Tag: rent

Housing market experts advise: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed

How the new interest rates affect house prices and rent

  • Housing market: hurry if you’re selling, halt if you’re buying, stay if you’ve borrowed, finance experts advise
  • Landlords will likely increase rent prices or sell to cope with increased mortgage repayments
  • Inflation and interest rates will keep rising, but house prices are already slowing down

The Office for National Statistics announced last month that UK inflation rose to 10.1%, from 9.4% two months earlier. The Bank of England expects it to further increase, peaking at 13.3% in October. The accompanying higher interest rates, currently at 1.75%, and bleak two-year economic outlook generally means bad news for homebuyers, landlords and renters across the UK.

Top market analysts at CMC Markets expect interest rates to further rise to 2.25% in September. This directly impacts mortgages on variable rates – around 1 in 5 households in the UK – and another 3.1 million whose fixed-rate periods expire in 2022-2023, according to UK Finance estimates.

Borrowers whose repayments are directly linked to the base rate, as set by the Bank of England, will now face mortgage repayments at rates between 3% and 4%, up from 1.75% and 2.75% only five months earlier. This will inevitably spill into rent prices.

CMC Markets analysed the latest data for June 2022 from HM Land Registry, published on August 17th, and concluded that the likely tendency for house prices is in a temporary slowdown, which is good news for those waiting a little longer to buy a home.

Michael Hewson, Chief Market Analyst at CMC Markets comments: “Houses sold in June 2022 only increased in price by 1% compared to May, whereas, last year, this constituted a much more generous 5.7% surge.

“This is only the first month this year for prices to slow down at such a fast rate, so some caution before jumping to conclusions is advised. Remember, house prices may be slowing down, but they are not decreasing. Importantly, since this is transactions data processed at the time, it does not take into account the big leap in interest rates that the Bank of England announced later that month, let alone the even bigger hike in August.

“Therefore, despite the soaring inflation and rising consumer prices across the board, UK house prices appear to be trailing behind because demand for homes has generally come to a screeching halt. Most buyers are weathering the storm for a few more months at least, while some are also working out how the cost of living crisis will pan out in the medium term so that the new mortgage is not squeezing their pockets beyond their comfort zone.

“For those still keen to get on the property ladder, there are plenty of fixed-rate banking products that can insulate them from the current spiralling interest rates on mortgages. They should, however, prepare for the possibility of being faced with higher-than-expected repayments once the fixed rate period expires, as the new variable rates are at the lender’s discretion. Fixed rates are not a cure-all either, as they may now be set to a higher level to start with.

“The buy-to-let market is equally volatile. Landlords will either pass the increased mortgage repayments onto tenants by increasing their rent or simply sell fast to lock in a better price.

“Right now though, those already on the property ladder are generally better off staying put rather than moving or re-mortgaging. They would not get a good deal on their old house in this market and may likely end up losing more money overall.”

What did the Bank of England do earlier in August?

The Bank of England explained that the rise in interest rates was necessary due to external pressures which are expected to persist. This means that British firms and residents will continue to feel this weight reflected on rising domestic prices, wages outpaced by soaring inflation, and even higher mortgage repayments, despite the Bank’s attempt to widen the borrowing pool through less restrictive mortgage rules.

Although historic, the Bank’s decision was not a surprise for trading analysts at CMC Markets, a London-headquartered financial services company, who believe the Bank was expected to raise interest rates higher than 1.25% during the June meeting, as a means to keep import inflation in check.

This is on the backdrop of a 10% year-to-date depreciation of the British pound sterling against the US dollar and an indication from the Federal Reserve, the US central bank, of a further interest rate increase by 0.5% or 0.75% in September.

Michael Hewson comments: “The UK currently fares worse than both the EU and the US. This is due to its closer dependence on energy shocks than the States and less government intervention to soften the blow compared to its European counterparts.”

What’s next and when will things calm down?

Other than adjusting the interest rates to the accurate level to keep abreast of import inflation, the economic projections for the UK paint a bleak outlook for the next two years.

The UK is projected to enter a recession in the final quarter of this year, the Bank of England announced. The country’s economy will contract by 1.25% in 2023 and 0.25% in 2024, however, inflation is becoming a much bigger long-term threat, with unrealistic chances of falling back to the desired 2% much before 2024.

