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Em Morley

House Prices in London Almost Double to a Whopping £600,000

Published On: May 12, 2016 at 10:39 am

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The average property in London has broken through the £600,000 mark, as house prices have almost doubled in the capital since 2009, according to data from LSL Property Services.

The firm, which owns Your Move and Reeds Rains estate agents, reports that house prices in England and Wales have risen by 8.9% since April last year, to reach an average of £298,030.

The figures, based on Land Registry data, show that property values have hit new peaks in nine out of ten regions. The North East is the only part of England where prices are lower than before the downturn of March 2009.

House Prices in London Almost Double to a Whopping £600,000

House Prices in London Almost Double to a Whopping £600,000

In London, prices have continued to surge, with the average property value increasing by 11% over the past year, to £600,625.

In eight London boroughs, average prices are double what they were during the credit crisis in 2009. The area with the greatest increase is Waltham Forest, where prices are up by a huge 113% over the last seven years. The average property in the area now costs £430,704.

The Director of Your Move and Reeds Rains, Adrian Gill, claims that some of the more affordable parts of the capital have experienced the steepest increases in prices, as residents search for cheaper homes.

“These kinds of huge hikes in home values in London mean that Sadiq Khan will now face a serious challenge to deliver his promise of increased affordable housing in the city,” says Gill.

The new Mayor of London has promised to deliver a series of measures that will aim to resolve the housing crisis.

The LSL report states that the average price of a home in England and Wales is edging closer to £300,000, after rising by 1% over the month and by 50% over the last seven years.

“This acceleration in home values comes when many had expected house prices to dip due to a natural decline in demand from buy-to-let and second homebuyers,” explains Gill. “However, after an exceptional March, there is a severe shortage of properties on the market, with fierce competition between buyers for each available property.”

LSL reports that there were 20,000 fewer sales in April, as demand fell in the weeks following the introduction of the 3% Stamp Duty surcharge on buy-to-let properties and second homes.

This is reflected in the latest report from the Royal Institution of Chartered Surveyors (RICS), which shows that demand has fallen for the first time in more than a year.

Figures from HM Revenue & Customs (HMRC) also reveal a large spike in home sales during March, as landlords rushed to purchase buy-to-let properties ahead of the higher tax rate.

The RICS believes that reduced demand from buy-to-let landlords appears to be the main cause of a decline in new buyer enquiries.

Mayor of London Receives Support for Rent Controls

Published On: May 12, 2016 at 9:21 am

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Categories: Landlord News

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Sadiq Khan, the new Mayor of London, has received support from property professionals for his campaign to introduce rent controls in the capital.

The average private rent price in London has hit a huge 62% of the typical wage, making housing unaffordable for the average tenant.

Khan is continuing to focus on the capital’s housing crisis, after his mayoral election campaign emphasised the issue that affects many Londoners.

However, Khan’s plans will require the co-operation of central Government to enforce any regulations on the private rental sector.

His measures have been criticised by Shaun Bailey, a Conservative politician elected to the London Assembly, who called them “Soviet-style rent controls”1.

Mayor of London Receives Support for Rent Controls

Mayor of London Receives Support for Rent Controls

Despite this, some property experts have spoken out in support of rent stabilisation measures.

The Head of Residential Research at JLL estate agent, Adam Challis, explains: “This is being described as rent control, but it is more properly described as rent indexing, and, set at the right level, it is completely palatable to investors. It offers a sense of relative certainty over what future rental growth is going to be.”

Richard Donnell, the Director of Research at Hometrack, believes large-scale landlords will accept a measure of control on rents – a finding reflected by a University of Cambridge study for the London Assembly last year.

These measures are often accompanied by longer tenancies, which was included in Zac Goldsmith’s – Khan’s main rival – mayoral manifesto.

However, Lucian Cook, the Director of Residential Research at Savills estate agent, claims: “Anything that involves capping rents may be a double-edged sword.”1 He insists that the fundamental problem lies in the shortage of supply of new homes.

More politically achievable is a London living rent, which Khan says would take the form of rents capped at one-third of the local average income, rather than market rents.

Challis claims this could replace existing affordable rents, which are often required within new developments under planning agreements. Part of Khan’s housing plan is to insist that 50% of all new home developments are affordable.

In the private rental sector, affordable rents can currently cost up to 80% of market rates.

