who can manipulate the tax system in their favour – by smoothing the declaration of their income – leaving a larger tax burden on younger people and those with lower incomes.
The Guardian
One in 10 social housing residents claim to live in unsafe homes
A survey by Shelter has found that one in 10 social housing tenants reported living in unsafe homes. More than half cited problems with damp and mould, and 11% fear dodgy electrics could spark a fire. Latest figures show 8.87m households rent from a local authority or housing associations in England. Of those, 29% were not satisfied after requesting a repair job in the last 12 months. Some 10% of properties also failed to meet the Decent Homes Standard last year – and 1.2m were stuck on social housing waiting lists. Last month, the Government introduced the Social Housing Regulation Act to ensure landlord scrutiny. Labour has pledged to “introduce a warm homes programme, update the Decent Homes Standard and give greater rights and protections to renters.”
Mirror.co.uk
COMMERCIAL
WeWork’s uncertain future spells trouble for commercial landlords
As WeWork warns of “substantial doubt” over its future, experts have predicted dire consequences for the commercial property sector. WeWork, once valued at $47bn, has been forced to combine shares in an effort to avoid being delisted from the New York stock exchange. The company’s potential bankruptcy could flood the struggling market with leases, exacerbating record low occupancy rates and difficulties in refinancing debt. The US office vacancy rate is at an all-time high, with Manhattan experiencing the highest vacancy rates since 1984. However, Anthony Sabino, a bankruptcy expert at law firm Sabino & Sabino, noted the commercial sector distress is also attracting Wall Street firms raising billions of dollars to target distressed assets. In New York, residential rents have increased by about 25% since the pandemic and developers are converting more empty offices into apartments.
The Observer
AUCTION NEWS
Come and meet the DMI team at live auctions next month
Why not visit a real live auction, see the bidding live and meet some of the DMI team who will be in attendance arranging funding for successful bidders? Upcoming auctions include Barnard Marcus in London on 11th September and Cottons in Birmingham on 13th September. You can review their websites for a list of Lots or just pop in for a coffee and a chat. See you there!
Rise in auction listings as sales revenue falls
Auction data firm Essential Information Group (EIG) has released figures for July which reveal a 6.8% monthly rise in auction listings in the period, representing a rise 16.2% on a quarterly basis and 19.9% annually. The percentage of lots sold has declined however, with a fall of 26.8% in revenue raised during July 2023 compared to the year-earlier period. David Leary, director of EIG, remarked: “This decline in total revenue signals an evolving landscape that requires a deeper understanding of market dynamics and strategic adaptation.” He went on: “Areas like East Anglia and the North East have shown notable growth in lots offered and sold, suggesting thriving markets and encouraging investment opportunities. However, even amid these positive developments, London has seen a dip in both these metrics, indicating a more complex scenario in the capital’s property auction sector.”
Estate Agent Today
PROPERTY FINANCE
Buying a home now more expensive than renting
Buying a home has become more expensive than renting for the first time in 13 years, according to analysis by Zoopla. First-time buyers now have to pay an extra £122 a month on a mortgage compared to renting the same property – an extra £1,500 a year. The price difference is even higher in London, where first-time buyers must pay an extra £493 a month on a mortgage compared to renting – a premium of 24%. In the South East, the second most expensive region outside of the capital, first-time buyer mortgage payments now cost 17% more than local rents, or an extra £2,580 a year. Rupert Simmonds, regional director at estate agents John D Wood & Co, said: “First-time buyers are assessing whether the benefits of owning a property outweigh the financial strain posed by higher monthly mortgage payments. Some are deciding to move further out from city centres to more affordable neighbourhoods where the gap between renting and buying might be narrower. Others are seeking guidance on innovative financing options.”
The Daily Telegraph
Calls for a code of practice for shared ownership schemes
The Daily Telegraph investigates the rising popularity of shared ownership schemes, with some buyers facing complications in selling the property, high fees, and poor quality appliances. Some 202,000 households were living in shared ownership properties at the end of 2021, according to the latest English housing survey on the matter, and demand went up by 14% last year, with the Help to Buy scheme having just ended. Paula Higgins, of the Homeowners Alliance, has launched its Better Shared Ownership Campaign, which wants to see a code of practice introduced to prevent the misselling of shared ownership schemes, as well as more transparency on the outcomes.
The Daily Telegraph
LENDING CONDITIONS
Older homeowners sacrificing inheritances to pay off mortgages
Older homeowners are using equity release to pay off their mortgages, sacrificing their children’s inheritances in the process. Rising interest rates have led to a surge in borrowers seeking equity release, with 44% using the funds to pay off their mortgages. Equity release mortgages allow homeowners over 55 to defer repayment until after death, but come with higher interest rates. This reduces the value of the property and diminishes inheritances. The average interest rate for equity release mortgages is 7.04%, compared to 6.79% for conventional mortgages. Steven Scales, home finance director at Canada Life, said rising interest rates – coupled with a prolonged cost of living crisis – has meant some homeowners reaching the end of fixed deals or on variable rates are facing repossession or being forced to sell up. “In today’s unpredictable economic environment, equity release can offer peace of mind and certainty for homeowners aged 55 and over, especially given the rise in house prices in the past few years,” he added.
The Sunday Telegraph
ECONOMY UK inflation slows to 6.8% in July as energy prices fall
Office of National Statistics (ONS) data show the consumer price index (CPI) measure of inflation fell to 6.8% in the year to July, down from a rate of 7.9% in June. Matthew Corder, deputy director of prices at the ONS, said falling gas and electricity prices drove down inflation last month when a change to the energy price cap came into force. However, core inflation, which strips out food and energy prices, remained at 6.9%. Food price rises stood at 14.9% – seven times higher than a year ago – despite a significant fall from the June 17.3%. With inflation still more than three times the Bank of England’s 2% target, many experts expect it will raise interest rates again next month in an attempt to slow price rises.
Financial Times The Daily Telegraph The Times The Guardian