The current political race for the Conservative Party leadership and the consequent fiscal policies promoted by the new British government is a major factor to take into account for any inflation, GDP, and unemployment projections and investment decisions.

As it stands with the current measures, inflation is expected to peak at 13.3% in October – a sharper increase than the Bank anticipated in June, originally estimated at 11%. It will continue to rise throughout 2023 only to decline in 2024.

Meanwhile, forecasts for the Consumer Price Index (CPI) are less optimistic now, expected to decrease only to 9.5% in the third quarter of 2023, although the Bank anticipates a sharp fall in prices immediately thereafter.

Selling prices are set to increase to reflect rising costs while real household post-tax income is expected to plunge in 2022 and 2023. The Bank predicted that core prices will peak at 6.5% this year, meaning that, in the following six months, food and energy will constitute more than half of the headline CPI.

The next meeting for the Monetary Policy Committee, where the Bank of England will decide what the new base interest rates might be, is set for September 15th.

Dragged Down By Debt

JRF Study reveals scale of debt crisis among low-income households

  • Number of low-income households in arrears has tripled since pandemic hit 
  • 4 in 10 working-age low-income households fell behind on bills during pandemic 
  • Millions are behind on rent and bills and have had to take on new borrowing 
  • JRF calls for urgent action to support low-income families through cost-of-living crisis and prevent worsening wealth inequality 

A large-scale study of households on low incomes has revealed the extent of the debt crisis hanging over the UK’s poorest families as the country braces to weather a cost-of-living crisis. 

The analysis by the Joseph Rowntree Foundation (JRF) looks at households in the bottom 40% of incomes in the UK – those with a household income of £24,752 or less. This represents around 11.6 million households.  

It estimates that 3.8 million such households are in arrears with household bills, totaling £5.2bn. 950,000 are in rent arrears; 1.4 million are behind on council tax bills; and 1.4 million are behind on electricity and gas bills. 33% of low-income households are now in arrears, which is triple the 11% estimated by a similar study prior to the pandemic.   

Working-age households on low incomes (those aged 18-64) have been particularly hard hit: 44% are in arrears. For households aged 18-24 this rises to almost three-quarters (71%) of people being in arrears. 

The survey shows clear signs that the profound financial impact of the pandemic has dragged families who were previously just about managing into arrears on essential bills. A large majority of households who are now behind on their household bills (87%) said that they were always or often able to pay all their bills in full and on time before the pandemic hit.  

This is not surprising given people on low incomes were more likely to lose income during the pandemic due to job loss, reduced hours or being furloughed. Even before recent energy price rises began to bite, six in ten households on low incomes (62%) reported that their costs increased during the pandemic.  

The other clear trend in the survey is the increased borrowing taken on by households on low incomes. Around 4.4million such households have taken on new or increased borrowing, and their total amount of borrowing comes to an estimated £9.5bn. 69% of households with new or increased borrowing are also in arrears. 

 The study highlights groups that have been hit particularly hard. Over half of the households in the following groups have been pulled into arrears: 

  • Families with children (55%),  
  • Households in London (55%),
  • Households with a person under 45 answering the survey (56%),  
  • Black, Asian and minority ethnic households (58%) 

Many families on low incomes are still reeling from the huge £20 per week cut to Universal Credit and Working Tax Credit earlier in the month. It is worrying that the survey was conducted in September when many of the households surveyed received the uplift which has now been removed. 

Energy bills and other costs are continuing to rise, with the price of energy projected to soar further in the coming months. An increase in National Insurance contributions next April is another extra cost many working people will face.

Of the households surveyed who receive Universal Credit, 40% are not confident they will be able to pay their bills in full and on time, while 35% don’t think they will be able to avoid taking on more debt. Half (50%) of these households say they do not feel confident they can find a job or work more hours, calling into question the Government’s insistence on jobs as the only solution. 

The comparison between how poorer and wealthier households have fared during the pandemic is striking. The Bank of England found that wealthier households have tended to accumulate savings during the pandemic. 

These households were more likely to stay in work and to be able to work from home, reducing daily costs, and to save money during lockdown due to enforced saving. Homeowners also benefited from rising house prices. 

JRF is urging the Government to put in place a package of support at the Budget to ease pressure on low-income households and prevent further debt. 

As well as urging the Government to reinstate the £20 in Universal Credit, the report also recommends that the Government provide at least £500m additional grant funding via the Household Support Fund for targeted debt relief. 

