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Em Morley

Rents in Scotland grow year-on-year

Published On: March 31, 2017 at 11:58 am

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Private sector rents in Scotland rose by almost 5% in the year to February 2017, taking the average rent to £575, according to the latest buy-to-let index by Your Move.

In total, rents were up by 4.9%, however the Index indicates that demand is sliding, leading to a fall in rents in some locations. These include Glasgow and Clyde and Highlands and Islands.

Rent Rate

The overall rent rate was down by 0.1% month-month. The East of Scotland remains the cheapest place to rent a property in the country, with an average of £535 per month. However, this is 2.3% higher than in February 2016.

In terms of performance, the strongest was in the South, where rents rose by 4.2% year-on-year to £560.

Yields remained solid, with landlords and investors continuing to see good returns from the Scottish rental market in February. Average yields were 4.9%, unchanged both month-on-month and year-on-year.

Compared to the rest of the UK, Scotland offers competitive yields, with investors here seeing better returns than those in England and Wales. Only landlords in the North East and North West of England saw more impressive returns, of 5.3% and 5% respectively.

Rents in Scotland grow year-on-year

Rents in Scotland grow year-on-year

Growth

Brian Moran, lettings director of Your Move Scotland, observed: ‘The Scottish rental market continues to grow as a whole, despite variations on a regional basis. In February we have continued to see demand reduce in several areas, particularly those with high numbers of migrants from European Union countries.’[1]

‘Government schemes have also had an impact on the rental market with more people being able to purchase their first home and leave the rental arena. For landlords and investors yields have remained strong, particularly when compared to the returns on property in England and Wales,’ Moran added.[1]

[1] http://www.propertywire.com/news/uk/rents-almost-5-scotland-february-latest-index-shows/

 

Slow High-End House Price Growth Offsets Stamp Duty Hike for Additional Homes

Published On: March 31, 2017 at 10:10 am

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Slow house price growth in the high-end property market has effectively offset the Stamp Duty hike that buy-to-let landlords and second homebuyers are now forced to pay, according to new research from Private Finance.

The independent mortgage broker’s analysis of Land Registry figures shows that the average house price among the top 5% of property sales in England and Wales in 2016 was £1.121m. This was up by just 0.5% from 2015, as a combination of Stamp Duty changes and uncertainty following the EU referendum put the brakes on high-end property sales.

The 3% Stamp Duty surcharge that was introduced in April 2016 means that a property worth £1.121m is now liable to Stamp Duty of £89,521 if purchased as buy-to-let or second home, at an effective rate of 7.98%. This is £33,639 more than the £55,882 fee under the previous system, which still applies if the property is bought as a main residence, at an effective rate of 4.98%.

Slow High-End House Price Growth Offsets Stamp Duty Hike for Additional Homes

Slow High-End House Price Growth Offsets Stamp Duty Hike for Additional Homes

Despite the higher fee amounting to a 60% hike in Stamp Duty costs for landlords, investors and second homebuyers in the high-end of the property market, Private Finance’s analysis suggests that this extra £33,639 has been more than offset by the potential savings to be made on property values as a result of slower house price growth.

Annual price growth of 0.5% in 2016 among the top 5% of property transactions was markedly slower than across the rest of the market, where average prices rose by 4.2%.

Had the top 5% of the market risen at the same rate, buyers would have had to part with £1.162m for the average high-end home in 2016, rather than £1.121m – an extra £40,827. This saving more than compensates for the additional £33,639 Stamp Duty bill facing landlords and second homebuyers.

The difference is even larger for potential buyers of second homes or buy-to-let properties in Greater London. The average high-end property sale in 2016 was worth £2.581m in the capital, up by 1.5% on the previous year.

However, the remaining 95% of the London property market saw average prices rise by 8.2% over the same period, from £443,259 to £479,507.

Had the top 5% of the London market grown at the same 8.2% rate, it would have pushed average prices in this bracket up to £2.750m, leaving buyers to find an extra £169,410 for their purchases.

This far exceeds the additional £77,431 in Stamp Duty that would be due on a £2.581m home if it were purchased as a buy-to-let or second home (where Stamp Duty would cost £300,903) rather than a main residence (where £223,472 would be due).

The study comes after the Office for Budget Responsibility forecast rising Stamp Duty receipts from 2016/17 to 2021/22, and revised its previous 2016/17 prediction made in November 2016 on the basis of residential transactions and prices being “stronger than expected”.

The Director of Private Finance, Shaun Church, says: “Conditions have been tougher at the top of the housing market since last April’s Stamp Duty reforms, which created all manner of disruption to normal activity before and after they took effect. A healthy housing market needs movement and fluidity at all levels and across all tenures, but successive changes to Stamp Duty in 2014 and 2016 have had the opposite effect.

“If there is one silver lining for would-be buyers and investors, it’s that slower growth of high-value property prices has had a positive impact on affordability. A buyer today can pay markedly less for a high-value property at the top end of the ladder than if growth had kept pace with the rest of the market, making it easier to absorb any extra Stamp Duty fees.”

