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Em Morley

Property prices up by 0.6% in June

Published On: July 14, 2016 at 10:14 am

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Categories: Property News

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Latest data released by LSL reveals that the average price of a property in England and Wales rose by 0.6% during June. This comes as a welcome break following three consecutive months of falling house price values, including a 0.9% drop in May.

Rise and falls

This said, property prices in the capital fell by 1.4% month-on-month, the largest drop seen since May 2011.

Across England, year-on-year prices have risen by 6%, with the typical house sale amounting to £293,444. The East of England saw the largest increase of 9.4%.

What’s more, sales in the three months to June increased by 8% in comparison to the same period in 2015. Of course, these figures were driven up by investors surging to beat the additional Stamp Duty deadline on April 1st.

During June 2016, roughly 72,000 sales were completed, 13% lower than in 2015, but up on the 55,250 figure seen in May 2016.

Property prices up by 0.6% in June

Property prices up by 0.6% in June

Brexit consequences

Adrian Gill, director of Your Move and Reeds Rains, has suggested that the Brexit result will bring with it wide ranging consequences for the housing market.

Gill observed, ‘exactly how the implications will play out in the sector over the coming months is yet to be seen and whilst London is likely to feel the effects more acutely, it is important to remember that the outlook is not all doom and gloom. Already lower interest rates promised by the Bank of England to stave off any slowdown are set to ease affordability and support prices.’[1]

‘What is clear is that the impact of April’s Stamp Duty increase has now largely played out, and there’s little evidence to suggest it has significantly hit investor appetite: first time landlords seem no less common and there’s new interest in mixed commercial and residential purchases, such as flats over shops that escape the increase. Ultimately, with interest rates set to remain lower for longer, the Bank of England reducing banks’ capital requirements and changes in Government imminent, the short-medium term outlook for the housing market could well remain positive after all,’ Gill added.[1]

[1] http://www.propertyreporter.co.uk/property/june-house-prices-see-a-06-rise.html

Training scheme to drive up standards in the PRS

Published On: July 14, 2016 at 8:42 am

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The UK Apartment Association (UKAA) has moved to launch a new training programme, aimed at improving the standards of service in the private rental sector.

In addition, the scheme is designed to professionalise the rental market.

Best practice

This training scheme will bring together all stakeholders from the sector, helping to share best practices for the ever-changing market. The overall view is to assist operators’ focus on putting tenants at the centre of their business.

Training will be delivered by the UKAA’s training partner Livewire Experientialists, an expert in hospitality and global specialists in industry information.

Michael Green, chief executive of the UKAA, observed, ‘as well as providing a much-needed platform for the professional rental sector, the UKAA’s remit is to drive up professional standards and our educational training sessions are a central part of that.’[1]

Training scheme to drive up standards in the PRS

Training scheme to drive up standards in the PRS

Customer service

Mr Green also believes that providing high levels of customer service is imperative, given the evolving nature of the UK rental market. Many tenants are becoming increasingly disillusioned with the standard of service that they are currently receiving.

All delegates taking part in the scheme, aimed at staff of all levels, will obtain essential skills, through which they can get better service.

Audra Lamoon, managing director at Livewire Experientialists, noted, ‘the property industry can learn a huge amount from the retail, hotel and leisure sectors in terms of providing outstanding levels of service and understanding hospitality and branding.’[1]

‘This training aims to empower everyone providing services within the private rental sector to really embrace and deliver on the brand promise and customer experience. Done right, through memorable customer service, operators can make their developments stand out and become the destination of choice,’ Lamoon added.[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/new-training-scheme-to-help-improve-standards-of-service-in-the-prs

How has Brexit impacted on market conditions?

Published On: July 13, 2016 at 11:41 am

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A new investigation has looked at the impact that the Brexit result has had on the number of property listings in major UK towns and cities.

Figures from the Property Supply Index, compiled by HouseSimple, suggests that 68% of locations saw listings slide in June. London saw a 13% drop.