It is also essential to address the systemic drivers of debt including through writing off Tax Credit debts when people move onto Universal Credit and addressing Universal Credit advance repayments that many households have no option but to take on during the five-week wait for the first payment.

This flaw in the design of the benefit has long been criticised by food banks and anti-poverty groups for causing ‘destitution by design.’ 

Katie Schmuecker, Deputy Director for Policy & Partnerships at JRF said: “There is a debt crisis hanging over millions of families on low incomes. Behind these figures are parents gripped by anxiety, wondering how they will put food on their children’s plates and pay the gas bill; young people forced to rely on friends to help cover their rent and avoid eviction.  

“While many households on higher incomes have enjoyed increased savings and rising house prices during the pandemic, people on low incomes are under serious financial pressure that shows no sign of abating. As a society, we believe in protecting one another from harm. As costs pile up and incomes have been cut, we urgently need to rethink the support in place for people at the sharp end of the cost of living crisis.  

“The Budget is about priorities. We know the Chancellor is capable of taking bold action to protect people from harm when it is required. Reinstating the £20 per week increase to Universal Credit and boosting funding for councils to tackle debt must be priorities in next week’s Budget. We must give families the firm foundations they need to flourish and take part in our economic recovery.” 

Dragged-down-by-debtDownload

Edinburgh tenants could cash-in on share of six figure windfall

  • Edinburgh residents could be due share of £210,776
  • The capital city has the largest number of unclaimed deposits – with one worth £3,484
  • More than 1,000 long-standing tenancies in Scotland have an EH postcode
  • One city resident reunited with deposit seven months after moving, thanks to SafeDeposits Scotland

SafeDeposits Scotland has revealed that tenants in Edinburgh could be due a share of £210,776, after failing to claim back deposits at the end of their tenancies.

The Glasgow-based tenancy deposit scheme holds deposits on behalf of landlords and agents in line with government regulations designed to ensure responsible leasing. When a tenancy ends and all parties agree to repayment, the scheme will then release the funds back to the tenant.

Currently, the EH postcode has 700 unclaimed deposits with a combined value of £210,776, with one individual claim worth £3,484 – the highest in Scotland. In total across Scotland, there are 2,513 unclaimed deposits, amounting to £690,383.

One Edinburgh resident, Fraser Hamilton, was recently contacted by SafeDeposits Scotland about his unclaimed deposit after he left his property seven months ago.

Fraser said: “I moved out of my flat near Fountain Park just before lockdown and I completely forgot about the deposit. A part of me just assumed that my landlord would have my details and send it to me when it was ready. Between that and the moving process itself, it just slipped to the back of my mind.

“Obviously, this isn’t how the process works so when I received the call from SafeDeposits Scotland, it was great to hear I’d be getting this money back. It was as simple as sharing my bank details and soon enough, my deposit was back in my account. It’s a great boost, especially just before Christmas, and I’d urge anyone else moving to remember to claim their deposit back.”

In 2020 to date, SafeDeposits Scotland has tracked down 1,093 tenants across the country that had forgotten to claim their deposits back. The not-for-profit organisation has so far managed to return £416,887 from the scheme to these tenants this year.

Research carried out by SafeDeposits Scotland also looked at the quantity of deposits the scheme holds for longer-standing tenancies. The average tenure length for tenancies with deposits protected by SafeDeposits Scotland is just over 2.5 years, however the scheme found over 4,500 active deposit accounts for tenancies of 10 years or more.

There are more than 1,000 long-standing tenancies in the EH postcode area alone, with a deposit for one tenancy in Peebles starting in 1976. While many of these tenancies will still be active, there may be some cases where a tenancy has ended and none of the parties have ever instigated the repayment process.

Mike Smith, operations manager at SafeDeposits Scotland, said: “Edinburgh has the largest amount of private rented sector homes in Scotland with 62,000 currently in the market*. And it’s our job to make sure deposits are kept safe, and that both landlords and tenants have access to our dispute resolution service should there be any disagreement once the tenancy ends.

“The private rented sector in Edinburgh accounts for 25% of the capital’s entire housing market, and with the city recently awarded the top UK place for millennials to live, we predict the sector to continue growing as more people, especially young adults, chose to work and live in Edinburgh.

