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Demand for property in PCL slows in April

Published On: May 16, 2016 at 11:47 am

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Demand for property in some the capitals’ most high-value locations has fallen, just weeks after the additional 3% stamp duty charge on buy-to-let accommodation was introduced.

In the prime central London sector, demand currently stands at 10% on average, falling by 23% since the changes were introduced, according to the PCL index from eMoov.

Lows

The Index shows that demand is now at its lowest level since records were first taken over one year ago. This indicates a significant change between supply and demand for property valued at £1m or more across London’s most prestigious regions.

During the run up to the stamp duty deadline, eMoov found that the rush to complete transactions had breathed new life into the top end of the market. Demand changed prime central London’s downward spiral and saw increases for the first time since May 2015 during the period.

However, it appears that this increase was superficial, with demand dropping so substantially just one month after the changes.

Demands

Only one region of prime central London, Fitzrovia, had maintained March’s increase in demand. Year-on-year, Belsize Park, Maida Vale, Primrose Hill, Holland Park and Marylebone were the only other regions to see an increase in demand.

Presently, Islington is the most in demand area, with 21%. Belsize Park is next with 19%, followed by Chiswick at 18%, Maida Vale at 16% and Notting Hill with 12%.

At the other end of the scale, St Johns Wood and Mayfair are suffering from the lowest demand levels on record, with just 4%.

Demand for property in PCL slows in April

Demand for property in PCL slows in April

Artificial

eMoov chief executive officer Russell Quirk, noted, ‘it’s now abundantly clear that the brief resurrection of London’s prime central London market witnessed in March, was an artificial skew as many scrambled to complete a sale before April’s stamp duty deadline.’[1]

‘It seems the extra 3% levy has slowed London’s top end market and this will inevitably lead to further, sizeable reductions in property values,’ Mr Quirk continued. [1]

[1] http://www.propertywire.com/news/europe/prime-central-london-demand-2016051311911.html

Uncertainty Causes Slowdown in Mortgage Approvals in April

Published On: May 13, 2016 at 9:13 am

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A slowdown in mortgage approvals in April was caused by uncertainty in the economy, according to the latest Mortgage Monitor from the UK’s largest chartered surveyor, e.surv.

Uncertainty Causes Slowdown in Mortgage Approvals in April

Uncertainty Causes Slowdown in Mortgage Approvals in April

Seasonally adjusted house purchase approvals in April totalled 57,512 – down by 19.4% from the 71,357 loans granted the previous month. This significant decline follows a previous three-month average of 72,693 house purchase approvals since the start of the year.

e.surv believes that economic uncertainty is playing a role in this decrease, as are new tax changes for buy-to-let landlords.

Annually, house purchase lending has fallen by 14.9% from the 67,594 loans recorded in April 2015. Preceding this decline, annual rises of 20.2%, 17.9% and 14.7% were seen, as Stamp Duty changes triggered an uplift in overall lending levels. The drop also follows record high lending during the previous quarter, fuelled by buy-to-let borrowing.

The Director of e.surv, Richard Sexton, comments on the figures: “The mortgage market is entering a more turbulent phase. As lenders steer for safety, three different forces are at work. First and foremost are the effects of the looming EU referendum on confidence and certainty for the UK. Whichever way the result, financial markets could see rapid shifts in the days and weeks beforehand, and especially immediately afterwards.

“Secondly, the lending market is in one sense beginning to return to its normal rhythm after suffering a hangover from the party of buy-to-let activity seen earlier this year. As this excitement begins to wear off, a more normalised lending climate is beginning to reassert itself. Home lending is solid beneath this predicted surface slowdown, but now the headache is by no means over, as new economic risks cause understandable caution from lenders.”

He adds: “The third major break on mortgage lending is a deeper foreboding about the solidity of the UK economy – quite subtle, but potentially more major.”

Sexton advises lenders: “It’s crucial for lenders to manage risks in the coming months. There now looks to be completely different interest rate speculation on the horizon and all eyes will be on the Bank of England to see the next steps taken. With some calls to cut interest rates rather than raise them, lenders will have to remain even more alert to economic conditions. And slowing growth is a further sign which is adding to doubts over economic security in general.”

However, he concludes: “Despite all these ongoing risks, the underlying core of the lending market appears strong enough to weather such tests. For some first time buyers, prospects are improving and despite rising house price costs, lenders remain keen to help credit-worthy borrowers get on the property ladder.”

Recently, mortgage lenders were warned to tighten their lending criteria on buy-to-let products, due to new rules in the sector.

Housing and Planning Bill Gains Royal Assent

Published On: May 13, 2016 at 8:32 am

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Housing and Planning Bill Gains Royal Assent

Housing and Planning Bill Gains Royal Assent

The controversial Housing and Planning Bill has now gained royal assent and has officially become the Housing and Planning Act.

