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Em Morley

Investors are looking at different property types amidst uncertainty

Published On: December 7, 2016 at 12:34 pm

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An increasing number of property investors are aiming to establish a plan to diversify their portfolios, amidst growing potential and economic uncertainty.

According to the head of a leading network of UK property auctioneers, buy-to-let landlords are looking to include a, ‘wider mix of property types.’

Different property types

Founding director of Auction House, Roger Lake, believes that investors are increasingly looking to put money into in all kinds of property, if they can afford to do so.

Lake notes that demand for commercial property is particularly strong at present.

‘Auction prices have rebalanced since the referendum result and buyers are now actively seeking opportunities. Demand for commercial lots has increased too, as more investors look to spread their risk over a wider mix of property types,’ Lake observed.[1]

Investors are looking at different property types amidst uncertainty

Investors are looking at different property types amidst uncertainty

Sales

Auction House has seen sales this year reach 2,873 lots to the end of November. This is at a success rate of 77%, raising a total of £387m.

Mr Lake said: ‘Supply has returned to normal levels over much of the country although the South East remains a challenge.’[1]

The group has seen a record number of lots entered into its auctions during the last month, with 25 auctions taking place between 1st-15th December.

Lake noted: ‘Our northern sale rooms will be particularly busy. We have an impressive 86 lots entered into our newly-launched Auction House North West sale at Bolton’s Macron Stadium, as well as 55 in our West Yorkshire auction and 101 in our latest Cumbria/North East catalogue.’[1]

‘As a result, we have a wide range of pre-Christmas bargains being offered and are expecting well-attended auction rooms and enthusiastic bidding,’ he concluded.[1]

If you are thinking of buying a property at auction, make sure you read this handy guide before you commit!

 

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/12/investors-seeking-to-spread-their-risk-over-a-wider-mix-of-property-types

 

Is the Government Finally Coming Round to the Idea of Build to Rent?

Published On: December 7, 2016 at 11:19 am

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The Government will invest money into a scheme that will see 2,000 high quality homes erected in the Build to Rent sector.

Is the Government Finally Coming Round to the Idea of Build to Rent?

Is the Government Finally Coming Round to the Idea of Build to Rent?

For some time, it’s seemed like the Government is almost out to get the private rented sector in the UK.

From the introduction of its additional 3% levy on Stamp Duty for rental market investors, to its refusal to later allow exemption from this rule for the Build to Rent sector, the Government appears to have very rarely had the best interests of the sector at heart.

However, it may now finally be seeing the value that the Build to Rent sector has for the British property market, both in terms of building new homes and providing accommodation that meets the needs of those who are looking to rent first and foremost, after it was revealed that the Government will be investing in a new Build to Rent project.

Delivering more than 2,000 homes nationwide, the plan is designed to bring into play the Government’s Autumn Statement policy of targeting housebuilding in areas where there is most demand for new homes.

This will mean the homes being constructed across Manchester, Leeds and Birmingham, all of which are key cities for business growth, and, as such, have higher demand from tenants.

In total, there will be as much as £400m spent on the huge Build to Rent project, and some £45m of this is going to be coming from the newly announced Home Building Fund from the Government, which Philip Hammond, Chancellor, unveiled last week.

Housing Minister Gavin Barwell said of the project: “Alongside home ownership, we’re determined to create a bigger, better private rental market to offer greater choice for tenants in a country that works for everyone.”

“This is one of the largest private rental sector deals in the UK and will not only create thousands of homes for people in Birmingham, Leeds and Manchester, it will create jobs and opportunities for many hundreds of people,” he added.

The Government has announced some support for the Build to Rent market through increased investment.

This article has been provided by Experience Invest.

Property price growth increases for first time in 8 months

Published On: December 7, 2016 at 11:08 am

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The latest data released from the Halifax has revealed that the annual rate of house price growth has increased from 5.2% to 6% in November. This represents the first rise in 8 months.

According to the report, property prices in the three months to November were 6% greater than at the same period in 2015.

This year, the quarterly figures (between September-November) were 0.8% higher than in the previous three months.

