High and Low Points Affecting Landlords

Latest Landlord News by: Madalena Penny.

Landlords are a resilient breed.  Faced with CGT rises, housing benefit caps, interest rate rises and generally a higher cost of living, the great British landlord tackles adversity with quiet confidence and of course with a bit of help from ongoing demand for rental properties.

LSL Property Services latest buy-to-let Index revealed that February has seen the first rent rise in the private sector this year.  With a rise of 0.2%, the average rent is now estimated at £684 per month and has increased by 3.9% on February of last year.  Not to be out-researched, Paragon have also revealed that 32% of residential landlords surveyed have raised rents on properties in Q1 of 2011 and nearly one third had increased their rental income as a result.

However none of this is surprising when confronted with data surrounding the private rented sector.  Again LSL, report that a shortfall of 158,000 first-time buyers had entered the market in the last year when compared to 2007/2008.  According to the latest statistics published on the 24th February this year, the Department of Communities and Local Government has contributed a true picture of the changing housing sectors with their latest publication, the ‘English Housing Report’.

Figures from the 2009/2010 report reveal:

  • The number of households created by the private sector has risen steadily.  In 2005 there were 2.4m in 2009/10 this had increased to 3.4m.
  • A fall in owner-occupied residences. In 2005/2006 14.8m households were owner-occupied, in 2009/2010 this had fallen to 14.5m.
  • 62% of social sector rents received housing benefit compared to 24% of the private sector in 2009/10.
  • In 2009/10, 1.8m households had moved into their current homes in the previous 12 months this is 600,000 less than in 2007/08 and the reduction is attributed to the decline of the owner-occupier sector.

In the last year alone there was an increase of 300,000 new households created in the private rented sector, with buy-to-lending recording an increase of 22% in 2010.  The shortage of available homes is again compromised through the lowest level of house building since the 1920’s and the affects of immigration laws, net migration totaled a staggering 196,000 in the UK in 2009, a rise of more than 20 per cent.  All this has lead to one in six households supported by the private sector, an amount of 15.65% of residences in England….and still rising.

While statistics show an unprecedented rate of tenant-demand and rent rises, the downside reveals the consequences to such a demanding market.  Further analysis from LSL reveal an increase of 12.6% in late or unpaid rent at the end of February 2011, totalling £296m throughout the UK, an increase of 11% from the £258m in January.