the rent check 91% 83% 68% 27% 40% PRS Barometer Average 3 bed property pcm Average 2 bed flat pcm Issue 2: November covering England & Wales

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1 in Association with the NLA Issue 2: November covering England & Wales 91% of tenants agree that the property they rent is a home PRS Barometer 83% of landlords achieve at least their rental asking price 68% of landlords have good confidence in the prospects for their letting business* 40% have agreed higher rents over 12 months 27% anticipate portfolio growth over the next 6 months 6% have seen rents fall over 12 months Regional Snapshot Average 2 bed flat pcm change over 6 months London (zones 1-2) 1, London (zones 3-6) 1,070 5 South East South West East England West Midlands Wales East Midlands North West North East Yorkshire & Humber Regional Snapshot Average 3 bed property pcm change over 6 months London (zones 1-2) 1, London (zones 3-6) 1,435 0 South East South West East England Wales West Midlands East Midlands North West Yorkshire & Humber North East Rounded to the nearest 5 pcm 39% of tenants are committed to renting whereas only one quarter are planning to buy.** The typical rental stay is 2 years and 6 months. 23% of landlords intend to purchase property in the next year. 73% of tenants disagree that renting is a barrier for family life.** The Rent Check surveyed 2,068 landlords across England and Wales over the six months to September *For the next three months. **From the NLA Tenant s Panel.

2 introducing The Rent Check is a collaboration of expertise from BDRC Continental the UK s largest independent market research consultancy and Allsop LLP one of the leading property consultancy firms and advisors on the residential property market. The Rent Check is a unique measure of the rents being agreed by landlords for private rented sector tenancies across England and Wales. This research tracks the experience of a large sample (2,068 in the six months to September 2013) of members of the National Landlord Association (NLA), providing a statistically robust overview of the rental market. This data provides insight previously overlooked by rental indices tracking average prices for all properties marketed and reflects actual rents agreed; which, as the Rent Check finds, are different from the asking rent initially advertised for 17% of all lettings. The Rent Check is also supported by the Tenants Panel in order for us to gain the perspective of the tenants. This provides us with an inclusive outlook of the private rental sector that other indices do not cover. These surveys will continue to track movements and evolutions in the private rented market each six months, analysing movement in agreed prices, regional variations and providing unique landlord and renter insight. The Rent Check is a survey forming part of the BDRC owned Landlords Panel which will provide supplementary analysis on rental trends, tenant profile and landlord confidence in future survey releases. the integrity of The data included in the Rent Check has been analysed and scrutinised by BDRC Continental s research analysts and draws on their experience in the consumer research arena. BDRC Continental has a seven year history of conducting research with residential landlords and have carried out focused research on the buy-to-let market and private rental sector on behalf of a wide range of clients and interested parties. the methodology of BDRC Continental s Landlords Panel is the only regular, commercially available study of the UK s private rental and buy-to-let sectors. Established in 2006 and run in partnership with the National Landlords Association, this subscription based study provides important insight into the market dynamics of a multibillion pound industry. Each quarter more than 1,000 online landlords across the UK are interviewed about the key aspects of their letting activity. Results are analysed and published by BDRC Continental. The Tenants Panel is carried out quarterly, with between completed and eligible questionnaires completed each time. For sake of clarity, the tenants are randomly selected from commercial lists within which participates self-select by declaring that they are private tenants. They are not connected to NLA members, although we do not rule out that some may coincidentally rent from them.

3 Issue 2: November 2013 Home is where the heart is: Providing a home in rental properties While the current hype around the re-invigorated sales market might suggest that a large proportion of current renters will already be packing their things ready to buy their own home, the results of the latest Rent Check survey suggest that there is still a significant number of private renters, who, by accepting or choosing to rent for the foreseeable future consider their current digs to be as much their home as any homeowner. The rents recorded by the The Rent Check across the country show that rents for family housing (three bed houses) have been mainly static or have risen over the summer, with only the North West experiencing a drop. Rents for two bed flats are also increasing in all but five regions. This, in a market where sales volumes in the three months to July this year were 12.5% higher than the same time last year, exemplifies the current shortage of housing across all sectors in England and Wales and sustained activity in the private rented sector. A common misconception would be to assume that an improving sales market will tempt landlords to sell up and bank the capital growth created by rising property prices - serving notice on their tenants and listing their properties on the sales market. The Rent Check for Summer 2013, however, found the opposite. In fact, only 7% of landlords surveyed stated the intention to sell at least one of their properties over the next 12 months, far outweighed by a large 23% who actually suggest they will be actively looking to increase their portfolio of properties over the same period. From the tenant s perspective, it is evident that they too are committed to the private rented sector, with 39% of tenants surveyed stating that their long term plans were to remain in rented properties, in comparison to only 27% who plan to buy. When asked how long tenants have lived in rented accommodation, a staggering 75% stated that they have remained in the rental sector for over 4 years, with 41% of those residing in the same house for over 4 years. Evidently tenants prefer, and are given, the security of long tenancies. Given the attitudes shown by both landlords and tenants, we don t expect tenancies to shorten or churn in the private rented sector (PRS) to increase significantly over the next twelve months. The rented sector provides a home to those not pursuing home ownership. At home with renting Home is defined in the Oxford English Dictionary (2013) as the place where one lives permanently, especially as a member of a family or household. Landlord confidence is at a 6 year high, with 68% of landlords rating their expectations for their letting business over the next three months to be Good or Excellent Mark Long, BDRC Continental. A rented property may not be considered a permanent place to reside but for 91% of the tenants surveyed by the National Landlords Association (NLA), their rented property is very much their home. While the word home might be associated with the ability to stay forever, it is apparent that a large proportion (45%) of tenants have an inherent fear that the property they consider to be their secure home is at threat if their landlord decides to terminate their tenancy. This was a stark contradiction to our findings in the Rent Check that only a minority 7% of landlords intended to sell in the next twelve months. Fear that they may be asked to leave their home is clearly more of a concern to tenants than perhaps it should be. However the upheaval of moving and the clear trend in rising rents perhaps more than justifies this. A family of renters The Rent Check for Summer 2013 did see a slight contraction in the average tenancy stay - shortening marginally from an average of 2.7 over the six months to April 2013 to 2.5 this period however, strong evidence continues to show that renting is a long term option for a large proportion of society. The average tenancy length for families and the elderly for example, is significantly higher than the average, with the retired remaining in a property for in excess of 3 years on average, and for families a similar 2.8. Families in fact were among the main tenant type for 46% of landlords. Another myth-busting result from the NLA s Tenant Panel was the discovery that some 73% of tenants disagreed that renting in the private sector was a barrier to family life. Plenty of households are bringing up families in rented accommodation, and in 10% of cases tenants explain that renting provides them with a property that they would otherwise be unable to buy. Add into this the ability to rent a property in some of the most competitive school catchment areas, where demand sees house prices continually pushing upwards and the belief that renting can provide a home seems increasingly justified. For low income households, rented accommodation may in fact be the only practical option, and one that suits family life for many reasons. Our case study below illustrates some of the reasons and the motivations to maintain a good relationship between landlord and tenant. Take a single parent in the South East, unable to buy a property with The National Landlord s Association (NLA) Tenant Panel of 605 private tenants found that an overwhelming 91% of tenants considered the property they rent to be their home Chris Norris, NLA.

