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Author: Sorcha Dugmore

Call for evidence on the impact of short-term lets

by Sorcha DugmorePosted on

The government has released a call for evidence to evaluate the impact of short-term lets on the housing market with the view to implement more effective regulations. 

Housing supply challenges are leading to mass shifts in quality of living – with young adults unable to leave their family homes, household overcrowding, unstable living circumstances and even an increase in homelessness.

How should this crisis be addressed? 

The most powerful way to address this crisis is to build more affordable homes across the country. The UK government has stated targets for this, but are falling behind on their plans to build new properties.  

Another factor in this crisis is unused homes, with an increasing number of properties being used primarily as a holiday home or other short-term let. Short-term lets are often criticised for having a big impact on the private rental sector, contributing to a significant lack of suitable housing for locals.

How big is the problem? 

  • Research from the BBC indicated that the total number of holiday lets across the country has risen by 40% since 2018.
  • Propertymark estimated in 2020 that 46,000 properties have already been made unavailable for local people looking for a home due to private landlords changing from long-term to short lets and one in 10 landlords would consider switching to short lets, under the current regulatory framework.

The correlation between increasing short-term lets and housing supply problems in the UK is hard to ignore. There is now pressure on the Government to take action to apply stronger controls to short-term lets to ensure a better balance between housing supply and the potential economic benefits from holiday makers. 

Government plans for 2023

The UK Government has released a call for evidence to develop a registration scheme in England for tourist accommodation with the aim of collecting data on the market to better understand the impact of short-term lets. 

The  review will look to address potential solutions for the key challenges caused by increasing short-term lets – particularly localised to areas where these issues are intensified by larger numbers of holiday makers. 

It will consider the growth of the short-term letting market, benefits of short-term lets and the potential impact of new policy suggestions. Additional consideration should be given to localised effects of the policies to account for the county variation in holiday let oversaturation.

It may be difficult for the UK government to balance the need to provide long-term homes with the economic benefits of holiday rentals, particularly considering the ever-growing need to boost the UK economy and move out of the cost of living crisis. 

We hope that the call to evidence will pave the way for balanced and data-driven initiatives which can benefit both the private rental sector and short-term letting agents.

Blackouts

by Sorcha DugmorePosted on

Blackout warnings have been issued by the National Grid, with planned nationwide blackouts expected to affect the UK in the coming winter months.

The Chief Executive of the National Grid, John Pettigrew, has warned that the blackouts are likely to take place during “very cold winter weekdays” between 4pm and 7pm and are a consequence of Russia’s war in Ukraine. 

How should Landlords respond? 

Unexpected blackouts could cause uncertainty and stress amongst tenants, particularly if they do not receive information on the length and frequency of the blackouts. However, when properly prepared, blackouts can be dealt with and both landlords and tenants can avoid major inconvenience. 

To make the circumstances as manageable as possible, landlords should take responsibility for properly informing their tenants of the expected upcoming blackouts, and provide useful information on how to prepare. 

Tips on how to prepare for the upcoming blackouts: 

  • Landlords should provide their tenants with updated information on the expected blackouts, including expected times and frequency (where possible).
  • Tenants should be advised to locate external batteries available for important devices (phones, laptops etc) ahead of the blackouts.
  • Tenants should keep a working torch in an easy to find location in their home.
  • Landlords should also consider the additional impact the blackouts may have on tenants who have young children, particularly around mealtimes. Reminding tenants that the expected blackouts may interfere with mealtimes will allow tenants to make alternative plans (such as pre-preparing non-cook meal options, or using a camping stove (for tenants who have a safe outdoor space).
  • To avoid panic, tenants can also be reassured that blackouts which only last for a few hours shouldn’t cause any major food safety issues for food kept inside the fridge or freezer. As long as the doors remain closed during the blackout, the fridge and freezer should remain at a cold enough temperature that the tenant’s food quality is not compromised.
  • Finally, due to the blackouts taking place during cold winter evenings, landlords can remind tenants to have alternative means of keeping warm available in the case that the temperature in their home drops significantly during the blackout. (Such as extra blankets and warm clothing). 

If tenants are well-informed of the upcoming blackouts and receive guidance on how to prepare, these planned blackouts shouldn’t cause any major inconveniences for either landlords or tenants. However, we advise following related news stories as more information is released in regards to the planned times and frequencies of these blackouts. 

Housing supply targets

by Sorcha DugmorePosted on

The UK is facing an urgent need for new and affordable housing across the country caused by an increasing population and lack of new builds. 

