10 Predictions for the UK Property Market in 2017
Rob Moore and Mark Homer, co-founders of Progressive Property, discuss their predictions for the UK property market in 2017.
Showing posts with label London house prices forecast. Show all posts
Showing posts with label London house prices forecast. Show all posts
Thursday, 6 July 2017
Wednesday, 28 June 2017
UK house price growth regains momentum, with prices up 1.1pc in June
By Sohpie Christie
UK house prices were up 1.1pc in June, the first rise in four months, thanks to strengthening demand on the back of healthy gains in employment and continued low mortgage rates.
According to Nationwide's house price index, the increase brought the annual growth rate up to 3.1pc - from 2.1pc in May.
Despite an uptick in house prices, growth in the south-east of England and London continued to slow compared to the rest of the country.
London saw a particularly marked slowdown, with annual price growth moderating to just 1.2pc - the weakest pace of growth in the capital since 2012.
Robert Gardner, Nationwide's chief economist, said: “The emerging squeeze on household incomes appears to be exerting a drag on housing market activity in recent months. The number of mortgages approved for house purchase has slowed a little in recent months and surveyors report that new buyer enquiries have softened.
“At this point it is unclear whether the increase in house price growth in June reflects strengthening demand conditions on the back of healthy gains in employment and continued low mortgage rates, or whether the lack of homes on the market is the more important factor."
While prices rebounded in June, Nationwide's data shows that quarterly price growth slowed significantly. Average prices in the three months to June were 2.8pc higher than the same period last year, compared to 4.1pc growth in the first quarter.
Lucy Pendleton, founder of independent estate agents James Pendleton, said: “The housing market has come up for air, which is incredible in a month that saw one of the least conclusive general elections ever.
“London had a bad day in the office in June but it always bounces back.
“Thanks to its stellar performance stretching back years, we’ve been confidently relying on London to shrug off any slowdown seen nationwide, but the tables have turned, if only briefly. If this trend continues in July, then that is going to turn some heads."
http://www.telegraph.co.uk/business/2017/06/28/uk-house-price-growth-regains-momentum-prices-11pc-june/
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| The annual rate of house price growth continues to point to modest price gains CREDIT: JASON ALDEN/BLOOMBERG |
According to Nationwide's house price index, the increase brought the annual growth rate up to 3.1pc - from 2.1pc in May.
Despite an uptick in house prices, growth in the south-east of England and London continued to slow compared to the rest of the country.
London saw a particularly marked slowdown, with annual price growth moderating to just 1.2pc - the weakest pace of growth in the capital since 2012.
Robert Gardner, Nationwide's chief economist, said: “The emerging squeeze on household incomes appears to be exerting a drag on housing market activity in recent months. The number of mortgages approved for house purchase has slowed a little in recent months and surveyors report that new buyer enquiries have softened.
“At this point it is unclear whether the increase in house price growth in June reflects strengthening demand conditions on the back of healthy gains in employment and continued low mortgage rates, or whether the lack of homes on the market is the more important factor."
While prices rebounded in June, Nationwide's data shows that quarterly price growth slowed significantly. Average prices in the three months to June were 2.8pc higher than the same period last year, compared to 4.1pc growth in the first quarter.
Lucy Pendleton, founder of independent estate agents James Pendleton, said: “The housing market has come up for air, which is incredible in a month that saw one of the least conclusive general elections ever.
“London had a bad day in the office in June but it always bounces back.
“Thanks to its stellar performance stretching back years, we’ve been confidently relying on London to shrug off any slowdown seen nationwide, but the tables have turned, if only briefly. If this trend continues in July, then that is going to turn some heads."
http://www.telegraph.co.uk/business/2017/06/28/uk-house-price-growth-regains-momentum-prices-11pc-june/
Monday, 19 June 2017
Wealth gap rises as home ownership falls, says study
By Michael Savage
Resolution Foundation finds that half the nation’s wealth belongs to a tenth of adults as property ownership declines
A fall in home ownership is fuelling the return of rising wealth inequality across Britain, it has emerged.
Booming house prices in the run-up to the financial crisis had led to a decade-long fall in the uneven distribution of the country’s wealth. However, comprehensive new analysis of the UK’s wealth divisions has now found that the trend has gone into reverse.
The study by the Resolution Foundation thinktank found that just a tenth of adults own around half of the nation’s wealth. The top 1% own 14% of the total. It warned that even this figure may be an underestimate because of the difficulties in calculating the assets of the super-rich.
By contrast, 15% of adults in Britain have either no share of the nation’s record £11.1 trillion of wealth, or have negative wealth. The study found that wealth is distributed far less evenly than earnings or household income.
The thinktank measured wealth inequality using the “Gini coefficient”, with 0 being perfect wealth equality and 1 representing a society where a single person has it all. Wealth inequality was almost twice as high as earnings inequality. Despite the perception that wealth inequality has been rising for decades, the research found that the inequality of net financial and property wealth fell steadily between 1995 and 2005, with the Gini coefficient falling from 0.71 to 0.64.
The fall was driven by high and rising home ownership, with more households benefiting from the pre-crisis property price boom. As a result, the proportion of property wealth owned by the bottom four-fifths of adults grew from 35% in 1995 to 40% in 2005.
However, home ownership has been falling steadily since the mid-2000s, with the wealth held by the bottom four-fifths of the population dipping as a result. Since the financial crisis, home ownership among the least wealthy 50% of the population has fallen by about 12%. Meanwhile, it has risen by 1% for the wealthiest tenth.
The shift in property ownership further towards the richest has contributed to the widening of wealth inequality. Including private pensions, the Gini coefficient rose from 0.67 to 0.69 from 2006-08 to 2012-14.
Total wealth across Britain, which includes private pensions, property, financial and physical wealth, rose in the wake of the financial crisis from £9.9tn in 2006-08 to £11.1tn in 2012-14. This has been fuelled by rising pension wealth.
While Britain as a whole has become wealthier, the wealth of a typical adult has fallen since the financial crisis from £99,000 in 2006-08 to £84,000 in 2012-14.
Private pensions account for 40% of the wealth total – the largest share at £4.5tn. The report forms part of the Resolution Foundation’s intergenerational commission. Conor D’Arcy, policy analyst at the foundation, said: “The accumulation of wealth over the course of our lives is arguably the most important driver of lifetime living standards, and yet it has been largely ignored in the public debate. Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance.
“With wealth inequality now rising again, the progress of the pre-crisis period has gone into reverse.
“At £11.1tn and growing, Britain has a lot of wealth to share around. It’s vital that policy makers ensure that the key drivers of wealth in Britain today – property and pensions – are accessible to as many people as possible, young and old.”
https://www.theguardian.com/inequality/2017/jun/17/wealth-gap-rises-as-uk-home-ownership-falls-resolution-foundation
Resolution Foundation finds that half the nation’s wealth belongs to a tenth of adults as property ownership declines
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| Falling homeownership is behind growing wealth inequality in Britain. Photograph: Getty Images |
Booming house prices in the run-up to the financial crisis had led to a decade-long fall in the uneven distribution of the country’s wealth. However, comprehensive new analysis of the UK’s wealth divisions has now found that the trend has gone into reverse.
The study by the Resolution Foundation thinktank found that just a tenth of adults own around half of the nation’s wealth. The top 1% own 14% of the total. It warned that even this figure may be an underestimate because of the difficulties in calculating the assets of the super-rich.
By contrast, 15% of adults in Britain have either no share of the nation’s record £11.1 trillion of wealth, or have negative wealth. The study found that wealth is distributed far less evenly than earnings or household income.
The thinktank measured wealth inequality using the “Gini coefficient”, with 0 being perfect wealth equality and 1 representing a society where a single person has it all. Wealth inequality was almost twice as high as earnings inequality. Despite the perception that wealth inequality has been rising for decades, the research found that the inequality of net financial and property wealth fell steadily between 1995 and 2005, with the Gini coefficient falling from 0.71 to 0.64.
The fall was driven by high and rising home ownership, with more households benefiting from the pre-crisis property price boom. As a result, the proportion of property wealth owned by the bottom four-fifths of adults grew from 35% in 1995 to 40% in 2005.
However, home ownership has been falling steadily since the mid-2000s, with the wealth held by the bottom four-fifths of the population dipping as a result. Since the financial crisis, home ownership among the least wealthy 50% of the population has fallen by about 12%. Meanwhile, it has risen by 1% for the wealthiest tenth.
The shift in property ownership further towards the richest has contributed to the widening of wealth inequality. Including private pensions, the Gini coefficient rose from 0.67 to 0.69 from 2006-08 to 2012-14.
Total wealth across Britain, which includes private pensions, property, financial and physical wealth, rose in the wake of the financial crisis from £9.9tn in 2006-08 to £11.1tn in 2012-14. This has been fuelled by rising pension wealth.
While Britain as a whole has become wealthier, the wealth of a typical adult has fallen since the financial crisis from £99,000 in 2006-08 to £84,000 in 2012-14.
Private pensions account for 40% of the wealth total – the largest share at £4.5tn. The report forms part of the Resolution Foundation’s intergenerational commission. Conor D’Arcy, policy analyst at the foundation, said: “The accumulation of wealth over the course of our lives is arguably the most important driver of lifetime living standards, and yet it has been largely ignored in the public debate. Given the hugely unequal distribution of wealth across Britain, it’s time we looked into how the nation’s wealth is divided up and what the consequences are for those who never build up assets of any significance.
“With wealth inequality now rising again, the progress of the pre-crisis period has gone into reverse.
