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Renters, too, want to head to the hills (and the coast)

 

After several reports of buyers wanting to leave the big cities and head to less crowded areas like the westcountry, now it appears that the rental market is heading in the same direction. Information collated by the property website Home says:

  • demand from renters in London, Birmingham and other cities has fallen sharply;
  • while demand in the south west is rising, pushing rents up 8% in a year;
  • favourite ‘must haves’ include a garden or terrace and access to the countryside.

Even before the pandemic the private rental sector was increasing – it’s now 20% of all homes in the UK. On top of that, the extra appeal of small cities like Exeter and of rural East Devon make buy to let a more attractive investment now than for many years.

 

The housing market is to remain open in the four week lockdown in England.

The Ministry of Housing, Communities and Local Government confirmed the news on Saturday evening via Twitter, some hours after Prime Minister Boris Johnson announced the lockdown until December 2.

A tweet from Housing Secretary Robert Jenrick said: "Q: Can I still move house? A: Yes – the housing market will remain open throughout this period. Everyone should continue to play their part in reducing the spread of the virus by following the current guidance."

That guidance, originally issued in August, says: “The process of searching for and moving into a new home is different because property agents, conveyancers and other professionals have modified how they work to reduce the risk from COVID-19. These changes could include doing more online, such as offering virtual viewings; vacating your current property during viewings; and ensuring your property is thoroughly cleaned before someone else moves in.

“We encourage all parties involved to be as flexible as possible and to be prepared to delay moves, for example if one of those involved becomes ill with COVID-19 during the moving process or has to self-isolate. It may become necessary to pause all home moves locally or nationally for a short period of time to manage the spread of coronavirus. We will let you know if this needs to happen.

“If you are about to enter into a legally binding contract, you should discuss the possible implications of COVID-19 with your legal professional and consider making contractual provisions to manage these risks. You should not expect to immediately be able to move into any home where people have COVID-19 or are self-isolating.

“Those renting a property, letting agents and landlords should be aware of and follow the government guidance on coronavirus and renting which contains further advice that may also be applicable such as on possession proceedings, repairs, maintenance and health and safety.”

For members of the public - prospective buyers and tenants, as well as vendors and landlords - the same government guidance note says: “You are free to move home. However, you may find the process of searching for and moving into a new home is different, as property agents, conveyancers and other professionals have modified how they work to reduce the risk from COVID-19.

“Initial viewings should be done virtually wherever possible. Property agents should be able to help you with this.

“Members of the public who are visiting an agent’s office or viewing a property should wear a suitable face covering as described in government guidance unless they are exempt from this requirement. This should be confirmed with the agent before arrival. Anyone with concerns should contact the agent in advance of their visit to discuss appropriate measures. The agent may require you to arrange an appointment before visiting the premises.

“All physical viewings where prospective buyers or renters will be entering the property should involve no more than 2 households inside the property at any one time. This includes any agent accompanying either party. Anyone in a support bubble with either household, however, will count as part of that household. 

“Please read the latest guidance on indoor gatherings and support bubbles.

Where prospective buyers who are currently from separate households wish to view the property on the same occasion, we advise that one household leaves the property to allow the other to enter. This allows for both households to view the property and ensures social distancing.

“Viewings should be arranged by appointment only and ‘open house’ viewings should not take place. When viewing properties in person, you should avoid touching surfaces wherever possible, wash your hands regularly and/or use hand sanitiser. If you need to be accompanied by small children, you should try to keep them from touching surfaces and ensure they wash their hands regularly.

If people are being shown around your home, you should open all internal doors and ensure surfaces, such as door handles, are cleaned after each viewing with standard household cleaning products.

“We recommend that you vacate your property while viewings are taking place in order to minimise unnecessary contact.

"Anyone involved in any aspect of the home-moving process should practice social distancing in line with public health advice.

“When moving between properties, you and those in your household should try to do as much of the packing yourself as you can. Where this is not possible, you should speak to removal firms in advance. There is further advice about this below.If you are particularly worried about the risk of infection, then speak to your landlord, estate agent or removers as they may be able to put extra precautionary measures in place.”

