Reeds Rains Property Blog

If you've been thinking of Buying or Selling a property, the option of house auctions is fast gaining interest. In the December edition of Manchester's Urban Life magazine, Reeds Rains City Living Manchester Lettings Manager Hannah Gretton ( regular contributor to their Ask the Expert property feature) explains the process of homes going under the hammer.  If you are interested in finding out more about our Reeds Rains Auction Services, please click here

Despite the slowdown in rental inflation, the monthly increase represents double the size of the 0.2% increase seen in the same period last year. After seven months of rent rises, rents are 3.4% higher than at the same point last year, with the average rent in England and Wales at a new high of £744 per month.

In London and the South East rents continued to rise, albeit at slower rates of 0.9% and 0.7% respectively. Five regions saw rents fall in October, with the sharpest falls in Wales and the Midlands. Rents in Wales fell by 1.6%, while those in the East Midlands fell 1.8% – the first fall in this region since March.

On an annual basis, rents rose the fastest in London. They increased by 7% to £1,102 – breaking the £1,100 barrier for the first time. The South East saw the next highest rise, 3.2% higher than a year ago. Meanwhile after monthly falls, rents in both Wales and the East Midlands are lower than at this point last year – by  2.2% and 1.5% respectively.

David Newnes, Director of LSL Property Services comments: “Rents may be rising but the good news for tenants is that the rate of increase is at its lowest in five months. A combination of improved buyer activity and a seasonal slowdown has taken some of the heat out of the rental market as it enters the traditionally quieter final months of the year. However, despite the deceleration, the fact that monthly rents rose by twice the rate seen a year ago points to the underlying strength of tenant demand.”

“Looking ahead, it’s difficult to see rents remaining stationary once the winter lull has passed. Admittedly, the sales market has shown signs of life in the last month, and the Funding for Lending Scheme seems to be acting as a catalyst for a modest improvement in the mortgage market. However, banks still need to set aside large sums of money for high LTV lending, so in the longer term the number of first time buyers won’t return to the level necessary to significantly undercut the strong demand for rental property.”

As a result of improving property prices in October, landlords saw an averagetotal annual return of 6.6% on a rental property in October, up from 5.9% in September. This represents an average return of £10,819 with rental income of £7,926 and a capital gain of £2,892.

If rental property prices maintain the same trend as the last three months, the average investor in England and Wales could expect to make a total annual return of 4.3% per property over the next 12 months – equivalent to £7,067 per property.^[1]  The average yield on a rental property rose to 5.4%, from 5.3% in October 2011.

Newnes comments: “Landlords’ prospects now look even better on paper, with capital gains contributing to overall returns. But there are grounds for caution. With the long-term headwinds facing the housing market, there’s no guarantee prices will rocket upwards in the next few years, and steady rental income is crucial for an investor’s return – let alone to pay the mortgage. In this context, it’s even more important that landlords avoid void periods, and prospective investors who research the areas with the biggest rental demand before purchasing will do well.”

The total amount of rent late or unpaid fell to the lowest level since January 2011, with total arrears of £265m, down from £297m in September. This equates to 8.1% of all rent across England and Wales.

Newnes concludes: “An improving economy and a resilient jobs market have helped tenants get on top of their rent. But we’ve also seen a change from landlords, who are cherry-picking the most financially robust tenants – especially for the most expensive properties. Property investors have become incredibly rigorous with their checks on prospective tenants, and are feeling the benefits.  

“Tenants, too, have cut down on spending as a necessity. Whether tenants can keep up this prudence over the festive season remains to be seen. 2013 will bring more austerity, and if rents rise further, arrears are unlikely to continue to fall.”

To read the full report including a regional breakdown click here

Reeds Rains Lettings Manager Hannah Gretton, is a regular contributor on the "Ask The Expert" panel for Manchester's popular Urban Life Magazine, sharing valuable advice on lettings for landlords and tenants.  This month, Hannah, a fellow member of ARLA ( Association of Residential Agents) and Lettings Manager for Reeds Rains City Living Branches at Manchester and Salford Quays; sheds some light on the importance of choosing an ARLA registered agent, if you are a landlord looking to instruct a lettings agent. If you wish to discuss any aspect of letting a property in either the city centre of Manchester or Salford Quays, then call Hannah on 0161 236 9088 or email manchester@reedsrains.co.uk and she will be glad to offer her expertise. 

