Rental Regional Review...
Housing rules, regulations and policies differ from England to Wales to Northern Ireland and Scotland so please read our regional round-up to see what’s happening in your area.
Our latest Buy to Let Index shows that over the 5-year course of the coalition Government, average rents in England and Wales rose by 15.2% - that’s more-or-less in line with inflation – from £667 per month to £768. The East of England has seen the greatest annual growth, with average rents up by 12%, and a current month-on-month increase of 2.5%. The North West is not far behind with a monthly increase of 2.3% and the rental market in both of these areas reflects buoyant jobs markets.
Tenant finances continue to improve, with arrears down by more than 3% since May 2010 and by 0.2% since last month. Gross yields for landlords are holding steady at 5% and total returns, including price growth, have climbed to 12.2%, an increase of 1.4% on a year ago. The rental market in England appears to be doing well and growing at a steady and sustainable rate.
From April this year, not only has the Capital Gains Tax (CGT) annual exemption amount increased to £11,1001, but the rules for foreign owners of UK residential property that is not their primary residence have changed. They will now have to pay CGT on any gains when they come to sell, bringing them in line with the rules for UK residents. Although this is unlikely to affect most of our landlords, it highlights the fact that tax legislation can change with each Budget. As something that could make a significant difference to your retirement and inheritance planning, you must ensure you are alerted to any tax changes that affect property owners. We will always highlight as much as we can in our newsletters but you should also be in touch with a property tax specialist, who can advise you appropriately for your personal situation.
The rental market in Wales shows average rents were £564 per month in March 2015, a small 0.5% fall versus February, while year on year, rents are static. Average yields are just over 4%2.
In February the Renting Homes (Wales) Bill was introduced into the National Assembly. If passed, the Bill would replace the current confusing and complex legal lettings framework with a much simpler one. There would be just two tenancy types – one for social housing and one for the private sector – and a number of measures would be introduced to clarify rights and responsibilities of landlords and tenants and make the renting process easier.
The Communities, Equality and Local Government Committee has already received written submissions and heard from Welsh Tenants, who expressed support for the general aims and principles of the Bill. The Committee is continuing its inquiry and will hold oral evidence sessions in the Autumn and we will update you on the next steps.
Landlords’ total annual returns hit a record high in Scotland for the 12 months to March 2015, with an average of 9.7%, equivalent to £15,000 per property (before mortgage and maintenance costs, but accounting for price growth and voids) – an increase of 1.5% on a year earlier. Edinburgh saw the strongest gross annual returns, at 13.4%, equivalent to £27,135.
Average rents in Scotland as a whole are rising steadily, up by 1.3% in the year to March 2015, an improvement on the 1.1% annual rise recorded for February. The Glasgow & Clyde region saw the biggest annual rent increase, at 3.6%, followed by Edinburgh & the Lothians, at 2.3%, but the Highlands & Islands suffered a drop of 1.9% from March 2014. The average rent for Scotland is £539.
Nevertheless, the picture is encouraging. Adrian Gill from Reeds Rains comments: “Landlords are seeing higher returns than ever and it is capital gains that have done the majority of the legwork, as the new transaction tax has put the foot on the accelerator of property prices lately. Rent rises are strolling forward at more of a leisurely pace, ensuring tenants can sit comfortably, but gross rental yields are robustly staying the course regardless.”
For landlords in Dundee, Shelter Scotland is looking to fund a project to promote higher renting standards within the city’s PRS, targeting landlords who are operating below ‘best practice’ guidelines but not causing enough concern to merit formal enforcement action. They want a private renting support officer to be tasked with giving advice and working with landlords, tenants and intermediaries to promote better understanding of the sector and suggest how day-to-day practice could be improved. If given the green light, the project could start in October and run for two-and-a-half years.
Each of the different areas across the UK (England, Scotland and Wales) has their own housing policies and Northern Ireland is no exception. So if you are considering buying a Buy to Let property in Northern Ireland, one of the first things you need to know is you will need a Landlord License to secure your Certificate of Registration. The number on this certificate needs to be included in any communication you have as a landlord, especially with your tenant.
It will cost you £70 to register online, £10 more for paper, and the registration lasts for three years.
You will have to give a lot of details about yourself to register, to make sure you are a legitimate landlord, including your name, email, mobile number, date of birth and company registration number, plus details of any agent acting on your behalf.
Need to know how landlord licensing affects you while working with Reeds Rains? Do call 0845 450 0865*, email Landlords@ReedsRains.co.uk or visit your local Reeds Rains branch to find out more and make sure you are abiding by the law.