“At £11.1tn and growing, Britain has a lot of wealth to share around. It’s vital that policy makers ensure that the key drivers of wealth in Britain today – property and pensions – are accessible to as many people as possible, young and old.”
https://www.theguardian.com/inequality/2017/jun/17/wealth-gap-rises-as-uk-home-ownership-falls-resolution-foundation
Tuesday, 6 June 2017
Landmark moment as average rents fall for first time in eight years
By Conor Shilling
Average UK rents fell in May, according to the latest HomeLet Rental Index.
The figures show that the average UK rent on a new tenancy last month was £901, 0.3% lower than the figure for May 2016.
HomeLet says the pace of rental inflation across the UK has been slowing in 2017, after peaking at 4.7% last summer.
Last month the firm reported that average London rents fell for the first time in almost eight years during April.
And the situation in the capital did not improve during May. The average rent on a new tenancy in London was £1,502, 3% lower than the same month last year and 1.1% lower than in April 2017.
Average rents on new tenancies also fell on an annual basis in the North East, Scotland, South East and Yorkshire and Humberside.
"Landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs," says HomeLet chief executive Martin Totty.
"Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”
HomeLet's figures for May are reproduced in full below:
https://www.lettingagenttoday.co.uk/breaking-news/2017/6/landmark-moment-as-average-rents-fall-for-first-time-in-eight-years
The figures show that the average UK rent on a new tenancy last month was £901, 0.3% lower than the figure for May 2016.
HomeLet says the pace of rental inflation across the UK has been slowing in 2017, after peaking at 4.7% last summer.
Last month the firm reported that average London rents fell for the first time in almost eight years during April.
And the situation in the capital did not improve during May. The average rent on a new tenancy in London was £1,502, 3% lower than the same month last year and 1.1% lower than in April 2017.
Average rents on new tenancies also fell on an annual basis in the North East, Scotland, South East and Yorkshire and Humberside.
"Landlords are now facing a difficult balancing act between ensuring rents are affordable for tenants in a low real wage growth environment whilst covering their own rising costs," says HomeLet chief executive Martin Totty.
"Any constraint to the supply of rental properties, because landlords are unable to achieve the reasonable returns they require, cannot be in the long term best interests of tenants, especially if, as we’ve now heard from all the main political parties, the UK’s population continues to grow.”
HomeLet's figures for May are reproduced in full below:
https://www.lettingagenttoday.co.uk/breaking-news/2017/6/landmark-moment-as-average-rents-fall-for-first-time-in-eight-years
Friday, 26 May 2017
London sees one-third drop in homes available to let, reports ARLA
By Graham Norwood
ARLA Propertymark says the number of properties managed per member increased marginally last month, from 183 to 185 - but there was a very different picture in London.
In the capital, the number of properties managed per branch fell by 32 per cent from 148 in March to 101 in April.
ARLA Propertymark says the number of tenants negotiating rent reductions fell last month – 2.8 per cent of agents witnessed tenants successfully negotiating price cuts, whereas in March 3.6 per cent reported this happening.
Some 24 per cent of letting agents saw landlords increasing rents in April.
Meanwhile the number landlords selling their buy to let properties remained the same, with an average of four selling per branch.
In April, tenants stayed in their rental accommodation for an average of 17 months, a decrease from 18 months in March. This is the first time since June 2016 the average length of a tenancy has dropped to a figure this low.
There are 65 prospective tenants registered per branch.
“Although the rental market in London has seen a large drop in the supply of properties to rent, it’s a different picture in the rest of the UK where we have seen little or no change to activity since March. It’s likely we’re seeing the rest of the rental market outside of the capital plateau as a result of the election in June, with renters potentially holding back on their property searches” says David Cox, ARLA Propertymark chief executive.
https://www.lettingagenttoday.co.uk/breaking-news/2017/5/london-sees-one-third-drop-in-homes-available-to-let-reports-arla
In the capital, the number of properties managed per branch fell by 32 per cent from 148 in March to 101 in April.
ARLA Propertymark says the number of tenants negotiating rent reductions fell last month – 2.8 per cent of agents witnessed tenants successfully negotiating price cuts, whereas in March 3.6 per cent reported this happening.
Some 24 per cent of letting agents saw landlords increasing rents in April.
Meanwhile the number landlords selling their buy to let properties remained the same, with an average of four selling per branch.
In April, tenants stayed in their rental accommodation for an average of 17 months, a decrease from 18 months in March. This is the first time since June 2016 the average length of a tenancy has dropped to a figure this low.
There are 65 prospective tenants registered per branch.
“Although the rental market in London has seen a large drop in the supply of properties to rent, it’s a different picture in the rest of the UK where we have seen little or no change to activity since March. It’s likely we’re seeing the rest of the rental market outside of the capital plateau as a result of the election in June, with renters potentially holding back on their property searches” says David Cox, ARLA Propertymark chief executive.
https://www.lettingagenttoday.co.uk/breaking-news/2017/5/london-sees-one-third-drop-in-homes-available-to-let-reports-arla
Wednesday, 17 May 2017
Spring selling season fails to materialise as house price growth stalls
By Isabelle Fraser
House prices slowed in March, according to official figures, as an increasing squeeze on consumers weighs on housing market activity.
The annual rate of growth was 4.1pc, down from 5.6pc in February, as the market stagnates due to a lack of supply.
Between those two months, the average house price across the country fell 0.6pc; this slump affected everywhere in the country except Wales and the West Midlands. In London, house prices fell 1.5pc in March alone.
Howard Archer at IHS Markit said that it added "to a mounting collection of weaker data and surveys which point to the housing market being increasingly affected by the deepening squeeze on consumers and their concerns over the outlook".
He said that these pressures would continue to intensify over the coming months and forecast house price will rise by just 2pc in 2017. Mr Archer added: "There is a very real and mounting possibility that it could come in lower than that."
The Royal Institution of Chartered Surveyors found that in March the market was "subdued", and the traditionally strong spring selling season faltered as new buyer enquiries and agreed sales remained broadly unchanged since the start of the year.
It comes as the Bank of England reported that mortgage approvals for house purchases dipped to a six-month low in March. The average price of a home in the UK is now £215,848.
Jonathan Hopper, managing director of Garrington Property Finders, said: “These official figures suggest the slowdown is sharper and started earlier than first thought.
“April’s surprise election announcement applied a dab to the property market's brakes, but this data confirms it had already dropped down a gear in March.
“While the speed and severity of the fall in annual price growth – down to its lowest level for more than three years – will alarm some sellers, such national averages mask the wildly different conditions at opposite ends of the market."
http://www.telegraph.co.uk/property/house-prices/spring-selling-season-fails-materialise-house-price-growth-stalls/
 |
| The annual rate of growth was 4.1pc in March, down 1.5pc from February CREDIT: PA |
House prices slowed in March, according to official figures, as an increasing squeeze on consumers weighs on housing market activity.
The annual rate of growth was 4.1pc, down from 5.6pc in February, as the market stagnates due to a lack of supply.
Between those two months, the average house price across the country fell 0.6pc; this slump affected everywhere in the country except Wales and the West Midlands. In London, house prices fell 1.5pc in March alone.
 |
| House price growth around the country |
Howard Archer at IHS Markit said that it added "to a mounting collection of weaker data and surveys which point to the housing market being increasingly affected by the deepening squeeze on consumers and their concerns over the outlook".
He said that these pressures would continue to intensify over the coming months and forecast house price will rise by just 2pc in 2017. Mr Archer added: "There is a very real and mounting possibility that it could come in lower than that."
The Royal Institution of Chartered Surveyors found that in March the market was "subdued", and the traditionally strong spring selling season faltered as new buyer enquiries and agreed sales remained broadly unchanged since the start of the year.
It comes as the Bank of England reported that mortgage approvals for house purchases dipped to a six-month low in March. The average price of a home in the UK is now £215,848.
Jonathan Hopper, managing director of Garrington Property Finders, said: “These official figures suggest the slowdown is sharper and started earlier than first thought.
“April’s surprise election announcement applied a dab to the property market's brakes, but this data confirms it had already dropped down a gear in March.
“While the speed and severity of the fall in annual price growth – down to its lowest level for more than three years – will alarm some sellers, such national averages mask the wildly different conditions at opposite ends of the market."
http://www.telegraph.co.uk/property/house-prices/spring-selling-season-fails-materialise-house-price-growth-stalls/
Sales volumes hit four-year low, as regional transactions plummet by up to 26% in England
By Marc Shoffman
Sales volumes declined across all regions of England at the start of the year, the latest official figures suggest.
Data for transactions in January – the latest month for which transactional data is available and revealed in the ONS and Land Registry House Price Index – show sales volumes down by up to a quarter across English regions.
The figures show that volumes fell by the most in London, down 26% year-on-year to 5,958, followed by the east of England and south-east which both saw 21% declines.
The north-east had the smallest drop, down just 8% on January 2016.
Overall, transactions fell 16.6% annually in January to 50,790 in England.
They were down 2% in Scotland to 6,239 and down 2.3% in Wales to 2,762.
Northern Ireland only provides quarterly data, but transactions were down 28.5% in the first three months of the year to 4,379.
Transactions across the UK were at 64,170 in January. This is down from 75,961 last year.
Of course this could all be clouded by last year’s Stamp Duty rush, but the numbers are also below a month before when sales volumes were at 82,351.
Even if you look further back to January 2015, the Land Registry recorded 71,703 transactions and 80,763 in January 2014.
You have to go back to January 2013 for when volumes were last lower for the month, at 52,550.
