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Government’s New Planning Rulebook to Deliver More Quality, Well-Designed Homes

Published On: July 26, 2018 at 10:00 am

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Secretary of State Rt Hon James Brokenshire MP has published new planning rules this week. They state the necessity of building attractive and better-designed homes in areas where they are needed.

The revised National Planning Policy Framework aims to make it easier for councils to take a stand against poor quality and unattractive developments, as well as providing communities the ability to voice their own opinions about how developments should look and feel.

The Prime Minister launched a public consultation earlier this year, which provided a comprehensive approach for planners, developers and councils to increase the amount of homes being built and at a faster speed. It also focused on looking at where people actually want to live.

This revised framework will focus on:

  • promotion of higher quality designs for new homes and places
  • stronger protection for the environment
  • making sure that the right number of homes are being built in the right places
  • councils and developers receiving greater responsibility and accountability for housing delivery

Secretary of State for Communities, Rt Hon James Brokenshire MP said: “Fundamental to building the homes our country needs is ensuring that our planning system is fit for the future.

“This revised planning framework sets out our vision of a planning system that delivers the homes we need. I am clear that quantity must never compromise the quality of what is built, and this is reflected in the new rules.

“We have listened to the tens of thousands of people who told us their views, making this a shared strategy for development in England.”

We have had a regular reminder that the Government is continuing with its target to achieve 300,000 new homes a year. There were 217,000 homes built last year, which was the biggest increase in housing supply in almost ten years.

Promoting high quality design of new homes and places

The framework aims to ensure that councils have the confidence and tools to deny permission for development if it does not prioritise design quality and fails to complement the surroundings.

Whilst there is a concentration on driving up the quality of new builds, councils will also remain in charge of applying such policies in the most relevant way in relation to the area.

In order to maximise the usage of land, the Government aims to provide the councils with more confidence to make refusals to applications that don’t provide enough homes.

Stronger protection for the environment

There have been updates made to the new framework, which provide further protection for biodiversity. The importance of ensuring that wildlife thrives, whilst also addressing the need for new homes has been pinpointed.

The planning system is due to align more closely with Defra’s 25 Year Environment Plan. This aims to improve the environment so that we are leaving it in a more prosperous state for future generations. There should be more protection for habitats, and the issue of air quality needs greater focus when development proposals are being considered.

The revised framework plans to ensure that all other reasonable options for development are exhausted before looking to alter a Green Belt boundary. The protection of ancient woodland and trees throughout England should be strengthened, in order for it to continue to thrive for further generations.

The Government has specified its intention to protect the Green Belt in England, explaining the high expectations and considerable evidence that would be required in order for any alterations to be authorised.

Building the right number of homes in the right places

There will be a new way for councils to calculate the housing needs of their local community, in order to tackle the issue of unaffordable house prices throughout the country. This will include the consideration of different forms of housing, such as retirement homes.

Overall, there is an aim to build more homes in the areas that are most in need, based on the affordability of existing homes for those on a lower or medium income.

Councils are introducing a Housing Delivery Test from November 2018. It will focus on increasing the amount of homes that are actually built in an area, rather than simply the amount planned to be delivered.

Clearer guidance for both developers and councils has also been published, in order to make sure that the necessary infrastructure and affordable housing is delivered to support communities. Developers will now know what is expected from them up front, even before the submission of planning applications. Councils will have greater control over holding them to these commitments.

Further information

During the consultation, the Government held ten regional engagement events and approximately 40 individual meetings. This consultation received 29,224 responses, including over 25,000 to the campaign itself.

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House Building Industry Prospering, with 74% Increase to Building Activity

Published On: July 26, 2018 at 9:27 am

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Planning and development consultancy Lichfields has released a new report, showing that the house building industry in England and Wales is now worth £38 billion a year. The research also shows that almost 700,000 jobs are supported by the industry.

Over the past four years, the UK economy has seen a massive boost, as house building activity has increased by 74%.