4 Issue 2: November 2013 Home is where the heart is: Providing a home in rental properties (Continued) enough space to house their family comfortably. Current lending criteria (multiples of annual salary) are a barrier to these low earners who are unable to save the deposit or borrow to the level they would need to purchase a property which suits their needs; being near to family or where their children currently go to school. For landlords, local families provide the committed tenant they need and a mutual dependency on one another often leads to an understanding and positive relationship between the two. Case Study: Family tenant Single mum in her mid-30s with two children of school age working as a part-time dentist s receptionist She struggles to save a deposit, has no bank of Mum and Dad to call on and does not meet standard lending criteria as her salary is too low for current multiples She has rented the same 3 bed terrace house for over two years Case Study: Landlord Bought the property as a buy to let investment Views the investment as a pension Is interested in capital growth over the long term Wants a hassle free tenancy and low management Likes renting to families as they often stay for the long term Benefits from tenants who are house proud and treat the property as their own. Problems are reported quickly and maintenance costs are low Feels good about renting to a local family Renting meets her needs: The cheapest property available to her to buy in the local area (if she were able) is a 2 bed flat, which would mean sacrificing the garden her children currently enjoy and the benefit of separate bedrooms Continuing to rent means her children can stay at the same school and she can be near to work and family The majority of repairs to the house and the cost of buildings insurance are the responsibility of her landlord. The property is furnished to a modern standard and her landlord also gives her flexibility to personalise the property to make it her own. Renting gives her flexibility if her work circumstances change She has a good relationship with her landlord She feels and treats the house as if it were her own home So, what about Help to Buy? What does the Government s Help to Buy Scheme offer current tenants? And what does this mean for landlords? The Government s Help to Buy scheme has pledged financial assistance to those with only a small deposit of as little as 5% of the property they would like to buy. Those taking up the scheme will be able to access Government equity, to top up their deposit to a maximum 20% of the purchase price. To benefit, purchasers need to get their hands on part of the 12billion offered before the end of 2016 when the scheme is due to close; that is, if the funds don t run dry before that. Tenants like that set out in our case study are obvious beneficiaries of Help to Buy funding. With a pool of 12billion being offered to purchasers, and an estimated 1.7m who say they plan to use the scheme however, the maths suggests the amount committed will not meet the demand for assistance. For many current tenants, by the time they have saved their part of the deposit, at the same time trying to keep up with current house prices, the scheme may well have run out - predicted by many to be a year ahead of the 2016 schedule. In light of this, whilst the hype may be reaching those motivated to buy their own home, it seems not to have affected landlords confidence, or the static level in rents we at the Rent Check have witnessed in regions outside of London over the past six months. Even if renters qualify for the funding on offer, this doesn t guarantee, as prices continue to rise, that they will be able to access properties in the locality they favour that are more suitable than the rented home they already enjoy. And for those outside the assistance criteria, there exist large strongholds of renters who are content to make their rented property their family home.

5 To subscribe to please To join the Landlords Panel please contact the National Landlords Association on or at team: Paul Winstanley Beth Hill Vicky Bingham Partner Senior Surveyor Property Analyst Mark Long Bethan Cooke Director Research Manager @allsopllp Disclaimer: This report is for general information purposes only. Whilst every effort has been made to ensure that all content is accurate, Allsop LLP and BDRC Continental do not accept responsibility whatsoever for any loss incurred directly or consequentially from the contents of this report. This report may not be published, reproduced or quoted (as a whole or in part), or used for any contract, prospectus, agreement or other document without prior consent. This report is copyright of Allsop LLP and BDRC Continental and may not be reproduced without written consent from both parties