Challis believes: “To implement this on new properties would be relatively easy – it’s already what we do in various forms within the affordable housing spectrum. That’s something that would probably be supported by the local population and by local authorities.”1

Julian Goddard, a partner at property advisers Daniel Watney, thinks there are more serious issues to look at: “My recommendation would be to look at the supply side and take measures to ease the viability of new schemes.”1

The Policy Manager at Generation Rent, Dan Wilson Craw, insists that rents linked to wages should be introduced across the market: “The living rent seems to be spooking a lot of landlords, but it is not big enough for them to worry about – we would like it to be far more widespread.”1

Yesterday, we reported on Khan’s plans to release a new list of rogue landlords. The database would ensure that tenants could check whether a landlord has committed any housing offences.

Do you believe that Khan’s plans will benefit all in London’s private rental sector?

1 https://next.ft.com/content/f432c7aa-16bd-11e6-b197-a4af20d5575e

Buy-to-let leads other asset classes

Published On: May 12, 2016 at 9:17 am

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Categories: Finance News

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Record-low mortgage lending rates, unshakeable demand from tenants and increasing rental yields have lead many people to turn to buy-to-let investment as a viable means of supplementing their regular income.

Poor returns from banks and building societies have also contributed to a rise in buy-to-let activity.

Performance

Buy-to-let investment continues to outperform all major asset classes. With the population of Britain set to drive demand, rental prices look set to soar even further.

The most recent PPRMI buy-to-let index for Property Partner indicates that residential property continues to thrive as an asset class. Returns on buy-to-let property are continuing to outstrip those generated by shares, bonds and cash investment.

Data from the Index shows total returns from buy-to-let property in England and Wales increased by an average of 9.6% over the last year. This was driven by gains in London, where buy-to-let landlords saw typical yields total 16.5%.

Increases

‘Total returns for residential property crept up to 9.6% in the year to March, as investors rushed to beat April’s stamp duty deadline. This was especially true of London, where annual returns were in double digits, reaching an eye-watering 16.5%. The East was strong too and from firsthand experience the Northern Powerhouse regeneration plan is boosting investment activity in the North West and in particular Manchester.’[1]

Despite the fragile nature of monthly figures, the report indicates clear regional disparities in the housing market. Yorkshire and the Humber and the North East regions in particular are looking extremely fragile.

‘Investors are understandably showing caution ahead of the EU referendum. But the fundamentals-high employment, wage growth, cheap borrowing and the chronic shortage of supply-remain in place and are positive,’ Mr Weaver continued.[1]

Buy-to-let leads other asset classes

Buy-to-let leads other asset classes

Substantial returns

Alternative research conducted late last year by economists at the Wriglesworth Consultancy for lender Landbay indicated that buy-to-let landlords have gained returns of around 1,400% since 1996.

This figure is significantly greater than other mainstream investments, such as shares, bonds and monetary transactions. With existing poor supply of housing failing to quell demand, present signs indicate that this growth will continue.

Additional data from HomeLet shows that typical rents in the UK outside of London stand at £764 per month, a rise of 5.1% year-on-year. The investigation found that rents rose in 11 out of the 12 regions of Britain annually in the three months to April 2016. The North West of England was the only region to see a fall, albeit of just 1%.

Martin Totty, chief executive of Barbon Insurance Group, Homelet’s parent company, noted, ‘rental price growth in most areas of the country is unchanged from the trends observed over almost three years.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/buy-to-let-returns-top-all-other-asset-classes

Housing Demand and Supply are Both in Decline, Reports RICS

Published On: May 12, 2016 at 8:35 am

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Housing demand has fallen for the first time since March 2015, according to the latest Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

Housing Demand and Supply are Both in Decline, Reports RICS

Housing Demand and Supply are Both in Decline, Reports RICS

The organisation believes that the market has cooled after landlords rushed to beat the 1st April Stamp Duty deadline and the EU referendum approaches.

The survey found that interest from buyers dropped in April, with 22% more chartered surveyors reporting a decrease in demand.

The RICS claims that there is little prospect of the market improving, with 8% more surveyors reporting a fall in new instructions in April and the lack of housing stock looking unlikely to ease in the short term.

Of the 303 surveyors polled, 22% more respondents in London expect property sales to drop over the next three months.

Despite a fall in demand, prices are still rising outside of central London and parts of the North of England. Over the next 12 months, prices are forecast to increase across the whole of the UK, with 61% more surveyors expecting prices to go up in England and Wales.

