Written By Em

Em Morley

More properties available to let in prime central London

Published On: November 15, 2016 at 11:31 am

Tags: landlords,prime central london,rental market,rents

Another piece of research has revealed that property available to rent in prime central London has risen sharply.

Data from the report by property company LosRes reveals that in the third quarter of this year, stock levels have risen substantially since the same period in 2015.

In contrast however, there was actually 4% fall in the number of properties actually rented out.

Rising stock

A LosRes spokesperson said: ‘Increased stock levels have meant that tenants are able to negotiate on price. A slow July market, following the referendum result, is impacting on the quarterly figures.’[1]

Taking prime central London properties as a whole, the number of homes let fell by 17% in comparison with the same period one year ago. August and September however saw increases of five and seven per cent respectively.

Concluding, the report said: ‘The majority of our subscribers surveyed still expect achieved rental values in 2016 to end the year down on 2015 levels, but the proportion expecting a fall has dropped since our previous survey in Q2 2016. This quarter, 32 per cent of respondents expect average rental values to end the year at the same level, or higher, than the end of 2015, up from 22 per cent in Q2 2016.’[1]

More properties available to let in prime central London

Falling rent

This report comes soon after a similar one conducted by lettings agency and property consultancy JLL.

Research Director, Neil Chegwidden, said: ‘With weakened tenant demand, the increased supply of properties on the market is not being eroded. Available supply has also been boosted by owners electing to rent out their properties as opposed to selling them, given the diminished demand in the sales market.’[2]

‘Although most are choosing to remain in their current accommodation due to the upheavel and cost of a move, some are moving elsewhere to take advantage of these conditions,’ he added.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/another-report-of-surge-in-supply-of-prime-london-homes-to-let

[2] https://www.lettingagenttoday.co.uk/breaking-news/2016/8/over-supply-leads-to-rents-falling-in-prime-london-lettings-market

London is Driving House Price Growth Yet Again, Shows Latest Data

Published On: November 15, 2016 at 11:10 am

Author: Em Morley

Categories: Property News

Tags: average house price,house prices,London,property sales

London is driving house price growth across the UK yet again, shows the latest official data from the Office for National Statistics (ONS)/Land Registry.

The figures for September – the most recent available – show an annual price increase of 7.7% across the UK as a whole, taking the average property value to £217,888. On a monthly basis, prices have risen by 0.2% since August.

House price growth

In England, prices rose by 8.3% year-on-year, to an average of £234,250. Since August 2016, prices were up by 0.2%.

Wales experienced an annual price increase of 4.4%, taking the average property value to £146,388. Month-on-month, prices rose by 0.2%.

In London, however, house price growth stood at 10.9% on an annual basis, pushing the average value up to £487,649. The capital experienced the greatest rate of monthly growth, at 1.4%, meaning it is now driving the UK yet again.

Annually, the East of England saw the greatest increase in property values, at 12.1%.

The North East experienced the lowest rate of annual growth, at just 1.5%. It also recorded the most significant monthly decline in prices, of 1.9%.

Average house prices by region

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Home sales

Between August and September, home sales dropped by 4.3%, with levels remaining lower than those seen in 2014, 2015, and before the Stamp Duty changes earlier this year.

London is Driving House Price Growth Yet Again, Shows Latest Data

Sales during July 2016, for which the most recent Land Registry figures are available, dropped by 28.1% in England, from 93,040 in July 2015 to 66,870.

The number of completed home sales in Wales fell by 23.4%, from 4,603 to 3,525 this year.

In London, home sales declined by a huge 43.3%, from 12,481 in July 2015 to 7,074.

There were 490 repossession sales in England in July 2016, and 54 in Wales.

The lowest number of repossession sales in England and Wales was in the East of England.

Commenting on the latest House Price Index, the Senior Economist at PwC, Richard Snook, says: “We now have three months of post-Brexit official housing figures, which show price growth remaining robust, but fewer properties changing hands. At the start of the year, we expected slower house price growth, but in fact, it has shown impressive resilience; in the first three quarters of the year, average annual house prices were up by around 8% across the UK compared to the same period last year.

