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Em Morley

Landlords are Cautiously Re-entering the Property Market, Reports Haart

Published On: May 1, 2019 at 8:00 am

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Categories: Landlord News

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A significant rise in the number of landlords re-entering the property market after coming to terms with the additional costs of investing imposed by the Government has been recorded by haart.

The estate agent has seen a surge in the amount of landlords offloading their investment properties over the past three years, due to buy-to-let tax and legislative changes.

However, haart claims that this trend is now reversing, three years on from the Government’s decision to introduce a 3% Stamp Duty surcharge on the purchase of additional homes – including buy-to-let properties.

According to the agent, landlord registrations have risen by 8% on a monthly basis across England and Wales, led by a 12% increase in London.

Sale prices to landlords, however, are down by almost 12% on the year, which partly explains why transactions across England and Wales are up by 11% on March 2018.

Paul Smith, the CEO of haart, comments on the findings: “Three years on from George Osborne introducing the 3% hike in Stamp Duty surcharges on second homes, landlords are beginning to come to terms with the additional costs and are cautiously entering the market again. Our branches across England and Wales saw a monthly uptick of 7.9% in the number of landlords registering to buy, a figure which has been continuing to grow since the start of 2019.

“Interestingly, sale prices to landlords are down by nearly 12% on the year, which may be spurring on this activity – these price decreases could be causing the available stock to fall within lower Stamp Duty thresholds, making the Stamp Duty levy a little easier to stomach. Despite this, landlords are not back in their hundreds – the number of registrations is still down 22% on the year. Whilst some brave souls are re-entering the market, the hammering buy-to-let investors received in terms of various tax changes is still fresh in many of their minds.”

He continues: “Clearly, investors are recognising the value that can still be found in buy-to-let property, especially in comparison to the overvalued and faltering stock market. Although the property market hinges on confidence, the FTSE 100, gold and cash are far more volatile to socioeconomic impact, so investors are increasingly returning to property, where they deem their money safest, and where the yields are highest.

“The market as a whole continued to gain momentum in March, as the pent-up demand from a delayed Brexit continued to drive transactions. Transactions are up 11% on the year, whilst new buyer registrations boomed by 23%.”

Landlords, are you re-entering the property market? 

Brexit Uncertainty Having a “Devastating Impact” on Property Market

Published On: April 30, 2019 at 9:30 am

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Categories: Property News

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Ongoing Brexit uncertainty is having a “devastating impact” on the UK property market, particularly in London, according to real estate investment advisory London Central Portfolio (LCP).

In its latest Residential Index, covering March 2019, the firm assesses the markets in prime central London, Greater London, and England and Wales.

Prime central London

The average house price in March (excluding new builds) was £1,848,282 in prime central London, following a decline of 3.7% in the first quarter (Q1) of 2019. 

Transactions fell by 15.7% in the year to March, to stand at just 3,378. However, on a quarterly basis, sales surged by 18.3%.

The average new build property value rose to £2,377,521 in March – a 60.8% premium over existing stock. New build transactions stood at just 586, following an 18% decline year-on-year.

Naomi Heaton, the CEO of LCP, says: “Average annual prices in March for prime central London now stand at £1,848,282. They have fallen 3.7% over the quarter. On an annual basis, prices hold, with a modest increase of just 1.8%.

“Annual transactions remain just above the record low seen last month and now stand at 3,378 – a fall of 15.7%. 

“Nevertheless, the run-up to the initial Brexit deadline of 29thMarch saw shrewd buyers and investors push through deals, whilst levels of competition remained subdued and sterling weak. As a result, transactions increased 18.3% in Q1. 

“It had been anticipated that, following Brexit D-day, there would be a clear roadmap for the UK to leave the European Union, engendering a market revival. However, subsequent delays to our departure have created more uncertainty. This is unlikely to change materially until a clear decision is in the offing.”

Greater London

The average property value in Greater London (excluding new builds) stood at £624,343 in March, following a monthly increase of 2.6%. Annually, prices rose by an average of just 1.4%.

Annual property transactions fell by 3.4% over the year, to just 87,368. This is 24.7% lower than at the EU referendum in June 2016.

International buyers have been purchasing a high proportion of London property in PCL
Brexit Uncertainty Having a “Devastating Impact” on Property Market

New build house prices now average £691,452, representing a 21.5% premium over existing stock and an annual increase of 15.2%.

However, new build sales are falling much faster than existing stock, at a rate of 18% annually.

Heaton comments: “Unlike prime central London, transactions in Greater London saw a fall in Q1 of 7.1%, as concerns about the post-Brexit landscape continue to trouble a largely domestic market. 

“This cements the long-term trend of falling transactions, with a drop of 3.4% over the year. At 87,368, they are now 24.7% lower than in June 2016, when the EU referendum took place. It illustrates the devastating impact the ensuing uncertainty has had on the property market, coupled with numerous tax hikes since 2014. 

