The Cost of Renting in the UK is Nearly at a Record High

This article by the Landlord Expert on October 4th, 2013 tells us that private rents are just £1 short of record highs as an effect of rising house prices on rental market.

The lettings network LSL Property Services said rents had reached their second highest level since 2008 - largely because of a shortage of property to buy as Government schemes help people onto the ladder.

LSL, which owns the Your Move and Reeds Rains chains, reported that at £743 on average, monthly rents in August were just £1 less than the all-time high recorded in October 2012.

The pace of rent increases stepped up to 0.7% month-on-month in August.

It said rents were 1.3% higher across England and Wales than a year ago - less than half the rate of inflation - but London's rental market was soaring.

At £1,126 typically, rents in the capital have risen at a much faster rate than inflation and are up by 4.8% year-on-year.

Earlier this week, official figures showed that house prices in London were up by nearly 10% year-on-year , indicating the strength of demand.

Wales saw the second biggest annual increase in rents, with a 2.3% uplift taking average rents to £561.

The South East recorded the strongest month-on-month growth, with a 2% rise pushing monthly rents to £762.

By contrast, rents in Yorkshire and the Humber are 1.6% lower than last year, at £536 typically, followed closely by a 1.5% annual fall in the North West, taking average rents to £582.

The North East saw the biggest month-on-month drop in rents, with a 0.8% fall taking average rents to £523.

Across the country, rental inflation had been cooling off for much of this year following the launch of Government schemes to give people with low deposits a chance to buy.

First-time buyer numbers have reached their highest levels in more than five years following the initiatives such as Funding for Lending and Help to Buy, which have widened access to mortgages and allowed some people who were previously trapped in renting to break free.

But David Newnes, director of LSL Property Services, said that weak income growth, which has an impact on households' ability to borrow, and a lack of housing supply meant that the private rental sector was continuing to see strong demand from new tenants.

Mr Newnes said: "Better availability of finance has allowed some households to leave the rental market. And rents certainly felt the short-term impact of that.

"But releasing a blast of pent-up pressure to buy a home is unlikely to change the long-term trend in renting.

"Although Government schemes are helping, buying a first home is still extremely hard on the back of low salary growth."

 Article Source: http://www.landlordexpert.co.uk/index.php/news-centre/6222.html

How to Avoid Being Caught Out if the Property Bubble Bursts

Simon Read suggests ways on how to avoid being caught out if the property bubble bursts as revealed on this August 12, 2013 news by The Independent.

The Bank of England’s base rate has never been lower and the new Governor, Mark Carney, has signalled that rates may not rise for three years.

Meanwhile, competition among mortgage lenders is getting more fierce, leaving average five-year fixed rates at 3.83 per cent, the lowest they’ve been for some time.

It’s no wonder more people are thinking about getting on the property ladder or taking advantage of the attractive headline rates to move home. Especially as the latest survey of estate agents from RICS, published today, shows that home prices grew last month at their fastest rate since the market peak of November 2006. That raises fears that if you don’t take advantage soon, the affordability of your dream home may yet again climb beyond your reach.

And there are many ways that – even if you don’t have enough of a deposit – potential borrowers can climb on to the property-owning bandwagon. But before you leap it’s worth heeding the warnings from some economists that a housing bubble looms. If the bubble bursts, as some predict, that shiny new home could prove a financial drain, especially if you’ve stretched your finances to buy it.

But such uncertainties have been a feature of the mortgage market for much of the past six or seven years. With that in mind, it’s wise to look to buy a home that you may be happy with for some years, rather than a property that you hope to sell at a profit in a year or two. If there is a bubble and consequent price deflation, you’re more likely to end up in negative equity, owing more than you borrowed and stuck with a property you can’t sell.

Given that, there are several ways for the short-of-cash to buy a home, not least through the Government’s Help to Buy scheme. It offers loans of up to 20 per cent of the value of a new-build property in England and will start part-guaranteeing mortgages across the UK from next year.

Article Source: http://www.independent.co.uk/money/spend-save/simon-read-how-to-avoid-being-caught-out-if-the-property-bubble-bursts-8758229.html