Housing supply issues have a significant effect on quality of living for renters, and potential renters, across the country. Lack of suitable housing can lead to: 

  • Overcrowding in houses as people work together to save costs 
  • Unstable living circumstances caused by increasing numbers of landlords selling up, or not being able to secure long-term rentals 
  • Increase in homelessness 
  • Impaired labour mobility 

According to research by the National Housing Federation, to minimise this crisis the UK must build an estimated 340,000 per year, with 145,000 fitting into the affordable housing category.

Additionally, it comes as no surprise that the supply challenges are creating a competitive housing landscape, raising prices and making it increasingly difficult for first time buyers to enter the market.  In August 2012, the average house price in England was £180,000, since then, house prices have increased by an astonishing 76%. 

As part of the Renters Reform white paper, the UK government pledged to build 300,000 new houses per year to work towards this goal.

Housing targets scrapped

Nearly 60 conservative rebels pledged to back-up plans to ban mandatory housing targets. Rishi Sunak has responded to this by easing measures and setting them as “advisory” instead of mandatory. 

In response to the surprising shift, Michael Gove stated “there is no truly objective way of calculating how many new homes are needed in an area” but the “plan-making process for housing has to start with a number”. 

Looking back to when Rishi became Prime Minister in October, there were already doubts surrounding these housing targets. In October (2022) statements, Rishi had claimed that he “did not believe in arbitrary, top-down numbers”. Whilst committed to building more suitable homes across the country the new Prime Minister doubted the achievability and accuracy of the targets.

The conservative rebels took issue with the effects the targets might have on specific constituencies, with concerns of over-building in more rural areas. The government has claimed that they will now consult on how the new guidelines can take local density into account. 

Whilst housing targets of 300,000 new homes per year will be advisory and not mandatory, the Government has stated their commitment to plan high numbers of new builds across the country. Additionally, new measures are being put in place to better control the short-term letting market in the hopes that this can create opportunities for higher numbers of suitable residential homes. 

The best property investment opportunities for next year

by Sorcha DugmorePosted on

As 2022 draws to a close, many landlords will be casting their eyes to 2023 and the rental opportunities that lie ahead for those seeking to expand their portfolios.

Despite ongoing economic challenges, property investment remains strong across the UK with rental demand and yields increasing across the country.

However, as the economic landscape changes, London is no longer taking centre-stage as a desired location for rental properties. Rising student demands and growing industry in northern cities is presenting new and exciting opportunities for landlords which might present more cost-efficient investments.

Where are the leading property investment opportunities in 2023?

1. Birmingham

As the largest professional hub outside of London, Birmingham presents an affordable opportunity for landlords wanting to expand their portfolios elsewhere.

The city benefits from a consistently high demand of both relocating professionals and students. This means buy-to-let landlords can find some exciting choices for investment in this city.

With 40% of the population in Birmingham being under 25, we can only expect demand for rentals in this city to continue growing over the coming years.

2. Bristol

In 2022, Bristol took top spot in Aldermore Bank’s buy-to-let city tracker, which ranks the UK’s best areas for buy-to-let investments. The research takes into account average rental prices, rental yield, short-term returns, long-term returns and percentage of the city population who are in the rental market.

Its top ranking was mainly due to long-term property growth; with an annual average growth of 5.1%, along with the lowest number of long-term property vacancies (0.6%).

This thriving city in the South West presents a research-backed solid investment that will likely appeal to landlords in the south looking to expand their property portfolios.

3. (any) Student Cities

As mentioned in our previous article, demand for student accommodation across the uk is at an all time high, presenting many investment opportunities for landlords who are interested in short-term student lets.

By nature student lets provide higher yields for landlords, due to charging rent per student. With the current demand crisis for student accommodation, now might be the right time to invest.

Landlord guide to avoiding winter mould damage

by Sorcha DugmorePosted on

During the colder winter months, the risk of property damage such as mould increases. Property mould is one of the most disputed types of property damage between tenants and landlords, with both building structure and tenant lifestyle contributing to these damages.

Property mould can cause structural issues, dry rot and leaks, which can all escalate into more significant damage. Additionally, the presence of mould can have a big impact on tenant health, with mould causing colds, allergies and worsening existing health issues such as asthma.

Can mould damage be prevented?

Both structural building issues and tenant lifestyle can contribute to property mould. We’ve put together some guidance below to help landlords better communicate with tenants during winter to prevent damage to properties.

1. Don’t let the property temperature drop too much

Rising energy prices are contributing to colder properties as tenants strive to save money. But unfortunately these cut-backs can cause mould build-up, which affects both tenants and landlords. Tenants should be properly informed of the ways they can be cost-efficient in their energy usage, whilst maintaining an acceptable temperature in the property.

Some preventative actions tenants can take include having the heating on for just one hour a day, making use of off-peak energy times to reduce costs, or maintaining a consistent minimum temperature in the household which can be more cost-efficient than an off-on approach.