“If the current cross-party talks yield a compromise which can be ratified, then the prospect of a swift exit is still on the table. If not, we will see an extension of the limbo that not just the London housing market finds itself in, but the UK economy as a whole, with significant negative implications.”

England and Wales (excluding Greater London)

Excluding new builds, the average house price in England and Wales stood at £254,196 in March. This follows a monthly decline of 1.4% and quarterly decrease of 2.6%.

Annual transactions continue to fall, by 0.8%, to reach 798,521. On a quarterly basis, sales plummeted by 14%.

New build property values stood at an average of £307,692, following an annual rise of 3.6%. This represents a 15.1% premium over existing stock.

New build transactions stood at 95,935 in the 12 months to March – up by 5.2%. However, quarterly new build sales fell by 24.3%.

Heaton explains the data: “Average prices in England and Wales (excluding Greater London) stand at £254,196 for March. This represents a monthly fall of 1.4% and a fall of 2.6% for Q1. Growth levels on an annual basis remain at the lowest since 2013, standing at just 2.9%. 

“Annual transactions also remain weak, and now stand at 798,521 – down 0.8%. With a fall of 14% in Q1, this downward trend could be expected to continue for now. 

“The Brexit wobbles that have been evident in the capital for some time are now impacting on England and Wales. Buyers’ faith in the market has waned and sellers are beginning to question whether now is the best time to make a move. Average prices have fallen every month since last September. 

“In previous market cycles, London has often been an early indicator of what was to come for the rest of the UK. This may well presage more bad news to come for the domestic market.”

Lowest March on Record for Supply of Homes for Sale

Published On: April 30, 2019 at 9:00 am

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Last month marked the lowest March on record for the supply of homes for sale, according to the latest Housing Report from NAEA Propertymark (the National Association of Estate Agents).

Despite a month-on-month increase, the supply of homes for sale hit the lowest level on record for the month of March last month. An average of 37 properties were available to buy last month on NAEA Propertymark member estate agents’ books – a 9% rise from 34 in February.

After demand dropped in February, the number of home hunters registered per branch increased by 17% in March, from an average of 252 to 296.

This is similar to the level seen in January, when 297 prospective buyers were recorded per NAEA Propertymark member estate agent.

Annually, demand was at the lowest level recorded for the month of March since 2013, when 286 home hunters were registered, following a decrease of 4%, from 308 in March 2018. Since March 2017, when 397 potential buyers were registered per branch, demand for housing has fallen by a quarter.

Following an increase in the number of sales made to first time buyers in February, this figure fell from 30% to 26% in March – the same level recorded in March last year.

The number of sales agreed per NAEA Propertymark member branch remained at an average of seven in March – the same level reported for the previous two months. Year-on-year, it was down slightly, from eight in March 2018.

Mark Hayward, the Chief Executive of NAEA Propertymark, comments: “Despite the fact that activity in the housing market increased in March, the levels of supply and demand recorded aren’t where we would expect them to be at this time of year. It’s clear buyers and sellers are still feeling cautious and holding off on making any decisions in light of the current political climate and economic uncertainty. 

“However, recent house price data indicates we might see confidence in the market grow as house prices slowly begin to return to previous levels and we edge closer to the summer months.”

Rent Prices are Flat, but Yields Perform Strongly, Reports Your Move

Published On: April 30, 2019 at 8:01 am

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Categories: Lettings News

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The average rent price in England and Wales remained flat in the 12 months to March, reaching £860 per month, according to the latest research by Your Move.

Rent prices in the South West continue to rise faster than all other regions, at an average of 3.6% in the year to March, to hit £701 a month.

Other regions to record strong growth include the West Midlands, where rents increased by 3.3%, to reach an average of £638, and Yorkshire and the Humber, where rents stand at an average of £589, following a 2.3% rise.

At the other end of the spectrum, the East of England saw the sharpest decline, at 2.0% over the 12 months to March, taking the average rent price to £875 per month.

Rents dropped by an average of 1.3% in London over the same period, but, with the typical price standing at £1,260 a month, the capital remains by far the most expensive region to rent a home in England and Wales.

Month-on-month, the East of England and North East both saw rent prices fall by an average of 0.3% – the only two regions to post such a decrease.

The North East remained the cheapest place to rent in March, at just £539 a month.

The average rent price in England and Wales as a whole fell by 0.1% between February and March.

Perhaps unsurprisingly, therefore, tenant finances remained solid last month, with the proportion of renters struggling with their finances remaining at 9.4% in March.

Martyn Alderton, the National Lettings Director of Your Move, says: “Yields continue to perform strongly, with just one region offering lower returns this month than in February.

“We continue to see landlords in the south of England looking further afield for their next rental opportunity, as northern properties deliver stronger yields.”

He continues: “The growth of the urban rental market has created yield hotspots for private landlords in northern cities like Manchester and Liverpool.

“Universities in these major cities are attracting students from across the country. Young professionals are also increasingly relocating to the north. The investment in infrastructure and culture, for example, the relocation of the BBC and ITV to Manchester, has undoubtedly boosted the desirability of the city among this group.”

