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Report Calls for Powers to be Devolved to London to Solve Housing Crisis

Published On: March 7, 2016 at 9:54 am

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Local authorities must be given more powers over house building in London if the capital is to overcome its housing crisis, according to a new report.

The London Housing Commission, lead by Lord Kerslake, states that rogue landlords should be forced to bring their rental properties up to a decent standard or have these homes banned from the market.

The report, released today, puts forward a number of proposals to solve London’s housing crisis.

It claims that all London boroughs should be able to set up their own landlord licensing schemes and use the fees to increase enforcement activity in the private rental sector.

The London Housing Commission insists that London needs a “radical devolution” deal if it is to overcome the severe lack of housing.

Report Calls for Powers to be Devolved to London to Solve Housing Crisis

Report Calls for Powers to be Devolved to London to Solve Housing Crisis

In return for greater powers over borrowing, property taxes and the planning system, the Mayor of London and local authorities would have to make a joint commitment to deliver significantly higher numbers of new homes, it says.

The report believes that devolving powers from central government to London boroughs could double the number of new homes built in the capital every year to 50,000.

It adds that London should be able to retain a significant portion of Stamp Duty money to fund house building.

The London Housing Commission would also like to see local authorities able to set Council Tax premiums on empty and second homes.

Lord Kerslake, the Chairman of the London Housing Commission, comments: “London is facing a housing crisis of unprecedented proportions brought about by a chronic under-supply of new housing. It needs urgently to be building far more houses of all types and tenures.

“The only route to building substantially more homes in London is to give the capital’s leaders more direct responsibility over the key levers, such as land use, planning rules, housing standards, property taxes and investment, and holding them accountable for delivery.”1 

The Head of Policy at the Royal Institution of Chartered Surveyors (RICS), Jeremy Blackburn, responds to the report: “There is no doubt that London faces a housing crisis. As we have always said, the solution relied on all parts of the housing sector firing on all cylinders to deliver all kinds of new homes from Government-funded social housing to private new builds.

“Critically, new and replacement social homes must have protection from Right to Buy in London.”

But Blackburn does not support all of the commission’s plans. He has criticised the proposal to allow councils to set up their own landlord licensing schemes.

He explains: “Though we agree with the London Housing Commission that poor quality homes and rogue landlords need to be addressed, the introduction of individual licensing schemes for each borough would place additional regulatory burdens on landlords and local authorities.

“They would also penalise those that are providing a good service, creating a fractured regulatory framework and hindering institutional investment in the private rented sector.”

However, he does praise some elements of the report: “Given the failure of central government to deliver enough genuinely affordable new homes, a move to devolve powers and responsibility to front line local authorities will help solve some of the issues that are currently blocking the supply of homes.”1 

Do you believe that these proposals would help solve the London housing crisis?

1 http://www.cityam.com/236061/london-housing-commission-calls-for-devolution-to-solve-chronic-lack-of-house-building

 

Buy-to-let investors rushing to beat deadline, but will it last?

Published On: March 6, 2016 at 11:40 am

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Buy-to-let investors are rushing to complete deals before the stamp duty changes on April 1st, according to new data from the Nationwide.

The firm’s house price index reveals that there has been a large rise in mortgage approvals, which reached a two-year high in January. Data also shows that prices increased on average by 0.3% in February. Growth for the year also increased by 4.8%.

Up and Up

Robert Gardner, Nationwide’s Chief Economist, noted, ‘the number of mortgages approved for house purchase increased sharply in January to almost 75,000, up from around 71,000 approvals in December and the highest number since January 2014.’[1]

‘However, much of the increase is likely to be related to the impending increase in Stamp Duty on second homes which is due to take effect in April 2016. This is likely to have brought forward a significant number of purchases, which in turn will probably result in a fall back in approvals during the spring/summer,’ he continued.[1]

Race

Jonathan Hopper, managing director of Garrington Property Finders, observes, ‘the race is on for second home and buy-to-let buyers to complete before April’s stamp duty hike. The resulting spike in demand sent the number of mortgage approvals surging in January and has sparked high levels of competition for typical buy-to-let properties-flats and terraced houses in popular rental areas.’[1]

Looking to the future, Hopper asked, ‘what will happen once the stamp duty scramble is over?’ He believes that, ‘the chronic shortage of supply is likely to continue nudging up prices, even after the pre-April stimulus fades.’[1]

Buy-to-let investors rushing to beat deadline, but will it last?

Buy-to-let investors rushing to beat deadline, but will it last?

Speed bump?