The bill was first introduced in October last year. During the last eight months, it has gone through around 40 parliamentary sessions, heaps of Government defeats in the House of Lords, and 16m pieces of data have been analysed. However, yesterday afternoon, it finally received royal assent to become law.

The act has been criticised for putting an end to social housing. Some of its policies include: the introduction of Starter Homes on new developments for first time buyers at a 20% discount; the extension of the Right to Buy scheme to housing association tenants; and the release of a blacklist of rogue landlords and letting agents, with powers to ban repeat offenders from the private rental sector.

Letting agents must also keep client money in accounts separate to business accounts under Client Money Protection rules.

The Chartered Institute of Housing (CIH) discussed the new legislation at the annual housing and health conference, ahead of royal assent.

The Shadow Housing Minister, John Healey, said the bill is limited and unbalanced, and only focuses on homeownership.

The conference was also attended by Matt Allwright, the presenter of Rogue Traders, who Healey said had done more than many MPs to highlight poor conditions and bad landlords in the private rental sector.

But don’t think this is the end for the bill – the flow of legislation is due to continue, and it is believed that a new housing bill will make it into the Queen’s Speech next week.

Although the bill will probably focus on garden cities, it will likely include small print that may be of interest to landlords and letting agents.

We will continue to provide you with updates on all changes to property and landlord law at LandlordNews.co.uk.

Housing Demand and Supply are Both in Decline, Reports RICS

Published On: May 12, 2016 at 8:35 am

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Housing demand has fallen for the first time since March 2015, according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Housing Demand and Supply are Both in Decline, Reports RICS

Housing Demand and Supply are Both in Decline, Reports RICS

The organisation believes that the market has cooled after landlords rushed to beat the 1st April Stamp Duty deadline and the EU referendum approaches.

The survey found that interest from buyers dropped in April, with 22% more chartered surveyors reporting a decrease in demand.

The RICS claims that there is little prospect of the market improving, with 8% more surveyors reporting a fall in new instructions in April and the lack of housing stock looking unlikely to ease in the short term.

Of the 303 surveyors polled, 22% more respondents in London expect property sales to drop over the next three months.

Despite a fall in demand, prices are still rising outside of central London and parts of the North of England. Over the next 12 months, prices are forecast to increase across the whole of the UK, with 61% more surveyors expecting prices to go up in England and Wales.

Regionally, London has lower price growth expectations over the next few years than the rest of the UK, with prices likely to remain steady. However, surveyors expect prices to go up in each part of the UK by between 3-5.5% per year in the next five years.

Surprisingly, following the recent surge in demand from buy-to-let landlords, there has not yet been a noticeable increase in new landlord instructions.

The survey suggests that recent policy changes in the buy-to-let sector are causing landlords to reconsider their position in the market. As tenant demand rises – 22% more surveyors have seen a rise rather than a fall – rent prices are more than likely to increase further. Due to a lack of stock for all tenures, rental growth is expected to rise at an average rate of 4.6% per year over the next five years.

The Chief Economist at the RICS, Simon Rubinsohn, comments: “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data.

“More ominous is the expectation that both prices and rents will head materially higher over medium term, despite existing affordability concerns with the supply pipeline continuing to fall short of household growth, notwithstanding the various levers the Government is pulling to try and drive development.”

The Housing Crisis is Deepening as Homeownership Remains Unaffordable

Published On: May 11, 2016 at 8:48 am

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The housing crisis is deepening, as homeownership remains unaffordable for the high number of aspiring first time buyers who cannot get onto the property ladder, according to new research conducted by YouGov on behalf of the HomeOwners Alliance and BLP Insurance.

The study, now in its fourth year, polls over 2,000 UK adults on their housing concerns and the latest trends affecting homeowners and those looking to buy a home.

The survey highlights the growing appetite of first time buyers to get on the housing ladder. Around three-quarters (73%) of non-homeowners now say they would like to own their own home, compared to 69% last year, 68% in 2014 and 65% in 2013.

The Housing Crisis is Deepening as Homeownership Remains Unaffordable

The Housing Crisis is Deepening as Homeownership Remains Unaffordable

Although the desire to own a home is mounting, the ability for first time buyers to purchase a property and save for a deposit remain the UK’s main concerns, with 82% and 80% respectively saying that these are serious issues.

Additionally, the proportion of aspiring homeowners who say that the availability of housing is a serious problem has soared to 78%, up from 72% last year. Hopeful homeowners are also increasingly concerned about the quality of housing, with 60% naming it a serious issue.

The study also found that the housing crisis is most severe in the capital. However, the new Mayor of London, Sadiq Khan, has set ambitious aims to tackle the shortage of affordable housing.

Positively, there was a noticeable drop in concern about the rates of Stamp Duty, after the Government’s reforms were introduced almost two years ago.

