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Em Morley

Average House Price Breaks Through £300,000 Mark

Published On: March 21, 2016 at 11:16 am

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Categories: Property News

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The average asking price of a property new to the market in England and Wales has broken through the £300,000 mark for the first time, according to new data.

The average house price is now £303,190, says Rightmove.

The news arrives exactly ten years since new asking prices passed the £200,000 barrier. This means that house prices have soared by 50% in a decade.

Average House Price Breaks Through £300,000 Mark

Average House Price Breaks Through £300,000 Mark

Despite the housing market crash occurring during this period, new asking prices did not go back down below the £200,980 reported in 2006 when prices fell.

Figures also show that average wage growth has been significantly lower than house price inflation over the last ten years, rising by just 22%.

Rightmove has found that new asking prices increased by 1.3% on February’s figure – the second highest monthly rise seen at this time of year.

The director of Rightmove, Miles Shipside, comments: “On average, 30,000 properties have come to market each week over the past month, up by 3% on this time last year. But there are insufficient numbers of newly listed properties in many parts of the country to meet demand.

“Visits to Rightmove are up by 14% in early March compared to the same period in 2015, so it’s no surprise that those buyers who can borrow more or can find some extra cash are keeping the price merry-go-round spinning, even though increasing numbers of aspiring home movers cannot afford the ride.”1

Surprisingly, the rise in new asking prices is not being driven by London, where the market is stagnant.

Six out of ten regions have experienced house price growth, while three of the top four are northern regions – the West Midlands, North West and Yorkshire and the Humber came after the South West, and ahead of all other southern regions.

Although new asking prices in the capital have remained steady month-on-month, homes in London are still worth more than double the average, at a huge £644,045 – an annual increase of 11%. This is the greatest rate of annual house price growth of anywhere in England and Wales.

Rightmove’s research also shows that the average time to sell a property last month was 68 days, down from 79 in the same month last year. In London, the typical time a house is on the market is 47 days, lower than at any point last year.

Average stock per agent – including properties under offer or sold subject to contract – was 54 in February, down from 59 last year.

Last month, Rightmove reported that the average house price was almost at £300,000, and expected the barrier to be broken soon. It will be interesting to see how prices move on from the current record high.

1 http://www.rightmove.co.uk/news/300000-milestone-hits-new-high

Scotland to Enforce Rent Controls Under New Bill

Published On: March 21, 2016 at 9:29 am

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Last week, the Scottish Parliament passed a bill to end the no fault ground for eviction and to enforce rent controls across the private rental sector.

Scotland to Enforce Rent Controls Under New Bill

Scotland to Enforce Rent Controls Under New Bill

The Private Housing (Tenancies) (Scotland) Bill will implement a rule that means that landlords and letting agents will no longer be able to ask a tenant to leave a rental property, simply because the tenancy has come to an end. Instead, tenancies will roll on automatically.

The new law will also allow the introduction of rent controls by local councils in areas where rent rises are considered excessive.

The Director of housing charity Shelter Scotland, Graeme Brown, believes that private tenants, landlords and letting agents in Scotland will benefit from the new legislation.

He states: “This bill represents the biggest move forward in private tenancy law in the last quarter of a century, and we welcome many of the changes it contains.

“It will significantly rebalance the relationship between tenants and landlords, and modernise and strengthen the rights of the growing number of private rented sector tenants in Scotland.

“The abolition of no fault eviction, combined with a flexible and secure tenancy, will help families in particular put down roots in their communities and help people to stay in their home for as long as they need.”1

The Scottish Housing Minister, Margaret Burgess, adds: “These significant changes will transform the private rented sector, creating a more modern tenancy, bringing stability to the sector and helping to meet Scotland’s housing needs.”1

Landlords and letting agents in Scotland have previously tried to challenge the new law.

Are you a landlord or agent in Scotland? What do you think about the changes?