Index

In order to compile its Property Supply Index, HouseSimple looked at the number of new properties put onto the market every month, in over 100 major towns and cities. The analysis also looked at all London boroughs.

Results indicate that Lichfield and Winchester saw the largest drop in supply in June, with new property listings down by 37% and 36.5% respectively. Interestingly, four out of the top ten largest fallers were located in the South of England.

The table below shows the ten UK towns and cities that saw the largest falls in new listings in June, in comparison to May:

Town/City Region % fall in new listings in May vs. April
Lichfield West Midlands -37.0%
Winchester South -36.5%
Chesterfield East Midlands -34.9%
Salisbury South West -33.3%
Exmouth South -29.8%
Hartlepool North East -29.6%
Bangor Wales -29.5%
Grimsby Yorkshire and the Humber -27.6%
Bath South West -24.4%
Weston-Super-Mare South West -19.9%

[1]

How has Brexit impacted on market conditions?

How has Brexit impacted on market conditions?

Despite the majority of areas seeing falling supply in June, a few regions experienced rises. The largest increases were located in the Scottish towns of Inverness and Stirling, where new listings were up by 30.5% and 18.5% respectively.

Uncertainty

Alex Gosling, CEO of HouseSimple.com, observed, ‘fear and uncertainty over the Brexit vote definitely had an impact on buyer and seller confidence in June, with many sellers holding off putting their properties on the market until the result was known. Now we know and although the decision has come as a bit of a shock, at least a degree of uncertainty has been taken out of the equation.’[1]

‘The property market can now roll up its sleeves and get on with it. Nothing has fundamentally changed overnight and people still need to buy and sell homes whatever the market conditions.We still have a supply shortage, and this may well counter any fallout from Brexit. There were concerns about the London market faltering, but demand is still strong in the capital and the weak pound should attract foreign investors looking to pick up bargains – particularly at the top end of the market,’ he continued.[1]

Concluding, Mr Gosling said, ‘for the rest of year, we may see a small dip in prices as there are choppy seas ahead, but it’s certainty not the end of the world levels predicted by some doom-mongers. Supply should hopefully edge up, as fears around the impact of Brexit dissipate and sellers feel more confident about market conditions and the wider global economy.’[1]

[1] http://www.propertyreporter.co.uk/property/has-brexit-hit-buyer-and-seller-confidence.html

RLA calls for Government to stop tax changes

Published On: July 13, 2016 at 10:40 am

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Rent increases in Britain are unavoidable unless MP’s move to stop what landlords are calling unfair tax changes, according to a new claim.

The Residential Landlords’ Association observes that plans to cut mortgage interest tax relief for buy-to-let landlords will see rents driven up.

Legislation

At present, legislation is moving through Parliament, which the RLA believes will see tax bills rise substantially and in some cases, cut profits altogether. Should supply of rental property continue to fall, landlords could face higher overheads, meaning they will raise rents to cover costs.

In a recent survey of RLA members, some 84% observed that they are more likely to consider raising rents following the Chancellor’s tax alterations.

The firm is now calling for amendments to the Finance Bill, in order to protect both landlords and tenants. It has called for the Government to stop the changes and to remove the additional Stamp Duty levy on buy-to-let purchases. It warns that the tax hike will have a detrimental impact on landlords and the sector when it is needed most.

RLA calls for Government to stop tax changes

RLA calls for Government to stop tax changes

Concerns

A number of MP’s have moved to express their concerns. Former Welsh Secretary, David Jones, has called for the Government to stop heaping more pressure on landlords.

Alan Ward, RLA chairman, stated, ‘landlords do not want to increase rents unnecessarily but many will have to if they stay in business as a result of these wholly unreasonable tax increases. It is unfortunately tenants who will end up paying the price either through higher rent bills of finding it more difficult to find somewhere suitable to live.’[1]

‘We welcome the concern of many MPs and hope that they will be able to persuade the Government to change its mind,’ Ward added.[1]

[1] http://www.propertywire.com/news/europe/uk-landlords-tax-change-2016071312136.html

HMO yields greater than other rental property types

Published On: July 13, 2016 at 8:57 am

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The most recent report from Mortgages for Businesses shows that HMO’s are outperforming all other types of rental property in terms of yields.

