Market Overview

UK landlords predict slower annual rent rises


Landlords in the UK expect rent rises to slow over the next 12 months to below the target rate of inflation, according to a the latest survey from lettings agent network Your Move and Reeds Rains.

On average, landlords estimate that rents will increase by 1.8% in the next year. This is lower than the Bank of England’s 2% target for inflation, and would also represent a slowdown on the current pace of annual rent growth.

The latest Buy to Let Index from Your Move and Reeds Rains reported that average residential rents across the UK are rising at an annual rate of 2.4%.

The majority of landlords polled do not intend to raise their rents in the next year, however 43% expect to raise rents and of those 57% cite covering the cost of inflation as their main motivation. Paying for maintenance work is the second most significant reason, listed by 31% of landlords. 

Over the last six months, 41% of landlords report seeing a rise in tenant demand. This comes as lettings activity has been growing, with new tenancies agreed across England and Wales up by 6.9% compared to August 2013.

Tenant demand has helped reduce average void periods in the private rented sector, ensuring greater stability of income for landlords. In the past year, 18% of landlords have already added to their portfolio of rental properties.

This appears to be inspiring confidence among property investors with 21% of landlords believing that now is a good time to invest in buy to let. Of those who report it is currently a prime time to purchase a rental property, 55% cited tenant demand as a key motivation for investment. Attractive property prices are the second biggest driver, reported by 54% of landlords, while 45% pointed to better capital returns on offer compared to other forms of investment.

The proportion of landlords who expect tenant demand to increase further now stands at 63%, up from 56% in January. Only 5% of landlords currently anticipate a fall in demand for rental properties over the coming years.  As a result, 22% of landlords intend to expand their portfolio over the coming year, an increase from 18% in January 2014.

‘Demand for rented accommodation is climbing, and there’s little sign of this stopping. While Help to Buy and higher LTV lending are enabling first time buyer activity, strong house price growth this year has lifted homeownership a few steps out of reach for many, and the private rented sector remains the safety net supporting those still saving for a deposit.  This is in addition to the thousands of people who rely on renting to offer them flexibility and freedom in their working lives,’ said David Newnes, director of Your Move and Reeds Rains.

The situation in the UK is a complete reversal in the U.S. where renting is currently more expensive than ever in many areas in the United States, making it difficult for renters to save for a down payment on a home, according to a new analysis report.

Homes remain more affordable to buy in 94 of the country's 100 largest metros compared to historic averages. But renting is more expensive than ever in 88 of the country's 100 largest markets.

This comes as the latest Zillow Rent index shows that after three months of flat or negative monthly growth, national rents rose in July from the previous month.

It means that overall only a dozen are currently more affordable than they historically have been for both renters and home owners, as widespread growth in housing costs continues to outpace wage growth.

Nationally, US home values rose 6.5% year on year in July while national rents rose 2.8% over the same period. The Zillow Home Value Index rose to $174,800 in July, up 0.2% from June 2014 and 6.5% from June 2013.

The firm points out that rental affordability is currently much worse than mortgage affordability, largely because rents didn't experience the huge drop seen in home values during the recession, and instead have just kept climbing upward.

Nationally, renters signing a lease at the end of the second quarter paid 29.5% of their income to rent, compared to 24.9% in the pre-bubble period. In 88 of the nation's largest metro areas, renters should currently expect to pay a larger share of their income toward rent than they would have historically.

As rental becomes higher, Americans should start planning on buying their own homes. Prospective home buyers can look at property listings provided by some firms that use disruptive video marketing platforms. Realbiz Media Group, Inc. (OTCQB: RBIZ)is a Florida-based digital media company that develops proprietary video marketing software that agents and their brokers can use to promote their virtual tour listings online. The company offers a Virtual Tour Program that allows real estate sellers to create virtual tours and presentationsthat are optimized for mobile viewing and could be syndicated through social media for only $29.95 a month.

The program is equipped with a video search engine optimization (VSEO) tool that automatically generate meta tags and descriptions for virtual tours and listings agents have uploaded to the platform so that they would be found easily by consumers online.

The program also has tools for creating QR codes, e-flyers, and seller reports as bonus features.

For agents on the go, the company has also recently launched a mobile app called EzFlix, which makes creating listings and virtual tours on mobile phones easier. The app also utilizes Realbiz Media’s patented technology, which allows agents to create local community content, real-time videos, and add personalized messages to these items. 

To learn more about Realbiz Media and its products, contact sales@realbizmediagroup.comor call 1.888.REAL.BIZ (888.732.5249).

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.


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