1 http://www.propertyindustryeye.com/scottish-government-passes-bill-bring-rent-controls/

Demand for Homes Drives 30% Rise in Mortgage Lending

Published On: March 20, 2016 at 8:27 am

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Categories: Finance News

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Demand for homes has driven a 30% rise in mortgage lending in the 12 months to February, reaching a total of £17.6 billion, according to the latest figures from banks and building societies.

Despite a monthly decline of 5% from January’s total, the Council of Mortgage Lenders (CML) has reported strong annual growth, as low mortgage rates and high demand for homes fuelled lending.

The £17.6 billion total was up from £13.6 billion recorded for February last year and was the highest lent in any February since 2008, when the financial crisis was starting to take hold.

The CML’s figures detail gross lending during the month, not taking repayments into account.

Recent months have seen strong levels of remortgaging activity, as borrowers take advantage of fixed rate mortgages at record lows.

Mohammad Jamei, an economist at the CML, states that the annual rate of growth was in line with the figures for the last months of 2015.

“The recovery is being underpinned by market fundamentals in the UK, as wages grow and unemployment falls, helped by Government schemes and competitive mortgage deals.”

Demand for Homes Drives 30% Rise in Mortgage Lending

Demand for Homes Drives 30% Rise in Mortgage Lending

The forthcoming change to Stamp Duty for buy-to-let landlords and second homebuyers, which comes into effect on 1st April, has caused a 40% increase in buy-to-let loans for house purchase in January, and it is likely that this surge will have continued into February.

However, Jamei does not believe that the figures point to a significant acceleration in lending: “While there may be a slight current boost to lending as some transactions seek to complete before the 1st April tax changes in the buy-to-let sector, this is likely to be followed by a slight fall in activity.

“Affordability pressures continue to weigh on activity, as does the low number of properties coming on the market, though this has been improving very recently.”1

Wednesday’s Budget confirmed that all property investors, including corporate landlords, will face the 3% Stamp Duty surcharge.

The new tax rate will add £6,000 to the cost of purchasing a £200,000 rental property.

The Chief UK Economist at IHS Global Insight, Howard Archer, says that lending was likely to have been boosted by both remortgaging and purchases.

“Housing market activity is seemingly getting some boost at the moment from increased activity from buy-to-let and second home purchases ahead of April’s rise in Stamp Duty,” he observes.

“This could exert limited upward pressure on house prices in the near term. Post April, a likely waning of buy-to-let interest may modestly dilute housing market activity and ease upward pressure on prices.”1

Many industry experts have reported a boom in the buy-to-let market ahead of the Stamp Duty change.

The main house price indices suggest that the cost of buying a home has risen more quickly than earnings in the past year.

Jeremy Duncombe, the Director of Legal and General Mortgage Club, which works with advisers and lenders, claims buyers are being forced to take out larger loans to cope with growing house prices.

He claims: “These high prices, combined with a lack of affordable housing, puts owning a property out of reach for many first time buyers. Initiatives that can aid the delivery of the 250,000 extra homes needed annually should be thoroughly explored by the Government, with all options considered.

“As the Chancellor himself conceded in his Budget, more needs to be done to speed up the realisation of these new properties if the housing market and the wider economy is to return to full health.”1 

1 http://www.theguardian.com/business/2016/mar/17/demand-for-homes-fuels-30-rise-in-mortgage-lending

The Shocking Difference in Rent Prices Around the UK

Published On: March 19, 2016 at 8:36 am

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Categories: Property News

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A national self-storage firm has analysed average rental properties around the country to highlight the shocking difference between rent prices, particularly between the north and south.

StoreFirst.com has revealed what a private tenant can rent for £800 or less per month in the UK’s ten largest cities, from a three-bedroom house in Manchester to a single bedroom in a London flatshare.

The company found that the average UK rent price, excluding London, was £740 per month in January this year, up by 5.5% on last year’s £702.

Unsurprisingly, London was the most expensive place to rent, with the single bedroom flatshare in Whitechapel costing £800 a month.

The average rent price in the capital is a huge £1,510 per month.

