Posts with tag: Buy-to-Let

Best April for gross mortgage lending since 2008

Published On: May 19, 2016 at 11:22 am

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The most recent report by The Council of Mortgage Lenders has revealed that gross mortgage lending hit £18.5bn in April.

Despite this being 29% down on the £26.2bn recorded in March, the figure is 16% greater than £16bn lent in April 2015. This makes it the largest lending total for April since 2008, when £25.3bn was lent.

Back-seat

Mohameed Jamel, economist at the Council of Mortgage Lenders, ‘as we move past the stamp duty change that came into effect at the start of April, we expect to see a quieter second quarter, as some transactions that were due to take place were brought forward to the first quarter of this year. This is likely to mean that over the next few months buy-to-let takes a back seat as lending is driven by first-time buyers, movers and remortgage customers.’[1]

‘The underlying picture still shows signs of growth, as the market remains underpinned by strong fundamentals such as increasing wages and rising employment. But it is possible that the uncertainty around the upcoming EU referendum in June will weigh on activity in the upcoming months,’ he added.[1]

Best April for gross mortgage lending since 2008

Best April for gross mortgage lending since 2008

No surprise

Henry Woodcock, principal mortgage consultant at IRESS, said, even with the availability of high numbers of low interest rate mortgage deals, it’s no huge surprise that borrowing in April was so much lower than in March given the false peak which resulted from a rush to beat the Chancellor’s 3% tax hike on BTL. Will we see a rise in lending in May? That will depend on a number of factors.’[1]

‘Lenders may increase the number of long-term deals of up to 40 years to tempt borrowers struggling to afford shorter terms, but on the flip side, as the Bank of England interest rate remains static, lenders may increase interest rate margins. The lowest rate tracker deals have already risen by 0.24% in the last six months. The unknown effect of the EU vote in June may further depress lending in May as borrowers wait and see both the result and the impact on lenders and house prices,’ Woodcock concluded.[1]

[1] http://www.propertyreporter.co.uk/hero/gross-mortgage-lending-sees-best-april-since-2008.html

Two industry bodies warn on EU exit impact

Published On: May 19, 2016 at 10:12 am

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Categories: Property News

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Both the National Association of Estate Agents and Association of Residential Letting Agents have warned that leaving the European Union could have ‘damaging consequences,’ on the housing industry.

Despite no conclusive arguments to either leave or remain in the EU, both firms have voiced concerns over construction of new properties should Britain leave.

Worries

Managing director of the National Association of Estate Agents, Mark Hayward, believes the situation is more complex than suggesting a Brexit would be good or bad.

However, a report drawn up by both firms alongside the Centre for Economics and Business Research (CEBR) states that a UK withdrawal from the EU, ‘risks drastically reducing the construction workforce, compromising current plans to build hundreds of thousands of new homes needed to ease the shortage in supply.’[1]

In the 23-page report four particular concerns have been highlighted:

  • Shortage of skills-While the impact of Brexit on migration policies is as yet unconfirmed, any restriction on foreign workers coming into Britain could compromise ability to construct new homes. What’s more, the Government’s target of one million new homes by 2020 could come under threat.Mr Hayward observed that, ‘an out vote could mean that in 10 years’ time we’d find ourselves with a severe skills shortage of construction workers. So even if we then had planning permission, investment and materials to build more housing, we simply wouldn’t have the resource to put the bricks and mortar together. It has the potential to have a very damaging effect on the future housing market.’[1]
  • Foreign investment-The report suggests that an out vote could see first-time buyers given leeway, as demand for housing eases. CEBR figures suggest that in 2014, 19% or 5.3bn of total foreign direct investment into the UK came from EU sources. In 2013, 17% of sales in London’s prime central property market made to non-UK recipients were to EU nationals.
Two industry bodies warn on EU exit impact

Two industry bodies warn on EU exit impact

  • Reduced migration influx impact-At present there are 3.03m UK residents who were born in other EU countries. Should Britain not maintain free labour movement, its total population could decrease by as much as 1.06m. Fewer people will lead to lesser demand, making the market more accessible for first time buyers. However, the report warns that reduced migration will affect the private rental sector: ‘Currently, private renting is a more popular choice among UK residents born in non-UK EU countries than for UK born individuals; if migration reduces the flow of renters from Europe, demand will weaken, which would put downward pressure on rent costs.’ Managing director of ARLA, David Cox, said, ‘the fact that rent costs would face downward pressure is both a blessing and a curse. While renters should face fair and reasonable prices, landlords need to be able to at least break even on any outgoings they have, such as a mortgage. If demand eases to such an extent that landlords cannot recuperate costs, we’ll likely see a mass exit from the market, which would then just have the opposite effect on demand as supply falls-and we’d be back to square one.’[1]
  • Capital Pains-The report also highlights that London has the greatest population of non-UK EU residents, therefore the consequences of a Brexit was be felt more heavily. In 2013/14, 25% of the total of London’s prime property purchasers resided outside of the UK.Mr Cox warns, ‘those whose freedom to work and live in the UK is at risk of Brexit are a key demographic for the private rented sector. Current projections of demand for rental properties therefore could be offset by Brexit. If the sentiment towards London as a safe haven changes, the UK’s largest rental market will feel the brunt of a Brexit.’ Concluding, Mark Hayward said, ‘it’s not as simple as saying that Brexit would have a positive or negative effect on the property market. We might to believe, for example, that the ease in demand and lower prices will allow first time buyers a route into the market, but any transactions may be put off for the short term until the period of uncertainty is over. An ease in demand is likely to be matched or outweighed by a decrease in housing stock, not just from reduced labour, as considered in the research, but also from decreased accessibility to building materials produced in non-UK EU countries. Ultimately, it could have long-lasting and damaging consequences.’[1]

