All Posts in Category Investing

High house prices will lead to a shift toward renting

High house prices and years without real-terms wages growth have prompted a growing number of young people to abandon the idea of ever owning their own property.

Earlier this week a report by the Resolution Foundation revealed that up to a third of ‘millennials’ face living in private rented accommodation all their lives, and now a separate study has found that people are currently more concerned about property prices and housing availability than at any point in the last five years.

Research undertaken by YouGov has found that 83% of people now consider existing house prices a ‘serious’ problem, up from 77% five years ago. This is despite the fact that asking prices are currently falling, according to Zoopla

The results of the YouGov study reveal a worsening picture for those wanting to get a foot on the property ladder.

Among aspiring first-time buyers, the proportion saying house prices (86%) and saving for a deposit (87%) is a serious problem is up over the past year.

Those looking to buy property in London are feeling the impact of the crisis harder than most, with 90% of Londoners surveyed saying house prices are a serious problem, up from 84% in 2014.

Meanwhile 77% of respondents say availability of housing is now a major concern, up from 69% in 2014, according to the survey, which was conducted on behalf of the HomeOwners Alliance and BLP Insurance.

The quality of homes was also identified as a growing issue, with 57% of adults saying it is a serious problem up from 52% in 2014.

Paula Higgins, chief executive, HomeOwners Alliance, said: “The housing sector in the UK is on its knees. There’s a shortage of building, a constant stream of stories surrounding poor quality and unfair deals for homeowners, a lack of social housing, rising homelessness and a leasehold system that is dangerously broken.”

The results of this survey paint a “bleak picture” for both the UK housing industry and potential home owners, according to Kim Vernau, chief executive, BLP Insurance.

She commented: “Concerns around quality of build reflect the serious deficiencies in quality within design and build procurement which are severely impacting confidence in the housing sector. To meet this challenge design codes and reviews should be implemented industry-wide.

“No single initiative will solve the current housing crisis. Steps need to be taken to stimulate SME housebuilders, embrace technologically innovative build methods and encourage new entrants into an industry suffering from a shortage of skilled workers. It is the responsibility of all stakeholders involved, from government to large developers to SME builders, to commit to meaningful change and push the industry forwards in delivering more, better quality and affordable housing options for those wanting to get on the housing ladder.”  

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Some landlords struggling with ‘complex’ BTL legislation

New buy-to-let regulations are making it harder for landlords to keep up to speed with complex compliance responsibilities, as the government drives to improve standards in the private rented sector, according to a new survey.

There are now no fewer than 145 individual laws and more than 400 regulations to follow, which means that it is surprisingly easy for even the most well-meaning landlord to end up breaking the law.

A new survey by TheHouseShop has found that almost one in five landlords – 18.2% – now find it “impossible” to keep up with constant regulation changes, with a further 29.9% saying they find it “very difficult” and another 31.2% finding it “quite difficult”.

The study suggests that some landlords are being overwhelmed by the sheer volume and complexity of rules and regulations in the rental market.

In fact, compliance with law and legislation was listed as the most challenging aspect of managing a rental property by 63.4% of landlords surveyed.

Nick Marr, co-founder of TheHouseShop, commented: “It’s a really difficult environment that landlords are operating in at the moment. The government have undertaken a range of measures to try and drive up standards in the rental industry, and while this is by no means a bad thing, it does mean that landlords have increasingly complex and wide-ranging responsibilities to deal with.”

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Government must ‘support, rather than attack’, private landlords, says RLA

Private landlords provide an increasingly vital source of affordable and flexible accommodation for many people and the government should do more to support them, according to the Residential Landlords Association (RLA).

The importance of the private rented market in this country should not be underestimated. In the context of high house prices and limitations to the availability and growth of social housing stock, a new report by the Resolution Foundation has found that up to a third of millennials – those born between 1980 and 1996 – face living in private rented accommodation all their lives.

But the government’s decision to introduce a series of anti-landlord policies, especially in relation to tax legislation, means that many buy-to-let investors are now thinking twice about investing in property, thus threatening to reduce the supply of much needed housing stock in the PRS.

Recent research by the RLA has found that 69% of landlords are deterred from investing in further homes to rent as a result of the government’s 3% stamp duty levy on the purchase of homes to rent out.

David Smith, Policy Director for the Residential Landlords Association, commented: “The [Resolution Foundation] report shows the perfect storm that young people face. With home ownership remaining difficult for many to access, demand for homes to rent continues to increase. This is at a time when government tax increases are discouraging many landlords from investing in new homes to rent out.”

Given that many landlords with low profit margins could soon end up making a loss as a result of recent tax changes, the RLA is calling for a number of reforms to support those in rented housing.

The trade body wants to see the stamp duty scrapped for landlords who invest in property, a combination of tax incentives and improvements to the process for regaining possession of a property, action to stop mortgage providers from prohibiting landlords from offering longer tenancies, the establishment of a new housing court, and relief from capital gains tax where a landlord is prepared to sell a property to a sitting tenant.

Smith added: “Ministers need to make pragmatic changes to their approach to private rented housing, with a series of policies that support, rather than attack, the majority of private landlords who are individuals to invest in the new homes to rent we need alongside all other tenures.

“This includes greater support and encouragement for those prepared to offer longer tenancies but who are concerned about being locked into agreements where tenants might be failing to pay their rent, not looking after their property or committing anti-social behaviour.”

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