Landlords, are you keeping your rent prices steady? At the same time, have you seen your yields perform strongly? 

Airbnb is Backing Sadiq Khan’s Call for Short-Term Lets Register

Published On: April 29, 2019 at 9:31 am

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Airbnb is Backing Sadiq Khan’s Call for Short-Term Lets Register

With almost 1 in every 40 properties listed on Airbnb, the holiday lettings website has continued to grow since it started in San Francisco in 2008.

However, whilst this growth means huge potential for hosts in particular, such huge growth in the short-term lets sector can pose problems too.

Sadiq Khan, Mayor of London, says: “Short-term lets are a benefit to visitors to London, and to Londoners themselves who want to earn a little extra money. But these benefits must be balanced with the need to protect long-term rented housing, and to make sure neighbours aren’t impacted by a high turnover of visitors. It is now time for the Government to work with us to develop a registration system of short-term lets, so local councils can make sure we get this balance right.”

Karen Buck, Labour MP for Westminster North, said: “I strongly welcome the Mayor’s initiative, coming on the day I am setting up an All-Party Parliamentary Group on the short-term let sector, to look at how we balance the competing interests involved. The accommodation ‘sharing economy’ brings many benefits but the law is open to abuse, leaving councils unable to enforce effectively and struggling to manage the impact of short lets on residential communities. Knowing who is actually letting out their properties helps get the balance right.”

Hadi Moussa, Airbnb Country Manager for the UK and Northern Europe, comments: “Airbnb is built on the principle of making communities stronger and we are proud to lead our industry on working with policymakers to secure smart rules that work for everyone.

“A clear and simple registration system that applies to hosts on all platforms is good news for hosts and will help authorities get the information they need to regulate our industry effectively. We want to continue working together with leaders in the UK and across the world to ensure that the sustainable growth of home sharing is good news for everyone.”

A press release from Airbnb said: “The UK has been a world leader in regulating the sharing economy and London is a top destination for guests from across the world. From July 2017 to July 2018, more than 2 million guests have stayed at listings on Airbnb in the capital, generating £1.3 billion for the economy and encouraging visitors to explore and stay in all parts of the city.

“Our platform is built on the principle of making communities stronger. We are proud of the responsible role hosts and guests on Airbnb have played in London and are pleased to continue leading our industry on working with policymakers to ensure rules are applied equally to everyone. We want to continue working together with leaders in the UK and across the world to ensure that the sustainable growth of home sharing is good news for everyone.”

For more reading and information on short-term lets, check out our article on What Makes the Best Airbnb Investment!

Housing Secretary Publishes Written Statement on Section 21 Reform

Published On: April 29, 2019 at 8:20 am

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Housing Secretary Publishes Written Statement on Section 21 Reform

On the 15th of April, the government announced that, without a legitimate legal reason, landlords would no longer be able to evict their tenants.

As it stands, section 21 gives landlords the option to evict their current tenants by giving an eight week notice period. These no-fault evictions are issued in instances if the landlord selling the property, or moving in themselves, for example. However, without Section 21, landlords will have little choice but to use the Section 8 route if they wish to evict a tenant, which involves applying for a court order.

This route can take a significantly longer amount of time, however it could mean tenants are much more stable and settled in their homes, plus it could help filter rogue landlords out of the system.

James Brokenshire writes: “The current legislative framework leaves tenants feeling insecure. They can be asked to leave their homes, with as little as two months’ notice, without the landlord providing any reason, using eviction proceedings under Section 21 of the Housing Act 1988. This sense of insecurity can profoundly affect the ability of renters to plan for the future, to manage their finances or to put down roots in their local communities.

“The government intends to establish a fairer system for both tenants and landlords by legislating to repeal Section 21 of the Housing Act 1988. Bringing an end to so called ‘no fault evictions’, would mean that a tenant cannot be forced to leave their home unless the landlord can prove a specified ground, such as rent arrears or breach of tenancy agreement. It would provide tenants with more stability and protect them from having to make frequent and short notice moves. It would also empower tenants to challenge their landlord about poor property standards where this occurs, without the worry of being evicted as a result of making a complaint.

“The private rented sector must also remain a stable and secure market for landlords to continue to invest in. The legislation I intend to introduce will include measures that provide landlords with additional safeguards to successfully manage their properties. We will strengthen the existing grounds for eviction available to landlords under Section 8 of the Housing Act 1988. This will allow the landlord to regain their property when they want to sell it or move into it themselves.

“It is important that landlords can have confidence that the court system works for them in instances when there is no other option but to seek possession of their property through the courts. That is why this announcement includes improvements to court processes, to make it quicker and smoother for landlords to regain their properties when they have a legitimate reason to do so.”

You can read more about the biggest change to the private rental sector in a generation on the Gov.uk website, here. Plus, find out what our expert Editor, Rose Jinks, thinks about scrapping the section 21 notice.