“Our research revealed that 700 people who lived in or around Edinburgh have left their homes without claiming back their deposit. This figure relates to where the landlord has instructed for the deposit to be repaid to the tenant, but the tenant hasn’t completed the process to receive their funds.

“We know moving home can be quite hectic but there’s no reason why a tenant shouldn’t claim what money they’re entitled to when they leave.”

Any surpluses generated by SafeDeposits Scotland are donated to its related charity, the SafeDeposits Scotland Charitable Trust.

Among the organisations to have received funding from the Trust this year is Edinburgh-based Deaf Action which, with a grant of £20,000, is developing a project to support Scottish landlords and tenants affected by hearing loss.

If tenants in Scotland think they have left a deposit with SafeDeposits Scotland unclaimed from a previous tenancy, they should enquire with the scheme on 03333 213 136.

Landlords encouraged to look forward to new academic year

SafeDeposits Scotland is working with landlords who provide student accommodation to help overcome challenges brought on by Covid-19, as the number of overseas students returning to the UK drops.  

During lockdown, the not-for-profit organisation reached out to landlords and tenants to provide advice and information around changes to the sector due to the pandemic. It works closely with all landlords including those that have been impacted by the decrease in students enrolling this academic year.

The Glasgow-based tenancy deposit scheme holds deposits on behalf of landlords and agents in line with government regulations designed to ensure responsible leasing.

As the sector continues to work towards pre-Covid-19 levels of activity, SafeDeposits Scotland is urging landlords to focus on providing the best renting experience for current tenants, while considering options to diversify their future tenant base.

Mike Smith, operations manager at SafeDeposits Scotland, said: “UK universities expect to see a £2.6 billion shortfall in the next academic year due to the pandemic, with 20% of domestic students not returning to university, and 75% of overseas students not enrolling this September.

“Pre-lockdown, demand for student accommodation in Scotland was notably high. Boasting some of the UK’s top universities, it’s no surprise areas including Aberdeen, Dundee, St Andrews, Glasgow and Edinburgh experienced an influx of students each year looking for housing.

But despite the drop in numbers of students expected to enrol this year, it’s evident there’s faith in the resilience of the sector, with a number of high-profile developments announced in the past month alone.

“Two recent Edinburgh examples of long-term growth within the sector include the new 120-bed purpose built student accommodation complex set to be built at Haymarket, while Unite Student has confirmed plans for a £24 million build of student flats at Meadowbank.”

To understand the concerns of landlords in the private rented sector during these unprecedented times more clearly, SafeDeposits Scotland carried out research to find out how they have coped during lockdown and how they feel about leasing property in the new academic year. 

Mike explained: “We’re confident demand for student housing will return, whether it is in the private rented sector or for purpose-built accommodation. However, until we have a clearer picture of what future academic enrolment figures are like, landlords could consider alternative ways to lease properties.

A good example is renting to young professionals that are looking to move away from home for the first time. The demands of these tenants are similar to students in the private rented sector, and it can be a way of keeping properties occupied until we know more about the future of higher education. 

“We recently carried out research with our landlords that are renting to students. This revealed that almost half (43%) secured new tenancies during lockdown while almost three quarters (73%) of this group expressed concerns around what this academic year will look like for them. 

“To alleviate concerns, we’ve been working closely with landlords to ensure the tenants they do have in place now have the best experience. To support, we’ve moved our face-to-face workshops online to offer free advice and information. Our Charitable Trust has also recently announced its funding towards research being carried out by the University of Stirling. This research is exploring the benefits of allowing tenants more flexibility to make a house a home.

“We believe having happy tenants leads to longer tenancies, creating more vibrant communities where people want to live. This boosts local economies and helps increase demand for rental property in that area.

“The property sector has been resilient during past economic challenges, but the full impact of the pandemic is yet to be seen. We know the government is working hard to support international students hoping to return to Scotland to continue their higher education studies. This will have a hugely positive impact for our landlords who rely on overseas students to rent their properties, and hopefully we will see the results of this work.

“In the short term, we urge landlords to implement safety guidance from the Scottish Government and manage risk wherever possible, while tenants adhere to the measures put in place.”