 

Rental market momentum is building

One big piece of news from this month’s RICS report is the uptick in landlord instructions. A total of +6% of contributors noted that they had experienced more landlords advertising rental properties in July, which is the first positive reading since 2016.

Over recent years, a number of changes have begun to affect some parts of the rental market. One major shift came from the introduction of Section 24, which changed some landlords’ tax bills. There’s also greater regulation in the market, such as more licensing schemes and new minimum requirements for some properties. Some of these changes have been good for the sector, improving standards in many properties. However, they have led a number of landlords to look to diversify, perhaps away from traditional buy-to-let.

On the tenant side, there’s been a “firm recovery”, according to +35% of surveyors. Tenant demand has increased for a third consecutive month, a significant recovery from the previous quarter. Looking to the future, +20% of respondents expect the market and rental prices to grow over the next year.

According to Elisabeth Kohlbach, CEO of Skwire, the rental market is the most positive area of  housing 

 

Property investors have been urged to take advantage of Rishi Sunak’s stamp duty holiday by expanding their portfolios.

Buy-to-let broker Mortgages for Business recommended for investors to buy quickly before the likes of second steppers are able to do the same.

The cut could benefit sellers as much as buyers, as they could take advantage of increased demand to raise prices.

Steve Olejnik, managing director of Mortgages for Business, said: “Clearly, landlords need to take advantage of the stamp duty holiday before the window closes in March next year.

“Property investors are in a better position to qualify for a mortgage now that reduced stamp tax allows them to wield a larger deposit.

“Furthermore, if the measures Rishi Sunak has put in place underpin property values, the cut will help those looking to remortgage as well.

“Less obviously, landlords may not appreciate they need to act while they are well-placed to move in a way that owner-occupiers are not.

“We know property investors have been remortgaging with a view to picking up some bargains. Owner occupiers have not been doing the same.

“Landlords have been preparing since the start of the lockdown, remortgaging to enlarge potential war chests with an eye on bagging bargains in the future.

“First-time-byers don’t have that flexibility and owner-occupiers haven’t been remortgaging in the same way. That means landlords are currently very well-placed to seize the day.

“But that advantage won’t last forever. That’s why smart investors will start expanding their portfolios immediately, rather than waiting and then scrambling to try to do deals at the last minute.”

Some 46% of landlords had been increasing the size of their loans – significantly higher than the long-term average of 38%.

Property investors must expand their portfolios sooner, rather later, according to Mortgages for Business.

The chancellor has lifted the threshold at which stamp duty kicks in from £125,000 to £500,000 in England and Northern Ireland until March 2021.

Surging tenant demand sees rents rise and voids fall 

Newly released figures from Goodlord havRe revealed that lettings market activity throughout June was significantly higher than recorded at the same time last year. As a result, rental costs are rising in the majority of regions and void periods are coming down, as tenants compete for new properties and the industry continues to see unprecedented demand after months of inactivity. Overall, the average cost of rent has risen by an average of 3% across the eight regions monitored. The biggest rise was seen in the South West, which saw average prices increase by 11% - from £859 per month to £965. Wales wasn’t far behind, posting a 9% rise in average rental costs. The only region which saw a dip in prices was the East Midlands, which saw average rental costs decrease by 4% - from £825 to £795. The UK average rental cost, per property, now stands at £892.72 per month. This is up from £862.48 in May. Void periods dropped in five out of eight regions monitored, as the market caught up to demand following the lifting of lockdown rules. The biggest drop came in the North East, with voids reducing from 29 to 17 days on average. A similarly large decrease came in the South West, where void periods dropped from 23 to 12 days. This reflects the increase in rental prices across the South West region. Drops in void periods were also recorded in the South West and the North West. It was a different picture elsewhere, however, with increases in void periods in the East Midlands, Greater London and the West Midlands. After a huge number of new tenancy applications were received during May, June saw that demand translates into completed lets. The number of completed lets stayed above 2019 averages for all but six days of June, marking an extremely busy month for the industry. The busiest day of the month was Wednesday 10th June, when the number of completed lets was 24% higher than the same day in 2019. New applications also remained steady. Each day in June saw new tenancy applications remain above 90% of 2019 levels. At the peak of the crisis, they dropped to a low of 28%.

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