Written By Em

Em

Em Morley

London Ends Year with Negative House Price Growth for Second Time in 23 Years

Published On: December 19, 2018 at 10:58 am

Author:

Categories: Property News

Tags: ,

Rightmove reports 'best ever spring sellers’ market' for the UK

London is ending the year with negative house price growth for only the second time in 23 years, according to the latest UK Cities HousePrice Index from Hometrack.

The report shows that house price growth across the largest cities in the UK has slowed to an average of 2.6% over the past year, which is the slowest rate of inflation since 2012, due to ongoing price declines in London and a sustained slowdown across areas in southern England.

House prices in London have dropped by an average of 0.1% over the last 12 months, making 2018 the second time in 23 years that the capital has ended the year with negative growth.

Property values are falling across two-thirds of local authority areas across London, by up to 3.5% (in Camden), while prices are rising in a third of markets, by up to 2.0% (in Barking and Dagenham).

Nevertheless, recent house price declines are doing little to materially change the affordability picture in London. The house price to earnings ratio peaked at 14x in 2016 and has started to fall, but remains stretched, at 13.3x.

Edinburgh currently has the fastest growing house prices of all UK cities (at an average of 6.6%), with increases in Manchester and Birmingham also running at more than 6.0%.

However, just four cities are recording higher levels of house price growth than this time last year – Manchester, Liverpool, Cardiff and Newcastle.

The cities that have seen the greatest slowdowns in property values over the past year are all located in the south of England: Bournemouth, Portsmouth and Bristol.

Affordability pressures have increased in these cities over the last 12 months, and they now record the highest house price to earnings ratios outside of London, Oxford and Cambridge.

Over the course of 2019, Hometrack expects UK city house prices to rise by an average of 2.0%, as above average growth in large regional cities offsets price falls in London.

Property values in the capital are forecast to register decreases of up to 2.0%, while, in more affordable cities, such as Liverpool and Glasgow, prices could rise by another 5.0% next year.

Richard Donnell, the Insight Director at Hometrack, says: “The diversity of London’s housing markets is shown by the clear divide between low house price growth in outer London and commuter areas, and nominal price falls concentrated in high-value inner areas of the capital. In 2019, we expect prices to continue to fall most in central areas of London. Our projection for a 2% fall in overall London prices will reduce the price to earnings ratio to 12.8x, in line with levels last recorded in mid-2015.

“Outside of London and the south, affordability levels in regional cities remain attractive, but this is changing. House price growth has run well ahead of earnings growth for the last five years and, together with small increases in mortgage rates, as well as growing economic uncertainty, the speed at which households bid up the cost of housing is reducing.”

He adds: “The fundamentals of housing affordability will shape the prospects for city house prices in 2019. This is already the case, with flat to falling prices in the most unaffordable cities, and above average growth in the more affordable areas. Ultimately, the speed at which affordability translates into price changes depends on economic factors, changes to mortgage rates and household sentiment. Brexit is the greatest driver of uncertainty in the near term and the prospects are for a slow start for the housing market in 2019.”

How Mould can cause Wealth Erosion and Disputes

Published On: December 19, 2018 at 10:21 am

Author:

Categories: Property News

Tags: ,

Any homeowner, landlord or tenant will know the displeasure that finding mould in a property can cause. But, did you know how mould can cause wealth erosion and disputes? The Association of Independent Inventory Clerks (AIIC) has issued a warning.

It is known that property investments can go up or down in value, but, whether you are an accidental or buy-to-let landlord, or a seller, looking after your property will pay dividends.

According to a recent study, 60% of British property buyers would leave a viewing if the home had obvious damp patches or mould. Other research shows that, if there is mould in a property, it will take longer to let.

Danny Zane, the Chairman of the AIIC and Managing Director of My Property Inventories, says: “Properties that have seen mould growth and have been poorly attended to take longer to rent. Our members inform us that tenants who move into such properties view the property as unclean and request a full professional clean, even when a professional clean had already taken place. A full clean can cost anything between £195 + VAT and £310 + VAT for a one-bedroomed flat.”

Mould is a type of fungus that spreads through spores. If allowed to thrive and colonize, it will be more difficult to remove. It can penetrate a property’s walls, floors and ceilings, down to its structure. It can even make the property uninhabitable, making it difficult to let or sell.