Overall, the report has also revealed the following about the house building industry last year:

  • £2.7 billion has been generated in tax revenues (via Stamp Duty Land tax, Corporation tax, National Insurance etc.)
  • £841m has been provided towards infrastructure, including £122m for new/improved schools)
  • 90% of the £11.7 billion that has been spent with suppliers has stayed in the UK
  • £12 billion has been invested in land for new homes
  • There is now a plan for 50,000 affordable houses to be built, through section 106 agreements. These will be worth over £4 billion

The report also highlights that this increase in housing supply is having a big impact on the industry. The Government currently has a target of providing 300,000 new houses a year in England. If such targets are met, then we could end up seeing benefits such as:

  • £14.2 billion in economic activity
  • 260,000 jobs created
  • £1.1 billion in tax revenue
  • £384m investment in infrastructure

Stewart Baseley, executive chairman of the Home Builders Federation (HBF), has said: “The house building industry is a massive driver of the UK economy and makes a huge contribution to communities across the country.

“While delivering much-needed new homes of all tenures, house builders are quietly creating and sustaining jobs, generating receipts for the exchequer and boosting investment in infrastructure and amenities in villages, towns and cities.

“As well as becoming ever more reliant on private builders to deliver affordable housing through planning agreements, vast sums are ploughed into new roads, schools and community facilities every year.

“The unprecedented increases in housing supply in recent years have delivered significant benefits for UKPLC and the industry is investing in more land and people to enable it to go further and build more.

“The industry is calling on Government to work with it to create the policies that will allow it to deliver the government’s ambition of 300,000 homes a year in England. Delivering more homes will not only help solve our acute housing crisis, but also provide a further boost to communities and economies up and down the country.”

Matthew Spry, Senior Director at Lichfields commented: “We were delighted to be asked by the HBF to update our original 2015 report. In preparing our analysis we drew upon a wide range of official and well-established data sources, as well as engaging directly with house building companies including to capture information they assemble as part of Corporate Social Responsibility reporting.

“We have again identified the very significant economic contribution made by house building and how boosting supply to achieve the Government’s aspiration of 300,000 homes per annum in England will not only help improve access to housing for people across the country but also deliver a significant economic and infrastructure dividend.

“It is important that this contribution is properly recognised in planning and investment decisions across central and local government, agencies and Local Enterprise Partnerships.”

House Prices Starting to Grow Once Again in London, Hometrack Reports

Published On: July 26, 2018 at 8:54 am

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House prices are starting to grow once again in London, causing the average increase across cities in the UK to rise, according to Hometrack’s latest UK Cities House Price Index.

In June, for which the most recent data is available, average house price inflation across cities in the UK stood at 4.6% on an annual basis. Over the first half (H1) of 2018, average prices were up by 4.4%, compared to 0.2% in H2 2017. This substantial increase in growth was caused by an uplift in London, Hometrack believes.

It is Manchester, however, that recorded the highest annual growth rate in June (7.4%), followed by Liverpool (7.2%), Birmingham (6.8%) and Leicester (6.5%).

On the opposite end of the scale, house prices have fallen in real terms (growth below the 2.4% rate of consumer price inflation) across six cities: Southampton, Oxford, Belfast, London, Cambridge and Aberdeen.

London’s annual growth rate was 0.7% in June, but an increase in the three-month growth rate has been recorded. Hometrack’s more granular house price indices confirm this trend, with a higher number of London postcodes recording monthly price gains; more postcodes are registering month-on-month price increases than declines.

Discount from asking prices

The current stabilisation of London house price growth reflects greater realism on the part of property sellers in the wake of a two-year re-pricing process, Hometrack believes. Since 2016, the discount from asking prices to sales prices has widened, reaching a high of 7% in inner London at the end of 2017.

House Prices Starting to Grow Once Again in London, Hometrack Reports

House Prices Starting to Grow Once Again in London, Hometrack Reports

Over H1 2018, the level of discounting to achieve a sale has started to narrow in inner London, to 6.7%. Discounts have also stabilised in outer London and the adjacent commuter areas. This is consistent with less downward pressure on prices.