‘It’s hard to know if the April stamp duty deadline will be a speed bump for the market or a speed boost,’ states Mark Posniak, managing director at Dragonfly Property Finance. ‘Demand from buy-to-let investors will fall away during March but first-time buyers could arrive in numbers.’[1]

Posniak feels that, ‘the age-old opponent of first-time buyers, the landlord, has effectively been red-carded and the playing field is now theirs.’ He went on to note, ‘as the buy-to let purge starts in earnest, the appallingly low home ownership rate for younger people may well pick up. With the Bank rate seemingly set in stone for 2016 and people confident about their jobs, demand is unlikely to wane.’[1]

‘The ebb and flow of the property market is difficult to predict at the best of times but with the possibility of Brexit and the April stamp duty change impacting landlords, its bordering on the impossible,’ he concluded.[1]

A storm brewing

However, Alex Gosling, CEO of online estate agents HouseSimple.com feels, ‘this could be the storm before the calm. February house price growth is being driven by the buy-to-let gold rush-investors trying to get in before the stamp duty hike. March is likely to be more of the same, as time is running out. It will be interesting to see what happens in April, which is historically a buoyant time for the housing market. We are walking into the unknown and there’s a chance that demand will drop like a stone.’[1]

‘With less buy-to-let investors snapping up properties from beneath the noses of traditional home buyers, we could well see a surge in first time buyers coming to the market. Home buyer demand has always been there, but they have often struggled to compete against committed investors, many of whom can buy for cash. Now they’re fighting on a more level playing field, we could well see the drop off in investor numbers replaced by a surge in first time buyer numbers,’ Mr Gosling added.

[1] http://www.propertyreporter.co.uk/finance/the-race-is-on-for-btl-investors.html

What’s in the Basement of This Liverpool Property?

Published On: March 6, 2016 at 8:52 am

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Although the country is suffering a shortage of housing supply, demand is incredibly high for this quirky Liverpool property that has a huge secret in its basement…

A pub.

The owners of this home in Fazakerley, Liverpool have built themselves a miniature pub in their basement to avoid stumbling home after heading to the local.

The six-bedroom house, which is on the market through Grosvenor Waterford, costs just under £300,000 and comes with a fully fitted pub downstairs.

The pub has a custom-built bar, complete with bar stools. There is an under-the-counter fridge and even boxed-in seating for you to enjoy.

It is decorated to a nautical theme, with a ship’s wheel on the wall and a lobster net on the ceiling. Completing the look is a pool table.

But it’s not just the basement pub that is appealing – this property has six bedrooms, three bathrooms and a large conservatory. It has attracted over 2,000 views on Zoopla.

The agent describes the pub basement: “The spacious basement (the full size of the ground floor) has been turned into a wonderful entertaining space with a pub and games room as well as a utility room and additional storage.”1

What do you think? Could you feel at home here?

1 http://www.liverpoolecho.co.uk/news/liverpool-news/home-pub-basement-goes-sale-10972232

Where are the top cities for buy-to-let investors?

Published On: March 5, 2016 at 11:45 am

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New research has indicated that many buy-to-let investors are leaving London behind in order to secure the best opportunities.

For years, the capital has represented the number one region for yields and soaring tenant demand. Now, with property prices in the city spiralling out of reach, investors are being forced to look further afield.

Best to invest

Data from a report by Savills assesses the top drivers of the rental market and identifies the best cities for buy-to-let investment.

The research discovered that Manchester, Reading and Bristol were the top-three areas in which landlords should invest. This is due to their strong economic growth and reputations as desirable locations to live in.

Though not an exhaustive list, Savills looked at invest prospects in areas where a substantial housing shortfall is expected. This was coupled with the economic potential of every city, including analysis of past and future growth sectors.

In addition, the report examined the investment potential of each city, taking into account the net income return, chances of rental and capital value growth and supply and demand. This included household projections, growth forecasts and local competition.

Eventually, the top ten cities for investment were found to be:

  • Manchester
  • Reading
  • Edinburgh
  • Bristol
  • Brighton
  • Leeds
  • Glasgow
  • Cardiff
  • York
  • Milton Keynes
Where are the top cities for buy-to-let investors?

Where are the top cities for buy-to-let investors?

Northern soul

‘House prices in London are about five times what they are in Manchester, but salaries re only 30% higher,’ noted Peter Armistead of Armistead Property. ‘Manchester is a very affordable place to live and demand for property is soaring in the city, thanks to the expansion of the MetroLink tram system, the trendy Northern Quarter and the BBC Media City.’[1]

‘Manchester has vibrant restaurants, bars, clubs plus a great music scene, galleries and museums,’ Armistead continued. ‘It also has an amazing student community and its universities, teaching and research facilities are truly wolrd class. It is home to nearly 100,000 students, making it one of the largest student cities in Europe. Despite all of its many advantages and attractions, Manchester is a very affordable place to live and many students chose to carry on living there after they graduate, as well as graduates from other areas moving to Manchester. Furthermore, wages relative to property costs are a very important factor in attracting these people.’[1]

Concluding, Mr Armistead said, ‘Manchester is a great place for BTL investment. An average residential property in Manchester is just £155,000, while a flat in a good area costs as little as £120,000. A property in the city can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper. It’s not surprising that investors are turning away from London to more fruitful, regional cities like Manchester. If investors can purchase cheaper properties with better yields, they will have the opportunity to protect and boost their profits in the longer term.’[1]

[1] http://www.propertyreporter.co.uk/landlords/savills-research-reveals-top-ten-btl-cities.html

 

British Homes are Earning More Than Their Owners

Published On: March 5, 2016 at 9:31 am

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Last year, British homes earned more than nearly half of all workers, according to a new study.