“But high prices are causing some buyers to stay out of the market altogether. The ONS data shows residential transactions in September were just 93,000 – 11.3% lower than the previous year. This implies that underlying demand may be weakening as property becomes less and less affordable.”

The Founder and CEO of eMoov.co.uk, Russell Quirk, also comments: “Interesting to see London back behind the wheel and driving the UK property market once again, with the largest monthly increase. This, along with a number of other industry data sets, shows that the capital suffered from wobbly knees post-referendum, but now seems to have well and truly found its feet again. It will be interesting to see if, a few reports from now, Trump’s victory has any notably direct influence on the UK property market.

“We predict a slight price peak at the top end of the market, particularly in London, but little more than that. Elsewhere across the country, strong annual growth all-round.”

He adds: “Interestingly, the UK seems to be suffering from some form of property paralysis across the east, with both the south and North East seeing a monthly fall in prices, along with Yorkshire and the Humber.”

Taylor Wimpey Confident in the Strength of the Housing Market

Published On: November 15, 2016 at 10:14 am

Author: Em Morley

Categories: Property News

Tags: housebuilding,housing crisis,housing market,new homes

Taylor Wimpey, one of the UK’s largest housebuilding firms, remains confident in the strength of the UK housing market, according to its latest trading update.

Looking at the second half of the year so far, the builder reports that the housing market has remained positive, with a high level of customer confidence. Customers are currently benefitting from a competitive mortgage environment, with a wide choice of mortgage products available across a range of loan-to-value ratios.

Current trading

Taylor Wimpey claims that underlying trading is stable across its core geographies. While the wider London market remains positive and in line with the rest of the UK, as previously expected, the central London market has slowed during the year, it says. In Zones 1 and 2, prices have softened slightly at the higher end of the market, although demand remains high in this sector.

The firm’s sales rates for the year to date have remained strong, at 0.75 sales per outlet per week (0.76 in 2015). For the second half of the year to date, sales rates stand at 0.70 (0.74 in 2015).

Cancellation rates for the year to date remain low, at 13% (11% in 2015). During the period, Taylor Wimpey operated on an average of 291 outlets (301 in 2015).

Taylor Wimpey Confident in the Strength of the Housing Market

The firm reports that it is fully sold for its targeted 2016 completions, and is building its order book for 2017 and beyond. As of 6^th November, it is around 23% forward sold for its expected 2017 private completions. The current total order book, excluding joint ventures, is ahead of last year and represents 8,981 homes (8,529 in 2015), standing at £2.3 billion (£2.1 billion in 2015).

Build costs

As previously expected, build costs are predicted to increase by around 3-4% during 2016, with the majority of cost pressures coming from labour, where skilled resource availability has improved, but not at the same rate as the increase in new home supply.

While the firm does expect to see some impact on input prices from the moving exchange rate, it does not expect this to be significant, due to the low level of direct imports. It forecasts underlying build cost increases in 2017 to be at a similar level to 2016.

Land and planning

The land market remains positive, claims the firm. While it continues to exercise an appropriate level of caution following the EU referendum and subsequent economic uncertainty, it has continued to progress attractive land deals.

In the year to 30^th October, it added around 11,500 plots to its short-term landbank. With a high quality short-term landbank, which is at the optimum scale for the business, alongside a continued strong conversion rate, Taylor Wimpey remains focused on the quality of individual sites and structure of commercial terms to add value.

Outlook for the future

While the implications of the EU referendum are still unclear, the UK housing market has remained resilient, says the firm, with long-term fundamentals underpinned by strong demand.

Looking ahead, the housebuilder remains confident that its business model and strategy positions it to perform well through all market conditions.

The Chief Executive of Taylor Wimpey, Pete Redfern, comments on the report: “Trading during the second half of 2016 and into the autumn selling season has been strong, with good levels of customer confidence and demand, underpinned by a wide range of mortgage products.