How Mould can cause Wealth Erosion and Disputes

If your property is part of a block of flats, mould could spread to other flats, too, and cause disputes with other property owners.

Zane explains how it forms: “In most instances, the combination of condensation and poor ventilation or poor insulation results in mould growth, which in turn is a major cause of dispute between a tenant and a landlord. Our members are trained to advise tenants at the time of check-in on how to keep the property ventilated and avoid deductions from their deposit when they leave. They are also trained to inform the landlord or his agent at check-out if they think the damage needs to be evaluated by an expert in the belief that parts of the property need maintenance.”

Simple steps that landlords can take to prevent mould growth involve ensuring that the heating works properly, that there are no leaks or blockages, chimneys are swept, the property is properly insulated, and window seals are replaced.

“As a Chairman of the AIIC, I heartedly recommend landlords and estate agents to engage independent inventory clerks for check-in and check-out reports, and take the clerks’ comments positively on board,” Zane urges. “This is because it is possible that landlords and agents may become too familiar with the property, to the point of overlooking or undermining certain areas.”

He adds: “Landlords may not always be pleased to hear what our members have to say, but they can find solace in the fact that it will be based on nothing else but unbiased, professional knowledge.”

Landlords, if you’d like more information on preventing condensation, damp and mould, take a look at our free, helpful guide: https://www.landlordnews.co.uk/guides/a-landlords-guide-to-condensation-control/

Fitness for Human Habitation Bill to Complete Passage through Parliament

Published On: December 19, 2018 at 9:55 am

Author:

Categories: Law News

Tags: ,,

Landlords ordered to make rent repayments to tenants

The Homes (Fitness for Human Habitation) Bill is due to complete its passage through Parliament today (Wednesday 19th December 2018).

As a result, tenants across England are on the verge of being given new powers to take action against rogue landlords.

The private members’ bill, which will give both private and social tenants in England the power to take their landlords to court if their home is unsafe, will have its third and final reading in the House of Lords today.

The proposed new rules would require all tenancy agreements to have an implied covenant, stating that landlords must ensure that their properties are fit for human habitation at the start of and throughout the tenancy.

Tenants would be able to seek legal redress through the courts if their landlords fail to do this, without having to first go through the council.

Under the planned legislation, rogue landlords would be required to remove hazards or pay compensation to their tenants.

The bill, tabled by Karen Buck MP, will head back to the House of Commons early next year, for MPs to consider any amendments added by peers, before it’s given Royal Assent.

According to Buck, 750,000 homes in the private rental sector and 250,000 in the social rental sector have Category 1 hazards.

The MP for Westminster North has said in the past: “Living in a cold, damp, or unsafe home is hell. It damages people’s physical and mental well-being. It erodes the income of the poorest households. It impacts on children’s education.

“The most vulnerable tenants are those most at risk of being trapped in substandard accommodation and they are often least able to withstand the damage such conditions do.”

We will continue to keep landlords and tenants up to date with developments to the new law on ensuring that rental homes are fit for human habitation.

Small Landlords Continue to Offload Properties, Belvoir Reports

Published On: December 19, 2018 at 9:00 am

Author:

Categories: Landlord News

Tags: ,,

Small landlords are continuing to offload their investments, according to Belvoir.

The estate and letting agent reports that, in the third quarter (Q3) of the year, its offices recorded an increase from 48% to 52% in landlords selling up to three properties, and a similar number selling between four and five properties, compared to Q2.

However, there was a decline, from 17% to 12%, in landlords selling six to ten properties. This leads us to believe that it’s the smaller landlords that are offloading their investments.

The CEO of Belvoir, Dorian Gonsalves, notes that, two years ago, 10-18% of its offices were reporting no sales of landlords’ properties. This figure is now 4-5%.

He claims: “The main reasons for landlords exiting the market are tax changes, constant regulation and increasing legislation, landlords moving back into their properties, and lower investment returns, as well as uncertainty over Brexit and what this will mean for the market.

“When selling properties, only 19% of offices reported properties being sold to first time buyers as the Government hoped, however.”

Gonsalves continues: “According to our survey, 33% of offices reported properties are being sold to other landlords and 23% are general sales.

“This suggests the Government’s plan to increase homeownership by reducing the attractiveness of buy-to-let isn’t necessarily working.”