He continues: “Despite being something of a damp squib, last month’s Housing White Paper hopefully marks a shift away from an era of policy gimmicks and short-term tinkering with housing. Greater thought is needed to create a Stamp Duty system that supports homebuyers and sellers across the market.

“In the meantime, the long-term trend of rising house prices means Stamp Duty can be just as much of a psychological issue for buyers as one of affordability. There are plenty of funding options at hand to help with covering transaction costs, which mean the associated fees and taxes need not be a permanent barrier to property purchases.”

North East property prices remain fairly static

Published On: March 31, 2017 at 9:58 am

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The latest property market analysis from KIS Housing has revealed that house prices in the North East stayed almost static for the second-consecutive month.

Average regional property values are just 0.1% down over the last four weeks, with prices nearly similar to one year ago. Values are only 0.07% lower than in March 2016. In cash terms, this is a difference of just £124.

Similarity

In fact, across the region, prices remained more-or-less the same to four weeks ago, sliding by only 0.1% or £307 in cash terms. This is in comparison to a rise of 0.1% in February but a fall of 3.1% in January.

At presently, a typical North East home will cost £163,467-compared to £163,591 at the end of March 2016.

By area, there was more noticeable rises in Blyth, Washington and Gateshead and Morpeth, with values here increasing by 2.9%, 1.3% and 1% respectively.

Rents

North East rents fell slightly to £576 in March, a fall of 2.2%.

Yields remain unchanged, with investors enjoying an average return of 4.3%. This means that North East investors are enjoying a better return than those in London (3.2%) and Cambridge (2.3%).

The cheapest place to rent in the North East is Easington, where one can expect to pay an average of £351 per month. Tynemouth was the most expensive in general terms, at £892pcm.

Peterlee was found once again to be the buy-to-let capital, with an average return of 6% for investors.

North East property prices remain fairly static

North East property prices remain fairly static

Fascinating

Ajay Jagota, founder and MD of Keep it Simple, said: ‘Last month I attributed frozen North East house prices to buyers and sellers alike adopting a wait-and-see approach in the run up to the triggering of Article 50-and I see no reason to revise that opinion this month.’[1]

‘With Theresa May taking that step this very week, it will be fascinating to see if we see more profound movement one way of the other in the weeks ahead.’

Some analysts have noted a growing North-South divide returning to the UK property market, with the North East lagging behind the rest of the country. These results, with prices falling as a whole and falling much more conspicuously in places like Peterlee and Easington do nothing to disprove that theory,’ he continued.[1]

Concluding, Jagota said: ‘But this doesn’t have to be gloomy news. What’s really positive for property in our region is quite how resilient and robust North East house prices have remained in the face of so much uncertainty and upheaval over the past 12 months, changing by little over £100.’[1]

 

[1] http://www.propertyreporter.co.uk/property/north-east-house-prices-static-for-second-consecutive-month.html

 

UK house price growth falls in March

Published On: March 31, 2017 at 9:04 am

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The latest report from Nationwide shows that house price growth in the UK fell in March by 0.3%, with annual growth also falling by 3.5%. This took the average price to £207,308.

In addition, the investigation shows that the gap between regional price growth is closing, with this now at its narrowest since 1978.

Rise and Falls

During the first three months of 2017, six regions saw property prices rise, six saw falls and there was no alteration in the East Midlands.

Robert Gardner, Nationwide’s Chief Economist, noted: ‘The spread in the annual rate of change between the weakest and strongest performing regions was at its narrowest since 1978 at 6.8%, the second smallest gap on record.’[1]

‘The South of England continued to see slightly stronger price growth than the North of England, but there was a further narrowing in the differential. Northern Ireland saw a slight pickup in annual house price growth, while conditions remained relatively subdued in Scotland and Wales,’ he continued.[1]

Quarterly Figures

Quarterly, overall year-on-year prices rose by 4.1%. By country, rises were:

  • England 4.7%
  • Northern Ireland 3.8%
  • Scotland 2.9%
  • Wales 1.2%
UK house price growth falls in March

UK house price growth falls in March

By region, prices in the South West, Outer South East, Outer Metropolitan, London and East Anglia all rose by 5% year-on-year.

Despite regional growth rates beginning to converge, there is still disparity in price levels. This becomes more profound when looking at prices relative to their 2007 peak. Prices in London for example are almost 60% above their 2007 levels, while those in the North, Yorkshire and Humberside and the North West are lower than their 2007 peaks.

Experts feel that the March dip in prices is not a trend, with monthly figures tending to be volatile. In addition, the fall is not thought to be connected with the trigger of Article 50 this week.