While Hometrack expects the rate of price growth to remain weak across the capital, greater realism on the part of sellers is positive news for transaction volumes, which have dropped by 20% since 2014.

The discount from asking price to sales price provides important insight into the relative strength of local housing markets. For instance, Liverpool has the second fastest rate of growth as prices rise quickly off a low base. The level of discounting in the city has narrowed over the past two years, but remains above average, at 4.6%.

Manchester had the lowest level of discounting (2.2%) across all cities in England and Wales. This remains on a downward trend, and it is no surprise that the city is currently recording the fastest growth in prices.

House price growth in Birmingham has moderated over the past year, while the gap between asking and achieved prices has started to plateau, standing at 2.8%. Hometrack expects a continued moderation in the rate of house price growth over the next 12 months.

Cities across southeastern England have recorded slower price growth, as affordability pressures increase. Southampton, for example, is registering annual house price growth of just 2.1%, while the level of discounting has risen from 2% to almost 4% since the third quarter (Q3) of 2017.

Prospects for H2 2018

The firm predicts that current trends will continue into H2 2018, as housing market forces continue to play out against the backdrop of rising employment levels and low mortgage rates.

The main risks that it identifies on the horizon are: the timing and scale of any increase in mortgage rates; and how the Brexit negotiations unfold in the coming months and in the run-up to March 2019.

Graham Davidson, the Managing Director of buy-to-let specialist Sequre Property Investment, comments on the latest report: “Once again, Manchester has the highest annual growth rate of 7.4% and it has now been joined at the top of the list by its near neighbour Liverpool, at 7.2%. This is certainly no surprise, considering the hive of activity that’s ongoing in these great cities.

“For several years now, buy-to-let investors have turned their backs on the south to take advantage of the low prices, high yields and capital growth in the north. However, with the lack of true discounts available, investors will need to be far more selective with their investment to truly make the numbers stack up. That doesn’t mean that there aren’t deals to be had; you just need to know where and how to find them.”

He adds: “Liverpool’s growth of 7.2% is up from just over 2% this time last year – something we’ve been heavily predicting would happen. Deals here are flourishing, due to the demand and because the returns are incredibly healthy. For anyone considering investing in this city, now is the time to do it.”

Majority of London Tenants Expect Rent Discounts for Poor Internet Connections

Published On: July 26, 2018 at 8:09 am

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The majority of London tenants expect to receive a discount on their rent prices for poor internet connections in their homes, a new study from property firm Cluttons reveals.

Private tenants are certainly pickier about the type of property that they are willing to rent now than they were a generation ago. This means that landlords can no longer get away with offering rundown properties with second-hand furniture and simply expect the rent to come streaming in. But, above all else, many young renters have come to expect high speed, reliable internet connections.

In London, 73% of tenants consider a good internet connection to be important when choosing a rental property, while 70% of those that work from home at least one day a week would reconsider renewing their tenancy agreement if their homes had poor internet connections.

The research also found that almost 60% of those living in the capital would expect some discount in their rent as compensation for poor internet connections, with close to one in five requesting a 10% reduction.

Unfortunately, slow and unreliable internet connections plague many residential properties in the capital, the study revealed, which was conducted in partnership with YouGov.

The report shows that London currently ranks 30 out of 63 UK cities for the number of premises covered by ultrafast broadband and is positioned in the bottom five UK cities for 4G coverage, which is clearly unacceptable for many private tenants.

John Gravett, the Head of Infrastructure at Cluttons, comments: “As London’s property market becomes more competitive, it is important for landlords to think of their tenants as customers and offer them properties that meet current demand.

“While traditionally it would fall to tenants to find the best offering from broadband service providers, now landlords are realising how important it is to make sure their buildings are well connected.”

The research found that half (49%) of landlords are already working to improve internet connections in their buildings and, of those surveyed, 72% said that this is a direct result of tenant demand.