[1] https://www.estateagenttoday.co.uk/breaking-news/2016/5/brexit-could-have-damaging-consequences-warns-naea-and-arla

 

 

How much does it cost to sell a property in the UK?

Published On: May 18, 2016 at 10:53 am

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Categories: Property News

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Netanagent.com, an estate agent comparison site, has provided a new online map to give property owners a better picture of the cost of selling of house in Britain.

This new map gives homeowners in the UK quick and easy access in assessing the cost of putting a house on the market.

Costs

According to the report, Hexham, a village in the Tyne Valley, is the cheapest place to market a property in Britain. On the flip side, Kensington in London was found to be the most expensive place to sell.

In addition, the map uncovers the differences in price being paid to move home in Britain. Unsurprisingly, London made up six of the top ten fee hotspots.

The 10 most expensive areas for estate agent fees were found to be:

  • Kensington-1.63%
  • Walsall North-1.60%
  • Cities of London and Westminster-1.58%
  • Preseli Pembrokeshire-1.56%
  • Chelsea and Fulham-1.54%
  • Putney-1.5%
  • Hammersmith 1.5%
  • Banff and Buchan, Scotland-1.5%
  • Holborn and St Pancraas-1.5%
  • Ynys Mon (Anglesey), Wales-1.5%   [1]

On the other hand, the 10 cheapest regions for estate agent fees were found to be:

  • Hexham-0.72%
  • Newcastle upon Tyne North-0.80%
  • Cannock Chase-0.82%
  • East Renfrewshire-0.84%
  • East Dumbartonshire-0.86%
  • Shrewsbury and Atcham-0.86%
  • Glasgow North-0.87%
  • Glasgow Central-0.87%
  • Glasgow South-0.88%
  • South Derbyshire-0.88%             [1]

The average nationwide fee was found to be 1.10%.

How much does it cost to sell a property in the UK?

How much does it cost to sell a property in the UK?

Selling

Alex Thorpe, netanagent.com managing director, observed: ‘No-one will be surprised to hear that London is the most expensive area to sell, but they may raise an eyebrow at two remote spots in Wales and Scotland hitting the top ten.’[1]

‘The costs are easily explained though and this is something that estate agents often struggle to get across-remote locations can mean a huge geographical area to cover, with increased overheads and a genuine lack of buyers. All of this can equate to a larger workload for an agent, justifying a slightly higher fee. Equally, in London, selling property isn’t just about listing a property on Rightmove and sitting back: we’re talking about vast sums of money, requiring agents to stay closely involved at all points and delivering the sort of high end service you expect to pay for,’ Thorpe continued.[1]

Averages

The online map covers the year between April 2015 and April 2016, drawing an average of property fee quotes from this period. This then gives a typical figure from sales of property of all different values.

In context, a property priced at the current UK average of £307,033 will cost £2,210 to sell in Hexham. However in Kensington, this will cost a fee of £5,004.

‘Whilst even the lowest fee may seem expensive to some homeowners, when selling a property the work that goes on behind the scenes is a lot more extensive than agents often talk about, especially post offer. Agents are the go-between in one of the most stressful processes we go through in life and they often become the main point of contact for a vendor, offering advice, support and hopefully peace of mind right up until completion,’ Mr Thorpe concluded

[1] http://www.propertyreporter.co.uk/property/where-is-the-cheapest-place-to-sell-a-house-in-the-uk.html

Would-be BTL investors urged against alternatives

Published On: May 17, 2016 at 8:46 am

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Categories: Landlord News

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A leading online letting agency is urging would-be buy-to-let landlords deterred by the Government’s legislation changes to resist investing in other alternatives.

An investigation into 500 investors by PropertyLetByUs found that many are considering overseas investment. European destinations such as France and Spain were found to be popular countries.

Challenges

However, the agency is warning investors tempted to invest abroad to think about the challenges of different fiscal regimes.