The data also shows that annual house price growth slowed to 4.1% in March, down from 5.6% in the year to February. Prices also fell 0.6% on a monthly basis to £215,848.
Commenting on the figures, Jonathan Hopper, managing director of Garrington Property Finders, said: “While the speed and severity of the fall in annual price growth – down to its lowest level for more than three years – will alarm some sellers, such national averages mask the wildly different conditions at opposite ends of the market.
“Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.
“Nevertheless the broader trend is undeniable. East Anglia’s gravity defying, double-digit rates of price inflation are a thing of the past and it has been forced to share its ‘fastest growing region’ crown with the east midlands.
“Even London finds itself in a position it is unaccustomed to – close to the bottom of the pile.
“The chronic shortage of supply is still propping up prices in many areas and mitigating the slowdown. But this snapshot of a slowing market – taken before the election announcement – confirms what many in the industry had feared. For the housing market, the snap election has come at just the wrong time – injecting an unwelcome dose of uncertainty into an already fragile market.
“Nevertheless the lull could be short-lived. If the election delivers a clear result that puts Brexit firmly back on track, the property market could receive a huge boost, freeing up more supply and with greater levels of clarity spurring discretionary buyers into action.”
http://www.propertyindustryeye.com/sales-volumes-hit-four-year-low-at-start-of-january-land-registry/
 |
| https://cdn3.iconfinder.com/data/icons/hexagon-office-business-set-1/141/54-512.png |
Sales volumes declined across all regions of England at the start of the year, the latest official figures suggest.
Data for transactions in January – the latest month for which transactional data is available and revealed in the ONS and Land Registry House Price Index – show sales volumes down by up to a quarter across English regions.
The figures show that volumes fell by the most in London, down 26% year-on-year to 5,958, followed by the east of England and south-east which both saw 21% declines.
The north-east had the smallest drop, down just 8% on January 2016.
Overall, transactions fell 16.6% annually in January to 50,790 in England.
They were down 2% in Scotland to 6,239 and down 2.3% in Wales to 2,762.
Northern Ireland only provides quarterly data, but transactions were down 28.5% in the first three months of the year to 4,379.
Transactions across the UK were at 64,170 in January. This is down from 75,961 last year.
Of course this could all be clouded by last year’s Stamp Duty rush, but the numbers are also below a month before when sales volumes were at 82,351.
Even if you look further back to January 2015, the Land Registry recorded 71,703 transactions and 80,763 in January 2014.
You have to go back to January 2013 for when volumes were last lower for the month, at 52,550.
The data also shows that annual house price growth slowed to 4.1% in March, down from 5.6% in the year to February. Prices also fell 0.6% on a monthly basis to £215,848.
Commenting on the figures, Jonathan Hopper, managing director of Garrington Property Finders, said: “While the speed and severity of the fall in annual price growth – down to its lowest level for more than three years – will alarm some sellers, such national averages mask the wildly different conditions at opposite ends of the market.
“Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.
“Nevertheless the broader trend is undeniable. East Anglia’s gravity defying, double-digit rates of price inflation are a thing of the past and it has been forced to share its ‘fastest growing region’ crown with the east midlands.
“Even London finds itself in a position it is unaccustomed to – close to the bottom of the pile.
“The chronic shortage of supply is still propping up prices in many areas and mitigating the slowdown. But this snapshot of a slowing market – taken before the election announcement – confirms what many in the industry had feared. For the housing market, the snap election has come at just the wrong time – injecting an unwelcome dose of uncertainty into an already fragile market.
“Nevertheless the lull could be short-lived. If the election delivers a clear result that puts Brexit firmly back on track, the property market could receive a huge boost, freeing up more supply and with greater levels of clarity spurring discretionary buyers into action.”
http://www.propertyindustryeye.com/sales-volumes-hit-four-year-low-at-start-of-january-land-registry/
Monday, 15 May 2017
Foxtons meets to put its house in order
By Simon Goodley
The swish estate agency has a list of tricky issues to negotiate at its annual meeting - not least its falling share price. Oh, and a stagnant property market
Social media frequently appears to be a modern popularity contest, but at least that gives us an indication of the reputations of some of our best-known companies.
Take the official Twitter account of the irksome estate agency Foxtons, for instance, which possesses a mighty 400 followers and drones on about the major housing topics de nos jours, such as: “Do you know what it takes to be a landlord?” (we might venture a guess).
By comparison, the @AvoidFoxtons account is proving far more popular, but the estate agent will get a chance to get its official message across this week, when it holds its annual meeting.
Still, the gathering comes as other irritating hecklers are also shouting from the sidelines. The company’s shares have lost about 30% of their value in the past 12 months, while fresh news from the Royal Institution of Chartered Surveyors (Rics) last week suggested that the UK housing market is continuing to slow down, with falling property sales and “stagnant” buyer demand contributing to one of the most downbeat reports since the financial crash. Oh – and obviously there is also the chance of a row with shareholders over executive pay.
So will anybody take any notice of Foxtons’s excuses for its list of current challenges? Possibly – although sympathisers may be less numerous than its collection of Twitter followers.
Package of trouble at Royal Mail
This week, Royal Mail Group is promising to hold its annual general meeting – although we’d all be wise to wait and see if it follows through with that pledge. The company is fast developing a reputation for not always sticking exactly to its word.
You will recall how there is currently an almighty row between the company and some staff about efforts to wriggle out of a defined benefit pension scheme – which pays out to employees based on years of service with either a career average or final salary.
They are nice pensions to have, but are now supposedly unaffordable, unless, as one City wag puts it, scores of workers do the collegiate thing and die more quickly. All of which explains why Royal Mail stopped new staff joining the scheme nine years ago.
Anyway, the company is now trying to cut the benefits to its employees who were already enrolled in the scheme, hence the threat of industrial action.
As any A-level business student will tell you, pensions are wages deferred and if Royal Mail does not deliver, it’s conceptually no different from cutting salaries. Expect that point to be made at this week’s AGM – assuming Royal Mail doesn’t try to sidestep that too.
Black horse rides off to private sector
Just as the concept of state-owned industries is thrust back into the news agenda with the drafting of the Labour manifesto, there comes a potentially symbolic moment when the UK government finally withdraws from one of its most infamous investments.
The government’s investment holding company, UKFI, has been selling down its once-43% stake in Lloyds Banking Group for months. We have now got to the point where, we are so insignificant on the share register that dashing boss António Horta-Osório might treat us as he does members of the paparazzi while on a foreign business trip – and not even notice we’re hanging around.
Anyway, this week is expected to be the moment when our now 0.25% holding finally goes to zero, so expect crowing by the Conservative party about how Lloyds has been nursed back into the private sector on its watch (and, possibly, Horta-Osório saying he’s off).
Apparently we have all made around £500m out of owning a stake in the bank – which sounds quite good, although that might be misleading.
Last week the Financial Times worked out that if we had we stuck our £20.3bn stake into Lloyds’ highest-paying instant access account, we’d have scooped £2.9bn in interest.
https://www.theguardian.com/business/2017/may/14/foxtons-image-sympathetic-updating
The swish estate agency has a list of tricky issues to negotiate at its annual meeting - not least its falling share price. Oh, and a stagnant property market
 |
| Foxtons: 400 followers on Twitter. Photograph: Dominic Lipinski/PA |
Take the official Twitter account of the irksome estate agency Foxtons, for instance, which possesses a mighty 400 followers and drones on about the major housing topics de nos jours, such as: “Do you know what it takes to be a landlord?” (we might venture a guess).
By comparison, the @AvoidFoxtons account is proving far more popular, but the estate agent will get a chance to get its official message across this week, when it holds its annual meeting.
Still, the gathering comes as other irritating hecklers are also shouting from the sidelines. The company’s shares have lost about 30% of their value in the past 12 months, while fresh news from the Royal Institution of Chartered Surveyors (Rics) last week suggested that the UK housing market is continuing to slow down, with falling property sales and “stagnant” buyer demand contributing to one of the most downbeat reports since the financial crash. Oh – and obviously there is also the chance of a row with shareholders over executive pay.
So will anybody take any notice of Foxtons’s excuses for its list of current challenges? Possibly – although sympathisers may be less numerous than its collection of Twitter followers.
Package of trouble at Royal Mail
This week, Royal Mail Group is promising to hold its annual general meeting – although we’d all be wise to wait and see if it follows through with that pledge. The company is fast developing a reputation for not always sticking exactly to its word.
You will recall how there is currently an almighty row between the company and some staff about efforts to wriggle out of a defined benefit pension scheme – which pays out to employees based on years of service with either a career average or final salary.
They are nice pensions to have, but are now supposedly unaffordable, unless, as one City wag puts it, scores of workers do the collegiate thing and die more quickly. All of which explains why Royal Mail stopped new staff joining the scheme nine years ago.
Anyway, the company is now trying to cut the benefits to its employees who were already enrolled in the scheme, hence the threat of industrial action.
As any A-level business student will tell you, pensions are wages deferred and if Royal Mail does not deliver, it’s conceptually no different from cutting salaries. Expect that point to be made at this week’s AGM – assuming Royal Mail doesn’t try to sidestep that too.
Black horse rides off to private sector
Just as the concept of state-owned industries is thrust back into the news agenda with the drafting of the Labour manifesto, there comes a potentially symbolic moment when the UK government finally withdraws from one of its most infamous investments.
The government’s investment holding company, UKFI, has been selling down its once-43% stake in Lloyds Banking Group for months. We have now got to the point where, we are so insignificant on the share register that dashing boss António Horta-Osório might treat us as he does members of the paparazzi while on a foreign business trip – and not even notice we’re hanging around.