Gravett continues: “Good connectivity has knock-on effects to many aspects of our lives, from how we communicate with each other to maintaining flexibility and, therefore, diversity in the UK’s workforce.

“Despite this, the British capital not only lags behind other UK cities, but it also ranks poorly compared to other European hubs, as well. In fact, London ranks 29th out of 30 EU cities last year for 4G speeds.”

He concludes: “We believe connectivity is now a utility, not just a nice-to-have, and our research clearly shows that there is a commercial benefit to both commercial and residential landlords in prioritising it as such.”

Landlords, have you considered how poor internet connections could be putting potential (and existing) tenants off your properties? This study proves that it is definitely worth looking into!

Buy-to-Let Special Report States “Increasing Shift Towards Areas with Higher Yields”

Published On: July 25, 2018 at 9:54 am

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The Mortgage Lender has commissioned a special report, which has found that buy-to-let investors are increasingly on the look out for properties that are cheaper and result in a higher yield.

Martin Ellis, the UK’s leading housing economist, is the author of the report. He has also predicted a rise in interest rates by 0.25% within the next few months and that house price growth will increase by no more than 2-3% by the end of this year.

Peter Beaumont, The Mortgage Lender deputy chief executive, said: “Our special report on the buy-to-let market looks at the macro and micro economic environment for buy-to-let investors and the factors that are likely to influence landlords’ investment choices over the coming years.

“It also highlights the need for a flexible and competitive buy to let mortgage market to facilitate continuing investment in a sector of the housing market that has grown in significance as home ownership has declined and demand for good quality residential property has increased.”

Currently, buy-to-let mortgages represent nearly 13% of new mortgage lending in the UK. It has fallen by 28% in 2017 and is now at £10.7 billion, in comparison to £14.9 billion in 2016. However, despite this fall, 2017 still saw growth, with an annual average 67% higher than what it was in the period from 2009 to 2013.

Buy-to-let remortgage activity has also been stable, with the volume of lending in 2017 only 0.6% lower than it was in 2016.

There has been a considerable amount of growth within the private rented sector (PRS) in recent years. 4.7m households in England are currently renting privately, which amounts to one in five. 46% of those aged 25-34 years old live in the PRS. This is almost double the statistic from 2006, which stood at 24%. The amount of tenants aged 35-44 years old in the PRS has also substantially increased over the last ten years, from 11% to 29%.

Home Sales Appear to Increase by 13% Between May and June

Published On: July 25, 2018 at 9:35 am

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Home sales have appeared to increase by 13% between May and June this year, although HM Revenue & Customs’ (HMRC’s) data is provisional, and is therefore subject to revision.

For June, the number of non-adjusted residential property transactions was around 13% higher than in May. On an annual basis, the amount has dropped by 8.8%.

Taking the seasonally adjusted estimates, home sales decreased by 3% between May and June, while transactions were down by 5.7% on June last year.

The provisional seasonally adjusted UK property transaction count for June was 96,340 home sales and 9,710 non-residential transactions.

In response to the latest figures, Neil Knight, the Business Development Director of Spicerhaart Part Exchange & Assisted Move, comments: “The number of (non-seasonally adjusted) residential transactions was 13% higher in June compared with last month. This is a bigger rise than May’s 12.1% increase and has most likely been boosted by first time buyers, who, according to data released this week, outnumbered home movers in the first half of 2018 for the first time ever.

“At the moment, it appears that it is first time buyers – being incentivised by schemes like Help to Buy – purchasing new builds that are driving both the property and mortgage markets. This is supported by last week’s (non-seasonally adjusted) construction output figures from the ONS, which showed that, while all new construction work was up just 1% on the previous year, output on new housing was up 5.7%.

“And, while it is encouraging to see steady growth in the new build sector, if we want to keep the market moving, we need to be looking at building a wider variety of properties and residential developments, so that home movers and downsizers have options too. Developers often choose new build schemes aimed at first time buyers because there is no chain, so it is easier to sell the properties and move on.”