The Reeds Rains team from our recently opened flagship City Living Liverpool Branch, attended the prestigious '"Your Move Magazine Property Awards" on Thursday 1st November.  Staged at the Metropolitan Cathedral, the awards are the most talked about event in the industry's calendar and are attended by all that contribute to Liverpool's vibrant property market. 

Reeds Rains City Living were awarded 'Best Lettings Agent 2012' which is a great achievement by the team in their first year of trading.  All of the city agents were mystery shopped on their service by an independent company and this award is a real testament to all the effort that has been put in by everyone at the branch. Darren Carter, Branch Manager commented, 'I'm so proud of my team, to achieve something so respected within the area in our first year is fabulous!" 

From Left to Right Maria Coran from Let Support ( award sponsor) with Ian Taylor, Darren Carter and Kelly Drummond 

So if you are a seasoned landlord looking for a proactive agent to source tenants, or a first time landlord that requires an agent to give guidance throughout the letting process, our award winning Liverpool team are here to help. Reeds Rains products range from 'Let Only', 'Rent Collection' and 'Full Managed'.  All you have to decide is what level of involvement you would like.

The City Living Liverpool branch is situated on North John Street within walking distance of Liverpool ONE shopping quarter and nestled close to the heart of the city's business district, primarily dealing with the sale and letting of City Centre apartments and flats in the core postcodes of L1, L2 and L3. Darren adds "We also have houses to sell and let in all compass directions from the city centre, as well as offering a prestige service for the more challenging and executive market of the L17 and 18 postcodes.

To contact our award winning lettings team please call 0151 227 2027   or email liverpool@reedsrains.co.uk

• House purchase loans jump to 54,713 in October
• Highest since January; second highest since December 2009
• FLS driving the increase. Becoming more effective following a quiet Q3 –  banks’ mortgage credit up by 36% for Q4
• 10% increase in lending to buyers with small deposits

House purchase lending in October increased 10% compared to September as the Funding for Lending Scheme increased mortgage availability, according to research released this morning.

The Latest Mortgage Monitor, produced by e.surv chartered surveyors, revealed there were 54,713 house purchase loans in October, the highest since January, and the second highest since December 2009. It represents a 4% increase on October last year, and reverses four consecutive months of negative annual growth dating back to May this year. The rise in lending has been driven by an increase in the mortgage credit availability to lenders, thanks primarily to the government’s Funding for Lending Scheme. Lenders have reported a 36% increase in mortgage credit for Q4 – the biggest quarterly increase since records began – which has encouraged banks’ to increase lending volumes and introduced more competition into the market. A higher proportion of house purchase loan applications were approved in October, with lenders predicting a 6% increase in the proportion of application approvals in Q4 compared to Q3.

Encouragingly, in line with the wider uplift, lending to borrowers with small deposits was 10% higher in October compared to Q3. There were 5,307 loans to borrowers with a deposit of less than 15%. This was the highest since April, and higher than the Q3 average of 4,826.

Richard Sexton, business development director of e,surv, explains: “If we discount January this year, when lending levels were artificially high thanks to the rush to beat the end of the stamp duty holiday, house purchase lending is as strong as it’s been since the end of 2009. It suggests the mortgage market is beginning to find it’s feet again after a torrid six months caused by tight funding conditions for lenders I would speculate that much of the improvement is down to the Funding for Lending Scheme It didn’t have a significant impact in Q3, but now it is beginning to flood lenders’ balance sheets with cheaper funds and has encouraged them to increase their mortgage lending.”

The increase in lending was spread equally across different LTV bands, indicating lenders are still not yet confident enough to use the improvement in mortgage credit to focus their lending disproportionately on high LTV borrowers. Nine in ten house purchase loans in October went to borrowers with an LTV below 85%, a similar level to September and Q3.

Richard Sexton explains: “The improvement in October is encouraging, but it is by no means a sign the market will recover to its pre-financial crisis health. Lenders aren’t confident enough to really begin focusing their efforts on first time buyers, which is why lending to high LTV borrowers still forms a disproportionately large share of the mortgage market. Lenders are hamstrung by strict capital adequacy requirements and the prevailing tight funding conditions in the wholesale money markets. These are chronic problems that will continue to hamper their efforts to increase their lending in the long-term. FLS is an artificial stimulant which appears to be counteracting these drags and ncouraging lending that may not otherwise have occurred – to this extent it should be applauded. But it isn’t a cure to the broader economic problems blighting the mortgage market. It will take a sustained spurt of economic growth to resuscitate the market back to rude health.”

To read the full report please click here