Landlord Confidence Increases

The number of landlords who are feeling optimistic about the rental market is at its highest level for five years.

The latest survey of over 600 landlords from Paragon Bank questioned landlords on their expectations for rental yields, the future of their lettings portfolio, capital gains, the private rental sector and the wider UK financial market revealed that the outlook was more positive than levels seen in the previous survey in 2016.

Landlords with the outlook to be either “good” or “very good” has been consistently rising following record low levels seen in the first quarter of 2020.

The survey also highlighted a link between optimism and portfolio size, with landlords who manage larger portfolios more positive about the prospects for their own lettings business. The survey found that 56% of landlords with 11 or more properties felt “good” or “very good”, falling to 46% for those with between one and 10 properties.

Confidence in landlords can affect their purchasing decisions with 63% of landlords who have recently bought a property having a positive outlook, compared to 48% of the total of landlords surveyed. In addition, 78% of landlords who plan to expand their lettings business in the next 12 months are optimistic, whereas confidence was seen in a lower proportion, 26%, amongst those looking to divest.

Landlord confidence dropped sharply in the Q1 of 2020, as the extent of the pandemic became more apparent. However, it appears that optimism has bounced back which shows that the sector is strong with plenty of opportunities for landlords.

Demand remains at historic high 

According to Arla Propertymark, the average number of people looking for a property to let fell from 107 per letting agent branch in August to 83 in September. This is higher than the 82 recorded per branch this time last year – making it the highest number registered in September.

The number of properties managed per letting agent branch went up slightly on a monthly basis, from 196 to 199, which is higher than September 2020’s figure of 193. In addition, the number of tenants who saw their rent go up in September stood at 75%, down slightly from August’s figure of 79%.

Despite a slight easing over the short term, in September 2019, 58% of tenants saw their rent rise and this year’s figure is the highest for September on record.

If you have a property that you are considering letting out, talk to us at Newton Letting. We believe that every rental property is different and so is every landlord. As a result, we have several different options for landlords who want to manage their property through Newton.

Whatever package you choose, you will work with a property manager who understands the local market and maximises your investment.

Talk to us today for a letting valuation for your property.

Landlords – Protect Your Property This Winter

As we head into the cold Scottish winter months, it’s important to prepare your property to protect it from any problems that will lead to void periods or expensive repairs.

New research from Propertymark has revealed that the void time for rental properties has decreased month on month since May 2021 to 2.1 weeks. In addition, the average tenancy time is rising which means that here has never been a more attractive time to be a landlord.

As the market remains fierce, Propertymark is advising landlords to avoid unwanted issues to make it more appealing to tenants.

The more you do now, the more likely you are to save time and money in the winter. Given that the average length of a tenancy is increasing, you are more likely to have a good tenant in situ when not only using a good agent, but ensuring your property is well-maintained.

Here are some tips on how to avoid problems with your rental property this winter:

Keep the property warm

It’s a good idea to carry out regular maintenance as well as your legal safety obligations.

Bleed your radiators regularly, keep on top of services rather than responding to problems, limit draughts by installing sealing around window frames, under doors and on the letterbox.

Insulating the loft can make a big difference in preserving the heat within your home and lagging the pipes will prevent them from freezing and bursting.

If you have any void periods, make sure you keep the home at an eco temperature if it looks like we are going to experience freezing conditions.

External maintenance

It’s important to maintain the exterior of your property to avoid any expensive repairs. Check and clean all guttering to prevent any blockages and subsequent water damage. Repair any windows and sills and check that the roof doesn’t have any missing tiles.

Maintain the garden area and get it ready for the winter by storing away any furniture and ask your tenants to carry out regular garden tidies to keep on top of it before spring.

Saving Energy When Renting an Apartment or Flat

Recent reports indicate that our energy bills are set to rise over the coming months as utility providers look to pass on the rising cost of fuel to its customers.

If you’re renting a flat, it’s difficult to make any major changes to the property to help make it more energy efficient and even simple changes could be in violation of your letting agreement.

If your rental property isn’t energy efficient, you could be spending over the odds to keep it warm during the winter. However, there are some changes you can make that will help to reduce your bills.

Talk to your landlord

Talk to the property owner to find out if there are some upgrades they would be willing to make to improve the energy efficiency – not only will it help to keep your bills down, but it will make it a more attractive rental property in the future should you move on. Make sure you report anything that needs to be taken care of including leaks or faults with appliances that could be causing you to use more gas or electricity – malfunctioning appliances will bump up your energy bill.

Water and heating

If you can, try and turn down your water temperature setting as this can really reduce your costs. If you live in an apartment and can’t access the water heater on your own, ask your landlord or letting agent for help. If you leave for work every day, make sure you aren’t paying to heat an empty home. If you have any control over the type of thermostat, choosing a smart thermostat can allow you to program the temperature in advance so you don’t have to do it manually every day. Making small adjustments to your thermostat can really add up. Finally, cutting back on how long you shower can lower how much electricity your water heater uses. You can also save energy by investing in an energy efficient shower head.