The cheapest London borough for renters is Havering, which has an average monthly rent price of £1,161. Kensington and Chelsea was named the most expensive, at £2,720 a month.

Behind London, the most expensive place to rent in the UK is the South East, with an average monthly rent of £933.

The Shocking Difference in Rent Prices Around the UK

The Shocking Difference in Rent Prices Around the UK

In Birmingham, tenants can rent a furnished, two-bedroom terraced house with two reception rooms for £800 per month, or a two-bed apartment with parking for £725.

A two-bed flat with a separate utility area is £750 in Bristol.

However, the more shocking differences are found the further north you go.

In Manchester, a spacious three-bed terraced house with a cleaner costs £795, while £5 more gets you a two-bed apartment with parking.

But Liverpool is even cheaper – a two-bed duplex apartment costs £725, while you can also find a four-bed terraced house with a garden for the same price.

Tenants in Leeds can get a two-bed apartment in the city centre with a Juliet balcony for just £650.

In Bradford, a three-bed semi-detached house with a garden and parking for two cars is £800 per month. Alternatively, a four-bed detached house with parking, a double garage, en suite shower and breakfast bar costs £750.

The best value for money was found in Sheffield, where a three-bed terraced house costs £675, while a two-bed unfurnished house is £495 a month.

What can you get across the border in Scotland?

Tenants in Glasgow can rent a two-bed semi-detached house for £750 per month, or a three-bed house with a garden for £700.

In Edinburgh, a two-bed flat with a communal garden costs £799.

The three cheapest areas in the UK were the North East at £528 per month, Northern Ireland at £582 and Wales at £595.

The Operations Director at StoreFirst.com, Oliver Kitson, comments on the findings: “When looking at the prices of rentals going up predominantly in city/town centre locations, it’s clear to see that renters are getting much less space for their money in the rental market. Despite Government schemes like Help to Buy and Help to Buy mortgage guarantees, it doesn’t seem as though people are ready, financially, to become homeowners.

“With average property prices being over eight times the average wage, it’s not difficult to see why.”1

If you are a landlord struggling to set the perfect rent price for your area, this advice will help: https://www.justlandlords.co.uk/news/setting-perfect-rent-price-property/

1 http://www.24dash.com/news/housing/2016-03-15-800-links-a-three-bedroom-house-in-Manchester-to-a-single-bed-London-flat-share

Buy-to-Let Lender Encourages Landlord Incorporation

Published On: March 18, 2016 at 3:07 pm

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Kent Reliance and InterBay Commercial, both part of OneSavings Bank, have launched a new policy to encourage landlords to incorporate their buy-to-let loans.

The new policy allows buy-to-let landlords to transfer their existing property from their individual name into a company or limited liability partnership structure.

A key feature of the new policy is that it will accept directors’ loans of gifted equity, subject to an insolvency indemnity policy.

Buy-to-Let Lender Encourages Landlord Incorporation

Buy-to-Let Lender Encourages Landlord Incorporation

After the Chancellor’s announcement in last year’s summer Budget that mortgage interest tax relief on buy-to-let loans will be gradually reduced from 2017, many have viewed incorporation of a limited company as the preferred means of holding investment property.

The Kent Reliance Buy-to-Let Britain report (from November), suggests that limited company lending could exceed 56,000 in 2016, up from 30,000 in 2014.

The NLA has found that 40% of buy-to-let landlords are considering forming a limited company.

Responding to this demand, the new policy will allow both new and existing customers to transfer a property from their individual name into a limited company or limited liability partnership, subject to current policy requirements being satisfied.

Borrowers are instructed to seek professional advice from a qualified professional prior to entering into any transaction.

The policy will be even more popular after Wednesday’s Budget announcement that corporate landlords will now be subject to the 3% Stamp Duty surcharge, due to be enforced on 1st April.

The Sales Director at OneSavings Bank, Adrian Moloney, says: “The Chancellor’s changes introduced a clear need for products designed specifically for property investors who were moving their investments into a limited company, and needed their mortgage finance to reflect this.

