Another week and another Newsround, here is our roundup of news items for this week, and there is a lot in the news about rent increases and down sizing.
Rent rises for tenants as inflation grips
Rents are up year-on-year across all regions, according to the property website Home. The mix-adjusted average rise across the UK is a huge 18.8 per cent, says the website.
Supply is worsening in this sector, with newly available rental properties down by 24 per cent now compared to a year ago. Greater London keeps going in an upward spiral. High demand and low supply of available properties pushes the annualised rental growth up.
The mix-adjusted average monthly rent in the capital region is now 25per cent higher than in pre-Covid June 2019.
Central London rents continue to set new records as supply plummets. Aside from the City (up 51 per cent), the greatest rises in asking rents over the last twelve months are now in Lambeth (up 44 per cent) and Hackney (up 43 per cent).
On the sales side, demand remains high and is increasing in London and the North East.
Stock levels remain very low by historic standards and consequently prices continue to rise rapidly across all regions. The supply of new instructions entering the market nudged up slightly this month as more potential vendors are tempted by record prices.
The website Home claims that the Bank of England’s efforts to tame inflation are not working.
Even by their own preferred measure (the Consumer Price Index), inflation is now 4.5 times their target rate and climbing. Of course, the unprecedentedly large and widening spread between mortgage interest rates and inflation specifically incentivises highly leveraged property purchases.
Hamptons Lettings agency claim For the first time since November 2019, rents in London grew faster than any other region in the country. Average rents across the capital grew 15.7 per cent over the last 12 months, faster than the 13.4 per cent recorded in the South West over the same period. Read more here.
Furthermore, it seems tenants are wanting to down-size.
Tenants down-sizing to combat rising rents and inflation
Down-sizing, once the preserve of retired homeowners, is now a phenomenon in the rental market too. That’s the claim of Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, who says it’s less a ‘race for space’ and more a ‘crawl to small’. She says
The race for space is being won by the better paid, while younger people are starting the ‘crawl to small.’ At the moment, with lockdown savings still kicking around, and some wiggle room in the budgets of higher rate taxpayers, some people can still afford to keep climbing the property ladder. However, as the cost-of-living bites, there will be plenty more who end up dropping back a rung or two instead
She says that amongst existing homeowners, 12 per cent of those aged 24 to 35 are planning to downsize. You can read more here.
Moving on, what’s happening this week with the rent reform bill following the announcement last week? The message from Sean Hooker, head of Redress for The Property Redress Scheme is clear.
Don’t panic! Renting reforms are far from ‘oven ready’
Sean Hooker advises landlords not to panic or believe all the scaremongering in the wake of the government’s radical Fairer Renting proposals.
Speaking on Goodlord’s Newsagent podcast, Hooker says the upcoming consultation with key stakeholders will be key to shaping a Bill which looks set to go through Parliament in the Spring.
We will be able to feedback to the government, we can’t change the fundamentals, but we can guide the direction of travel.
Hooker says the proposed new property portal – focusing on homes rather than landlords – in theory means providing a holistic experience by monitoring properties to focus attention on failing landlords. But measuring these standards will be the issue, he adds
You could incorporate electricity and gas safety information, deposit information and insurance information. It also makes sense for the government to take ownership and for others like us to have licence and access to this that will help delivery of services
Read more about what he says here.
Surging electric car sales leads to two-tier housing market
Houses with off-road parking space will not only command a higher sale price, the rental value will also be boosted as more people buy electric cars. The electric vehicle (EV) market is booming, which will inevitably have an impact on property prices. With a limited number of charging points on the road network, having a home charging point is an absolute necessity for most electric car owners.
Latest statistics show sales of electric cars have nearly doubled and now with soaring fuel prices, there is even more reason to go electric. Savills confirms it has seen a surge in demand for houses with off-road parking and more space for home working, office / garden /garage.
In the London suburbs, Savills says that homes with driveways now command a 5 per cent premium over similar properties without the facility to charge a vehicle. But in the most expensive parts of the city this premium can increase to one-third – a full 33 per cent higher price with a driveway, even more than the premium a large garden usually commands.
But what is better a big garden or a driveway? Read what Savills say here.
Call for rented homes to be included in flood reinsurance scheme
And finally this week there are calls for the government to expand its flood reinsurance scheme to cover private renters. Flood Re, which steps in when normal insurance firms won’t insure a property at the greatest risk of flooding, is unavailable to properties in blocks of more than four flats, or for private renters, according to newspaper reports.
Geoff Barraclough a member for planning and economic development, says the damage caused by the floods destroyed many residents’ homes, ruined their life-long possessions and took a personal toll on many people. He says
The government should urgently review Flood Re’s needlessly restrictive eligibility criteria so that the scheme can protect all of our residents.
You can read about this here.
Newsround will be back next week.