Managing director of PropertyLetByUs, Jane Morris, said, ‘each country has different tax laws relating to property and they can change quickly, with little warning. For example, in 2012 the French Government imposed a 15.5% social charge on capital gains from the sale of second homes or rental income-a measure which was estimated to bring in €250 million a year. Tax on rental income rose overnight, from 20% to 35.5 % while capital gains tax on property sales rose from 19% to 34.5%.’[1]

‘These new tax measures hit overseas investors hard and meant that a British couple who bought a French property for €200,000 20 years ago and were selling it for €750,000 would have to pay almost €60,000 in charges, on top of the existing capital gains tax. They received no credit against their UK tax bill for this amount,’ Morris continued.[1]

Would-be BTL investors urged against alternatives

Would-be BTL investors urged against alternatives

Tax

This tax implication was overturned last year by the European Union, which decided the measure was illegal. As such, France was ordered to repay tens of millions of euros to UK and other EU non-resident owners, who had rented or sold their properties in the last two or three years.

Morris noted that, ‘clearly, overseas property taxation can be more costly than the UK, despite often much lower property prices. It is important that landlords take into account potential tax hikes and don’t get sucked into the marketing hype that surrounds overseas property investment.’[1]

‘Property experts will often highlight new markets they appear to be investment hotspots and you may be able to find bargains in countries where prices have fallen dramatically, but it’s often wiser to buy in more established markets,’ she concluded.[1]

[1] https://www.lettingagenttoday.co.uk/breaking-news/2016/5/letting-agency-warns-against-easy-alternatives-to-buy-to-let

Demand for property in PCL slows in April

Published On: May 16, 2016 at 11:47 am

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Categories: Property News

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Demand for property in some the capitals’ most high-value locations has fallen, just weeks after the additional 3% stamp duty charge on buy-to-let accommodation was introduced.

In the prime central London sector, demand currently stands at 10% on average, falling by 23% since the changes were introduced, according to the PCL index from eMoov.

Lows

The Index shows that demand is now at its lowest level since records were first taken over one year ago. This indicates a significant change between supply and demand for property valued at £1m or more across London’s most prestigious regions.

During the run up to the stamp duty deadline, eMoov found that the rush to complete transactions had breathed new life into the top end of the market. Demand changed prime central London’s downward spiral and saw increases for the first time since May 2015 during the period.

However, it appears that this increase was superficial, with demand dropping so substantially just one month after the changes.

Demands

Only one region of prime central London, Fitzrovia, had maintained March’s increase in demand. Year-on-year, Belsize Park, Maida Vale, Primrose Hill, Holland Park and Marylebone were the only other regions to see an increase in demand.

Presently, Islington is the most in demand area, with 21%. Belsize Park is next with 19%, followed by Chiswick at 18%, Maida Vale at 16% and Notting Hill with 12%.

At the other end of the scale, St Johns Wood and Mayfair are suffering from the lowest demand levels on record, with just 4%.

Demand for property in PCL slows in April

Demand for property in PCL slows in April

Artificial

eMoov chief executive officer Russell Quirk, noted, ‘it’s now abundantly clear that the brief resurrection of London’s prime central London market witnessed in March, was an artificial skew as many scrambled to complete a sale before April’s stamp duty deadline.’[1]

‘It seems the extra 3% levy has slowed London’s top end market and this will inevitably lead to further, sizeable reductions in property values,’ Mr Quirk continued. [1]

[1] http://www.propertywire.com/news/europe/prime-central-london-demand-2016051311911.html

Landlords using holiday letting sites to disregard obligations

Published On: May 16, 2016 at 10:50 am

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Categories: Landlord News

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A rising number of landlords are trying to disregard their legal obligations of renting a property by advertising their investment as a holiday let.

The Residential Landlords Association (RLA)claims that nearly two-thirds of the total number of listings on Airbnb in London are for lets of 90 days or more. This, the Association claims, could be breaking the law, which states that lets on a short-term basis cannot exceed 90 days per calendar year.

Listing concerns

Research from the RLA has found that 65% of the total number of listings on Airbnb in London are available for 90 days per year.

Nearly 7,000 homes or flats are multi-listings where hosts have in excess of one listing. Of these, 78% are available for more than 90 days per year.

The RLA is concerned that a number of buy-to-let landlords are avoiding giving tenants security, by advertising longer lets on holiday home websites. As such, tenants’ deposits are not being secured and safety standards are not being met.

In addition, the RLA is also concerned that tenants could be using these websites in order to advertise rooms for sub-letting, without the consent of their existing landlord. A recent survey of RLA members found that 15% of landlords have seen tenants advertise a property or room on these kind of sites without permission.

This concern is underlined by potential problems in adhering to the Right To Rent scheme. Landlords who do not grant consent will not have checked the eligibility of their new inhabitant, which could land them in extremely hot water.

Landlords using holiday letting sites to disregard obligations

Landlords using holiday letting sites to disregard obligations

Review

Now, the RLA has called for an urgent review into these types of actions, from both the Government and the new major of London, Sadiq Khan.

Alan Ward, chairman of the RLA, said, ‘the growing popularity of holiday letting sites such as Airbnb raises serious questions about their potential for abuse. Ministers must act to clamp down on those property owners using the website to deny tenants safe, legal and secure accommodation. Landlords also need support to address illegal sub-letting of properties by their tenants.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/5/holiday-letting-sites-being-abused-for-long-term-letting