Rental prices have been rising for some time and we are now in the busiest period of the year for lettings. The average UK rent reached an all-time high in June at £1,007. That’s a 5.9% rise when compared to the same month last year and 9% up from 2019.
Andy Halstead, chief executive at HomeLet& Let Alliance, says of the rises:
”Increased costs for landlords mean increased costs for tenants. Some landlords have exited the market whilst the stamp duty holiday has stimulated the sales market, impacting the stock level. These are all factors driving an increase in rental values for new tenancies, which are way above the rate of inflation.”
There are also now real signs of a turnaround in Berkshire’s rental market, as city centres come back to life and we all begin to think about resuming our commutes. Prices in the capital are now up by 1.5% when compared to last year (source: Homelet).
Andy Halstead, goes says of the London and local area market:
“The impact of Brexit on international tenants has been exacerbated by the pandemic, noticeably in London and surrounding towns. Positively, this month we can see the demand for rental properties is growing, not only through the increase in rents but also the volume of new lets that we’ve seen in the major towns.
“After a year where demand and rental values have dipped, we can expect to see growth again as the impact of the pandemic gradually subsides.”
In welcome news for many aspiring buyers, the government’s much heralded Mortgage Guarantee Scheme has now kicked off. 95% mortgages had almost completely disappeared from the market as lenders tried to minimise their exposure to high value loans during the height of the pandemic. It proved a very difficult period for first-time buyers who, unless they were able to raise at least a 10% deposit, were effectively locked out of the market.
The scheme aims to give them a leg-up onto the property ladder. Under it, the government is guaranteeing lenders the proportion of the mortgage that’s over 80%. For a 95% mortgage, for example, that means they are guaranteeing 15% (5% is the deposit). Both first-time buyers and home movers are eligible. It’s exclusively for repayment mortgages of between 91% LTV and 95%LTV. Unlike some previous schemes, it can be used for the purchase of both new build and existing homes.
It has led to a large number of high street lenders launching new 95%LTV products. Amongst them are Barclays, Halifax, HSBC, Lloyds Bank, NatWest and Royal Bank of Scotland and Santander. Rates are, typically, a little higher than they are for those with larger deposits, hovering around the 4% to 4.5% mark.
If take-up is high, it could provide a significant boost to the sales market at the at the same time as taking some of the heat out of the lettings market.
If you’ve got a property for let in Wokingham or Bracknell and would like to get an idea of what its rental income might be, just give us a call at Sears