Hunt for missing tenants takes to the streets of Edinburgh

  • Over £200k of deposits unclaimed by Edinburgh tenants
  • First ever Scottish ‘deposit clinic’ to take place tomorrow

More than £200,000 worth of deposits have been left unclaimed by Edinburgh tenants. This Saturday (January 27), for the first time, anyone who thinks they might be owed money can check what they’re due at Scotland’s first ever ‘deposit clinic’. Continue reading Hunt for missing tenants takes to the streets of Edinburgh

Office space to let in North Edinburgh

Two local projects have office space to let

NEA

North Edinburgh Arts (above) has a ‘Big Bright Office’ space available from 1st September:

Ground floor office with large corner window
Can accommodate 4/5 desks
Built in kitchen with sink, cooker, fridge, dishwasher
All utility costs (gas, electricity, water) included
Reception duties, 9am – 5pm, and post handling included
Access to a photocopier/colour printer charged per print
Access to meeting/workshop rooms by arrangement
Free parking
Lively community café on site
Award winning gardens on site

Other agencies operating out of NEA include Tomorrow’s People, Muirhouse Link Up, Licketyspit Theatre Company, Tinderbox Orchestra, North Edinburgh Timebank. Ideal for a creative, community, or third sector organisation.

Cost £600 per calendar month

For more details or to arrange a visit call Sandra on 0131 315 2151 or email admin@northedinburgharts.co.uk

PrenticeCentre

And across in Granton Mains, The Prentice Centre (above) also has office space available to let.  

This would be most suitable for small charities, community groups or social enterprises. There is also the opportunity for two or three small organisations to share the premises if you only require office space for one or two days per week.

The Prentice Centre is a modern, purpose built Community Centre serving the communities of West Granton, Pilton, Muirhouse, Royston/Wardieburn and Drylaw.

Office space comprising one main office with a large storage cupboard and small kitchen area has now become available in The Prentice Centre.

The office has space for 3 work stations, with additional space for low level seating. There are adequate power points within each workspace; the tenant would have to install telephone and internet.

The rental includes: heat, lighting, security shutters and alarm, cleaning, reception services and contribution to the performing rights society fees.

The centre is Wi-Fi enabled, there is ample free on street parking nearby.

The Prentice Centre is open Monday to Thursday 8am to 8.30pm, 8am to 3pm on a Friday all year, with the exception of Edinburgh Public Holidays and Christmas through New Year, when we are closed.

The unique aspect of a let in the Prentice Centre is the ability to hire our Board and other meeting rooms at a fraction of their cost: we can supply tea and coffee for meetings at an additional cost. Our Board Room has a ceiling mounted projector with a screen: there is a laptop available for use, making it ideal for formal meetings and for training purposes. We are also on a number of main Lothian Bus routes including numbers: 8, 14, 16, 24 and 32

This space is ideally suited to small to medium sized community groups, charities or social enterprises who must share the ethos of West Granton Community Trust who own the Centre.   Sharing the office with another small charity or social enterprise may be possible.

Rental in the region of £5000 per annum

Please contact Janet on 0131 552 0485 for further details and to arrange to view the office.

Tenants urged to take up rent payment help

Nearly half the Council tenants in Edinburgh subject to the UK Government’s under-occupancy charge – better known as the ‘bedroom tax’ –  have not applied for extra help to pay their rent despite facing growing arrears and debt, it’s been revealed.

Almost 3,000 Council tenants are under-occupying their home and face paying between £14 and £25 per week as their housing benefit doesn’t pay for their extra room, but only around 1,500 of these tenants have applied for extra help available from the Council through Discretionary Housing Payments.

The Council was awarded extra funds from the Scottish Government in September this year, bringing the total available for Discretionary Housing Payments to over £3 million.

Recent figures from the Council’s housing service showed an estimated £1.25 million of arrears are attributable to people not paying the under-occupancy charge, which has been dubbed the ‘bedroom tax’.

City Housing Leader Councillor Cammy Day said yesterday: “It’s critical that hard-pressed tenants seek the extra help the Council is offering in the form of Discretionary Housing Payments, otherwise they face getting deeper into debt.

“Staff from the Council and advice agencies have been holding special surgeries and writing to, visiting and calling tenants over the last few months but ultimately tenants need to apply for the assistance available or they will lose out. I would urge any tenant who hasn’t yet applied for extra help to get in touch with their local housing office without delay.”

The under-occupancy charge was introduced to encourage tenants with a spare room to move to a smaller home. On average there is only ever one single bedroom property available to let for every 80 under-occupying households in the city.

Council tenants affected by the under-occupancy charge are encouraged to contact or call in to their local housing office for advice.cooncilhooses