Anyway, this week is expected to be the moment when our now 0.25% holding finally goes to zero, so expect crowing by the Conservative party about how Lloyds has been nursed back into the private sector on its watch (and, possibly, Horta-Osório saying he’s off).
Apparently we have all made around £500m out of owning a stake in the bank – which sounds quite good, although that might be misleading.
Last week the Financial Times worked out that if we had we stuck our £20.3bn stake into Lloyds’ highest-paying instant access account, we’d have scooped £2.9bn in interest.
https://www.theguardian.com/business/2017/may/14/foxtons-image-sympathetic-updating
Thursday, 11 May 2017
Demand from buyers in UK falls in first few months of 2017
Demand from buyers is currently 33.8%, down by 17.56% since the end of 2016. It has reached 39.4% in England, 36.18% in Scotland and 27.35% in Wales, according to the national hotspots index report from eMoov.
The index, which measures demand in 150 towns and cities, shows that the highest levels of buyer demand is 68.29% in Rugby, followed by Portsmouth at 66.7% and Bristol at 64.43%, while the lowest is in Aberdeen at 14.11%, Hartlepool at 15.43% and Middlesbrough at 19.15%.
Stoke-on-Trent at 82.25%, Stockton-On-Tees at 77.75% and Walsall at 65.09% have all seen the largest increases in buyer demand in 2017 so far.
But demand has been falling on London commuter towns and cities including Guildford down 35.84%, Watford down 35.73%, Cambridge down 29.74%, Reading down 27.17% and Brentwood down 26.93%.
‘With many of the UK’s major cities becoming too expensive for homeowners in the region and travel infrastructure improvements allowing us to live further away from work, it is no surprise that places such as Rugby and Portsmouth have grown in prominence amongst UK buyers. It isn’t just those in London that are looking outside of the larger city boundaries and opting for more affordable towns in the surrounding area,’ said eMoov chief executive officer Russell Quirk.
He pointed out that at 32.31%, buyer demand across London is down 5%. The borough of Bexley has the most demand at 56.13%, followed by Newham at 51.82% and Havering at 50.51%. The biggest decreases were in the boroughs of Greenwich which was down 60.83%, Lambeth down 57.62% and Hounslow down 52.69%.
Westminster has the lowest level of London buyer demand at 10.14%, followed by Kensington and Chelsea at 11.49% and Hammersmith and Fulham at 13.15%. Since the end of 2016 demand has fallen in all three of these boroughs by 36.64%, 28.16% and 40.24% respectively.
Across Scotland the highest levels of current buyer demand are in South Ayrshire at 67.18%, Edinburgh at 56.47% and Glasgow at 56.42% while the biggest increases in demand are in Highland with a rise of 66.59%, South Lanarkshire up 47.69 and Fife up 40.47%.
Although demand is still low in Aberdeenshire, the area has seen an increase of 21.46% since the end of 2016. While the biggest declines in buyer demand since 2016 are Moray with a fall of 22.54%, Argyle and Bute down 14.2%) and Stirling down 6.33%.
In Wales Caerphilly at 47.12%, Newport at 46.92% and Cardiff at 42.89% rank as the top three hottest areas for property demand at present. But Cardiff’s popularity amongst Welsh buyers means the capital has seen some of the lowest upward growth in buyer demand, having increased by just 4.15% so far in 2017, whilst Rhondda Cynon Taf is up 31.57% and Swansea up 28.29%, the largest increases in buyer demand this year.
The Ceredigion, Pembrokeshire and Denbighshire regions have the lowest demand in Wales at 15.75%, 15.54% and 13.36% respectively while the biggest falls in demand in Wales are Bridgend down 13.47%, Monmouthshire down 9.63% and Neath Port Talbot down 3.22%.
http://www.propertywire.com/news/uk/demand-buyers-uk-falls-first-months-2017/
Wednesday, 10 May 2017
Article 50 led to remortgage market in the UK stalling, latest report suggests
The latest data shows that the value of remortgaging levelled off at £5.2 billion in March and accounted for 25% of the total lending market, down from 29% the previous month.
The figures from conveyancing service provider LMS also shows that more home borrowers are opting for fixed five year deals with 32% choosing such a product, a substantial rise from the 9% previously with a five year fixed rate.
Andy Knee, chief executive of LMS, believes Article 50 prompted the change and he also thinks that the general election in June and Brexit negotiations overall coupled with rising interest rates means that the remortgage market could experience some tricky months between now and the end of the year.
The report also suggests that with interest rates starting to creep up it is price and long term financial security that were the two main motives for remortgaging in March. Some 19% of home owners lowered repayments by remortgaging in March, while 84% lowered their mortgage rates through remortgaging.
The figures show that while five year fixed mortgage rose, variable mortgages decreased in popularity with just 7% fixing onto a variable mortgage, down from the 19% who previously had one.
However, for the first time since September 2016, the average mortgage rate increased. The average mortgage rate climbed to 2.13% in February from 2.06% in January, the highest increase since June 2012.
The report suggests that it is significant that the number of home owners expecting a rate fall has dropped for the sixth month in a row. In September 2016 some 9% of those polled by LMS expected rates to fall. By January, this had fallen to only 2% and now sits at just 1%. Remortgagors predict further interest rate rises with 46% expecting mortgage rates to rise again within a year.
Knee said it is encouraging that the number of people remortgaging rose year in year in March as this is the result of improved affordability. Remortgage repayments accounted for just 17.3% of income in February, down from 18.4% in February 2016.
http://www.propertywire.com/news/uk/article-50-led-remortgage-market-uk-stalling-latest-report-suggests/
Tuesday, 9 May 2017
House prices post first quarterly fall in four years as market stagnates
By Isabelle Fraser
The quarterly rate of house price growth fell for the first time in more than four years, as the housing market stagnates.
House prices were 0.2pc lower in the three months to April than in the preceding three months, according to Halifax. This is the first quarterly decline since November 2012.
They fell 0.1pc between March and April, but the average price was still 3.8pc higher than the same month last year, less than half of the annual rate of growth last year.
This dip follows on from lower Nationwide house price data and a six-month low of mortgage approvals according to the Bank of England. Howard Archer, an economist at IHS Markit, said that this "fuels our belief that the housing market is being increasingly affected by the increasing squeeze on consumers and their concerns over the outlook."
Hansen Lu, at Capital Economics, said that a house price correction "seems unlikely", adding that "price growth has stalled because prices are so high", rather than any effect of the snap election. Huge levels of price growth in the last two years has led to a crunch on affordability.
The picture is not the same across the country, as in some areas - particularly in northern cities - prices are soaring as growth in the south slows. Jonathan Hopper, managing director of Garrington Property Finders, said that "the mediocre average figures mask the wildly different conditions at opposite ends of the market".
“Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.
“Such volatile conditions are being driven by two conflicting forces – patchy demand but a near universal shortage of supply. With Royal Institution of Chartered Surveyors reporting that the number of properties coming onto the market has fallen for 13 months in a row, in many areas buyers outnumber the number of homes for sale."
Martin Ellis, Halifax housing economist, said: “A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale, should nonetheless help continue to underpin house prices over the coming months.” Mr Archer has forecast that house prices will grow by just 2pc this year.
http://www.telegraph.co.uk/property/house-prices/house-prices-post-first-quarterly-fall-four-years-market-stagnates/
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| House prices were 0.2pc lower in the three months to April than in the preceding three months CREDIT: DAVID ROSE |
House prices were 0.2pc lower in the three months to April than in the preceding three months, according to Halifax. This is the first quarterly decline since November 2012.
They fell 0.1pc between March and April, but the average price was still 3.8pc higher than the same month last year, less than half of the annual rate of growth last year.
This dip follows on from lower Nationwide house price data and a six-month low of mortgage approvals according to the Bank of England. Howard Archer, an economist at IHS Markit, said that this "fuels our belief that the housing market is being increasingly affected by the increasing squeeze on consumers and their concerns over the outlook."
Hansen Lu, at Capital Economics, said that a house price correction "seems unlikely", adding that "price growth has stalled because prices are so high", rather than any effect of the snap election. Huge levels of price growth in the last two years has led to a crunch on affordability.
The picture is not the same across the country, as in some areas - particularly in northern cities - prices are soaring as growth in the south slows. Jonathan Hopper, managing director of Garrington Property Finders, said that "the mediocre average figures mask the wildly different conditions at opposite ends of the market".
“Properties in some regions continue to see double-digit price reductions, while at certain price points in the most in-demand areas, gazumping is back with a vengeance.
“Such volatile conditions are being driven by two conflicting forces – patchy demand but a near universal shortage of supply. With Royal Institution of Chartered Surveyors reporting that the number of properties coming onto the market has fallen for 13 months in a row, in many areas buyers outnumber the number of homes for sale."
Martin Ellis, Halifax housing economist, said: “A continued low mortgage rate environment, combined with an ongoing acute shortage of properties for sale, should nonetheless help continue to underpin house prices over the coming months.” Mr Archer has forecast that house prices will grow by just 2pc this year.
http://www.telegraph.co.uk/property/house-prices/house-prices-post-first-quarterly-fall-four-years-market-stagnates/
Thursday, 27 April 2017
London house prices: average asking prices in the capital fall at biggest rate in eight years while UK prices hit record high
By Prudence Ivey
The drop in prices is led by more expensive homes in central London, but there's some hope for first-time buyers too.
London house prices have experienced their biggest annual drop in nearly eight years, as sellers of more expensive homes in desirable inner London areas adjust their expectations following years of spiralling price rises.
