Rental demand hotspots across the UK
- Published: Tuesday 28 January, 2020
- Updated: Tuesday 05 May, 2020
- Category: News update
- By: Nicola Eaton
Rental management platform, Howsy, has released figures showing levels of tenant demand by city, across the UK.
The analysis looks at number of rental properties listed on major property portals and the proportion which are already let.
Top 10 cities for rental demand
Newport, in Wales, is perhaps the surprise location to take the number 1 spot, with 35% rental demand. In second place is the Welsh city’s near neighbour, as the crow flies, Bristol, with 34% demand.
The Midlands features next, with Nottingham in third place at 33%. Leicester also features in the top ten, but in ninth place with a much lower 18% demand.
Joint third is Cambridge, in East Anglia, also with 33% demand.
Next is a jump across the Irish Sea to Belfast, with 25% demand, in fourth position.
There is a three-way tie for fifth, sixth and seventh, with three locations on the south coast, Plymouth in the south west, and Bournemouth and Portsmouth all at 23%.
Each with 18%, Leicester and Manchester tail off the top 10.
By contrast, Aberdeen, Swansea and Leeds with 5%, 8% and 9% respectively were at the bottom end of the scale.
The report from Howsy also makes the same analysis of the boroughs of London. Bexley, Bromley, Sutton and Lewisham top that list, with 38% rental demand.
Merton tails off the top 5, with 32%.
Croydon (31%), Greenwich (30%), Haringey (29%), Enfield (29%) and Kingston upon Thames (27%) complete the top 10 for London.
The costlier boroughs of Kensington and Chelsea, and Westminster are, perhaps understandably, at the opposite end of the scale, with only 7% demand.
Indistinguishable Housing Benefit payments
An upgrade to The Department for Work and Pensions (DWP) system, has rendered the housing benefit element of an individual’s Universal Credit, indistinguishable to landlords.
Prior to the technology upgrade, housing benefit payments to landlords would carry a reference to identify which tenant the payment was for.
However, in the middle of December, this changed. Payments are now being processed with a 28 number reference which is meaningless to the landlord.
The issue has been highlighted by letting agent, Caridon Landlord Solutions, who state that they have received high volumes of calls on the matter.
Managing Director of the firm, Sherrelle Collman, outlined the experiences the company has had in trying to resolve the issue with the DWP:
“We called Universal Credit Full-Service line but they are unable to help without a National Insurance number, date of birth and/or address.
Then we called the Third-Party deduction line, and they are unable to help unless the tenant is in arrears and now has third party deductions set up. Some landlords have numerous payments for the same amount but for different tenants, making it impossible to identify who the payment is for."
This issue has the potential to cause problems for all parties involved. Tenants may become vulnerable to eviction for unpaid rent on the one hand. On the other, landlords may be left unable to demonstrate evidence of unpaid rent, if an individual from amongst a number of benefits tenants does fall into arrears.
NRLA merger delayed
Plans to launch the new National Residential Landlord Association, on 1st January 2020, have been delayed as ‘technicalities’ have got in the way.
The merger will still happen. Until it does members of the Residential Landlords Association and National Landlords Association will continue to be supported by their originating association.
The Associations shared the following statement on the matter:
“Despite a target of January being set at the time of the members’ vote last September, this was ambitious and technicalities have put dates back by a few weeks.”
Going on to comment that:
“Amalgamation of resources is going well and the new organisation will launch within a few weeks.”
Clarification sought on regulation of Scottish holiday lets
Following the recent decision to give local councils in Scotland powers to regulate the holiday let sector, two trade bodies have joined forces to seek clarification on the scope of the plans.
The UK Short Term Accommodation Association (STAA) and the Association of Scotland’s Self Caterer’s (ASSC) have submitted a joint letter to Kevin Stewart, Minister for Local Government, Housing and Planning in Scotland.
In it, the trade bodies seek guidance on five key issues:
- The definition of a short term letting
- Detail on what licensing will comprise (criteria, duration, administrative processes)
- Costs of licensing and planning permission
- How control zones will be put in place and monitored
- Regulation and taxation
When the plan to regulate was announced, the director general of the STAA, Shomik Panda, expressed his concerns:
“Whilst we are disappointed that the government has felt it necessary to introduce a mix of initiatives that could lead to an uncertain and fragmented regulatory environment in Scotland, we remain positive about the industry and will work constructively to ensure that the new rules will be workable when they come into effect next year.”
He went on to emphasise the financial contribution that the sector makes to Scotland’s economy:
“It is important that the new discretionary powers are not used in a way that inhibit the ability for individuals to earn valuable income and act as a deterrent to potential visitors, thus damaging the valuable contribution short-term rentals make to the Scottish economy. We hope that councils will engage with us and other representatives of the sharing economy before implementing any new discretionary regulations."
The position of the Scottish government was outlined in a statement by Kevin Stewart on the matter, where he acknowledged both the positives and challenges of short-term lets:
“Short-term lets can offer people a flexible travel option and have contributed positively to Scotland’s tourism industry and local economies across the country.
“However, we know that in certain areas, particularly tourist hot spots, high numbers of short-term lets are causing problems and often make it harder for people to find homes to live in.
“That is why we are empowering local authorities to implement a system that works for their area. By giving councils the power to set conditions around short-term lets licences and put in place planning control areas to tackle hot spots, communities across Scotland will be able to decide what is best for them and their local economy.”
The problems considered, during the consultation prior to the decision to regulate, were:
- Loss of residential housing,
- Antisocial behaviour of guests,
- Rubbish, littering and property maintenance and repair issues,
- Personal safety risks,
- Damage to property,
- Regulatory mismatches in terms of health and safety and taxation,
- Enforcement compliance statutory and voluntary requirements,
- Poor visitor experience for guests and other visitors,
- Loss of revenue to public authorities,
- Poor public perception of the short-term letting sector.
Scotland’s approach to regulation may well act as a template for other parts of the UK, which is why monitoring developments will likely be of interest to those operating in the sector in other parts of the country.
Landlords to buy HMOs in 2020
Of those landlords planning to purchase property in 2020, 31% will invest in HMO (House of Multiple Occupation) property. This figure has risen from 12% in Q3 2019, according to data from Paragon Bank.
The lender has released their Q4 2019 PRS Trends report. This statistic is at its highest since Q2 2017.
For landlords adjusting to the evolving buy to let environment, the appeal of HMO’s is from their typically higher yields – averaging 6.5%, versus other property types with 5.6%.
The quid-pro-quo is that HMOs are generally more complex to manage.
Paragon’s research demonstrated that a greater number of portfolio landlords (9%) were looking to purchase in Q1 2020 than non-portfolio landlords (1%).
There is expectation within Paragon that portfolio landlords will lead the way in growth within the sector, however, as confidence grows it is possible more non-portfolio landlords will follow suit.
Managing director of Paragon, Richard Rowntree, who was appointed in September 2019 following his predecessor’s retirement, shared his comments on the latest research:
“The private rented sector needs to grow to meet increasing levels of tenant demand and it’s clear that portfolio landlords will drive that growth."
He went on to highlight what may be signs of returning landlord confidence:
“Although still fragile, hopefully we are starting to see some green shoots with regards to landlord confidence. Landlords have encountered significant regulatory and fiscal changes in recent years and we hope to now enter a more settled period.”
This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.