Kate's top 5 stories of the week - arrears affecting Landlords and Tenants

publication date: Jan 15, 2015
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books

Join Now

Kate's top stories this week...

Story 1 - Long term rent arrears down, but year on year on the rise
Your Move and Reeds Rains have established that in the last quarter of 2014, 7.2% more tenants were seriously behind on rent compared to the same period in 2013. Rent arrears are substantially down on previous years after hitting a peak of 14.6% in February 2010. Adrian Gill, director of estate agents Your Move and Reeds Rains, comments: “As rising wages start to combine with much lower levels of unemployment, the fundamentals of the economy have started to turn in favour of tenants. If that can continue, then so can the trend away from arrears, as renting becomes more affordable.” Eviction orders fell by 6% on a quarterly basis, the first annual fall since 2010, and figures for landlords paying off buy-to-let mortgages were the highest since early 2008, with arrears falling by 7.4% over three months between Q2 and Q3 in 2014 - an annual decrease of distressed loans to landlords of 28.3% over the year. Adrian Gill concludes: “Gradually landlords have turned from a defensive mindset, saving what they can from the financial fire, to thinking once again about growing their portfolios and supplying more homes to let.” For more information, see http://www.lslps.co.uk.

Kate’s thoughts:-
When we hear about arrears in the PRS, we often only hear about tenant arrears, but landlord arrears are as serious and when compared to homeownership, the arrears in PRS are a lot less – almost 50% less tenants are in rent arrears than mortgage arrears.

Read - Renting quick guide checklist

Story 2 - North-South divide grows less evident in home repossessions
e.surv Chartered Surveyors’ latest figures suggest that the gap in the North-South home repossessions divide is narrowing by 16%, with totals falling 14% year-on-year in England and Wales, although 76% of towns in the North continue to have higher-than-average repossession rates. The North West is the poorest performing region, with three of the top five towns with the most court-ordered repossession in this region, led by Oldham, which has the highest of England and Wales’ repossession rates. However, of the top ten repossession postcodes, Luton, Romford, Croydon and Ilford are now on the list. London is improving more slowly due to tighter house price affordability, and is currently running at about the same rate as Wales, a fall of 12%. Richard Sexton, director of e.surv chartered surveyors, explains: “Even though home-owners in the North have made wide strides towards financial fortitude over the last year, there still remain many pockets where homeowners are struggling to get back on their feet after being knocked backwards by the financial crisis.” Lancaster and Carlisle were the only North-West areas with below-average repossession rates, in Wales only Llandindrod Wells did. West-Central London and West London have not only the lowest rates of repossession in London, but also across England & Wales. To read more, go to www.lslps.co.uk.

Kate’s thoughts:-
With MPs looking at housing policies for the 2015 general election, this data shows that just looking at one form of tenure isn’t good enough. PRS, social home and homeownership affordability and arrear figures need to be considered to make sure policy changes help all. The reality is in some parts of the UK that housing is too expensive for the average person and that makes communities unsustainable, but there are plenty of areas where it is affordable and we need to learn what’s happening in these areas – is it purely a supply/demand issue? Is it wages that hold prices/rents back? Is there a social change towards homeownership versus renting? Is it a combination? More research is required before introducing policies or unintended consequences could worsen the housing situation.

Read - Buying or Renting checklist

Story 3 - House prices in Conservative constituencies increase eight times faster than in Labour equivalents
Recent research by Savills has indicated that since the last general election, value in Conservative areas outside London rose by 16%, Lib Dem areas by 8% and Labour areas by just 2%. In addition, an average home in a Conservative seat is worth £252,083 compared to an average £153,843 in a Labour seat. These figures emphatically underline the regional and political gap in the UK and Lucian Cook, Savills Director of Residential Research, said that “the home-owning Conservative voter has generally done very well over the past five years.” Critics have accused the Conservatives of introducing policies that benefit older and better-off voters, who generally live in Conservative-held areas, although party strategists say the new stamp duty model proves them wrong. The research shows that the top 20 UK seats by value (11 held by Conservatives) have property worth a total of £741bn. The cheapest 20 seats (15 held by Labour) are collectively worth just £57bn, which is less than any of the three most expensive seats: Cities of London and Westminster (£78.8bn), Kensington (£74.8bn) and Chelsea and Fulham (£61.8bn). When Savills removed London’s anomalous statistics from its figures, it became clear that property values were rising far faster in Tory and Lib Dem constituencies during the price explosion of recent years. For further information, see http://www.ft.com/home/uk.

Kates thoughts:-
I guess this isn’t a big surprise! Many Conservative areas tend to be in the higher wealth brackets and the more wealthy you are the more property prices are likely to grow!

Read - First time buyer quick guide

Story 4 - London and the South East restrain increase in house value
According to LSL Property Services (including Your Move and Reeds Rain) annual house price growth has slipped back into single figures, as house prices registered a hiatus in December. Values in London & the South East appear to be slowing down as compared to steady price growth in other regions. In 2014, price growth picked up speed at the top end of the market, but slowed down at the bottom end. Total home sales grew in 2014 by 18% year-on-year, as stamp duty reforms boosted activity in December. Uncertainty was identified as a strong theme for the coming year, due to a number of factors: the General Election, housing and house-building issues, relaxation of planning rules through the Starter Home Initiative, a possible Mansion tax, increased numbers of buy-to-let landlords following new pension arrangements and continued economic insecurity with the UK. Low oil prices may also play a significant role, as will an anticipated interest rate rise later in the year. Wide variations in house price predictions reflect this uncertainty. To read more, go to www.lslps.co.uk.

Kate’s thoughts:-
2015 will be a fascinating year for house prices. We are entering new territory in that government and people don’t see house price growth as necessarily a ‘good thing’. With the Bank of England limiting lending and uncertainty this year as well as affordability issues post prices recovering from the recession, will people still be keen to move?

Read - How to work out your property market checklist

Story 5 - England's first housing zone areas shortlisted
The government has declared England’s first pioneering housing zones where it will be easier and faster to build new properties on brownfield land, to help provide thousands of new homes across the country. There are 29 areas outside London on the shortlist, all of which have bid to become one of ten housing zones. Chancellor George Osborne said, “… I’m delighted to announce the areas shortlisted to become the first housing zones in England which, as part of a wider package of measures, will help deliver up to 200,000 new homes on brownfield land.” Brandon Lewis, Housing Minister, added, “Getting Britain building is a vital part of our long-term economic plan.” In the year to September planning permission was approved for a near-record 240,000 new houses, while housebuilding starts are at their peak since 2007. Since 2010 the government has introduced a number of initiatives to ensure brownfield land is prioritised for new housing development, including abolishing regional strategies pinpointing green belt land for development, and selling sufficient publicly-owned brownfield sites to accommodate 100,000 homes. To read more, visit the Government website.

Kates thoughts:-
Any policy which recognises the importance of speeding up planning should be applauded. What we need to make sure is the properties built are still of a good quality from a living perspective – adhering to the best design standards.

Read - Quick guide to self build checklist

For FREE, independent and up to date advice on buying, selling and renting a home, sign up for FREE to Property Checklists. Join now to access our FREE property checklists, including:-

All our information is brought to you by Kate Faulkner, author of Which? Property books and one of the UK's top property experts.
This website is Copyright © Designs on Property Ltd and Propertychecklists.co.uk protected under UK and international law.