While house prices in the rest of the country hit a new record high, Greater London saw asking prices fall by 1.5 per cent.
The drop – which equates to an average of £9,400 – was mainly due to continuing dips across prime central London, but there are signs that the price pressure for first-time buyers may also be easing, according to the report released by Rightmove today.
The biggest fall was recorded for large family homes with five or more bedrooms, where average prices are now £1.49-million, 7.3 per cent lower than in April 2016. But Rightmove data found that inner London was also affected, with asking prices dropping in such popular areas as Wandsworth, Islington, Lambeth and Southwark, where average prices range from £630,000 to £800,000.
“Sellers in the capital are having to trim their price aspirations to try to tempt spring buyers to buy their property instead of one down the road,” said Rightmove’s Miles Shipside.
Annual house price changes in London
“While the year-on-year fall of 1.5 per cent is the worst for nearly eight years, it needs to be put into the context that overall prices are still an average of only £10,000 below their all-time high. Demand continues to be strong, but at the right price for the right property.”
Asking prices in inner London dropped by an average of £35,500 year-on-year, equivalent to the Stamp Duty payable on an average-priced £803,000 property in the area.
HOPE FOR FIRST-TIME BUYERS
First-time buyer properties in London rose 0.5 per cent compared to April 2016 to £483,592.
While this is still well above widely accepted affordability calculations, the slowing pace of price growth for two-bedroom and smaller properties will offer a degree of respite to buyers whose ability to save towards a deposit has been dramatically outpaced by rising prices.
Although prices recorded an overall annual fall in the capital, the average asking price in outer London went up slightly to £526,000.
BUY-TO-LET EASES IN CHEAPEST BOROUGHS
However, even some of the cheapest outer boroughs experienced only moderate price rises, with some seeing average prices fall slightly, thanks to declining interest from buy-to-let investors after last April’s Stamp Duty hike on second homes.
In Barking and Dagenham, still London’s cheapest local authority, prices rose by only half a per cent to £304,000, while in the Olympic borough of Newham, home to popular first-time buyer areas including Forest Gate, East Ham and Stratford, they fell 1.1 per cent.
“We’re finding that most of the properties we’re selling are to first-time buyers or upsizers coming from areas like Camden, Islington, Hackney or Bethnal Green. They can sell their flats and buy a Victorian terraced house here for £400,000,” says Rashad Cheema, manager of Spencers estate agent in Newham.
“Investors have eased off because of the Stamp Duty hikes last April. About 90 per cent of our buyers are buy-to-live now and most of those are first-time buyers or upsizers. Before April 2016 at least 60 per cent of our buyers were investing in buy-to-let.”
http://www.homesandproperty.co.uk/property-news/london-house-prices-asking-prices-in-the-capital-fall-at-biggest-rate-in-eight-years-a109891.html
The drop in prices is led by more expensive homes in central London, but there's some hope for first-time buyers too.
London house prices have experienced their biggest annual drop in nearly eight years, as sellers of more expensive homes in desirable inner London areas adjust their expectations following years of spiralling price rises.
While house prices in the rest of the country hit a new record high, Greater London saw asking prices fall by 1.5 per cent.
The drop – which equates to an average of £9,400 – was mainly due to continuing dips across prime central London, but there are signs that the price pressure for first-time buyers may also be easing, according to the report released by Rightmove today.
The biggest fall was recorded for large family homes with five or more bedrooms, where average prices are now £1.49-million, 7.3 per cent lower than in April 2016. But Rightmove data found that inner London was also affected, with asking prices dropping in such popular areas as Wandsworth, Islington, Lambeth and Southwark, where average prices range from £630,000 to £800,000.
“Sellers in the capital are having to trim their price aspirations to try to tempt spring buyers to buy their property instead of one down the road,” said Rightmove’s Miles Shipside.
Annual house price changes in London
 |
| Source: London Evening Standard graphic:<br> Rightmove House Price Index for April 2017 Created with Datawrapper |
Asking prices in inner London dropped by an average of £35,500 year-on-year, equivalent to the Stamp Duty payable on an average-priced £803,000 property in the area.
HOPE FOR FIRST-TIME BUYERS
First-time buyer properties in London rose 0.5 per cent compared to April 2016 to £483,592.
While this is still well above widely accepted affordability calculations, the slowing pace of price growth for two-bedroom and smaller properties will offer a degree of respite to buyers whose ability to save towards a deposit has been dramatically outpaced by rising prices.
Although prices recorded an overall annual fall in the capital, the average asking price in outer London went up slightly to £526,000.
BUY-TO-LET EASES IN CHEAPEST BOROUGHS
However, even some of the cheapest outer boroughs experienced only moderate price rises, with some seeing average prices fall slightly, thanks to declining interest from buy-to-let investors after last April’s Stamp Duty hike on second homes.
In Barking and Dagenham, still London’s cheapest local authority, prices rose by only half a per cent to £304,000, while in the Olympic borough of Newham, home to popular first-time buyer areas including Forest Gate, East Ham and Stratford, they fell 1.1 per cent.
“We’re finding that most of the properties we’re selling are to first-time buyers or upsizers coming from areas like Camden, Islington, Hackney or Bethnal Green. They can sell their flats and buy a Victorian terraced house here for £400,000,” says Rashad Cheema, manager of Spencers estate agent in Newham.
“Investors have eased off because of the Stamp Duty hikes last April. About 90 per cent of our buyers are buy-to-live now and most of those are first-time buyers or upsizers. Before April 2016 at least 60 per cent of our buyers were investing in buy-to-let.”
http://www.homesandproperty.co.uk/property-news/london-house-prices-asking-prices-in-the-capital-fall-at-biggest-rate-in-eight-years-a109891.html
Monday, 24 April 2017
Buy-to-let lending ‘unlikely to recover in the near future’
By Marc Da Silva
The UK property market continued to rally last month, with gross mortgage lending surging by 19% compared with February, but it is becoming more ‘complicated’ for buy-to-let landlords to access the finance they need to add to their property portfolios, according to the latest data from the Council of Mortgage Lenders (CML).
Various tax changes have had an adverse impact on the buy-to-let market, as reflected by the fall in transactions in the sector, and the signs are that the market is not likely to pick-up any time soon.
“Buy-to-let lending is unlikely to recover in the near future,” said Paul Smith, CEO of haart estate agents. “The tax changes brought about in April heaped more strain on Britain’s landlord population.”
“We need see the government incentivising home movers, and not just penalising investors,” he added.
Also reflecting on the latest mortgage lending data, John Goodall, CEO and co-founder of buy-to-let specialist Landbay, commented: “Following the recent changes to buy-to-let tax relief and the introduction of tighter underwriting criteria, it is becoming even more complicated for aspiring homeowners and landlords to access the finance they need.”
Goodall believes that some firm commitments from the government are needed to tackle the housing crisis.
“Positive measures aimed at encouraging the development of high quality rented properties will target the lack of supply across both sales and lettings in the housing market,” he added.
https://www.landlordtoday.co.uk/breaking-news/2017/4/buy-to-let-lending-unlikely-to-recover-in-the-near-future
The UK property market continued to rally last month, with gross mortgage lending surging by 19% compared with February, but it is becoming more ‘complicated’ for buy-to-let landlords to access the finance they need to add to their property portfolios, according to the latest data from the Council of Mortgage Lenders (CML).
Various tax changes have had an adverse impact on the buy-to-let market, as reflected by the fall in transactions in the sector, and the signs are that the market is not likely to pick-up any time soon.
“Buy-to-let lending is unlikely to recover in the near future,” said Paul Smith, CEO of haart estate agents. “The tax changes brought about in April heaped more strain on Britain’s landlord population.”
“We need see the government incentivising home movers, and not just penalising investors,” he added.
Also reflecting on the latest mortgage lending data, John Goodall, CEO and co-founder of buy-to-let specialist Landbay, commented: “Following the recent changes to buy-to-let tax relief and the introduction of tighter underwriting criteria, it is becoming even more complicated for aspiring homeowners and landlords to access the finance they need.”
Goodall believes that some firm commitments from the government are needed to tackle the housing crisis.
“Positive measures aimed at encouraging the development of high quality rented properties will target the lack of supply across both sales and lettings in the housing market,” he added.
https://www.landlordtoday.co.uk/breaking-news/2017/4/buy-to-let-lending-unlikely-to-recover-in-the-near-future
Thursday, 13 April 2017
Borrowing becomes cheaper than ever as lender slashes five-year mortgage deal to below 1.3%
By Rosalind Renshaw
In a move which has elicited genuine gasps in the mortgage world, a lender has slashed rates on a five-year fixed mortgage to just 1.29% – the same as for its two-year fixes.
Atom Bank only launched into the mortgage market in December, and its latest offer went live yesterday.
The digital-only lender is offering five-year rates starting at 1.29% on a 60% loan-to-value mortgage, with the rate fixed for five years. The rate goes up to 1.99% on a 90% mortgage, again fixed for five years.
Would-be borrowers may have to act fast as the offer is available for a limited time, and only through brokers.
Atom director of retail mortgages Maria Harris said: “This move is entirely unprecedented.”
Andrew Montlake, a leading figure in the mortgage industry, said: “Talk of disruption in the mortgage industry has taken many forms, with digital banks such as Atom being at the forefront of this.
“However, this latest move, offering five-year fixed rate products at two-year fixed prices, has really turned the mortgage market on its head.”
Montlake, director of Coreco mortgage brokers, said the deal could be a game changer.
He said: “Customers could really benefit from this new breed of lender.”
