Reeds Rains Property Blog

Property News from Reeds Rains

Buy-to-Let Index - October 2014

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 Tenant finances absorb record rents

  • Rents across England & Wales reach new record of £770 per month, up 1.5% over the last twelve months
  • Tenant finances improve despite higher rents – with levels of late rent now just 0.3% above all-time lows
  • Landlords’ gross returns reach 13.3% over last year, due to shorter void periods and rising house prices

Tenants have paid down rent arrears despite a new record for monthly rents in October, according to the latest Buy-to-Let Index.

Residential rents across England and Wales now average £770 per month, or £12 more than October last year.

Annual rent rises were 1.5% in the twelve months to October 2014. This follows faster average rent rises of 1.9% in the previous twelve months ending October 2013, and rental growth of as much as 3.4% over the preceding year.

On a monthly basis, rents in October 2014 rose 0.3%, or just £2 compared to the previous month of September 2014.

Slower rent rises have coincided with healthier tenant finances, with rent arrears approaching all-time lows. 

David Newnes, director of estate agents Reeds Rains, comments: “Rents have edged to a new record and the rental market is pulsing with new demand. Yet at the same time, tenants are getting on top of their finances – helped by a cooling pace of such rent rises.

“Better affordability is good for tenants in the longer run too – and for landlords who can rely on steady revenue to pay the bills. That helps to support a virtuous cycle of only gradual rent rises. Alongside slower overall inflation, a material boost to the supply of properties available to let has helped keep rents from rising as quickly as in previous years.”

In absolute terms this means the average landlord in England and Wales has seen a return, before deductions such as mortgage payments and maintenance, of £22,434 in the last twelve months. This is made up of rental income of £8,404 and an average capital gain of £14,030.

Looking ahead, if rental property prices continue to rise at the same pace as over the last three months, the average buy-to-let investor in England and Wales could expect to make a total annual return of 11.2% over the next year, equivalent to £20,520 per property.

David Newnes concludes: “Landlords have benefitted from a spurt of rapid house price growth.  But as price rises steady a little, landlords can rely on newly stable rental yields.  Gross yields on a typical property dipped over the last six months as purchase prices grew faster than rents, and now yields have steadied again, just above the long-run average of five per cent.

“Stable yields aren’t the only good news for landlords.  Letting a property now involves even less risk of not getting the rent on time, and tenant arrears could reach a new record low in the coming months.  That should boost demand from tenants, investment from landlords and perhaps even good deals from lenders.  Good news on the affordability of renting is good news for the whole industry.”

 Read more details on the Buy-to-Let Index

Buy-to-Let Index - September 2014

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Rents hit fresh record despite sharp slowdown in annual rises

  • New all-time record high of £768 per month for average residential rents across England & Wales
  • Comes despite slower rent rises of just 1.5% in year to September, down from 2.4% in year to August
  • Tenant finances improve with only 7.2% of all rent in arrears, falling from 8.5% in September last year
  • House price rises take landlords’ gross returns to record 13.4% before mortgage or maintenance costs.

Rents have edged to a new all-time record, at a slowing annual rate of just 1.5%, according to the latest Buy-to-Let Index from the UK’s largest lettings agent networks, Your Move and Reeds Rains.

Residential rents across England and Wales now average £768 per month, or £10 higher than in September 2013.

On a monthly basis September’s average rents are 0.8% higher than in August, representing a rise of £7 in absolute terms since the previous month.

Annual growth has slowed dramatically since August, when rents were 2.4% higher than a year before – rising just 1.5% over the twelve months ending September 2014.

David Newnes, director of estate agent Reeds Rains, comments: “Historically rent rises have broadly tracked inflation.  And as the wider cost of living grows ever more slowly, so too has the cost of renting a home.

That said, autumn is always a busy period for the lettings industry, and this has been no exception.  Looking ahead, it is likely that rents in most parts of the UK will have now reached their seasonal peak – so as the market cools along with the autumn weather there may be opportunities for some tenants to pick up a favourable deal."

Read more about the Buy-to-Let Index September 2014 here 

How’s That!

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Members from Acomb Cricket Club

Local estate agents Reeds Rains, sponsors of Acomb Cricket Club, is delighted the club has been promoted from Division 1 of the York &District Senior League into the Premier Division.

Acomb Cricket Club beat Sessay into second place on the last day of the season, after getting a winning draw away at Bridlington. Sessay lost the top spot and this allowed Acomb Cricket Club to leap to the top. From 5 points behind going into the last day, they ended up 14 in front.

Richard Sykes Chairman says: “There have been 3 main players standing out a mile from the rest of the team, skipper Andy Tute scored 751 runs, Matthew Dale bagged 669, and his brother Joe achieved 532.

Mark Bell was the top wicket taker with 39, followed by Joe Dale taking 28 wickets.  Congratulations to Georgie Brown who reached a hat-trick against Driffield.

Wicket keeper Richard Sykes took 21 people, supported in the outfield by Martin Pepper and Matthew Dale who both got 15 catches, and Joe Dale who took 13.