The average house price in Britain increased by £18,000 last year – more than the salary of almost 40% of the workforce, says Post Office Money.

The Cost of Buying and Moving report reveals that the average price rise almost matched the starting salaries of many professionals, including nurses, teachers, junior hospital doctors and police officers, who all start on around £22,000 per year.

British Homes are Earning More Than Their Owners

British Homes are Earning More Than Their Owners

In London, the average property price increased by £46,000 in 2015, compared to an average annual salary of £36,000 in the capital.

A recent report from the Halifax discovered that the largest gap between wages and property price rises was in Three Rivers, Hertfordshire, where house prices have risen by £148,000 in the past two years, exceeding average earnings by a huge £98,000.

Three Rivers is becoming increasingly popular with London commuters, due to the Metropolitan line.

The second biggest gap was in Harrow, northwest London, which often features in the top ten areas with the fastest rising prices.

Greenwich was in third place thanks to becoming a regeneration hotspot. It is just minutes from Canary Wharf on the DLR and Jubilee line, and will boast a new Crossrail station in 2018, making it even quicker for workers to get to the City of London.

The average house price rise in the UK was £5,800 lower in December last year compared to the year before, while workers’ wages increased by an average of £400, to £26,400.

In London, the average property price growth fell by £11,300 from £57,600 for the previous year. However, the average home in the capital still costs £536,000. Elsewhere, the average price is £365,000 in the South East and £315,000 in the East of England.

The Head of Mortgages at Post Office Money, John Willcock, analyses the data: “Although the rate at which property prices have increased has slowed compared with the dramatic rises seen in 2014 and early 2015, we have still seen a big increase in prices over the last year.

“This has been driven by demand for housing outstripping supply, with the number of properties coming to market failing to match the needs of people looking to buy.”

He remarks: “While this is good news for those who already own their home and will see their property wealth increase, our study highlights the uphill struggle that buyers and movers looking to climb the property ladder continue to face, especially when attempting to get on that all-important first rung.”

Willcock offers his predictions for the rest of the year: “Forecasts seem to indicate a year of two halves in 2016, with prices pushed up before April, as buyers race to beat the new Stamp Duty surcharge on second homes, but then weakening following its introduction and uncertainty around the UK’s position in Europe.

“In the medium term, house prices look likely to continue to rise, as demand for property continues to outstrip the supply of new homes.”1 

As of 1st April, buy-to-let landlords and second homebuyers will be charged an extra 3% in Stamp Duty. Reports have found that landlords are rushing to complete on property purchases to beat the deadline.

It has also be claimed that home movers are delaying their plans ahead of the EU referendum on 23rd June, deciding whether to move once the outcome is confirmed.

Additionally, questions were raised this week over whether housebuilders are restricting housing supply in order to boost profits.

1 http://www.homesandproperty.co.uk/property-news/british-houses-earn-more-than-their-owners-average-home-rose-by-almost-20k-across-the-country-and-a99506.html

Home Movers Postponing Plans Until After EU Referendum

Published On: March 4, 2016 at 3:25 pm

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Home movers are postponing their plans until after the EU referendum on 23rd June, according to new research from removals firm Bishop’s Move.

The company surveyed 1,000 people in the UK, with a number of buyers and vendors in every region saying they will wait until after the poll.

Home Movers Postponing Plans Until After EU Referendum

Home Movers Postponing Plans Until After EU Referendum

Those living in London are the most likely to wait until after the referendum result to move house, with 47% saying they will not buy or sell until after 23rd June.

Just 20% of Londoners said the referendum would not make a difference to their plans.

The Sales and Marketing Director at Bishop’s Move, Chris Marshall, says the study “does paint a picture of both the attitude towards the EU referendum amongst London homeowners and also their approach towards the price of property in the capital”.

The latest house price figures show that the average property in the capital is now worth a huge £526,085. It is believed that Londoners will need a 266% pay rise to get onto the property ladder.

In other parts of the UK, between 11-15% of home movers are deferring their plans ahead of the poll.

Marshall explains the results: “It’s actually a very similar situation we found in Scotland during its 2014 independence referendum.”

He continues: “Significant policy decisions can severely impact the UK housing market, and our own research last year also found almost a quarter of those looking to buy and sell a property delayed their move by one to four months in order to wait for the outcome of the general election.

“However, whilst these results point to a slowdown in the build up to June, we fully anticipate business to resume as usual, particularly when the school holidays arrive and everyone wants to get their moves completed during the break.”1

1 http://www.ibtimes.co.uk/eu-referendum-london-property-market-faces-slowdown-ahead-brexit-vote-june-1546881