Energy efficient lighting

Make sure you’re using LED light bulbs, especially for light fixtures and lamps that you use often. These use up to 90 percent less energy and last 15 times longer than standard bulbs. You can also cut down on energy costs by turning off lights in unused rooms.

Avoid energy guzzling devices

Some devices and appliances consume energy even when they aren’t in use – be careful of phone chargers left plugged in and televisions and gaming consoles on standby. Unplug them or use power strips so you can turn everything off at once. If your kitchen is unfurnished, ask your landlord if they would upgrade to energy-efficient appliances – for example a refrigerator with a high energy rating could make a noticeable change to your bills.

Laundry

If you can, use a low temperature to wash your clothes as this can greatly reduce the electricity usage – in addition do larger loads less often and rather than using a tumble dryer try and line dry. Check wither you are on an Economy tariff as it could be cheaper to use appliances at night.

Weatherstrip windows

You won’t be able to replace windows but weather strips are effective in keeping the heat in.

Radiators

Don’t cover your radiators with clothes that need drying or put furniture in front of them otherwise the heat will be absorbed the airflow restricted.

Flooring

If you have hardwood, laminate or vinyl flooring use thick rugs to provide additional insulation.

What’s Happening with House Prices?

The latest figures from HM Land Registry show that the average UK property value was 8% higher in the year to June to £255,535 – but a 3.7% monthly drop.

Is this a sign that house prices are stabilising or starting to fall?

This is the first sign of a house price decline in over 18 months, but it’s important to note that property values have been rising at a record pace for a sustained period of time, so this stabilisation is inevitable. With mortgage affordability remaining at record lows, the housing market will continue its buoyancy well into autumn and beyond.

This slight readjustment in the market, which has been fuelled by a partial slowdown in activity in some parts of the country, is not unexpected but with an uneven balance between demand and supply in many regions, demand will continue for the rest of the year especially as desperate buyers who want to get in the market as soon as possible will be willing to pay more to outbid other buyers.

Since the property market opened at the end of last year in June, no one could have predicted the rise in house prices that we have seen across nearly every region in the UK – with some of the highest price rises and selling times in Scottish regions.

The pandemic resulted a re-evaluation of buyers’ priorities towards more space to accommodate the new normal of home working. There was a move away from city centres in favour of rural areas with access to a garden or local parks. This, combined with pent-up demand during lockdown, a stamp duty holiday, and the re-introduction of high LTV mortgages and low borrowing rates, resulted in one of the busiest periods we have seen in the housing market.

We have seen a strong annual rate of growth with no real let-up in demand. Stock in scarce and this has pushed up property prices.
The autumn is traditionally one of the busiest times of the year and we could also see a return of overseas buyers as the travel industry opens up once more.

If you are considering purchasing an investment property in Glasgow, there are still some great options especially with rental demand high and apartments still relatively affordable compared to three and four bedroom family homes.

If you want to find out about rental values and locations – talk to us at Newton Letting.

Energy Efficiency in Rented Homes

According to the latest survey from Direct Line, energy efficiency is hot topic for renters. In fact, 80% of potential renters responded that they would ask their landlord what measures they have implemented to improve the energy efficiency of a property before moving in.

In fact, 75% of respondents said that energy efficiency is important to them, and 60% felt that landlords aren’t taking the issue seriously enough.

A small number of people reported that they would take a hard-line approach with 25% going so far as turning down a property or even moving out if the energy efficiency wasn’t up to scratch.

The survey also questioned landlords. It found that 83% of landlords have made positive changes to their properties and 73% believed that they had a good understanding of the importance of energy efficiency in appealing to renters. Landlords reported that they had made improvements to the property out of their own concerns for the environment (39%). The most popular change that landlords have made is to improve the lighting and appliances within their property (48%) while 33% added new insulation and 22% installed a smart meter.

The survey is encouraging to both renters and landlords, demonstrating that there is a rising number of people who understand the importance of energy efficiency, ensuring that homes are both sustainable and affordable to run.

It appears that a high number of UK landlords are taking positive action to make sure their property is greener, and that tenants’ costs can be kept to a minimum.

If you are making improvements to your property – check you have the appropriate insurance to reflect these changes.

Biggest Buy-To-Let Gains Seen in Scotland

According to recent research, the average buy-to-let property gained £15,000 in value during the pandemic with Scotland seeing some of the biggest price rises. The typical value of a rental property went up by 6% from March 2020 to March 2021, but in Scotland this figure was 11%. It’s believed that these increases are a result of people moving out of cities in search of more space.