“While there remains some uncertainty following the UK’s vote to leave the European Union, we are encouraged to see that the housing market has remained robust, and trading has remained resilient. We have a strong order book position for 2016 and going into 2017, and we will maintain our focus on delivering our medium-term targets.”

He adds: “Looking ahead, we continue to implement our disciplined strategy, which ensures that we are well placed to perform well through all market conditions and deliver enhanced value through the cycle.”

Does the housebuilder’s confidence indicate that the country is on its way to creating the homes we so desperately need, despite economic uncertainty?

Around 25% of investors will quit sector following tax changes

Published On: November 15, 2016 at 9:41 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let landlords,mortgage interest tax relief,rents,tax changes

A new survey of 1,000 buy-to-let landlords has revealed that around one quarter are thinking of quitting the sector as a result of recent and forthcoming tax changes.

The research conducted by the Residential Landlords Association highlights stamp duty surcharges and restrictions on mortgage interest tax relief as the main features.

Rising rents

This follows a previous study that showed that 56% of landlords plan to raise their rents, in order to cope with the tax alterations.

David Smith, policy director at the Residential Landlords Association, said: ‘The RLA’s findings are a worrying sign of the potential trouble ahead for tenants as a result of the previous Chancellor’s tax rises. Any reduction in supply is going to make it more difficult for them to find a place to live and will inevitably drive rents up.’[1]

‘Ahead of the Autumn Statement (next week), we are calling on the new Chancellor to consider the evidence, reverse policy and support growth in the rented sector,’ Mr Smith added.[1]

Around 25% of investors will quit sector following tax changes

Tax burden

The call from Mr Smih and the Residential Landlords Association comes on the heels of another call from Laura Lamb, director of The Mortgage Company.

Lamb feels that the stamp duty surcharge should be aimed at portfolio landlords, as opposed to amateur ones.

‘Responsible lending is very important and I fully support that but stress-testing mortgages rates at 5.5% interest rates with a rent cover of 145% is just ridiculous and will massively limit lending,’ Lamb observed.[2]

‘I would focus more attention on offering more assistance to those trying to buy. The Government has introduced the Help to Buy ISA but it’s only available if you are purchasing a property under £250,000. Most first-time buyers in London and the south are looking at purchase prices in excess of this so they instantly lose out,’ she concluded.[2]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/a-quarter-of-buy-to-let-investors-will-quit-warns-grade-body

[2] https://www.lettingagenttoday.co.uk/breaking-news/2016/11/hands-off-buy-to-let-mortgage-chief-tells-the-government

Letting Agents Profiting from Spiralling Fees, Believes Student Tenant Site

Published On: November 15, 2016 at 9:31 am

Author: Em Morley

Categories: Landlord News

Tags: letting agent fees,letting agents,rent prices,tenants

Letting agents are profiting from charging spiralling fees for “no extra work”, believes a student tenant website.

A study by StudentTenant.com – a free-to-list student lettings platform – highlights the extent to which letting agents are profiting from higher rent prices.

Their “antiquated model” of charging a high commission to let a property still allows them to pocket sky-high fees, without conducting extra work, insists the organisation.

Letting Agents Profiting from Spiralling Fees, Believes Student Tenant Site

In the last 12 months, rent prices have risen to an average of £901 per month – up by 3%, which is higher than the current rate of inflation.

The lowest rents can be found in the North East of England, at an average of £530 a month. However, in London and the South East, it’s a completely different story…

The cheapest London borough for private tenants is Croydon, where the average rent is £1,170 per month. In Westminster, this rises to a huge £2,241.

Although the problem is considerably worse further south, rent rises have been felt across the country.

The UK’s greatest increase over the past year was in Lambeth, where rents rose by 12% to reach £2,874.

Only one part of the UK, Scotland, has seen a decrease in rents over the past year.

Some London boroughs have experienced rent declines, however, with Haringey seeing the greatest fall, of 6.4%. Prices are also down in Brent, Bromley, Kingston and Chelsea.

With the majority of regions and London boroughs seeing rent price growth, letting agents will also have experienced a bump in their earnings, StudentTenant.com points out.

