Daily Archives: January 9, 2020

What have been the top performing property types of the past decade?

What have been the top performing property types of the past decade?

Fresh research from Proportunity reveals how different property types performed over the past decade, based on price growth.

The data, collected across England and Wales, shows that terraced houses have been the best performing housing type in the past 10 years, with terraced homes in London enjoying the highest house price growth during that time.

The company, which provides Help to Buy-style equity loans, analysed the changing price per square metre of all properties sold in England and Wales since 2010, and found that the compound annual growth rate (CAGR) for each property type by region, and also at an England and Wales-wide level.

Despite recent stagnation, Greater London was home to the highest performing property types in all but one category over the past decade. The capital’s flats, terraced and semi-detached houses all outperformed their counterparts in other regions, with growth of 4.93%, 5.07%, and 4.33% respectively.

But owners of detached houses in the East of England saw only a marginally higher growth: 3.07% compared to 3.06% in London.

Across all of England and Wales, the top performing property type was terraced houses, with an average growth of 3.05%. Semi-detached houses had growth of 2.9% on average, with flats seeing growth of 2.35%. The slowest growing property type was detached houses, with annual growth rates of 2.33% since 2010.

Flats in the North East performed the worst of any regional property type, with an average decrease in price of 0.5%. Flats in Yorkshire and The Humber, and the North West also lost value over the decade, with 0.12% and 0.04% decreases annually respectively.

Vadim Toader, founder and CEO of Proportunity, said: “The 2010s were marked by the after-effects of the financial crisis, and then by Brexit uncertainty.

“Despite these headwinds, we have largely seen growth across the board but the clear winner is terraced housing, or more specifically, terraced homes in London, with buyers likely attracted to their historic characteristics and charm, as well as their limited supply, compared to new builds. Yet, despite their popularity, they are out of reach for many first time buyers in the capital, with Help to Buy restricted to new-builds only, which are typically flats or semi-detached or detached houses.”

Compound Annual Growth 

Region Name flat cagr 2010-2019 terr cagr 2010-2019 semi cagr 2010-2019 detached cagr 2010-2019
East Midlands 0.74% 1.78% 2.11% 2.25%
East of England 2.62% 3.47% 3.59% 3.07%
London 4.93% 5.07% 4.33% 3.06%
North East -0.50% 0.08% 0.47% 0.67%
North West -0.04% 1.07% 1.43% 1.21%
South East 2.49% 3.40% 3.41% 2.84%
South West 1.34% 2.19% 2.35% 2.18%
Wales 0.50% 0.90% 1.01% 1.20%
West Midlands 0.65% 1.52% 1.96% 1.91%
Yorkshire and The Humber -0.12% 0.91% 1.30% 1.32%
England and Wales 2.35% 3.05%     2.90% 2.33%

Price per square metre (£)

Region Name flat ppsqm 2010 flat ppsqm 2019 terr ppsqm 2010 terr ppsqm 2019 semi ppsqm 2010 semi ppsqm 2019 detached ppsqm 2010 detached ppsqm 2019
East Midlands 1762.7 1883.2 1561.8 1830.5 1692.1 2041 1918.9 2344.7
East of England 2563.4 3234.3 2423 3294 2474.8 3398.9 2703.6 3550.2
London 4085 6301.6 4215.8 6577.2 4289 6282.5 4745.2 6222
North East 1459.5 1394.9 1283.5 1292.4 1545.6 1612 1885.4 2002.4
North West 1753.8 1747.4 1438.8 1583.4 1708.7 1941.3 2036.3 2269.4
South East 2806 3502 2717.1 3671.6 2778.8 3758.9 3081.6 3966.2
South West 2388.2 2691.4 2221.6 2700.5 2275.2 2803.9 2531.6 3073.2
Wales 1645.5 1720.7 1414.9 1534.1 1593.2 1743.5 1841 2049.8
West Midlands 1836 1946.8 1694.9 1941.9 1816.2 2162.6 2109.8 2502.1
Yorkshire and The Humber 1791.2 1772.2 1496.3 1623.3 1691.7 1899.9 1966.6 2212.7
England and Wales 2417.1 2978.6 2225.2 2915.7 2347.2 3037 2600.9 3200.3

Top tips for new student landlords

Top tips for new student landlords

Student property remains one of the most lucrative investments available to landlords, with sky-high double-digit yields currently on offer in many parts of the country.