2. Remove mould immediately

Early-stage mould is easily wiped away. Tenants should be encouraged to keep look-out for property mould and remove the mould immediately with mould remover spray to prevent spreading.

3. Ventilate when drying clothes inside the property

When tenants use drying racks inside properties to dry their laundry, they release large amounts of moisture into the air. Inside a cold apartment, this moisture builds up on walls and surfaces and can quickly turn into mould.

Tenants should be advised to always dry their clothes in a well-ventilated space (or preferably outdoors where possible). Having the heating on whilst clothes dry will speed up the drying process and reduce the risk of damp and mould.

4. Make sure ventilation is not covered

If property vents are covered by furniture, or extraction fans are not used in damp rooms, the restricted air flow will increase the likelihood of damp.

Tenants should be encouraged to open windows in bathrooms for a short period to avoid a build up of moisture and to avoid blocking air vents.

5. Reduce condensation when cooking

Boiling pans, frying and using ovens, can all contribute to additional condensation and moisture build-up. Tenants should be advised to keep windows open whilst cooking to increase ventilation and help to regulate the temperature. Where there are no windows in the kitchen, using the extraction hood when cooking will help to reduce condensation.

6. Avoid gutter blockages

At this time of year gutters can easily get clogged with falling leaves and debris from trees as well as moss from the roof. Overflowing gutters can damage walls and create damp issues inside the property. Landlords and tenants should ensure that gutters are cleaned before the worst of the winter months to avoid blockages.

Summary

It is important not to ignore mould, condensation and damp issues within a property. They often start off small but can grow quickly and cause lasting damage when ignored.

Many modern properties are so well insulated that it is difficult to stop condensation from building up so it is important that tenants are aware of the need to ventilate the property even when it is cold outside.

Be vigilant when carrying out property inspections and act quickly when tenants report damp, condensation or mould in the property and where necessary ensure repairs are made.

Abolishing Section 21 – Could it be good news for landlords?

by Sorcha DugmorePosted on

The section 21 notice allows landlords to regain possession from assured shorthold tenancies without establishing fault on behalf of the tenant, usually referred to as a ‘no fault eviction’.

This has been criticised for affecting the wellbeing of private tenants, creating a sense of insecurity and lack of clarity. Abolishing this process and implementing more predictable systems is intended to provide more security for tenants and landlords across the country.

As part of the renters reform bill, the abolition of the section 21 ruling is part of a Government white paper which promises to create fairer standards of living for renters across the country.

What is changing?

The Renters Reform Bill sets out plans to abolish section 21 eviction notices. The abolition would supposedly put an end to ‘no fault evictions’, granting tenants more clarity in regards to the length of their tenancies.

After section 21 is abolished, landlords will need to provide a suitable reason for ending tenancies, for example, a breach of contract or selling the property.

Whilst bringing significant change to the buy-to-let market, landlords will be relieved to learn that the changes to section 21 do not affect their ability to take back properties from anti-social tenants or for necessary reasons (such as wanting to sell the property or move back in.)

In fact, this process may become easier when it is for a suitable reason. With the new changes, Court processing is intended to be reformed to be quicker. Evictions currently can take 6 to 12 months.

We can expect that this new system brings both a sense of security for tenants as well as an easier process for landlords who need to reclaim their properties for necessary reasons. However, we would advise that landlords work with a suitable managing agent such as Howsy, who can help them navigate the changes in legislation as well as the eviction process.

Increase in demand for student accommodation

by Sorcha DugmorePosted on

Rising university applications are putting pressure on rental markets in student cities across the UK. With rising student numbers, and fewer landlords entering the market, it seems that this trend will continue to grow over the coming years.

This could lead to an increase of rental prices of up to 5% according to Unite, the UK’s largest developer of student accommodations

Data suggests that there are 3.5 students for every bed in purpose-built student housing in the UK. With student numbers only expected to rise in the coming years, this market is only going to become more competitive.

What can we expect over the next year?

  • Demand, and as a consequence prices, for student accommodation will surely rise across the UK through 2023.
  • More property investors may take the opportunity to explore student rentals as an option for their portfolios.
  • Landlords may benefit from rapidly increasing yields on their student lets.
  • This trend is likely to continue both in major cities and smaller student towns.
  • The trend seems to be higher in northern student cities such as Manchester, Bradford and Nottingham. As well as a noticeable rise in demand in coastal university towns.

Presently, there seems to be a lack of landlords investing in new student lets despite the potential for profit increases over the next few years.

Student properties are known to have one of the greatest yields out of any housing lets. Charging students per room, rather than the rental for the entire property, means that rental income is naturally high without having too many negative repercussions for the tenants. Larger student houses (with four or more rooms) have highly compelling yields against the value of the property.