He adds: “We are still seeing landlords buying, but the numbers of properties are reduced, particularly those landlords buying six or more properties.”

Although Belvoir is predicting rent price increases next year, it reports that, in Q3 this year, the average rent dropped by 1.25% on the same period of 2017. This takes the current average UK rent price to £730 per month.

Are you planning to offload some or all of your buy-to-let properties? If so, let us know whether you’re a small or large-scale landlord, and why you’re deciding to leave the sector.

Low Mortgage Rates Supported Housing Activity in November

Published On: December 18, 2018 at 10:56 am

Author:

Categories: Finance News

Tags: ,

The number of mortgages approved in November was flat compared to the previous month, but competitive remortgage and first time buyer markets mean that activity was actually up on the same month of last year.

The latest Mortgage Monitor from chartered surveyors e.surv found that 67,109 mortgages were approved during the month of November (on a seasonally-adjusted basis).

This is marginally higher than in October, when 67,011 approvals were recorded.

On an annual basis, November saw a healthy rise in activity, with approvals up by 4%.

Low mortgage rates continue to represent good value for those with an appetite to commit to remortgaging, e.surv found. But, in addition to these remortgages, first time buyers have continued to increase their market share.

In November, 25.9% of all loans went to borrowers with a small deposit. This is higher than the 24.6% recorded a month ago, as well as the 24.2% market share in September.

This has helped sustain activity towards the end of the year. Typically, the number of homebuyers searching for new properties tails off as the country heads into winter.

Richard Sexton, the Director at e.surv, comments: “Conventional wisdom suggests that, as we reach the end of the year, the number of people looking for houses drops away.

“But, while this is likely to be the case next month, the latest approval figures suggest that cheap mortgages are attracting a consistent level of borrowers into the market, regardless of the weather.”

He continues: “However, in December, mortgage lenders often look to secure their annual targets, sometimes resulting in keenly-priced deals on offer at the end of the year.

“We have already seen a number of cheap first time buyer deals launch in recent weeks, and other lenders could follow suit.”

Increase in small deposit borrowing

The number of mortgages approved for small deposit buyers rose once again in November, as the market share of mid-market and large deposit borrowers was squeezed.

Low Mortgage Rates Supported Housing Activity in November

Large deposit borrowers accounted for 28.9% of the market in November, which is lower than the 29.6% recorded in October.

Despite this fall, the proportion of loans to mid-market borrowers dropped back on a monthly basis. This was due to the rise in loans to small deposit customers.

Some 45.2% of all loans went to mid-market borrowers in November, which is lower than the 45.8% recorded in the previous month.

On an absolute basis, the amount of small deposit borrowers grew rapidly, from 16,485 to 17,381.

Sexton says: “The market has continued to shift towards those first time buyers and others with smaller deposits, and away from those with large amounts of equity in their property.

“Almost 1,000 additional small deposit buyers achieved their dream of homeownership this month compared to October.”

Yorkshire: the small deposit hotspot

Northern regionsc ontinued to be the most attractive for small deposit homebuyers in November.

In Yorkshire, 34.8% of all loans were awarded to borrowers with smaller deposits, which is higher than any other region. This put the region ahead of the North West (31.0%) and Northern Ireland (29.2%).

These three regions all recorded a higher proportion of small deposit borrowers than their large deposit counterparts in November.

The fourth area where this was the case was the Midlands, where small deposits made up 28.5% of the region’s market.

At the other end of the scale, just 16.5% of borrowers in London were in this category. This put the capital ahead of the South East, where the figure was 20.9%.

London and the South East saw their respective markets dominated by those with cash to splash. Large deposit borrowers accounted for 38.2% of the market in the capital, while, in the South East, this figure was 35.0%.

Yorkshire (20.7%), the North West (22.8%) and the Midlands (24.9%) all saw less than a quarter of mortgage approvals go to this segment of the market.

In Northern Ireland, 27.8% of mortgages were to those with larger deposits.

Sexton explains: “While experts often talk about UK-wide averages, scratch underneath the surface and there are several distinct regional markets in the UK.

“People looking to buy in northern parts of England, as well as Northern Ireland, tend to have smaller deposits, while those closer to London must have a big amount of cash to put down.”

He concludes: “Buyers in the south of England should not be despondent, however, as there are great pockets of value in the capital and surrounding counties.”