Muddle

Jonathan Hopper, managing director of Garrington Property Finders, observed: ‘The market has become a muddled mix of extremes, with double digit reductions going on at one end of the spectrum and gazumping at the other. So it would be overly melodramatic to view the Nationwide’s latest data as a turning point. In reality, average house prices have been meandering for several months against the volatile and uncertain economic backdrop.’[1]

‘Buyer intent remains strong in many parts of the UK, but buyers have become acutely price sensitive. No one wants to buy a home only to realise they could have got it cheaper if they had waited so on the front line, prospective buyers are scrutinising prices harder than ever,’ he added.[1]

Russell Quirk, chief executive officer of eMoov, noted it is unusual to see a dip in the spring market. He went on to say: ‘Although an air of uncertainty on the run up to Wednesday’s formal process may have left a few buyers on the fence, it is unlikely to have had any direct impact itself. Although the market remains healthy which is great news for existing homeowners, those facing the sizable task of climbing the UK ladder are opting to concede and rent. Not just those at the first rung, but seemingly the third and fourth as well.’[1]

[1] http://www.propertywire.com/news/uk/march-dip-uk-house-prices-seen-blip-not-trend/

EPCs are here to Stay Despite Brexit, Believes Elmhurst Energy

Published On: March 31, 2017 at 8:57 am

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EPCs are here to Stay Despite Brexit, Believes Elmhurst Energy

EPCs are here to Stay Despite Brexit, Believes Elmhurst Energy

Elmhurst Energy, the energy performance assessment specialist, believes that Energy Performance Certificates (EPCs) are here to stay, despite Theresa May’s formal triggering of Article 50 of the Lisbon Treaty, which will commence the UK’s departure from the EU.

Martyn Reed, the Managing Director of the firm, says that while he is concerned about the uncertainty ahead, he remains optimistic about energy efficiency.

The recent Bonfield Review suggests there should be a quality framework to help homes in the UK become warmer and more efficient; this is very much based around the foundation of an Energy Performance Certificate and the recommendations that are created specifically for each property.

Landlords, remember that you must have an EPC for your property before letting it to a tenant. This legal requirement was initially introduced by the EU.

Elmhurst Energy considers EPCs and energy assessments to be vital if the UK is to meet its fuel poverty targets, together with international treaties on climate change from the United Nations. Elmhurst also highlights that the Fifth Carbon Budget and the Paris Agreement are not EU commitments, but relate to the United Nations and will therefore continue regardless of Brexit.

Reed explains: “Whilst Elmhurst Energy believes that the EU has been good for energy efficiency and our sector, the referendum decision was made, and it is now the responsibility of Government to re-establish the economic and political environment, so that businesses can make medium and long-term decisions with confidence.

“I have no doubt that Brexit will impact on EPCs, but I am totally confident that energy assessment and energy certificates are here to stay. Whilst there is likely to be change at the edges, Elmhurst will be doing its part of ensure that it is change for the good.”

While the next two years of negotiations may be turbulent, Elmhurst Energy remains committed to raising people out of fuel poverty and encouraging the Government to continue to recognise that the cheapest form of energy is energy efficiency.

Number of House Sales Agreed Reaches Ten-Year High

Published On: March 31, 2017 at 8:18 am

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The number of house sales agreed in February hit a ten-year high, according to the February Housing Report from NAEA Propertymark.

House sales agreed

The number of house sales agreed increased to a ten-year high in February, to an average of 11 per branch. The last time this figure surpassed ten per branch was in September 2007, suggesting that buyer confidence is growing. In January, estate agents agreed eight house sales per branch, up from six in December.

Number of House Sales Agreed Reaches Ten-Year High

Number of House Sales Agreed Reaches Ten-Year High

Although high house sales were recorded in February, three in every four (74%) of the sales made were below the original asking price, indicating that sellers are taking a pragmatic approach to their property transactions.

Sales to first time buyers

The proportion of house sales that were agreed for first time buyers dropped to 22% in February, down from 30% in the previous month.

Housing supply

The number of properties available to buy on estate agents’ books rose to 44 in February. In January, just 38 were available per branch.

This figure has increased by 26% from last February, when agents had just 35 properties on their books.

Demand for properties

The number of homebuyers registered per estate agent branch remained at 425 in February for the second month in a row.

Housing White Paper

Only 7% of estate agents expect the remedies outlined in the Government’s Housing White Paper to be enough to fix the broken housing market.

Two fifths (43%) don’t think they will make a difference, while 39% believe the proposals could positively impact the market, but can’t yet tell how.

The Chief Executive of NAEA Propertymark, Mark Hayward, comments: “The number of sales agreed reaching a ten-year high indicates the housing market is moving in the right direction.

“However, first time buyers need to be a priority – the number of sales made to the group dipped in February, when it should be growing. As house prices continue to rise, the market’s most vulnerable buyers are being priced out and the only way to address this is to increase housing stock.”

He adds: “The Government has pledged yet again to build more homes, but our members aren’t feeling optimistic about the plans. If promises are kept and we see construction sites set up across the UK, we’ll be in a better position in a few years than the stark reality we will be facing if this doesn’t happen.”