Search Results For: buy to rent sector

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

Published On: February 26, 2016 at 4:07 pm

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Londoners will need a 266% pay rise if they have any hope of getting onto the property ladder in the capital, warns the National Housing Federation (NHF).

The average price of a London property is now a huge £526,085 – more than 16 times the typical salary of £32,838 that the average London worker receives annually, according to data from the NHF, which represents affordable housing providers.

Buying a home in over half of London boroughs would require an income of more than £100,000 per year.

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

Londoners Need 266% Pay Rise to Get on Property Ladder, Warns NHF

In more affordable parts of the capital, such as Barking and Dagenham, the average income is still half of what is needed to get a mortgage, the report by the NHF found.

Despite typical earnings of £59,000 in the Royal Borough of Kensington and Chelsea, it is the least affordable area, with the average house price of £1.94m costing 33 times the average income.

The Chief Executive of the NHF, David Orr, insists that a secure and affordable home should be available to everyone.

“Living in London doesn’t have to mean living in cramped, overpriced, insecure accommodation; the housing crisis is not inevitable,” he believes.

The report marks the launch of the NHF’s 100,000 Affordable Homes for London campaign, which urges the next London mayor to give the affordable housing sector access to public land.

In return, the NHF has pledged to help the mayor tackle the current housing shortage, which is estimated to be around 151,000 homes.

“Both Sadiq Khan and Zac Goldsmith have correctly identified housing as one of the biggest challenges facing London,” says Orr. “We’re here to say that we know how to help.”1 

Last week, the House of Lords’ National Policy for the Built Environment committee warned that housing associations should be able to play a bigger part in the crisis, as the Government will not reach its 240,000 house-building target by relying on the private sector alone.

Over the last mayoralty, housing associations have built 40,000 homes for rent and sale in London.

Earlier this week, the Council of Mortgage Lenders (CML) warned that first time buyers and home movers are already stretching their mortgages in order to get onto or move up the property ladder, as house prices spiral.

The latest property market news can be found at LandlordNews.co.uk.

1 http://www.housing.org.uk/press/press-releases/266-pay-rise-what-the-average-londoner-needs-to-buy-a-home/

 

SDLT changes causing ‘confusion and uncertainty’

Published On: February 18, 2016 at 2:14 pm

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The stamp duty surcharge of 3% is just a matter of weeks from coming into force. However, a leading lettings expert has stated that the forthcoming changes are causing, ‘confusion and uncertainty,’ in the private rental sector.

Ben Evans, MD of Fleet Milne Property, a lettings consultancy based in central Birmingham, believes building barriers to investment will deter thousands of potential tenants searching for rental accommodation in his area.

Lack of stock

Mr Evans said, ‘for years now, central Birmingham has been characterised by a lack of rental stock and the city desperately needs new apartments to meet demand. At present, it is no exaggeration to say we could potentially let every property to four or five different parties.’[1]

‘If investors are deterred from purchasing new properties because of onerous SDLT payments making their investment unviable, new rental stock simply will not become available to the extent that it needs to in order to meet ongoing demand and rents will continue to rise as a result,’ he continued.[1]

SDLT changes causing 'confusion and uncertainty'

SDLT changes causing ‘confusion and uncertainty’

Confusion

Evans went on to say that, ‘even though we are just weeks away from the changes to SDLT being implemented, there is still confusion and uncertainty within the sector and the imminent increase continues to create more questions than answers.’[1]

There has been a flurry of investors looking to beat the April 1st deadline across the country. However, a report from rplan.co.uk suggests that nearly a quarter of would-be buy-to-let landlords have been put off by the changes.

‘Overnight, the SDLT on a £250,000 property purchased for buy-to-let will increase from £2,500 to a massive £10,000,’ Evans suggests.

In Birmingham though, activity remains high, with prices of apartments in central Birmingham still relatively low-cost.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/2/stamp-duty-change-causing-confusion-and-uncertainty-in-rental-sector

 

Home lending values in UK continue to rise

Published On: February 18, 2016 at 9:33 am

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Home lending values increased across all residential sectors during the final month of 2015, according to the latest figures released from the Council of Mortgage Lenders (CML).

However, there are differing pictures in terms of growth and decline.

Annually, the value of lending rose across all lending types, with the CML expecting further steady growth in the next couple of years.

Borrowing

First time buyers borrowed £4.5bn for house purchase purposes, up by 18% on December 2014. This amounted to 29,300 loans, up by 6% month on month and by 11% year on year.

Those looking to move home borrowed £6.6bn. This totalled 33,400 loans, up by 3% month on month and by 12% in comparison to December 2014.

Home owner remortgage activity however was down 16% by value in December 2015, in comparison to November. Year-on-year figures show a different story, with remortgage lending up 24% in value.

Gross buy-to-let lending saw month on month declines, but year on year gains.

Home lending value in UK continues to rise

Home lending value in UK continues to rise

Loans

Additionally, the data shows that first time buyers took out 87,100 loans, which totalled £13.3bn to purchase homes. By value, this was up by 8% year on year.