There are lower-priced products on the market – Yorkshire Building Society has a 0.99% rate, but this is fixed for only two years.
Atom’s new five-year deal significantly undercuts the opposition: the next cheapest five-year deal is offered by Leeds Building Society with a rate of 2.55%.
While there are early redemption charges with Atom’s new five-year deal, borrowers can overpay by 20% each year without being charged, and the mortgage is portable.
http://www.propertyindustryeye.com/borrowing-becomes-cheaper-than-ever-as-lender-slashes-five-year-mortgage-deal-to-under-1-3/
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| http://www.pnwr.com/images/fixed-rate-home-mortgage-rates_2100.png |
In a move which has elicited genuine gasps in the mortgage world, a lender has slashed rates on a five-year fixed mortgage to just 1.29% – the same as for its two-year fixes.
Atom Bank only launched into the mortgage market in December, and its latest offer went live yesterday.
The digital-only lender is offering five-year rates starting at 1.29% on a 60% loan-to-value mortgage, with the rate fixed for five years. The rate goes up to 1.99% on a 90% mortgage, again fixed for five years.
Would-be borrowers may have to act fast as the offer is available for a limited time, and only through brokers.
Atom director of retail mortgages Maria Harris said: “This move is entirely unprecedented.”
Andrew Montlake, a leading figure in the mortgage industry, said: “Talk of disruption in the mortgage industry has taken many forms, with digital banks such as Atom being at the forefront of this.
“However, this latest move, offering five-year fixed rate products at two-year fixed prices, has really turned the mortgage market on its head.”
Montlake, director of Coreco mortgage brokers, said the deal could be a game changer.
He said: “Customers could really benefit from this new breed of lender.”
There are lower-priced products on the market – Yorkshire Building Society has a 0.99% rate, but this is fixed for only two years.
Atom’s new five-year deal significantly undercuts the opposition: the next cheapest five-year deal is offered by Leeds Building Society with a rate of 2.55%.
While there are early redemption charges with Atom’s new five-year deal, borrowers can overpay by 20% each year without being charged, and the mortgage is portable.
http://www.propertyindustryeye.com/borrowing-becomes-cheaper-than-ever-as-lender-slashes-five-year-mortgage-deal-to-under-1-3/
Friday, 7 April 2017
More landlords will be affected by UK tax change than the Government thinks
The measures were first announced in the 2015 Budget and since then landlord organisations have been campaigning and lobbying for the Government to reconsider.
Now a study from AXA reveals that far more believe they will be affected than has been suggested by officials and almost half of landlords involved in the research plan to quit the rental market by 2020, fearing they are being unfairly targeted.
The research shows that more than 40% of landlords believe they will be worse off as a result of the changes. This is despite the UK Government’s assurances that 82% will not have any additional tax to pay.
AXA found evidence that this change coming on top of a raft of legislation aimed at landlords in recent years means that almost half of private landlords will withdraw from the market by 2020.
Indeed, some 21% said they plan to sell all their rental properties, 10% will reduce their portfolio and 7% will switch to commercial property ownership, which is perceived as a safer option. A further 8% say they will transfer ownership of their rental property to their spouse or other family member who is in a lower tax bracket as a way of avoiding extra tax.
As one West Midlands landlord put it: ‘Landlords with mortgages on their buy to let properties are unlikely to make much profit with the new system coming in. People like me may just decide the new system isn’t worth the hassle and sell their properties leaving less accommodation for people to rent’.
Two thirds of landlords surveyed said they feel stigmatised for running a rental business, saying it is a myth that landlords are rich. One pointed out that after mortgage, tax and repairs, he doesn’t make a profit on the two properties he owns.
Just over half directly quoted Government policy as a source of people think landlords are fat cats who do nothing for their tenants. ‘We are being victimised by the Chancellor. Government finds landlords a convenient scapegoat and is shifting the blame for the housing crisis,’ another said.
The reality is that just 4% of private landlords have a portfolio big enough to be able to give up work and live off the proceeds. The average UK landlord makes £343 rental profit each month after expenses and profit levels vary widely across the country, ranging from £297 in the West Midlands to £713 in London.
‘Landlords have been subject to one piece of new legislation after another in recent years, much of it very complex indeed. We see a real confusion as to what the new tax changes will mean, with government and landlords giving very different estimates of the impact,’ said Gordon Rutherford, head of marketing at AXA Insurance.
‘We need to remember that few landlords are professional property tycoons. Two thirds in the UK are accidental landlords. They tend to own just one rental property that they’ve inherited or are finding hard to sell, and they make a modest income once time and expenses are out. They do feel increasingly apprehensive, as we can see from the numbers thinking of withdrawing their properties from the rental market in the coming years,’ he added.
Steve Bolton, founder of Platinum Property Partners, believes that the Government should still make a U change as the new tax changes threaten to seriously damage the UK buy to let market.
‘Landlords will no longer be able to offset all their finance costs against their rental income before calculating their tax bill. In implementing these changes, the Government is breaking an age old taxation practice and is forcing landlords to pay tax on part of their costs despite no other type of business having to follow such rules,’ he pointed out.
‘Landlords play an integral role in today’s property market. Rental demand is at an all-time high, and not just because many have been priced out of buying a home in their desired location. A growing number of people are choosing to rent because they enjoy the convenience and flexibility, and our increasingly mobile workforce requires it. The Government itself admitted in its recent white paper the importance of a fair and affordable rental market: yet by targeting landlords’ profits, these changes will inadvertently make renting more expensive for tenants,’ he said.
He also pointed out that the changes will not only affect higher rate taxpayers, but also an estimated 440,000 additional landlords that will be pushed into this tax bracket because of finance costs artificially inflating their income.
‘Many will find their tax bill outweighs their profits, forcing them to sell properties, increase rents, which are often already below market rates, or leave the market altogether. All of these make renting more expensive for tenants, and they will ultimately be the ones forced to fund this tenant tax,’ he explained.
Bolton believes that the tax changes are based on a fundamental flaw that driving landlords out of the housing market will improve first time buyer levels. ‘This simply isn’t true. Landlords and first time buyers do not buy the same types of properties, and shrinking rental supply won’t suddenly help first time buyers to save for a deposit. In fact, it will do the very opposite as rents become more expensive. The sooner the Government realises this and reverses the changes, the better,’ he added.
http://www.propertywire.com/news/uk/landlords-will-affected-uk-tax-change-government-thinks/
Thursday, 6 April 2017
New built homes in London set to reach record levels in London in 2017
And while the majority have sold off plan, more homes will complete unsold this year than at any time over the past decade, according to international property adviser Savills.
Total net completions, including sub-market and intermediate housing provision, are expected to peak at 46,500 this year, ahead of the minimum 42,000 homes a year target set by the London Plan.
But this is still well short of real housing demand, which Savills puts at 64,000 homes per year. Lead indicators suggest that 41,000 homes were completed in 2016.
However, the Savills report points out that what is being built currently does not match the shape of demand. Savills estimates that 58% of demand is for homes costing less than £450 per square foot, which accounts for just 15% of the five year build forecast.
It explains that over the past five years, private house building starts have raced ahead of completions, supported in large part by rising volumes of off-plan sales, which assist cash flow and give certainty to funders and are therefore vital to the current delivery model.
But, over the next few years, private sector completions are forecast to fall sharply, the result of rapidly falling home starts, as developers adjust to lower rates of sale. Policy intervention is required, Savills says, in order to reach the level of development needed and shift the focus to the lower value end of the market.
Sales have started to slow, meaning more homes will remain unsold on completion, particularly in the prime market. Between 2013 and 2016, some 13,500 more homes were started than sold and Savills estimates that unsold, finished homes will total 2,800 this year, up from 1,000 last year.
The oversupply issue is particularly acute above the £1,000 per square foot price point. While the mainstream market has been constrained by stretched affordability and changes to the taxation of buy to let investors, there were 1.6 starts for every sale above the £1,000 per square foot price point during 2015 and 2016, accounting for nearly half of the 13,500 overshoot.
The report explains that since the peak of 2015, development starts have fallen sharply. Savills expects starts to total just 21,500 this year and fall to 18,000 annually over the next two years.
In turn, completions are forecast to fall to just 18,000 by 2021. While this will allow high levels of supply in the private market to be absorbed, assuming sales rates are sustained at 2016 levels, it will leave London chronically undersupplied in new homes.
An expected increase in large scale private rented sector deals and a marginal increase in overseas buyers attracted by the currency play will support volumes at current levels, but developers will need to adopt pragmatic sales strategies, particularly where land was bought at peak values. Sales are expected to run slightly ahead of start volumes from next year, ultimately allowing the market to correct.
‘To a large degree, the fact that London almost hit its official new homes target last year should be seen as a massive success, but these figures suggest we are at the limit of what can be built under the current delivery model,’ said Edward Green, Savills research analyst.
‘This year may present some harsh realities for a number of developers, but the bigger issue remains that of a city chronically undersupplied in the homes it desperately needs. An additional model for housing delivery is needed, that adds to the output of major housebuilders and the market sales model,’ he added.
Savills also suggests that more Build to Rent and a strengthened affordable housing programme are part of the answer. But in order to increase delivery in the market segments it is needed most, there need to be further changes to the way in which land is brought forward, including greater public sector land release.
The report adds that there is a real opportunity to boost supply if the Government and GLA implement measures to unlock investor appetite for PRS. Pro-active planning, proposed in the Housing White Paper, is a useful early step, but other policy measures are required, especially from the Mayor.
http://www.propertywire.com/news/uk/new-built-homes-london-set-reach-record-levels-london-2017/
Wednesday, 5 April 2017
No way out of the renting gap
By Kate Hughes
Renters will remain the poor cousin to homeowners until politicians change their attitudes, experts warn
If there’s one thing that’s sure to stretch the intergenerational chasm just that little bit further, it’s property ownership stats.