Going forwards, the first team is now driven to make the top 6 of the premier league next season which will see them promoted into a new structure for 2016, which will see us playing at better grounds against better opposition.  We’re trying to attract a few new players to the club over the off season to boost the numbers throughout the club, and allow our second team to progress up through the divisions also.

We value the support From Reeds Rains in Acomb who have been fantastic to the club during the season.”

Reeds Rains branch in Acomb, York

The sponsorship is part of Reeds Rains drive to support the local community and create greater links with it

If you would like to find out how Reeds Rains can help you buy or sell your property then visit the Acomb branch at 1 Carr Lane, York, North Yorkshire, YO26 5HT or call 01904 782621(*) for more information.

 

(*) Calls maybe recorded for training and/or monitoring purposes.

Mortgage Monitor August 2014

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House purchase approvals fall 5% in August

As holiday season causes a summer slowdown from July

  • Monthly house purchase approvals fall 4.6% from July to 63,485 in August
  • Higher LTV lending forming greatest proportion (18%) of house purchase approvals since 2008
  • Higher LTV lending growing 51% year-on-year with 11,300 higher LTV loans in August
  • North West and Yorkshire & Humber home to highest proportion of higher LTV loans – areas where Help to Buy is also needed most

House purchase approvals slipped 5% in August, as the mortgage market slowed down for summer, according to the latest Mortgage Monitor from e.surv, the UK’s largest chartered surveyor.

There were 63,485 house purchase approvals in August, 4.6% lower than 66,569 approvals in July. It was the second consecutive month in which house purchase approvals declined as the holiday season temporarily slowed the lending recovery. Since the start of June, monthly house purchase approvals have fallen 5.4%.

However, a recovery in monthly approvals in June suggests that the recent fall is down to the holiday season, rather than an impact of new regulation. MMR was introduced on 26thApril 2014, and after a slight fall in lending in its pilot month, house purchase approvals increased 8.4% between May and June.

On an annual basis, house purchase approvals increased by 0.3% annually, from 63,293 in August 2013.

Richard Sexton, director of e.surv chartered surveyors, explains: “The summer holiday season has temporarily slowed the mortgage market, as home-movers hang up their property search in exchange for buckets and spades.

But this is a seasonal stagnation rather than a sign of a more permanent decline. The new MMR regulations have been fully absorbed into the mortgage application process, the backlog of applications they temporarily caused has all been cleared away, and now the mortgage market is in full health moving forwards.

“As the seasons change and we move into autumn, we are already anticipating that mortgage approvals will bounce back upwards. Lenders are signalling a desire to pump up lending volume towards the tail end of the year, and there is still a whole host of buyers desperate to get onto the housing ladder, particularly at the bottom of the market.”

Read the full Mortgage Monitor release here

All You Need to Know about MMR

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In April all lenders were required to change the way that they assessed residential mortgages.  Historically lenders had used simple multiples of the applicant’s income to dictate how much they would lend and although underwriting had become more complex with other factors taken into account there was still a focus on the “top line” of applicants income.

 On the 26th April this year, all that changed and lenders were required to look at the customer’s ability to make the payments, not just at the current pay rate but also at a notional figure taking into account the fact that rates are likely to rise in the short to medium term.

At the time there was a great deal of scaremongering that went on, thankfully, whilst the scrutiny that lenders do apply to potential mortgage applicants has risen most of the scare stories have proven unfounded.

What has become clear however is that consumers still don’t really understand how the changes apply to them.  A recent survey by TSB showed that only 51% of aspiring homeowners had even heard of the Mortgage Market Review (MMR), which by consequence means that almost half of people looking for a house don’t understand, or in some cases even know about, the changes.

MMR is primarily designed to ensure that people only borrow what they can reasonably afford to repay so it is encouraging to read in the same report, that 41% of those who were aware felt that the rules would ensure this.

As with most things getting professional advice is always a great starting point; borrowers have to remember that this is almost certainly going to be their largest purchase and for most people is their single largest outgoing each month, so getting good advice, listening to that and acting on it is a sound idea.

There are a number of things that can be done in preparation for that meeting and we always advise our customers to have taken time to prepare a few basics before coming in to see an adviser;

·         Think about your expenses after you have moved, these will likely to be different to where you currently live and certainly will be significantly different for those who are still living with parents.

·         Document these expenses and look at what is left over to pay a mortgage and the associated protection policies.

·         Start saving as early as possible, even if it isn’t a huge amount each month

·         If you have had financial difficulties in the past get a copy of your credit report. This won’t necessarily stop you getting a mortgage but may mean that an adviser has to look at different option.  Non disclosure of any historic financial problems is viewed very badly by lenders so be very upfront about the problems and the reasons for them

·         Check that you are on the electoral role, if a lender can’t find you, they are unlikely to want to lend you money.

By John R Hargreaves, Financial Services Director, Reeds Rains Estate Agents

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

An administration fee of £499 will be payable when you sign the professional fee agreement upon mortgage application.

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