Home movers took out 101,900 loans, amounting to a total of £20.3bn and up by 18% year-on-year.

Gross buy-to-let activity saw considerable annual increases, with values up by 39%. In addition, buy-to-let lending was at its highest level since 2007.

Increases

‘Improving economic conditions, boosted by government schemes like Help To Buy, saw the highest quarterly number of loans to purchase a home for eight years,’ observed Paul Smee, director general of the CML. ‘The market has seen a gradual upward trajectory over the past few years, rather than rapid growth and we’d expect this trend to continue with gross lending steadily increasing over the next two years.’[1]

Kevin Purvey, chairman of Intermediary Mortgage Lenders Association (IMLA), believes the next figures will show a rise in buy-to-let lending ahead of the stamp duty changes in April.

Purvey said, ‘although gross buy-to-let decreased both in volume and numbers of loans month-on-month. IMLA’s latest research shows that the government’s interventions in the private rental sector will not throw continued growth off course and we’d predict gross buy-to-let lending to reach £48bn in 2017.’[1]

[1] http://www.propertywire.com/news/europe/cml-property-lending-data-2016021811573.html

 

More Tenants than Homeowners in London by 2025, Claims PwC

Published On: February 16, 2016 at 2:56 pm

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The majority of Londoners will be living in rental accommodation by 2025, with just 40% owning their own home, according to a new study by PwC.

This prediction is a reversal of 2000’s property market, when 60% of Londoners owned a home either outright or with a mortgage.

The expected continuation of generation rent will be bad news to many, including the Government, which has been attempting to fuel homeownership through schemes such as Help to Buy.

Additionally, Chancellor George Osborne is clamping down on the buy-to-let sector by imposing tax and financial changes on landlords.

However, it is young people that will be the hardest hit by changes to the housing market. Priced out by high house prices and impossible deposits and mortgages, only 26% of those currently aged 20-39 will own their own home by 2025.

Comparatively, 64% of those born in 1960 and 1970 owned a home by the time they were 35.

Affordability issues will hit Londoners the hardest, with a predicted 24.4% rise in the amount of people renting privately in the capital between 2000 and 2025. In the UK as a whole, it will increase by 14.5%.

A senior economist at PwC, Richard Snook, comments on the firm’s predictions: “This analysis shows that people are increasingly being locked out of owning a home in London, demonstrated by the sharp rise in private rental levels and sharp fall in homeownership.

“High prices are making homes in the capital unaffordable to most and could undo a century-long trend towards rising homeownership rates. In just 25 years, the city has been transformed to one where rental is becoming the norm – especially for younger people.”1

Thanks to low interest rates, those with mortgages are seeing their housing costs fall in comparison to tenants, particularly in London.

The Resolution Foundation reports: “Measured before housing costs, median incomes in London appear to have grown by 2.9% post-crisis; measured after housing costs, they remain 3.7% below pre-crisis levels.”1

The number of people renting is expected to grow in every region of the UK. Northern Ireland will experience the next highest increase in renters, at 24.4%, fuelled by low levels of house building and a younger population. The slowest rise will be seen in the South West, at 6.1%.

Homeownership in Britain hit a high in 2003, at 71% of households. It has been in decline ever since, according to Savills’ Neal Hudson. The Right to Buy scheme of the 1980s is thought to have boosted the peak in homeownership.

David Snell, a partner at PwC, explains how the country must adapt to these forthcoming changes: “With around 60% of Londoners predicted to be renting by 2025 – 40% private sector and 20% social housing – policy will need to adapt. This could include encouraging a better quality of private rented accommodation, including longer tenure periods and more rental properties designed for families.”

He continues: “Demand for housing in the UK has outstripped supply for more than two decades. Changing the outlook for generation rent will require us to build more houses than needed, just to match population growth in order to make up the past shortfall between housing supply and growth in demand.”1 

Recently, we reported that the average buyer who purchases a home this year will have already spent a huge £52,900 on rent.

However, it was also revealed in HomeLet’s rental index that rent price growth in Greater London is at its lowest rate for two years. Despite this, the average new rent in the capital is £1,510 per month. The average across the UK, excluding London, is £740 a month.

The Chief Executive of housing charity Shelter, Campbell Robb, says: “Faced with sky-high housing costs and instability, and forced to wave goodbye to their dreams of securing a home of their own, the shortage of affordable homes in the capital is putting huge pressure on London’s renters.

“But it doesn’t have to be this way; many renters in Europe enjoy greater stability, and there’s no reason London’s tenants can’t as well. To turn around this crisis, the next Mayor of London must prioritise longer, more stable tenancies in the capital and finally commit to building the genuinely affordable homes that Londoners are crying out for.”1

1 http://www.telegraph.co.uk/finance/property/property-market/12157946/Generation-Rent-London-to-become-a-city-of-renters-by-2025.html

Landlords’ confidence, ‘at all-time low’

Published On: February 14, 2016 at 11:11 am

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An alarming statement by the CEO of the National Landlords Association (NLA) has painted a worrying picture of the current state of the buy-to-let sector.