Increased growth

Martin Ellis, Halifax housing economist, noted: ‘House prices in the three months to November were 0.8% higher than in the previous quarter. This increase followed little movement in prices on this quarterly measure in both September and October. The annual rate of growth also increased, rising for the first time for eight months.’[1]

‘Despite November’s pick-up, the annual rate has been on a steady downward trend in recent months since reaching a peak of 10.0% in March. Heightened affordability pressures, resulting from a sustained period of house price growth in excess of earnings rises, appear to have dampened housing demand, contributing to the slowdown in house price inflation. Very low mortgage rates and an ongoing, and acute, shortage of properties available for sale should help support price levels although annual house price growth may slow over the coming months,’ he added.[1]

Jeremy Duncombe, Director at Legal & General Mortgage Club, also commented: ‘November’s figures show a slight increase in monthly house price growth, but nothing like the thundering rate that we got accustomed to over the first half of the year. Despite the negative perceptions that often accompany such slowdowns, this cooling of house price inflation should be viewed positively. The fact remains that there is still a huge disparity between wage growth and property price inflation.’[1]

Property price growth increases for first time in 8 months

Property price growth increases for first time in 8 months

Early Christmas present

Founder and CEO of eMoov.co.uk, Rusell Quirk, said that the report shows: ‘yet more signs of life shooting from the frosty ground of the UK property market with the first annual increase in eight months providing UK homeowners with an early Christmas gift. Many in the industry have been quick to put the boot in over the last few months where the UK property market is concerned, hanging gloomy predictions on a dwindling level of demand in the market.’[2]

‘It would seem this simply isn’t the case. The driving factor behind inflating house prices is an imbalance between supply and demand and, with house prices spiking this late in the year, it would seem there is certainly a sustained level of buyer demand present in the current market,’ Quirk added.[2]

[1] http://www.propertyreporter.co.uk/finance/house-price-growth-increases-for-first-time-in-eight-months.html

[2] Russell Quirk, eMoov press release, 07.12.16

The Top 10 Hotspots for Property Demand Revealed

Published On: December 7, 2016 at 10:20 am

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The fourth and final Property Demand Hotspots Index of the year has been released by online estate agent eMoov.co.uk, detailing which parts of the country have experienced the largest increases and decreases over the past quarter.

The index grants a percentage score for each area based on the level of housing stock available on the major property portals against that which has already sold, before calculating the total change.

The data shows that, nationally, property demand has dropped by 7% over the last quarter, now standing at 38%.

The Top 10 Hotspots for Property Demand Revealed

The Top 10 Hotspots for Property Demand Revealed

Bexley, at 65%, has dropped to third place from its usual top spot, toppled by Solihull (77%) and Portsmouth (67%). Demand is at 65% in Bristol, while Northampton (60%), Medway (59%), Gloucester (58%), Ipswich (58%), Bedford (57%) and Edinburgh (57%) complete the top ten.

However, it is the locations where property demand has increased the most over 2016 that provides a peculiar coincidence; nine of the top ten begin with an S.

With the London market slowing due to a combination of higher Stamp Duty rates for second homes and a lack of foreign interest post-Brexit, it’s the Midlands and northern regions that have shown strength. With six out of the top ten areas with the highest growth located here, it seems UK buyers are stoking the engines of the Northern Powerhouse.

Landlords looking for new investments in 2017 should look to the northern regions of the country for affordable house prices and high tenant demand.

Stockport, in the North West, has experienced the greatest increase in demand over the year, up by a huge 126%, with Stoke-on-Trent (112%) in the West Midlands and London’s only entry, Sutton (110%), also enjoying triple-digit growth.

Demand in Sheffield has risen by 99% in 2016, with Sandwell (83%) and Solihull (79%) representing the West Midlands. Swindon (74%) and Somerset (65%) sandwich Bradford (67%) as the only areas from the South West, while Southampton (63%) is the only entry from the South East.

Outside of the top ten, Highland, Gateshead, Salford, Manchester and Hull all recorded increases in demand of more than 50% over the past year.

The largest decreases were seen in Sunderland (63%), Swansea (57%), Hounslow (51%), Lambeth (46%), Camden (45%), Southwark (43%), Shropshire (42%), South Lanarkshire (42%), Westminster (39%) and Aylesbury (39%).

The Founder and CEO of eMoov, Russell Quirk, comments: “A tough year for the UK market, but it has come through it relatively unscathed.