The firm’s research puts the average letting agent fee at 12.7% of the total rent for the year, meaning the typical fee across the UK is over £1,300. In the South East, it’s more than £1,500, while those in Westminster charge a whopping £3,415.

Following a bumper rent price rise, letting agents in Lambeth can now charge £345 more than at this time last year.

But is this justified, asks the group.

“It’s really hard to justify the amount that a typical high street letting agent charges in the first place, let alone above inflation increases in most parts of the country,” insists its Managing Director, Danielle Cullen. “There’s a significant shortage of good rental stock, which means higher rents and yields, which can be great news for landlords, but not so great for tenants.”

She adds: “But when much of that gain is eroded by greedy agents taking a fatter and fatter chunk of it, 12.7% of what would otherwise be the landlord’s income in effect, then buy-to-let investors might want to think twice about resorting to an old fashioned high street-based rental firm.”

In order to protect tenants from spiralling fees, Citizens Advice has called on landlords to cover letting agent costs. Do you think this is a good idea? And would this deter you even more from using a high street service?

Shortage in property pushing up prices

Published On: November 14, 2016 at 12:03 pm

Author: Em Morley

Categories: Property News

Tags: Brexit,housing supply,landlords,property,property prices

New figures released from haart estate agents has showed that transactions, viewings and registrations all slipped during October.

The report reveals that property prices rose by 0.5% month-on-month and by 1.5%, taking the average UK house price to £227,566.

Dropping demand

Buyer demand for homes dropped by 2% in September and is down substantially by 22.4% year-on-year. What’s more, the number of properties coming onto the market has dropped 5.3% month-on-month and by 6.1% year-on-year.

As such, the decrease in stock has led to the number of buyers chasing an instruction to rise slightly. There are now nine potential purchasers for every new property coming onto the market.

In addition, the market has become less efficient in the last month, with the number of transactions decreasing and viewings rising.

Market ups and downs

The typical purchase price for first-time buyers has increased by 2.8%, up year-on-year by 5.6%. However, the number of first-time buyers entering the market dropped by 1.5% month-on-month and by 30.1% annually.

In terms of tenants, the numbers entering the market fell by 2.6% and by 13.4% annually. This pushed down rents marginally, with the average rent now £1,385 in the whole of the UK. In London, demand has risen by 6.8% month-on-month, but is still down year-on-year. Average rents in the capital are £1,961.

Investors taking out landlord insurance on properties have increased over the last month, with numbers registering to buy rising by 5.4% month-on-month across Britain. Despite that increase in demand, sales prices have fallen, by 3.5% over the month and by 9% in London.

Transactions increased by 28.6% across the UK over the course of the year.

Shortage in property pushing up prices

Confusion

Paul Smith, CEO of haart estate agents, noted: ‘The nation’s property market is suffering from the ongoing confusion around Brexit and what it will mean for our economy. Homeowners are experiencing a crisis of confidence, with sellers either holding out for better offers or keeping their properties off the market altogether. A Brexit courtroom drama has hardly helped the situation. The Government must set out a clear plan for Brexit to help buyers and sellers feel confident and to get housebuilders building again.’[1]

‘In London, which voted heavily in favour of Remain, the problem is particularly acute, with the number of new properties on the market down by over 10% on last month, and transactions down by over 20% on last year. The current supply shortage has seen a jump in London prices compared to last month, but unlike normal times this isn’t a sign of a ‘hot’, active market. It is a blip undermined by the fall in transactions – in reality nobody is winning in the current market. The ‘Psychology of Brexit’ is holding the market back, and the government must act to avoid this dip becoming a long-term problem,’ he continued.[1]

Concluding, Mr Smith said: ‘The Autumn Statement is the Government’s opportunity to relieve the pressure. Philip Hammond must look to cut stamp duty, especially at the bottom end to help ‘generation rent’ make their move onto the property ladder, which will increase fluidity in the market. We also need to see new incentives to ensure housebuilders continue with planned projects and increase their pipelines to get Britain building again.’[1]

[1] http://www.propertyreporter.co.uk/property/property-shortage-continues-to-push-up-house-prices.html