According to Richard Lambert, confidence in the market is at an all-time low and is, ‘worse than levels witnessed during the financial crash.’[1]

Tumbling

Mr Lambert will address peers at the Building Societies Association’s annual meeting and is expected to say that confidence in landlords’ business expectations have slipped by more than a third in the last year. He believes it is fallen from 67% to a record-low of 43%.

If he is to be believed, the current level of confidence in the BTL sector is 5% lower than levels seen after the financial crash of 2007.

Also in his address, Lambert will highlight how the actions of the Chancellor in the Budget and Autumn Statement has led the NLA to backtrack on predictions of growth in the sector. Originally, the NLA suggested that the sector would grow by more than one million households in the next five years.

Now, the firm suggests that if landlords act as predicted, there will be a sharp sell-off of properties of up to 50,000 in the next year. This will be followed by another 100,000 properties sold every year thereafter to 2021.

Landlords' confidence, 'at all-time low'

Landlords’ confidence, ‘at all-time low’

Bleak findings

Lambert will also present findings from the NLA Quarterly Landlord Panel survey, which shows:

  • The number of landlords looking to sell in the next year has doubled from 7%-19%
  • 28% of landlords do not plan to add to their portfolio
  • 10% plan to reduce their housing stock
  • 5% intend on selling their entire property stack

‘Two speeches from the Chancellor in 2015 have led to a crisis in confidence greater than when all but a few BTL products were immediately withdrawn from the market following the 2007 financial crash,’ Lambert said. ‘Up to half a million properties could come onto the market as a result of the Summer Budget and Autumn Statement, which the Chancellor will no doubt deem a success.’[1]

Continuing, he said, ‘there is no guarantee that these will be the one or tow-bedroom flats of small houses that will appeal to first time buyers, especially as landlords are more likely to offload less desirable stock in less desirable areas.’[1]

‘We’ve always said that Mr Osborne is blinded to the impact of his decisions by his commitment to homeownership. He may have intended to focus on the small-scale part-time investor, but it’s the larger and more professional landlords who will be hit worst by cuts to mortgage tax relief and increases to stamp duty and who appear most likely to leave the sector,’ he concluded.[1]

[1] http://www.propertyreporter.co.uk/landlords/landlord-confidence-crashes-to-all-time-low.html

 

Large investment in BTR should be exempt from SDLT

Published On: February 8, 2016 at 11:55 am

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In yet another contest against the increase of Stamp Duty for buy-to-let and second properties from April, the industry is calling on the Government to protect larger scale investment.

The British Property Federation (BPF) wants higher scale investment in residential homes protected from the tax hike. The firm argues that unless this type of investment is protected, the industry is at risk of losing much-needed funding.

Warning

In its warning to the sector, the BPF said that the higher rate of tax could cancel out the progress made by the build to rent sector since 2011. New data indicates that there are over 30,000 build to rent units with planning permission in Britain, representing a 47% increase since October.

Additionally, the BPF noted that since the beginning of 2016, there have been significant investments made in the sector. These include Grainger PLC, which pledged to invest £850m by 2020.

Further high-scale investors include Legal and General, working alongside Dutch pension fund PGGM to deliver a £600m build to rent investment plan. Greystar Europe Holdings, one of the largest housing investors in the United States, has announced the acquisition of a 26.5 acre plot in Greenford, West London. What’s more, the Royal Bank of Scotland has pledged £1bn in lending for the build to rent sector.

Large investment in BTR should be exempt from SDLT

Large investment in BTR should be exempt from SDLT

Exemption

The BFP has called for the introduction of an easy portfolio test that will exempt institutional investors with 15 or more units in their portfolio from paying the extra tax.

‘Since the start of the year, there has been investment in the build to rent sector on a scale that we have never seen before,’ noted Melanie Leech, chief executive of the BPF. ‘Following the changes that were made to SDLT a few years ago, investment in the sector has really taken off and it is great to see pension funds and other institutions now investing heavily in housing.’[1]

‘There is cross-party support for new housing and a better quality rented sector and we would expect the Government to recognise the impact that the SDLT surcharge might have on investment in new homes and the creation of a better quality rental product,’ she continued.[1]

Negative impact

If an exemption is not provided, there would be a significant negative impact on the sector, according to Andrew Stanford, UK residential fund manager at LaSalle Investment Management and chair of the BPF’s Build to Rent committee.

‘We were encouraged by the proposed exemption for large scale investors from the additional 3% SDLT,’ Stanford observed. ‘If the exemption was not implemented it would have a significant negative impact on our ability to invest in the nascent build to rent sector.’[1]

‘LaSalle intends to provide good quality, built to rent homes across the country for customers on their journey to home ownership or for customers who want the flexibility and security of renting a home with a long term institutional landlord,’ he added.[1]

Adam Challis, head of residential research at JLL, feels that the build to rent sector has a real opportunity to increase the quantity and quality of private rented properties. He noted that, ‘the 3% SDLT charge would undermine this once in a generation opportunity to give renters a better deal.’[1]

[1] http://www.propertywire.com/news/europe/uk-build-rent-tax-2016020811530.html