UK house prices up 0.8%

UK house prices up 0.8% MoM, 75% of tenants happy renting, letting agents face legal action over licensing, industrial and office sectors drive increase in rents;
Red Monopoly houses on piles of coins

This month HM Land Registry released their August 2019 UK House Price Index summary. Month on month, the current average of £234,853, was up 0.8% and also represented an annual increase of 1.3%.

During the same period in 2018, the increase from July to August was 0.3%.

There was significant regional variance, with Wales experiencing a significant annual upswing in average house prices of 4.5%. Month on month Wales also performed well, with an increase of 2.3%, second only to the North East when the monthly increase was 3.1%

London and the South East faired worst with an annual drop in prices of 1.4% in the capital and 0.6% in the South East.

Region

Price

Monthly change

Annual change

Wales

£168,318

2.30%

4.50%

Northern Ireland (Quarter 2 - 2019)

£136,767

0.80%

3.50%

North East

£134,736

3.10%

3.30%

North West

£168,221

1.30%

3.10%

East Midlands

£197,682

1.80%

2.60%

West Midlands Region

£201,510

1.50%

2.40%

Scotland

£154,549

0.30%

1.60%

England

£251,233

0.80%

1.10%

Yorkshire and The Humber

£165,767

0.20%

1.00%

South West

£260,901

0.70%

0.90%

East of England

£294,192

0.30%

0.10%

South East

£326,232

0.80%

-0.60%

London

£472,753

-1.30%

-1.40%

Source: HM Land Registry

Before Brexit became a factor, overseas investors would typically invest heavily in London, due to the relatively ‘safe’ investment opportunity.

With another extension to January 2020 currently being debated, the uncertainty in the air is set to continue for a while yet.

Tenants happy renting

75% of tenants are happy renting

A recent survey of 2,000 tenants, conducted by lender Landbay, has unveiled that three quarters actively want to remain renting at the present time.

Not only this but, of that number, 33% intended to rent for life with no intention of buying a property instead.

As might be expected, the age group most at ease with remaining in rental accommodation was the over 55’s. 64% of this cohort were of this view.

This percentage halves when it comes to 35-54 year-olds, a third of this group want to rent indefinitely. There is a slight split in this number when it comes to gender, 36% of males in this age group are keen to rent whereas 31% of females share the same desire.

Well under half of renters are keen to buy property in the short term – 42%.

Of those surveyed, tenants living in London expressed the greatest desire to own their own home, only 17% would actively choose to rent forever.

At the opposite end of this scale, Welsh tenants are those most happy to remain renting forever.

The driving force behind the desire to remain renting, falls into two key areas, according to the research.

Firstly, the costs involved in owning a home are an issue for tenants, and second, the ongoing maintenance costs are also a factor.

A positive factor in favour of renting is the flexibility that it offers – 25% of those surveyed cited this as a benefit of remaining in rental property.

Town house

Legal action on licensing

Letting agents are being warned that they may be jointly or solely culpable for ensuring that property subject to selective licensing, is licensed.

As such, legal action could be taken against agents in place of, or as well as, the landlord owner.

Liverpool City Council has been the active in targeting unlicensed property that falls within selective licensing areas, with 1,700 instances of legal action since April 2015, when the city’s scheme began.

Liverpool City Council has also achieved greatest success, amongst other local government organisations, in securing prosecutions. Fourteen prosecutions were upheld over the period 2014-2018.

David Kirwan, managing partner of Kirwans solicitors, based in Merseyside, explained that the Housing Act 2004 clearly references that responsibility for holding a licence may not just be the owner.

Kirwan pointed out that the wording in Section 88 clear states that, ‘an agent or employee of the person having control of the house’ may be the ‘appropriate person’ to hold the property license.

Similarly, Mr Kirwan highlighted that Section 95 of the Act is clear that, where someone falls within the category of being the appropriate person to hold the licence, that person could be found to have committed an offence for any failing to do so.

Advice to landlords

For landlords who are reliant on letting agents to keep them the right side of the law on this matter, David Kirwan’s advice is clear, check your agreement with your letting agent:

“Managing agents need to be on their guard and ensure that all properties on their books are covered by the relevant licences to safeguard themselves against legal action, while landlords should check the agreements and terms of business set out in the contracts with their agents.”

This is good all round advice. Many landlords appoint a letting agent thinking that legal ramifications related to the renting of property will then be the responsibility of the agent. This may not be true.

Seeking the advice of a legal professional specialising in property law or, at the very least, a landlord association could help landlords better understand their obligations.

Commercial building

Industrial and office sectors drive increase in rents

Rents for commercial UK property as a whole are up 0.4% in Q3 2019, with property within the industrial and office sectors driving the growth, according to CBRE.

This growth mitigates the impact of the faltering retail sector, which itself experienced a tempering in performance this quarter.

Rental values in the industrial sector go from strength to strength, with a 1.7% increase this quarter on top of eleven consecutive quarters of outperformance.

Regionally, the Midlands and the North have donce particularly well, with rental growth of between 3 and 4%.

The Capital is also achieving above average rental growth for the sector, rental growth for London industrial property was 2.1%. Scotland was not far behinds this at 2% growth.

Office property is also performaing very favourably, and the sector as a whole achieved 0.7% increases in rents in Q3 2019.

Whilst still experiencing a fall in rents, the retail sector did at least experience a modest month on month improvement, with a fall of -0.8% versus -1.1% in Q2. However, Robin Honeyman, senior research analyst at CBRE UK did point out that the fall “…is still the third biggest fall for the sector in the last five years.”

This information should not be interpreted as financial advice. Mortgage and loan rates are subject to change.