London Central Portfolio Index Shows Gloomy State of Market

Published On: December 18, 2018 at 10:29 am

Author:

Categories: Property News

Tags: ,,

The latest Residential Index from London Central Portfolio (LCP) shows the gloomy state of the UK property market in November.

Looking at the markets across prime central London, Greater London, and the whole of England and Wales, the real estate investment firm has recorded decreases in both property values and sales.

Prime central London

The average house price in prime central London (excluding new build homes) was £1,859,365 in November. This follows a monthly decline of 2.7% and quarterly decrease of 5.9%.

Annually, transactions in the market have dropped by 14.7%, to 3,703, which is down by a substantial 45% on 2014.

The average new build home price was £3,390,716, representing a whopping premium of 72.7% over existing stock. Quarter-on-quarter, new build sales have plummeted by 44.2%, to just 133.

Naomi Heaton, the CEO of LCP, comments: “Annual transactions stand at 3,703 – just above 71 sales a week. This represents a fall of 14.7% over the year and is the eighth consecutive month that annual sales have dipped below 4,000. To put this into context, transactions during the Global Financial Crisis (GFC) fell below this figure for only four months.

“The historically low levels of transactions are now not only having a tangible impact on estate agents, but also the Treasury. The revenue from Stamp Duty for the first three quarters of 2018 is down by £685m on 2017.

“These already low and falling levels in transactions and prices have, no doubt, been exacerbated by the toxic atmosphere created by the UK Brexit negotiations. The recent leadership challenge, whilst voted down, can only add to uncertainty.

“There is, however, a significant weight of capital poised to make its move. There is clear evidence that more experienced investors are returning to the market to capitalise on extremely discounted prices and sterling depreciation. There have been several instances in recent weeks where assets have attracted competitive bids and transacted in a matter of days.

London Central Portfolio Index Shows Gloomy State of Market

“It is possible that this is the first sign of a long awaited bounce back.”

Greater London

In November, the average property value in Greater London (excluding new builds) was £625,457. This follows a quarterly fall of 0.4% and annual growth of just 0.8%, which is the lowest level recorded since the GFC.

Year-on-year, sales have continued to fall (by 4.1%), to just 90,106. New build transactions have seen far greater falls, however, of 19.6% over the year to November.

The average new build price was £734,701 in November, which represents a 20.2% premium over existing stock.

Heaton looks at the market: “Average prices in Greater London now stand at £625,457. Prices have fallen 0.4% over the last quarter. They have stagnated over the year, with a nominal increase of 0.8%. This is the lowest level of growth since the GFC, and the current political climate is hardly conducive to any upward movement.

“Transactions on an annual basis now stand at 90,106 – a drop of 4.1% over the year. They have fallen over 26% since the introduction of the 3% additional rate Stamp Duty on second homes on 1st April 2016.

“Whilst investors may be motivated to buy into a globally attractive market when prices are softening, for the majority of domestic buyers, this is not good news. Coupled with the Brexit chaos and its implications for the local economy, one can foresee continuing falls in transactions and price stagnation.”

England and Wales

Across England and Wales, the average house price in November was £257,666 (excluding new builds), following a monthly decrease of 1.0% and quarterly decline of 3.1%. Annually, prices have risen by an average of just 2.4% – the lowest growth since 2013.

Annually, transactions stand at 807,503, marking a further fall of 1.0%.

The average value of a new build home was £297,986 in November, which represents a 15.0% premium over existing stock. Year-on-year, new build sales have increased by 4.5%, but have declined by 2.5% over the past quarter.

Heaton gives her views: “England and Wales (excluding Greater London) is showing the same price suppression as the capital, with a third consecutive monthly fall in value. Average prices now stand at £257,666 and fell by 3.1% over the quarter. Annual growth at just 2.4% is the lowest since 2013.

“Transaction levels throughout England and Wales also continue to fall and now stand at 807,503 – a drop of 1.0% over the year. It appears that we are now seeing the uncertainty that has been permeating the London market spreading to the rest of the UK, as we approach the Brexit D-day.

“With transactions falling, average prices stagnating, a series of residential taxes over recent years and a deferred vote on the current Brexit deal, the UK housing market is in the middle of a perfect storm. Without a clearer picture of what to expect after 29th March 2019, it is unlikely that there will be any material change to the status quo.”