The latest figures points to what we already know – that home ownership among the UK’s youngest adults is plummeting.
Data and analysis from a triumvirate of august institutions reckons that back in 1990 more than 60 per cent of 25-29 year olds – the very last of the fabled baby boomers - were homeowners. Today it’s just 31 per cent.
Even among those lucky few, the report – from Cambridge and Anglia Ruskin universities in partnership with the Social Mobility Commission – suggests, the bank of Mum and Dad is playing a key role, with 34 per cent of first time buyers now receiving a pot of cash to help secure a home (up from 2 per cent just 7 years ago).
“Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder,” says Alan Milburn, chair of the Social Mobility Commission, who adds: “The way the housing market is operating is exacerbating inequality and impeding social mobility.”
In fact, those with help can typically afford to buy just two years earlier than those without help – albeit rising to more than 4.5 years for Londoners. But those few years can make all the difference.
A recent study by homelessness charity Shelter, which divided people into those who had been able to buy their first home before 30, those who bought after 30 and those who remained in rented accommodation after age 35 found, predictably, that there was a long-term financial divergence between those who own and those who don’t.
But the numbers are far greater than we might expect.
For a family with a child, for example, those who bought before 30 will be £146,300 better off over their lifetime than families who have to save and buy later, when parents were 30-plus.
Compared with families who never manage to buy, early buying families will be £561,200 better off. This was thanks not just to rising property prices, but also ownership related life decisions including the impact of taking career breaks to start families at different times to renters and pursuing higher paid jobs to cover the mortgage, as well as renters spending an average of £44,000 more over a lifetime on lost housing costs.
Nor are the benefits of owning purely financial. A separate study by digital mortgage broker Habito, points to a clear psychological link between owning and social status.
“We’ve seen repeatedly in our customer focus groups that for first time buyers, acquiring a mortgage is seen as a step up that reinforces a sense of belonging to their social group, catching up with their friends and being “in the club” of homeowners,” says CEO Daniel Hegarty.
“Home ownership can be an integral part of supporting social mobility, not least due to the fact that home owners are more likely to remain in a property longer than the average renter,” adds Mitesh Patel, CEO of property technology firm Engage.
“For renters this creates a feeling of disconnect with their neighbours and local community.
“Millennials, who have been confirmed as the generation destined to rent for longer, are feeling the impact stronger than any other group. Our own research recently revealed over a third (36 per cent) of millennial tenants feel disconnected from their communities – more than another age group.”
“The UK’s housing crisis, which has priced millions out of owning a home of their own, will continue to fuel the UK’s social and economic divide unless we start to provide renters with the same sense of ‘belonging’ as home owners. If this issue is not addressed by landlords, it could leave more people feeling disconnected simply because they don’t own their home.
None of this means there aren’t benefits to renting of course.
They aren’t obliged to put all their savings into what we often forget remains a relatively high risk financial basket for example, nor are they restricted in terms of mobility as they develop careers, says Michael Ball, Professor of Urban and Property Economics at Henley Business School, who points to examples of very positive attitudes towards renting in countries like the USA and Germany.
“But we have two very British issues,” he warns. “Entering home ownership is much cheaper than renting and because renters tend to only stay in one place for 18 months, landlords have high administrative costs that are passed on to their tenants along with the taxes they pay.
“There are huge tax breaks for homeowners, who don’t pay anything against the equity in their home or the rise in prices. They’re the biggest tax breaks anyone will receive over the course of their life.
And with no changes to the tax system or a significant increase in house building on the cards, this is only going one way, he suggests.
“If income rises, demand for housing goes up. But with no houses being built, real house prices rise by around 3 per cent a year over time. Homeowners – resisting suburban expansion despite the fact that just 1 per cent of England is covered in housing excluding gardens – are locked into that [expectation].
“That means the growing number of renters will continue to pay progressively higher rents.
“The financial divergence will continue unless politicians change their attitudes towards both house building and the tax system.”
http://www.independent.co.uk/money/no-way-out-of-the-renting-gap-a7656001.html
Renters will remain the poor cousin to homeowners until politicians change their attitudes, experts warn
 |
| Renters will be worse off than owners by at least £400,000 over the course of their lifetime, as the latest report warns of growing barriers to social mobility PA |
The latest figures points to what we already know – that home ownership among the UK’s youngest adults is plummeting.
Data and analysis from a triumvirate of august institutions reckons that back in 1990 more than 60 per cent of 25-29 year olds – the very last of the fabled baby boomers - were homeowners. Today it’s just 31 per cent.
Even among those lucky few, the report – from Cambridge and Anglia Ruskin universities in partnership with the Social Mobility Commission – suggests, the bank of Mum and Dad is playing a key role, with 34 per cent of first time buyers now receiving a pot of cash to help secure a home (up from 2 per cent just 7 years ago).
“Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the bank of mum and dad to give them a foot up on the housing ladder,” says Alan Milburn, chair of the Social Mobility Commission, who adds: “The way the housing market is operating is exacerbating inequality and impeding social mobility.”
In fact, those with help can typically afford to buy just two years earlier than those without help – albeit rising to more than 4.5 years for Londoners. But those few years can make all the difference.
A recent study by homelessness charity Shelter, which divided people into those who had been able to buy their first home before 30, those who bought after 30 and those who remained in rented accommodation after age 35 found, predictably, that there was a long-term financial divergence between those who own and those who don’t.
But the numbers are far greater than we might expect.
For a family with a child, for example, those who bought before 30 will be £146,300 better off over their lifetime than families who have to save and buy later, when parents were 30-plus.
Compared with families who never manage to buy, early buying families will be £561,200 better off. This was thanks not just to rising property prices, but also ownership related life decisions including the impact of taking career breaks to start families at different times to renters and pursuing higher paid jobs to cover the mortgage, as well as renters spending an average of £44,000 more over a lifetime on lost housing costs.
Nor are the benefits of owning purely financial. A separate study by digital mortgage broker Habito, points to a clear psychological link between owning and social status.
“We’ve seen repeatedly in our customer focus groups that for first time buyers, acquiring a mortgage is seen as a step up that reinforces a sense of belonging to their social group, catching up with their friends and being “in the club” of homeowners,” says CEO Daniel Hegarty.
“Home ownership can be an integral part of supporting social mobility, not least due to the fact that home owners are more likely to remain in a property longer than the average renter,” adds Mitesh Patel, CEO of property technology firm Engage.
“For renters this creates a feeling of disconnect with their neighbours and local community.
“Millennials, who have been confirmed as the generation destined to rent for longer, are feeling the impact stronger than any other group. Our own research recently revealed over a third (36 per cent) of millennial tenants feel disconnected from their communities – more than another age group.”
“The UK’s housing crisis, which has priced millions out of owning a home of their own, will continue to fuel the UK’s social and economic divide unless we start to provide renters with the same sense of ‘belonging’ as home owners. If this issue is not addressed by landlords, it could leave more people feeling disconnected simply because they don’t own their home.
None of this means there aren’t benefits to renting of course.
They aren’t obliged to put all their savings into what we often forget remains a relatively high risk financial basket for example, nor are they restricted in terms of mobility as they develop careers, says Michael Ball, Professor of Urban and Property Economics at Henley Business School, who points to examples of very positive attitudes towards renting in countries like the USA and Germany.
“But we have two very British issues,” he warns. “Entering home ownership is much cheaper than renting and because renters tend to only stay in one place for 18 months, landlords have high administrative costs that are passed on to their tenants along with the taxes they pay.
“There are huge tax breaks for homeowners, who don’t pay anything against the equity in their home or the rise in prices. They’re the biggest tax breaks anyone will receive over the course of their life.
And with no changes to the tax system or a significant increase in house building on the cards, this is only going one way, he suggests.
“If income rises, demand for housing goes up. But with no houses being built, real house prices rise by around 3 per cent a year over time. Homeowners – resisting suburban expansion despite the fact that just 1 per cent of England is covered in housing excluding gardens – are locked into that [expectation].
“That means the growing number of renters will continue to pay progressively higher rents.
“The financial divergence will continue unless politicians change their attitudes towards both house building and the tax system.”
http://www.independent.co.uk/money/no-way-out-of-the-renting-gap-a7656001.html
Tuesday, 4 April 2017
Buy to let specialist gives upbeat forecast, despite tax changes
By Graham Norwood
Specialist buy to let lender Paragon Mortgages has given an upbeat forecast for the private rental sector, despite the arrival of new tax burdens for landlords.
Paragon says gearing amongst landlords remains low so far this year with the average loan-to-value ratio decreasing two per cent to 35 per cent in the first quarter of a year, according to the firm’s survey of some landlord clients.
Some 68 per cent of landlords now have borrowings of less than half the value of their investment property portfolios and, since the second quarter of 2012, average gearing has reduced significantly.
On average, landlords spend 30 per cent of their rental income on mortgage payments, with almost half suggesting they spend less than a quarter.
Although buying intentions remain subdued, there has been no large-scale sell off by landlords of buy-to-let properties. The size of the average portfolio is 13 properties, unchanged from the autumn, and Paragon insists the forecast is stable as landlords indicate they do not expect their portfolios to change in size over the next 12 months.