With students heading back to university over the next few weeks, demand for student housing is currently high thanks to the growth of international students coming to study in the UK, and rise in UK nationals signing up for higher and further education. It is therefore unsurprising that investing in student property is on the rise – up 17% according to Savills.

But being a landlord is not easy and there are many issues faced, therefore bill-splitting service Glide had created a guide on how to deal with various tenant issues in the best way possible.

Repairs

Although student tenants have a reputation for house parties and late night drinking, that stereotype is perhaps a little outdated.

With the rising cost of student loans and students themselves becoming more money conscious than other generations, ensuring that their deposit is returned to them at the end of term likely a key priority for the majority.

However, as with renting to anyone, wear and tear is to be expected, especially for larger multi-occupancy properties, while any issue with the structure or exterior of the property you are renting out is your responsibility to maintain. Issues relating to  flooring, walls and any sanitaryware, such as toilets, sinks or baths, must also be resolved by you if they break.

But items brought into the property by the tenant are their responsibility to maintain. It’s not the landlord’s responsibility to pay for the repairs on items like TVs which were provided by the occupant.

It is important to remember to take an inventory of the property before tenants begin their occupancy, in order to enable you to tell the difference between repairs which naturally develop and issues that are caused by tenant neglect. Photos of the premises are useful to have in case of dispute.

Utilities 

As a landlord, you are responsible for ensuring that all gas and electric appliances are safe in the property, and a gas safety check is required every year. It is also your duty to install smoke alarms on every floor of the building – and carbon monoxide alarms in every room where a fuel burning appliance is situated.

But while it is down to the landlord to ensure the safety of these features, if appliances provided by the tenant break, or light bulbs need replacing, that’s down to the tenant to replace themselves. It is important to clarify these terms in the lease agreement to avoid any disagreements.

Making sure the boiler works and is regularly serviced to maintain the constant and safe supply of hot water for an occupant is also a non-negotiable. Should a boiler break, or if any leaks in the water supply occur, it is the landlord’s responsibility to get these fixed as soon as possible. It is also worth checking with your tenants how long the property will be empty during the Christmas break – if the boiler is switched off for extended periods during a particularly cold spell, there is a risk that the pipes will freeze, which could lead to central heating issues when tenants return in January.

A landlord must keep the general state of the property to a level which is deemed to be fit for habitation. This essentially means they must be kept clean, tidy and without any health and safety hazards for when the tenant moves in.

From there, it is the occupant who is responsible for the upkeep of the home, including features such as the gardens. However, issues like mould, damp and pests – such as rats – must be resolved by the landlord if they  result from general wear and tear.

As the owner, you are entitled to inspect the property as many times as you like, but tenants must be given at least 24 hours written notice advising of your intentions to enter the premises.

Bills and payments

The collection of rent payment is a concern, especially for student tenants, who may not be used to the responsibility of regular payments and arranging bills. However, the stigma around students being irresponsible with money is outdated and not reflective of the current generation.

CPS Homes of Cardiff said that “Students make for reliable, almost guaranteed tenants each year due to the academic cycle. You know that if the current tenants are planning to leave at the end of their tenancy a new group is just around the corner, ready and waiting to move in at the start of the next academic year.

“And contrary to the beliefs of many, they are usually very prompt payers of rent because they’re in receipt of a student loan that they receive termly.

“Having confirmation of this student loan is far stronger than an employment reference because people are far more likely to quit or lose their job than drop out of University.

“If they ever do get into trouble with their rent payments, a parent or guardian will have usually agreed to act as a financial guarantor at the start of the tenancy. This means a landlord can approach said person and demand full payment of the balance owed.”