Regionally, London has lower price growth expectations over the next few years than the rest of the UK, with prices likely to remain steady. However, surveyors expect prices to go up in each part of the UK by between 3-5.5% per year in the next five years.

Surprisingly, following the recent surge in demand from buy-to-let landlords, there has not yet been a noticeable increase in new landlord instructions.

The survey suggests that recent policy changes in the buy-to-let sector are causing landlords to reconsider their position in the market. As tenant demand rises – 22% more surveyors have seen a rise rather than a fall – rent prices are more than likely to increase further. Due to a lack of stock for all tenures, rental growth is expected to rise at an average rate of 4.6% per year over the next five years.

The Chief Economist at the RICS, Simon Rubinsohn, comments: “Uncertainty is a word that features heavily in the feedback we are receiving from members responding to the survey and is contributing to the flatter trend in the latest data.

“More ominous is the expectation that both prices and rents will head materially higher over medium term, despite existing affordability concerns with the supply pipeline continuing to fall short of household growth, notwithstanding the various levers the Government is pulling to try and drive development.”

Many homeowners neglect garden security

Published On: May 11, 2016 at 2:38 pm

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An interesting new survey has revealed that millions of UK homeowners are neglecting the security of the garden in their homes.

According to research conducted by online garden furniture retailer Rattan Direct, 27% of Britons do not lock their garden gates or doors to their backyard.

Lack of security

Home security is at the forefront of many homeowners’ checklists, but the research suggests that this does not stretch to their gardens or outdoor space.

A number of people surveyed admitted to not replacing broken padlocks or gates, leading themselves susceptible to theft.

A whopping 80% admitted to leaving some valuable items in their garden. Expensive garden furniture topped the list, followed gardening tools, bicycles and outdoor toys for children.

Just 7% of people questioned said that they keep items from their garden locked away in a shed or in their property overnight.

Many homeowners neglect garden security

Many homeowners neglect garden security

 

Regional variance

The survey also indicated that by region, peoples’ attitude towards their security varied. 23% of Welsh residents said that they had nothing in their garden worth securing.

Alternatively, those in Yorkshire were found to be the most security conscious, with 10% saying that they bring all of their items inside to ensure burglars did not target their outdoor space.

Robert Fernandez, spokesperson for Rattan Direct, said, ‘securing our gardens and backyards should be top of the list of priorities. Every single homeowners or tenant should invest in a padlock to protect those items that are often left outside overnight. Replacing stolen items can be very expensive, even if you feel they hold very little value in the first place.’[1]

[1] http://www.propertyreporter.co.uk/household/are-you-keeping-your-garden-secured.html

 

 

UK housing market cools after record period

Published On: May 11, 2016 at 11:56 am

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UK housing market activity is slowing after the surge to beat the increased stamp duty surcharge deadline.

Data from the Halifax indicates that yearly house price growth in Britain slowed to 9.2% in April, down from the 10.1% recorded in March.

Records

The cooling of the market comes after the rush to beat the rise in stamp duty land tax for buy-to-let and second properties. A record 165,400 homes were sold in Britain during March, ahead of the tax changes coming into play on the 1st April.

This figure was 11% greater than the previous record number of property sales recorded in January 2007, according to HMRC.

Rob Weaver, director of investments at property crowdfunding platform Property Partner, said, ‘the much-heralded stamp duty deadline ultimately led to a stampede by buy-to-let investors and second home owners up to March. Unsurprisingly, April’s dip in house prices is the calm after the storm.’[1]

UK housing market cools after record period

UK housing market cools after record period

Concerns

A number of experts have predicted further cooling in the market, as uncertainty surrounding the upcoming EU referendum continues to intensify. However, the market is widely expected to pick up following the vote, with demand continuing to far outstrip supply.

Martin Ellis, Halifax’s housing economist, noted, ‘current market conditions remain very tight as the severe imbalance between supply and demand persists.’[1]

‘This situation, combined with low interest rates and rising employment and real earnings, should continue to push house prices up over the coming months, ‘Ellis added.[1]

Despite the market cooling in the last month, 2016 has still seen a positive start for the property market in general.

David Livesey, chief executive of the Connells Group, believes, ‘this generally positive climate looks set to be maintained over the coming quarters, regardless of the result of the upcoming referendum and with demand for housing continuing to outstrip supply, the outlook for the hosing market remains positive.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2016/5/the-calm-after-the-storm

[2] http://www.propertywire.com/news/europe/uk-property-market-outlook-2016051011895.html