Twenty five per cent of landlords expect the value of their portfolio to increase in the next 12 months, whilst just eight per cent think it will decrease. Some 38 per cent of those questioned said tenant demand was ‘growing’ or ‘booming’ and 46 per cent believe tenant demand will increase over the next 12 months.
https://www.lettingagenttoday.co.uk/breaking-news/2017/4/buy-to-let-specialist-gives-upbeat-forecast-despite-tax-changes
Specialist buy to let lender Paragon Mortgages has given an upbeat forecast for the private rental sector, despite the arrival of new tax burdens for landlords.
Paragon says gearing amongst landlords remains low so far this year with the average loan-to-value ratio decreasing two per cent to 35 per cent in the first quarter of a year, according to the firm’s survey of some landlord clients.
Some 68 per cent of landlords now have borrowings of less than half the value of their investment property portfolios and, since the second quarter of 2012, average gearing has reduced significantly.
On average, landlords spend 30 per cent of their rental income on mortgage payments, with almost half suggesting they spend less than a quarter.
Although buying intentions remain subdued, there has been no large-scale sell off by landlords of buy-to-let properties. The size of the average portfolio is 13 properties, unchanged from the autumn, and Paragon insists the forecast is stable as landlords indicate they do not expect their portfolios to change in size over the next 12 months.
Twenty five per cent of landlords expect the value of their portfolio to increase in the next 12 months, whilst just eight per cent think it will decrease. Some 38 per cent of those questioned said tenant demand was ‘growing’ or ‘booming’ and 46 per cent believe tenant demand will increase over the next 12 months.
https://www.lettingagenttoday.co.uk/breaking-news/2017/4/buy-to-let-specialist-gives-upbeat-forecast-despite-tax-changes
Friday, 31 March 2017
It's a housing class war as the Tories set their sights on young people
By Dawn Foster
With April heralding the new financial year, a number of political fresh starts are due this weekend. One is the removal of housing benefit for 18- to 21-year-olds.
I’ve written about this before. Leaving aside its arbitrary and politically nonsensical rationale, supposedly stopping “dependence on benefits” by starving poor people into economic activity, the costs that the policy incurs will outweigh any potential savings.
Young people will simply not be able to afford their rent, and will turn to loan sharks and the type of high-cost, dodgy credit available to people on low incomes. Or they’ll end up homeless, on the street or relying on the local council to place them in a hostel or temporary accommodation, which invariably costs many times more than the local market rate for a private rented flat.
Now, in addition, the Chartered Institute of Housing has released research which shows that housing is almost totally out of reach for young single people in many areas. Single young people are finding that the gap between how much the cheapest properties in their area are and how much help they get with housing costs through the Local Housing Allowance (LHA) makes housing inaccessible. And a freeze on LHA until 2020 will only make matters worse.
Young tenants can either attempt to find the cash needed to make up their rent from the rest of their budget – skimping on food, fuel and other bills – or will end up in arrears and face potential homelessness. In 50 areas, LHA covers less than a quarter of local rents and, with competition for cheaper properties already high, young people in receipt of benefits often find they aren’t private landlords’ preferred tenants anyway.
So we have very young adults who’ve had housing support completely stripped away, and even on reaching their 21st birthday, there is no relief to be found, only a tough market increasingly squeezing them out. Housing simply isn’t working for millions of young people, and has become a huge source of constant anxiety on a scale it has rarely been in the past.
But it isn’t all bad news for young people. This April the government is also bringing in the “Lifetime ISA”, a tax-free savings account that gives you £1,000 of cash from the government when you save £4,000 a year towards buying your first home. So if you save the maximum for five years, you’ll receive a £5,000 wad from the Treasury. The maximum you can receive is £32,000. This will encourage and help first-time buyers, we’re told.
These policies are completely typical of the Conservative approach, dividing young people and entrenching deep inequality.
The people who need help least, the minted with parental help available for purchasing homes, get a tax-free lump sum to make their lives even easier. The people who need help most are completely cut adrift, and have any hope of becoming solvent and achieving not even comfort but basic shelter destroyed by actively cruel policies.
It’s typical of austerity policies in all its hypocrisy, combined with turbo-charged venom for the poor. After the financial crash, we were repeatedly told that paying wealthy financiers and bankers less, or even scrapping bonuses was out of the question: paying them more would incentivise them to perform far better and benefit everyone. But the poor are a different species to Conservatives: the only way to make them find a home, or a job, or to work harder, is to starve them into action, deny them a roof over their head, and threaten them with sanctions and the withdrawal of subsistence welfare payments.
For years politicians and commentators have argued there is a generational war, shown in the effects of the housing crisis and the erosion of workers’ rights. But old habits die hard. April’s disparate approach to young people over housing shows the Conservative party is still fighting the class war.
https://www.theguardian.com/housing-network/2017/mar/31/class-war-housing-conservatives-young-people-unaffordable
 |
| Young people aged 18 to 21 will no longer receive housing benefit towards their rent – but those saving up to buy will get cash from the Treasury. Photograph: Dimitris Legakis/Athena Pictures |
I’ve written about this before. Leaving aside its arbitrary and politically nonsensical rationale, supposedly stopping “dependence on benefits” by starving poor people into economic activity, the costs that the policy incurs will outweigh any potential savings.
Young people will simply not be able to afford their rent, and will turn to loan sharks and the type of high-cost, dodgy credit available to people on low incomes. Or they’ll end up homeless, on the street or relying on the local council to place them in a hostel or temporary accommodation, which invariably costs many times more than the local market rate for a private rented flat.
Now, in addition, the Chartered Institute of Housing has released research which shows that housing is almost totally out of reach for young single people in many areas. Single young people are finding that the gap between how much the cheapest properties in their area are and how much help they get with housing costs through the Local Housing Allowance (LHA) makes housing inaccessible. And a freeze on LHA until 2020 will only make matters worse.
Young tenants can either attempt to find the cash needed to make up their rent from the rest of their budget – skimping on food, fuel and other bills – or will end up in arrears and face potential homelessness. In 50 areas, LHA covers less than a quarter of local rents and, with competition for cheaper properties already high, young people in receipt of benefits often find they aren’t private landlords’ preferred tenants anyway.
So we have very young adults who’ve had housing support completely stripped away, and even on reaching their 21st birthday, there is no relief to be found, only a tough market increasingly squeezing them out. Housing simply isn’t working for millions of young people, and has become a huge source of constant anxiety on a scale it has rarely been in the past.
But it isn’t all bad news for young people. This April the government is also bringing in the “Lifetime ISA”, a tax-free savings account that gives you £1,000 of cash from the government when you save £4,000 a year towards buying your first home. So if you save the maximum for five years, you’ll receive a £5,000 wad from the Treasury. The maximum you can receive is £32,000. This will encourage and help first-time buyers, we’re told.
These policies are completely typical of the Conservative approach, dividing young people and entrenching deep inequality.
The people who need help least, the minted with parental help available for purchasing homes, get a tax-free lump sum to make their lives even easier. The people who need help most are completely cut adrift, and have any hope of becoming solvent and achieving not even comfort but basic shelter destroyed by actively cruel policies.
It’s typical of austerity policies in all its hypocrisy, combined with turbo-charged venom for the poor. After the financial crash, we were repeatedly told that paying wealthy financiers and bankers less, or even scrapping bonuses was out of the question: paying them more would incentivise them to perform far better and benefit everyone. But the poor are a different species to Conservatives: the only way to make them find a home, or a job, or to work harder, is to starve them into action, deny them a roof over their head, and threaten them with sanctions and the withdrawal of subsistence welfare payments.
For years politicians and commentators have argued there is a generational war, shown in the effects of the housing crisis and the erosion of workers’ rights. But old habits die hard. April’s disparate approach to young people over housing shows the Conservative party is still fighting the class war.
https://www.theguardian.com/housing-network/2017/mar/31/class-war-housing-conservatives-young-people-unaffordable
Wednesday, 29 March 2017
Landlords optimistic about future of buy to let in the UK
Some 37% of landlords anticipate growing rents over the next six months, a year in year increase of 36%, and 44% of landlords had good or very good expectations for their own letting portfolio over the next three months.
However, the research from independent property consultancy Allsop also shows that the percentage of landlords intending to purchase one or more property in the next 12 months fell to 16%, the lowest level in just over four years.
And the Rent Check Rent report on the rental market in England and Wales published with BDRC Continental, reveals that the majority, some 83% of landlords, reported that obtaining buy to let finance had become more difficult in the last six months.
The report calculates the estimated annual return for three, five and 10 year periods after tax for basic rate 20% tax payers and 40% tax payers, and analyses rental yields, house price growth and running, finance and legal costs.
Using Office for Budget Responsibility national forecasts for wage growth and house prices, the top performing regions for indicative returns are the East Midlands and Yorkshire, with returns of 11.25% per annum over a five year period for a 20% tax payer, and 9% per annum for a 40% tax payer.
Using the same national analysis, London was the worst performing region at a still respectable 5.75% per annum for 20% tax payer and 4.75% per annum for a 40% tax payer over the same period. Of the landlords polled, 45% were higher rate income tax payers.
‘For those with equity to invest, buy TO let returns still have the potential to outstrip savings accounts over the long term. Whilst tax changes and toughening lending criteria is challenging landlords, most are in it for the long term and we still only expect a small minority to exit as the tax changes feed through,’ said Paul Winstanley, partner at Allsop.
‘With no quick solutions to the housing crisis, long term private landlords providing decent accommodation will continue to play an important role in housing our population. As long as there are no new tax rises targeting landlords, buy to let will remain a stable and attractive sector for the long term,’ he added.
http://www.propertywire.com/news/uk/landlords-optimistic-future-buy-let-uk/
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