Across the UK, the value of the private rented sector has grown 5.8% to £1.4trillion due to the housing market boom we have seen over the last 18 months. Although the value of the buy-to-let sector went up, the number of available properties for sale fell.

Mortgage lender Shawbrook Bank carried out research into the effect the pandemic on UK landlords. Scotland, along with the North West of England and Wales, saw the most dramatic increases. Scotland was highest at 11%, North West 10.7% and Wales 9.5%.

In addition, according to the latest Nationwide index, residential house prices jumped by 10.5% in the year to the end of July.

According to the survey, over 30% of landlords planned on a more rural location for their next investment property and were attracted by features that would attract tenants as a result of the pandemic such as a garden, space for home working and more internal space.

LBTT holiday

The LBTT (stamp duty) holiday resulted in a 25% increase in those who purchase a buy-to-let property, rising to 43% for landlords with a portfolio of four or more properties. In addition, 46% of landlords said that they would not have purchased a buy-to-let property had it not been for the LBTT holiday.

The tax break, along with rising house prices, attractive yields and high demand from tenants, has resulted in this spike.

Scotland best for rental yields

The survey also found that Scotland was the best for rental yields, with an average yield of 5.8% closely followed by the North West at 5.5%.

A fall in supply

While the value of the buy-to-let sector increase, there was a marked decrease in available rental properties as landlords exited the market. The number of private rented properties fell by 2.6% in the year from March 2020. Figures from the National Residential Landlords Association show that the number of landlords planning to purchase a property fell from 19% in this year’s Q1 to 14% in Q2. By contrast, the number of those selling up was 20% higher.

Two thirds of landlords surveyed were confident about the market in the coming year.

Are Property Asking Prices Starting to Fall?

According to the recent reports from Rightmove, asking prices in the UK have fallen for first time in 2021 following a continued period of price rises. There was a drop of just over £1,000 from the average asking price of a home here in the UK.

Although this can seem alarming to those who are looking to sell and maximise the value of their property, analysis from Rightmove shows that the average asking price has only fallen for larger homes, typically those with five or more bedrooms as well as four-bedroom detached houses.

Those looking to buy and sell this type of property have been impacted the most by the recent LBTT/Stamp Duty savings. In addition, as we approached the summer and saw restrictions ease off with a promise of normality returning (with many people still taking a holiday albeit closer to home), they were put off moving home and we saw the typical August quietening of the market.

Across the rest of the property market, first time buyers and second-steppers are seeing the average asking prices of houses and flats with one or two bedrooms, and houses with two, three or four bedrooms reaching record highs again this month, as buyer demand shows no sign of abating. These movers weren’t moving to take advantage of the stamp duty (LBTT) holiday and instead the market was correcting itself following a period of inactivity whereby movers were putting their plans on hold due to the restrictions.

Looking ahead

Rightmove predicts that, given there are a record number of people still looking to move, the autumn will see a buoyant housing market with more sellers listing properties for sale and strong demand pushing asking prices further upwards. With high buyer demand, the number of properties for sale is still currently very low and properties are selling at the fastest pace ever – within an average of 36 days and the fastest selling time here in Glasgow.

However, the number of properties for sale is still at a record low, with buyer demand hoovering up new supply. We’re seeing more properties selling, and quickly.

For those wanting to take advantage of strong selling prices and complete on a new property in time for Christmas, the advice is to sell now. For those looking to buy a home or rental property, you could be facing strong competition so make sure you have everything you need to proceed with a purchase.

Tenant Arrears at Lowest Level in Ten Years

It’s good news for landlords as tenant arrears have fallen to the lowest level in ten years. According to new research, this fall in tenant arrears has been fuelled by landlords providing essential help during the pandemic including rental discounts over the last 18 months, in a bid to provide vital assistance to their tenants. The survey demonstrates the reliability of landlords during the pandemic as they acted quickly to support their tenants during an extremely challenging time.

The report from Paragon Bank found that from April to June this year, the number of renters who fell behind on their rent was 1.3 per landlord – in the first quarter of this year this was 1.6 per landlord. The current rate is the lowest figure in a decade.

Tenants with rent outstanding was 2.1 per landlord between April and June last year when the pandemic started to hit residents’ finances. In the first quarter of this year, the typical tenant owed £2,376, and in the second quarter this was £1,781. The good news is that this figure has been on the decline and the current average amount of outstanding rent is at a four-year low, falling by £595 per tenant over the last three months. This is the lowest amount of rental payments owed to landlords since December 2017. The research also shows that 17% of portfolio landlords missed out on income compared to 12% of single property landlords.