Average yields on a HMO stand at just below 10% since 2011.

Rising product numbers

Buy-to-let products have risen during the second quarter of the year, in comparison to the first, albeit more slowly. Products increased by an average of 75 in quarter two, compared to 142 in the first three months of the year.

This slower rise during the second quarter can be attributed to lenders creating separate offerings, with more stringent stress test calculations for borrowers.

Remortgaging followed a similar trend and house purchase activity slid to levels seen in 2015. This was due to the surge in investment transactions before the Stamp Duty deadline.

LTV increases

Average LTV values of HMOs also increased quarter-on-quarter, from 62% in Q1 to 75% in Q2. When data from the last five years is analysed, LTV’s on HMO’s have remained steady, averaging 69%.

LTV’s on vanilla buy-to-lets have also stayed consistent, averaging 67% during the same period.

However, LTV’s for multi-units and semi-commercial property have seen a more up and down few years. The average LTV of a multi-unit stood at only 56% in quarter two of this year, in comparison to an average of 64% in the last five years. Average LTV’s for semi-commercial property was 60% in the second quarter of the year.

HMO yields greater than other rental property types

HMO yields greater than other rental property types

Consistent yields

David Whittaker, managing director of Mortgages for Business, said, ‘we now have five years’ worth of data against which investors can benchmark their portfolios. Both Vanilla BTL and HMO property offer fairly consistent yields. Fort the more cautious investor and for those who like a mix of risk within their portfolio, 6.1% average yield on a standard BTL still represents a good return. And for the more experienced investor, HMOs certainly perform better than all other types of rental property averaging just below 10% since 2011.’[1]

‘Average yields on multi-units grew to a very positive 9.5%, well above the five-year average of 7.4% demonstrating that landlords can often achieve greater yields by taking on more complex property types. Semi-commercial property performed less well than expected considering these buildings are not subject to the residential stamp duty surcharge. Going forward it will be interesting to see whether any trends develop as more investors are expected to move into this niche,’ Whittaker added.[1]

[1] http://www.propertyreporter.co.uk/landlords/hmos-outperforming-all-other-types-of-rental-property.html

TDS encourages organisations to apply for funding

Published On: July 12, 2016 at 11:34 am

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Categories: Finance News

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Organisations supporting private landlords and tenants have been invited to ask for a share of a £70,000 funding pot.

The TDS Charitable Foundation is designed to assist in driving up standard in the private rental sector.

Bids

For 2016, the amount of money available to fund projects aimed at improving the sector has been increased. Both landlords and tenants have been urged to submit their bids before the deadline, which is on Wednesday 10th August.

Specifically, the Foundation is looking at making funds available to commission a feasibility study, which will look at establishing a research centre for the PRS in England and Wales.

Examples of organisations who have successfully applied for funding in the past include Designs on Property Ltd. This firm was awarded £15,000 to fund a group of 12 independent reports on the sector. The first of these looked at the typical trends of a buy-to-let landlord and was published this month.

TDS encourages organisations to apply for funding

TDS encourages organisations to apply for funding

Vital

Leading property expert Kate Faulkner observed, ‘without the funding from the TDS Charitable Foundation we would not have been able to carry out this independent research, which I believe is vital if we are to fully understand the industry in which we work and start challenging the misperceptions surrounding the private rented sector.’[1]

‘I’d never applied for funding before but there was plenty of support available at every stage of the process and I would really encourage anyone who thinks they have a project that meets the objectives of the foundation to apply,’ she added.[1]

Prof Martin Partington, chairman of TDS and the TDS Charitable Foundation, said, ‘our not-for profit status enables us to use part our surplus income to raise standards in the industry we serve by reinvesting in education and training and promoting best practice and as an organisation this is something we are passionate about.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/7/funds-available-to-help-raise-standards-in-the-private-rented-sector