Welcome to our first Newsround for February, giving you a roundup of items trending in the housing news this week.
PRS is vital for UK economy & social life
A new report based on a survey of 2,000 private renters that was commissioned by the NRLA has stated that the private rented sector has an important economic and social role to play in our country.
The report suggests that renters are far from feeling unhappy or trapped. In fact,
- only one in ten (six per cent) of private renters want to switch to social rented housing, whilst
- three quarters (76 per cent) said they want to buy a home of their own at some point in the future, and
- less than one in five (17 per cent) would have done so already if they could.
Chris Walker, a Director at ChamberlainWalker Economics says that the sector
has attributes that make it the tenure of choice for many private renters, and that a high-quality and well-provided PRS is likely to be a good thing both socially and economically.
41 per cent of private renters rated the affordability of their rents as ‘excellent’ or ‘good’, with a further 38 per cent rating it as ‘fair’. Furthermore, 31% of renters saw job security as the biggest factor in deciding when to buy their own home. Where older renters are concerned, 48% aged 55 and older want to stay in the sector.
Ben Beadle, Chief Executive of the NRLA says
Today’s report makes clear the positive and vital role the rental market has to play in the economic and social life of the country. Contrary to the rhetoric from many, for the vast majority of tenants their experience in rented housing is positive. This is the platform the Government needs to build upon to ensure a sector that works for renters and responsible landlords.
Landlords seeking to increase rents
Bank base rate interest rates have just gone up to 4%. A forecast predicts that the base rate will hit 4.5% by mid 2023. A new survey out by Finbri details that if this is the case, then over half of landlords will be looking to increase their rents. This will undoubtedly have a knock-on effect to the housing supply within the PRS and some landlords looking to sell their investment properties.
The problem does not just end there. With higher inflation, there could be fewer investment opportunities for landlords, which could force landlords to consider other methods of investments to diversify and weather the looming recession. The survey suggests landlords may go looking at other options such as stocks and shares, hedge funds, and venture capital, to name just a few.
Finbri found that 44.66% of landlords plan to sell up or at least reduce their portfolio if the base rate reaches 4.5%, so looking at other options might not be such a bad idea to mitigate the effects of increasing rates.
Is this something, you, as a landlord, are considering?
Tory MP stands up for landlords
Andrew Lewer, a Tory MP has spoken out for landlords and called on the government to help landlords by reforming taxation. He wants to see a large increase in house building to help renters have more choice and supply. He says
Restrictions on mortgage interest relief and the imposition of a stamp duty levy on the purchase of homes to rent out have indeed made life more costly for landlords. Landlords are seeing the cost of their mortgages going up and it quickly becomes a far more financially prudent decision to sell their homes rather than deal with the burdensome and indeed confusing job of managing a buy-to-let.
Marry this to the uncertainty surrounding the government’s plans for the sector, whether in energy efficiency requirements or the ending of Section 21 repossessions, and you do not exactly have an attractive market.
He wants to see the additional homes stamp duty scrapped along with the unfreezing of Local Housing Allowance and future rental regulations that encourage long-term investment. You can read the full article here.
Build more homes
Andrew Lewer MP writes in more detail here about how the government need to review how the PRS is taxed and remove the stamp duty levy. He states that rents have increased by 4.2% over the last 12 months and blames this on supply and demand. Tenant demand is now 46% above the five year average, while supply is down 38%. Citing this as a ‘chronic imbalance’. This makes renters’ life stressful finding homes and is due to ever increasing rents making it almost impossible for them ever to buy homes of their own.
He goes on to say that the lack of houses is down to the government who have discouraged investment in the PRS sector due to the tax system for buy-to-lets and other investors.
Andrew asks that the government start with a review of how this sector is taxed and remove the stamp duty levy. His statistics state that if the stamp duty levy was removed on homes that would be rented out then it would bring into fruition almost 900,000 new private rented homes over the next ten years, giving the government a 10bn revenue boost too. He acknowledges that the PRS is not full of property tycoons but private landlords letting just one property, who cannot shoulder all these rising costs and taxes.
He writes a compelling article and also acknowledges that repossession needs to be high on the agenda for the government to resolve for both the landlord and the tenant.
£50m housing scheme excludes private landlords
Landlord Today reports that The Welsh Government has launched a new ‘National Empty Housing Grant’ scheme that would see 2,000 empty properties brought back into use. Both home owners and prospective homes owners can apply for a grant up to £25,000 to improve energy efficiency and remove significant hazards. To qualify the property has to have been empty for 12 months and once the work is complete, it has to be used as a main residence for at least five years.
This is only open to owner-occupiers, social housing landlords, community housing and local authorities. The Leasing Scheme for Wales will run alongside this initiative which is for private landlords.
Propertymark supports this idea and says
We are pleased to see £50m has been designated to bringing empty homes back to life in Wales. This is something Propertymark has campaigned for as it will allow communities to bring desperately needed, unoccupied properties back into use. Wales also has the oldest housing stock, so it’s good to see recognition of the need for funding to improve energy efficiency in residential homes.
Councils causing HMOs numbers to decline
This post on LandlordZone reports that England’s HMO market has shrunk by more than 21,000 properties largely due to Council planning and licensing rules.
The largest reduction has been in the East Midlands (16%) and the North East (15.8%) but there are also big reductions in the South East (6.7%), London (5.2%) and the North West (1.6%). Although London remains home to the greatest proportion of HMOs, accounting for 29% of England’s total stock.
Although HMOs are often unpopular with neighbours, it is often the only way that low-income people can afford to rent. So this reduction is concerning. See also this report which points out that banning student HMOs is causing big problems in the student market in St Andrews.
Snippets
Barclays to stop telling tenants credit card debt ‘helps them pass referencing’
Rent freeze backfires according to property portal analysis
Landmark ruling raises concerns over privacy ramifications for property developers
Rising number of tenants forced to leave Scottish private rental sector
Demand for energy efficient homes increases by over 20%
Strict guidelines for AirBnb and holiday let landlords set by York council
Why is the Founder of Property118 Selling His Best Property?
Can’t the Tories see that letting homeless charities close will cause more homelessness?
Newsround will be back next week.