It’s worth noting that the current low arrears levels are a result of landlords providing tenants with rental discounts or payment holidays in a bid to help their finances during a difficult time. A separate survey of landlords and tenants by Shawbrook Bank found that 46% of landlords reduced monthly rent payments at some point during the pandemic. In fact, 28% gave a payment holiday, while 18% gave their tenants a reduction in rent. In addition, 38% of landlords changed their tenants rent and landlords lost an average of £7,500 as a result of payment holidays and £6,500 as a result of rent reductions. Rental payment holidays lasted an average of three months and rent reductions lasted on average four months.

These figures demonstrate the reliability of landlords during the pandemic as they acted quickly to support their tenants during a global crisis.

A good time to invest?

With arrears currently at low levels and requests for financial support on the decline, now could be a good time to invest in rental property. There has been a significant number of landlords exiting the buy to let market over the last few years, but it appears that there are signs of confidence returning to the lettings market. Rents are increasing across the UK (with the exception of London) as demand for rental property increases, and banks are increasing their buy to let mortgage offering with rates as low as 1.9% there has been a relaxation of the tightened lending criteria we saw during the pandemic.

Creating a Calming, Inexpensive Garden for Tenants

Over the last year we have all learned the importance of outside space. We have been through lockdowns which caused anxiety and uncertainty. For some, not having a garden or terrace to retreat to meant that they felt cooped up and the end of lockdown represented a need to find a new home, leading to a busy housing market especially from renters who no longer wanted to be restricted by only having local parks for fresh air. 

If you are considering buying a rental property and want to maximise the appeal, how about a garden that will provide your tenants with the ideal place to calm down, relax and retreat in the sunshine.

A great garden can help you to relax and take stock, away from the stress of the outside world. What’s more it can be more effective and appealing when it’s uncomplicated, simple, and paired back. A simple abundance of flowers and colours using just a few varieties can give the space clean lines and a refreshing simplicity.

One of the key elements of a simple garden is to use fewer types of plants in greater numbers. This works well in gardens of all size – by using pots on balconies, raised beds, and hanging baskets you can create a calm and inviting space especially if you keep a larger garden as simple and as uncluttered as possible.

Ornamental grasses are a great addition to this style of garden. They are natural, easy (and fast) growing. Try Miscanthus and Pampas grasses (Cortaderia) to cover ground. Bamboo is a beautiful plant too – but grow this in pots rather than in the ground so it is easier to control.

Consider healing aromatic plants to boost your wellbeing and create a sense of calm. Lavender, thyme, mint, lemon balm and echinacea are beautifully scented and look beautiful – they grow fast and are inexpensive to plant.

If the garden is overlooked by neighbours you might want to create a shaded area by screening it off with shrubs, hedges, wall panels or even a pergola with a climbing plant over the top.

Finally, choose plants and flowers that will provide a splash of colour. Silver and grey foliage can offset the colour of flowers beautifully including Senecio ‘Angel Wings’ or ‘Brachyglottis ‘Sunshine’ which produces bright yellow, daisy-like flowers which look stunning against grey and silver.

By using lighting to highlight your steps, paths and water features you’ll create a wonderful atmosphere and can highlight your favourite features throughout all of the seasons.

A Zen garden actively encourages wildlife and. Add flowering periennials, use wild flowers to attract bees and butterflies. Consider a bird feeder, nesting box and bird bath to attract different species of birds. You could also install a squirrel feeding box which can’t be opened by birds.

Last but not least, make sure you have a comfortable seating area for your tenants to relax and enjoy your their garden space – and it will look great in marketing photos!

UK House Prices Rise by £10,000

We are currently experiencing a period of exceptionally high demand for houses in the UK – and with a shortage of homes available, this has pushed up prices and made it the fastest-moving housing market in five years.

According to the latest Zoopla House Price Index, house prices have soared by more than £10,000 since March 2020 and the scramble for homes is only slightly easing.

This increase has resulted in the sharpest rise in house prices since October 2016 with the average home costing £229,300 in May. This has pushed 1.8 million properties into a higher stamp duty bracket. What’s more, high demand for homes with more space has meant that the average time to sell a property is just 22 days – almost half the number of days in May 2019.

House prices are up by 3% in Glasgow and 2.9% in Edinburgh – the UK average was 4.7% – last year this was 2.2%. House prices are rising fastest in the most affordable markets.

The demand is being driven by a combination of a re-evaluation of priorities and people wanting more inside and outside space. In addition, there is greater mortgage availability for first-time buyers with the re-introduction of 90% and 95% mortgages after the widespread withdrawal of these mortgage products last summer.

Unfortunately, these first time buyers are flocking to the housing market without having a home to sell, meaning that stock levels aren’t being replenished.

With competition for the homes that are available exceptionally high, many people are missing out. That’s why it’s important to be in a strong position to make an offer – this includes having a mortgage offer in place, your deposit easily accessible with proof of its origin, your credit score in good order and all paperwork such as tax returns and payslips available.

If you’re looking to sell – now is a great time to maximise your sale price and you’ll be in a particularly strong position if you don’t have a property to sell.