“Although changes to second home Stamp Duty thresholds and the leave vote may have tainted demand slightly due to an air of uncertainty, there seem to be a number of areas that have benefitted, with the market almost turned on its head in terms of desirability to buyers.”

He continues: “2016 seems to have been a bit of a leveller where the property market is concerned, with many of the so-called weaker markets really seeing a spike in buyer demand, which will, in turn, result in a healthy increase in prices going into the New Year.

“Worrying for homeowners in the likes of Aylesbury, Hounslow and Camden though. These areas were ranking consistently quite highly where demand is concerned, but this seems to have dropped off considerably during Q4 and homeowners and sellers in particular could receive a lump of coal this Christmas when it comes to the price of their property.”

Buy-to-let valuations down by 18.5% year-on-year

Published On: December 7, 2016 at 9:53 am

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The number of buy-to-let valuations have fallen sharply since the introduction of the 3% stamp duty surcharge in April. In addition, the proposed ban on letting agent fees have moved to further unsettle the market, according to research from the Connells group.

Tax changes

Undoubtedly, 2016 has been a tough year for buy-to-let landlords, given the raft of tax changes introduced by the Government. These changes have raised concern that those investors with low profit margins could end up making a loss as a result of these alterations.

In fact, some could be pushed out of the sector altogether.

Unsurprisingly, the number of valuations carried out for the buy-to-let sector slipped by 6.1% month-on-month and by 18.5% on a yearly basis to November.

John Bagshaw, corporate services director of Connells Survey & Valuation, observed: ‘2016 has been something of an annus horribilis for landlords. They have had to contend with the reverberations of the 3% stamp duty surcharge and the removal of the 10% wear and tear allowance.’[1]

Buy-to-let valuations down by 18.5% year-on-year

Buy-to-let valuations down by 18.5% year-on-year

Remortgaging rise

However, despite the number of buy-to-let valuations being down by 18.5%, remortgaging actually rose by more than 20% during the period.

Bagshaw observed: ‘Homeowners want to lock into deals before rates rise. There’s no doubt that remortgaging is driving the mortgage market at the moment.’[1]

During November, there was a surge in people looking to remortgage. Valuations rose by 4.9% in comparison to October, and by 24.6% annually.

[1] https://www.landlordtoday.co.uk/breaking-news/2016/12/buy-to-let-valuation-instructions-plummet-18-5

One Million Landlords at Risk of Imprisonment Under Right to Rent Rules

Published On: December 7, 2016 at 9:31 am

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One million landlords are at risk of imprisonment and/or an unlimited fine under new Right to Rent rules.

One Million Landlords at Risk of Imprisonment Under Right to Rent Rules

One Million Landlords at Risk of Imprisonment Under Right to Rent Rules

Last week, on 1st December, failure to comply with the Right to Rent scheme became a criminal offence under the Immigration Act 2016. Although the scheme has been in place since February, it only carried civil penalties.

The latest study by Tenant Referencing UK shows that 50% of landlords are unaware of their legal obligations when it comes to checking the immigration status of prospective tenants.

Landlords or their letting agents are now committing a criminal offence if they have “reasonable cause to believe” an illegal migrant is renting the property that they are letting. It is also an offence for agents who have “reasonable cause to believe” that their landlord client is letting to a tenant who’s disqualified due to their immigration status and who go ahead with the management of the property.

Additionally, if a landlord or agent serves a section 8 notice that does not specifically refer to the Immigration Act 2016, it is considered invalid and the tenant will have a technical defence to possession proceedings.

Details of the new section 8 notice can be found here: https://www.justlandlords.co.uk/news/new-section-8-notice-today/

Over the last three months, Tenant Referencing UK conducted a poll of 1,000 new landlord members, finding out what they know about the Right to Rent rules. Worryingly, 50% of those asked were unaware of any such legislation, meaning that around one million landlords are at risk of imprisonment and/or an unlimited fine for failing to comply.

Thankfully, we have a helpful guide created in association with the Home Office that comprehensively explains landlords’ and agents’ obligations under Right to Rent rules: /home-office-reinforces-landlord-responsibilities-right-rent/

To avoid facing imprisonment or hefty fines, remember to stick to the law and check the immigration status of all prospective tenants.