Scotland’s rent freeze based on ‘skewed numbers’
3 years ago | 3 comments
Renters see biggest annual rent rise since 2016
12:03 AM, 15th December 2022, 3 years ago
13
Tenants have seen rents rise yet again with the Office for National Statistics (ONS) reporting that rent prices grew by 4% in the year to November.
The latest Private Housing Rental Prices index highlights that rents were slightly higher in last month than October’s 3.8%.
However, the annual percentage change is the largest recorded by the ONS since January 2016.
Rents outside of London grew by 4.2%
The rents being paid outside of London grew by 4.2%, from October’s 4.1%, and in the capital, they grew by 3.5%, up from a 3% rise in October.
When the regional variations are analysed, private rents grew annually in England by 3.9%, in Wales by 3.1% and in Scotland by 4.4%.
The highest annual percentage change for rent was for landlords in the East Midlands at 5.1%, while landlords in the North East and London saw the lowest rise of 3.5%.
‘London finally saw a slight decrease in renter demand’
Commenting on the latest ONS figures, Gareth Atkins, the managing director of lettings at Foxtons, said: “After an uncharacteristically busy October, London finally saw a slight decrease in renter demand, in line with the usual seasonal trend for November.
“It also saw a slight increase in new listings, which goes against the usual trend – an especially welcome surprise in a year of low lettings stock.”
He added: “However, there were no sweeping adjustments in the November market; rental prices were only slightly below recent record highs, demand year-to-date was still 15% higher than 2021, and supply was still 33% lower year on year.”
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Member Since May 2018 - Comments: 2037
5:37 PM, 15th December 2022, About 3 years ago
So, what the report says in section 1.32 is that over half (57%) had a buy-to-let mortgage and 5% had some other loan. Only about a third had no debt.
Section 1.29 says the median value of loans was £200,000.
The report says that most landlords have a small portfolio: Section 1.5 says that 85% of individual landlords owned between 1 and 4 properties. Figure 1.2 seems to show that most had 1-2 properties. 45% of landlords just own one property.
Section 1.6 says that landlords with BTL mortgages were more likely to have multiple properties (67% with a BTL own two or more properties). I can’t see anything in there saying that older landlords have less debt (not impossible that I missed it). In fact, I can’t see any link with age other than that a high proportion of landlords view their property as a pension. I think it’s more likely that landlords used debt over time to increase the size of their portfolios.
Either way, the PRS is heavily mortgaged. Unless you are a Ltd company you cannot deduct the finance costs, so if interest rates go up fast then rents will also go up. Rent rises are a direct result of tax policy.
And whilst Scotland may presently be freezing it doesn’t look like there’s much of a rent freeze compared to England or Wales.
Member Since September 2022 - Comments: 193
5:49 PM, 15th December 2022, About 3 years ago
Well back in 1996 BTL mortgages were introduced and most if not all were Interest Only.
Now any Landlord building a portfolio of properties is not going to pay down IO BTL mortgaged properties they already own but save money for the 20/25% deposit they need for the next property purchase.
Yes most properties have increased in value since 1996 but Capital Gains tax will reduce any profit you make plus selling costs.
Many Landlords are now losing money with the huge Interest rate rises in the last 12 months
Member Since May 2018 - Comments: 2037
9:45 AM, 16th December 2022, About 3 years ago
Reply to the comment left by DAMIEN RAFFERTY at 15/12/2022 – 17:49
That’s correct. The English landlords survey says in section 1.18 that 58% of buy-to-let landlords view their properties as a pension. The government acted against landlords by preventing them from deducting their finance costs from their income. Landlords are now squeezed between HMRC and the finance industry. If they are now losing money in cash terms and weren’t to raise rents in response they would be giving their pensions to their tenants.
Clearly, they aren’t going to just sit there and let that happen. They will make a change and whatever change they make will result in rent rises. A disproportionate amount of the current rent increase comes from new-lets.