However, landlords are now facing a further 3% in Stamp Duty on buy-to-let properties. Concerns have been raised that landlords may decide to leave the sector, which would cause a decline in private rental property stock; further exacerbating the affordability crisis.

The Chief Executive of the HomeOwners Alliance, Paula Higgins, comments on the results: “Despite a blizzard of Government initiatives aimed at helping homeowners, the housing crisis is deepening across the country, with ever more non-homeowners wanting their own home, and ever greater concern about the lack of housing.

“Many Government policies have boosted demand for homes, but what this survey shows is that the real problem is the desperate shortage of houses. Until the Government tackles the fundamental issue that we just don’t have enough good quality homes, the housing crisis will continue to deepen and a generation will continue to have their dreams of homeownership crushed.”

The Chief Executive of BLP Insurance, Kim Vernau, also responds: “We are now at a critical juncture for the construction industry and housing market. The Government urgently needs to speed up the delivery of new homes for aspiring first time buyers. Tenures of all types are required across the country, and affordable housing and social housing should also be a priority.”

With a high number of prospective first time buyers struggling to purchase their own homes, demand for private rental property looks set to remain strong. Therefore, good landlords that stick to the law and rent out good quality homes are crucial – make sure you check LandlordNews.co.uk regularly for landlord updates.

Strong start to the year for property market

Published On: May 10, 2016 at 1:19 pm

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A new report has underlined the strong start to the year for the British property market, with the positivity recorded at the end of 2015 continuing.

Data from the research conducted by Connells Group shows the number of active buyers coming into the residential market has soared to record highs. Combinations of attractive factors, such as low interest rates, have contributed to this increase.

Growth

David Livesey, group chief executive, noted that with stock available at record lows, additional pressure from new buyers, combined with buy-to-let investors looking to beat the stamp duty deadline, has lead to widely-restricted choice.

He believes however that the ratio of applicants in comparison to new instructions has evened out and that property price growth has not been as rapid as seen in previous quarters. This in turn is leading investors or first-time buyers to believe that purchasing could be productive in the long-term.

Livesey said, ‘this slight cooling has by no means turned into a chill, with property remaining a valuable asset that will continue to increase in value for the foreseeable future. Supply side initiatives, driven by the Government’s attempt to stimulate housebuilding in particular, may need further support if they are to have any meaningful impact on the level of available stock in the short term.’[1]

Positive

The report indicates that landlords and tenants alike have enjoyed a productive beginning to the new year. Activity from renters has risen healthily, with many looking to move into new accommodation.

Interestingly, the report shows that despite the fresh demand from new applicants entering the market, the ratio of registered applicants is not as high as in the same period in 2015. Average rents across England have also stabilised .

Mr Livesey pointed out that a rise in rental stock is easing pressure on the market, as buy-to-let landlords are moving to purchase less expensive properties. ‘This may not be what the Government had in mind when it aided the construction of such properties, but it has given tenants respite nonetheless. In addition, tenants are also driving harder bargains, securing longer leases at a cheaper monthly rate meaning they need to return to the market less often, which is also attractive to landlords.’[1]

‘The mortgage market has also sprung back to life this quarter, largely propelled by high activity levels in the residential and buy-to-let sectors. Home movers and first-time buyers are seeking to take advantage of the low interest rate, high LTV lending environment,’ he continued.[1]

Strong start to the year for property market

Strong start to the year for property market

Stamp Duty increases

Unsurprisingly, the report confirms that there was a substantial increase in buy-to-let lending as a result of the 3% stamp duty surcharge on buy-to-let and second properties. The report shows that lending activity fell after the deadline.

Livesey notes however that, ‘this is not a sign that investors have lost confidence, more a short term trend as they simply sought to avoid an unnecessary upfront cost. Indeed, over the long term, the sector is more than capable of riding out the increased levy given its strong fundamentals, namely, high yields, high rental demand and accessible mortgage lending.’[1]

Brexit fears

With uncertainty surrounding the upcoming EU referendum growing, the report suggests that the economic outlook still looks positive.

‘There are some warning lights flashing in certain areas of the global economy and the current Brexit debate is leading to a degree of business uncertainty. The uncertainty is similar to that seen in the lead up to the Scottish Referendum in 2014 and the UK General Election in 2015 and whilst this may introduce some hesitancy to the market during the second quarter of the fundamentals of the UK economy remain strong, with low unemployment, reasonable rates of GDP growth and rising real term wages, ‘Livesey observed.[1]

‘This generally positive climate looks set to be maintained over the coming quarters, regardless of the result of the upcoming referendum and with demand for housing continuing to outstrip supply, the outlook for the hosing market remains positive,’ he concluded.[1]

[1] http://www.propertywire.com/news/europe/uk-property-market-outlook-2016051011895.html