Whilst student lets are short-term in nature, each year landlords can guarantee a fresh set of students seeking accommodation in the area. A well-located student house should have no problem securing new tenants year-on-year, whilst having the freedom to evaluate rental prices annually before welcoming new tenants to the property.

Looking Forward: Promising opportunities for Landlords in 2023

by Sorcha DugmorePosted on

2022 has come with a unique set of challenges for everyone. Nationwide inflation and skyrocketing energy costs have greatly affected the property market. With the 2019 pandemic still having a domino effect across the UK economy and political changes providing a sense of instability; it has been difficult for property owners to look forward to 2023 with much clarity or optimism. 

But has any good come from the changes the UK has seen over the last year? And what can we expect in 2023? 

Whilst there are still many challenges ahead, there are some significant causes for optimism that property owners can look forward to in the coming year. There are some exciting developments in rising yields for landlords, as well as highly profitable rental opportunities within some areas of the UK.

Rentals are in very high demand

Demand for rental properties in the UK has steadily increased throughout 2022. The Zoopla UK Rental Report (Q3) stated that UK rental growth is close to peaking at +12.3% per annum. 

Cities in the East Midlands, specifically Derby and Birmingham, are prime investment opportunities for landlords with some estimates suggesting rental growth of 14% by 2026.

Rental yields continue to increase

Your rental yield is the sum of the total annual rent your tenant pays, divided by the value of the property. Rental yield is the most crucial metric to consider when starting a new property investment to estimate your returns. This year has seen some positive news for landlords in relation to rental yields. 

Total returns from rental income recently climbed from -2% (2020) to an astounding 17% (2021). Even allowing for last year’s acceleration in inflation, these returns are impressive and provide hope for the remainder of 2022. With high mortgage rates leaving potential buyers waiting, the demand for rentals is expected to continue to increase. Analysis from the property investment company Track Capital has found a handful of northern student cities to be leading uk rental yield increases, including; Newcastle Upon Tyne (Avg. 9.8%),  Manchester (avg. 10.1%), Bradford (10.6%) and Nottingham (11.3%).

The cities with the highest growth in rental yields could be reflective of desired lifestyle changes from tenants. We can see from the data that affordable regional cities are becoming leading rental hotspots for the UK. Over the last few years, renter priorities have shifted – With more renters desiring more space whilst enjoying the ease and transport links that living in a small city provides.

Whilst 2022 has brought a unique set of challenges for the rental sector, there are some promising trends that we hope to see carried over into 2023.

Preventing winter property damage

by Sorcha DugmorePosted on

As the weather gets colder and winds become stronger, seasonal changes can lead to both minor and major property damages. This change in climate increases the need for repairs, emergency call outs, and can trigger the start of lasting damages such as leaks, cracks and mould.

The good news is that there’s some simple actions that can be taken to protect your properties from building damage.

So what can you do? Here’s our list of high-priority maintenance checks in November:

1. Conduct a roof inspection

It is recommended to check your property roofs at least once a year as a preventative measure against leaks and further damage. You can hire a roofer to conduct the inspection for around £100-£200, or you can take a close look at your roof yourself using a ladder.

A roof inspection should check for missing or damaged tiles, signs of algae, and moss or leaf build up.

Cracked roofs or missing tiles can start leaks, which in the beginning may be unnoticeable, however can quickly lead to household damp, mould, and create larger openings.

2. Emptying gutters and trimming large trees

Falling leaves can escalate the risk of blockages in your gutters and drainpipes. This causes water to flood back into gutters, potentially triggering property leaks. Emptying gutters at the beginning of winter creates more space and reduces the likelihood of blockages and leaks.

3. Protect your pipes

The cost of fixing a burst pipe can rise to around £7,500 during freezing weather. The best way to protect pipes from bursting in freezing weather is to make sure that the pipes are well insulated prior to the cold winter months. As an additional measure, keeping your hot water on for at least one hour a day through the colder months will protect your pipes from the worst of the freezing weather.

4. Boiler checks

There’s nothing more frustrating for tenants than a broken boiler in the middle of winter. Conducting maintenance checks on boilers in the lead up to winter can prevent emergency call outs or costly repairs later on. It is recommended to service your boiler every 12 months, especially if you have boiler insurance as this is likely invalidated without a regular service.

Protecting you home for winter

Approaching winter months can be daunting for landlords with the increased likelihood of property damage. However, working with a fully managed letting and property agent can provide you with reassurance moving into these colder months. Popular Howsy plans come with home emergency and repair cover to provide you with the peace of mind you need managing your properties over this challenging season.