“Our new criteria provide a solution for professional investors who wish to manage their portfolios through a limited company structure. We’ve also made sure that the process is as quick and efficient as possible for brokers and their clients.”1

1 https://www.landlordtoday.co.uk/breaking-news/2016/3/lender-encourages-landlord-incorporation

First Rent Price Rises Recorded Since September

Published On: March 18, 2016 at 1:43 pm

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In February, rent prices in the private rental sector increased on a monthly basis for the first time since September last year, according to the latest report from Your Move and Reeds Rains.

As the sector prepares itself for a host of new Government policies, the average rent price in England and Wales is now £791 per month.

The research found that average rent prices are now increasing on a monthly basis for the first time since September 2015, up by 0.1% between January and February.

The average rent of £791 a month is 3.3% higher than a year ago, equivalent to an extra £25 per month for tenants.

First Rent Price Rises Recorded Since September

First Rent Price Rises Recorded Since September

The report also found that the rate of rent arrears has also increased, as tenants struggle with their finances.

The Director of Your Move and Reeds Rains, Adrian Gill, says: “Spring is here for the rental market. Rents are rising and demand is growing. In a warming market, tenants are beginning to feel the heat when signing new tenancies.

“But this delicate ecosystem of soaring demand from tenants and steady investment from landlords is under threat. Rent rises could now accelerate further, and gentle spring warmth could start to feel less comfortable. If Government attacks on landlords bite – having worsened again in this week’s Budget – the flow of investment from landlords could wilt.”

He explains: “Landlords are increasingly deliberate in their actions and savvy in their business decisions. But all landlords investing steadily in new property to let are the heroes of the buy-to-let industry, not the villains. Thanks to the business acumen and persistence of landlords, Britain’s private rented sector has become home to millions of households and the only real backstop against the weakness of other tenures.

“All landlords, regardless of the number of properties they own, want to provide a quality service as part of earning a reliable return on their investment. For those with the right advice, this is part of operating a successful business model. Avoiding void periods and ensuring a good relationship with reliable tenants is essential. So it is hard to understand the logic behind restricting the flow of new investment, and the competition between existing landlords.”

Gill adds: “Additional taxes on the purchase of new buy-to-let properties will not support the stated aims of these policies – namely to improve homeownership. By attacking buy-to-let, the Government will only serve to push up market rents more quickly, stymieing the efforts of many tenants to raise a deposit to buy a home, while also boosting returns for existing landlords with the best advice to navigate new complications.”1 

In Wednesday’s Budget, the Chancellor announced that large-scale buy-to-let investors will be subject to the 3% Stamp Duty surcharge, which is set to be enforced on 1st April.

Regionally, the Midlands has led annual rent growth.

Those living in the East Midlands have seen their rent prices rise by 7% in the last 12 months. This is followed by increases of 6.3% in the West Midlands and 6.2% in the East of England.

These three regions are all ahead of London, with rent prices in the capital up 4.8% on February 2015. As recently as November, London consistently led rent rises in the UK.

Meanwhile, rents are down annually in three out of ten regions. The North East suffered the greatest decline, at 2.5%, followed by Wales at 1.5% and 0.1% in the South East.

On a monthly basis, rents have risen in five out of ten regions. The East of England recorded the highest price rise at 1.1%, with the South East and East Midlands coming in joint second, at 0.6%.

Contrastingly, rent prices in Wales and the North East are now lower than they were in January, down by 0.9% and 0.7% respectively.

After these monthly increases, rents in the West Midlands are now at a record high of £596 per month, with Yorkshire and the Humber also seeing an all-time high of £559 a month.

Despite recording the fastest annual rent rise, prices in the East Midlands are still £1 short of their record high of £610, seen in November 2015.

Unsurprisingly, Your Move and Reeds Rains’ data shows that landlords’ gross annual rental yields are now at a 17-month high.

1 http://www.propertyreporter.co.uk/landlords/anti-landlord-policies-fuel-first-rent-rises-since-autumn.html