If you are the landlord of a shared property, it is not up to you to organise the payment of rent and utility bills.

This is the responsibility of the occupants, as the money is ultimately to be paid to you, while any disputes should be settled between tenants.

However, encouraging your tenants to sign up to a bill splitting service takes the headache out of arranging bill payments – each tenant receives a bill for their share of the utilities, meaning no-one is stuck chasing for payments and all potential arguments are negated.

Landlords urged to prepare for new MEES regulations in April

Landlords urged to prepare for new MEES regulations in April

Landlords of the draughtiest homes in England and Wales will be required to upgrade their properties ahead of new rules requiring the installation of energy efficiency measures.

Since April 2018, new rules have been in place across England and Wales, setting out minimum energy efficiency standards (MEES).

These regulations made it unlawful for landlords to grant a new lease for properties that have an energy performance certificate (EPC) rating below E, from 1 April 2018, unless the property is registered as an exemption.

While April 2018 heralded an initial change in the rules regarding energy efficiency standards, the bigger picture will see regulations that affect all rental properties, irrespective of the length of tenancy, in April 2020, when it will become unlawful to rent any property that has an existing or continuing tenancy that fails to meet the minimum required energy rating.

What’s more, the government is considering raising this target in another couple of years, at which point ‘D’ is expected to be the minimum EPC rating, so it is worth getting your properties up to scratch now to prevent even more work later.

To help landlords understand the rule changes, Fladgate, a City law firm, has shared some information below to allow them to understand what precautionary measures they should take and the consequences of not complying with MEES.

Do I benefit from an exemption?

If your property is caught by the EPC regime, you must comply with the MEES Regulations, unless you can rely on one of a few exemptions available to landlords, including but not limited to:

1.       Exemption due to devaluation – a temporary exemption of 5 years will apply if a landlord can demonstrate that the installation of energy efficiency measures would reduce the market value of the property by more than 5%;

2.       Exemption for new landlords – if a person becomes a landlord recently or suddenly in specified circumstances under the MEES Regulations, a temporary exemption of six months will apply; and/or

3.       Third party consent – if a landlord cannot obtain necessary third party consents to improve the EPC rating of the property (including but not limited to lender consent, superior landlord consent and/or tenant consent), then a landlord may let a “sub-standard” property.

A landlord wishing to rely upon an exemption must register an exemption on the online Private Rented Sector Exemptions Register. Local authorities give and keep these fines and so are incentivised to enforce the legislation.

What if I don’t comply with the MEES Regulations?

If a landlord fails to comply with the MEES Regulations, there are financial penalties, which vary depending upon the length of the breach.

A landlord renting out a “non-compliant” property (less than three months in breach) may be fined up to either £5,000 or 10% of a rateable value up to a maximum of £50,000, whichever is greater.

A landlord renting out a “non-compliant” property (three months or more in breach) may be fined up to either £10,000 or 20% of the rateable value up to a maximum of £150,000, whichever is greater.

There is also a fine of up to £5,000 for providing false or misleading information, or failing to comply with a compliance notice.

What should I do? 

The tightening of the MEES Regulations imposes further onerous obligations on landlords operating within the private rented sector.

If you have a property with an EPC rating of F or G then unless one of the exemptions referred to above applies, you should begin preparing now for the extension of the regulations to existing tenancies to take effect on 1st April 2020.

As the deadline fast approaches, landlords would be well advised to consider the following, in order to protect their assets:

1.       Review your property or property portfolios to identify whether or not properties are compliant;

2.       Consider the cost and extent of any works required;

3.       Consider access to the properties (lease terms permitting) to carry out works required to bring the properties up to the minimum ‘E’ rating; and

4.       Consider whether any exemptions may be relied upon.

Failure to do so will impact upon landlords’ abilities to market and deal with their properties.

There is speculation that MEES will rise again in 2022, making ‘C’ or ‘D’ the new minimum requirement. When considering any works to upgrade a property to comply with the MEES Regulations for April 2020, landlords should also bear in bind the potential future impact of the regulations.