Posts with tag: general election

What’s in Store for London House Prices?

Published On: May 7, 2015 at 10:41 am

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It would be an ideal situation for London property prices and non-London prices to even out. But the recent average between the two places London house values extremely higher than those around the country.

For the two to meet, London prices will have to fall considerably, or non-London prices will have to accelerate upwards.

What's in Store for London House Prices?

What’s in Store for London House Prices?

If either of these things happen, now would be the best time to leave London and get more for your money elsewhere. If you have already left the capital, you’ll be pleased to hear that London prices have slowed down in the last few months.

In the prime central London market are stories of homes selling for much less than they should have, that’s £10m instead of £15m. This could be down to the rising pound, which has risen 20% against the euro since last summer. This makes the UK much more expensive for European investors who would have entered the market a year ago.

And naturally, the general election has had an affect. But with today being the day, the property market should seem clearer now that campaigning has ended.

There is also concern that banks such as HSBC or Standard Chartered will leave London to avoid rising bank charges. House sales and prices will be affected, as they would be if Labour wins the election and mansion tax is introduced.

There is the possibility of a 50% rate of income tax, meaning that those at the top end of the market will be on lower net incomes. Labour has also pledged the abolition of non-dom status.

Additionally, the buy-to-let sector in London could be under fire if taxes on these investments are altered. This would greatly impact the general market, as there is a higher proportion of rental property in London than elsewhere.

But also, we should be looking outside of the UK, and noting that the world’s wealthy are getting poorer. Saudis are experiencing falling oil revenues, the Russian economy is in a bad state, and China’s crackdown on corruption is stopping people gaining wealth.

With less super rich overseas buyers and existing investors put off by UK taxes, it is unclear what will happen to prime central London property prices, and therefore the rest of the country.

Sales of Properties Worth £1m Have Dropped by a Fifth

Published On: May 6, 2015 at 2:58 pm

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Sales of properties worth over £1m have fallen by almost a fifth year-on-year due to concerns over a possible mansion tax, revealed Land Registry.

Around England and Wales, 851 homes worth over £1m were sold in January, a 19% drop on January 2014, when 1,049 properties worth more than £1m were sold.1

The majority of properties in this price bracket were sold in London.

The uncertainty surrounding the election will be cleared soon when the results are announced, however, buyers are worried about potential mansion taxes and affordability pressure. Experts have found that London’s high-end property market has slowed as a result.

Stamp Duty changes in December 2014 also made this tax more expensive for buyers in the capital’s most expensive boroughs.

Sales of Properties Worth £1m Have Dropped by a Fifth

Sales of Properties Worth £1m Have Dropped by a Fifth

Land Registry research found that property prices in Kensington and Chelsea have had the slowest annual growth of all London boroughs in the past year, with just a 5.2% increase. The average home in this area is worth £1.29m.

Westminster was the only other London borough to record year-on-year price growth of less than 10%, with a 9.9% rise, making the average price £999,687.

In contrast, Newham experienced the highest growth of all London boroughs, with a 19.8% upsurge in prices, to £291,364.

Property Economist at Capital Economics, Matthew Pointon says: “Uncertainty regarding the mansion tax has taken its toll on prices in prime central London.”1 

In all price brackets, the amount of property sales in England and Wales was 53,168 in January, an 18% drop compared with January 2014, at 65,175.

House values rose in England and Wales by 5.3% in the year to March, reaching an average of £178,007. On a monthly basis, they dropped slightly by 0.8%.

The strongest price growth was recorded for semi-detached houses in the past year, with an increase of 6.1%. The average semi-detached home is now worth £169,194.

Regionally, London still has the strongest year-on-year price growth, with an 11.3% rise, making the average property in the capital worth £462,799 in March.

The only region to record lower house prices than a year ago was the North East, with a 2.9% drop to £97,444. In Wales, prices rose 2.7% to £117,828.

This data arrives as estate agents report a slowdown in the market as buyers await the outcome of the general election. The first time buyer sector in particular has experienced a downturn.

The National Association of Estate Agents (NAEA) found that first time buyers bought 22% of properties sold in March. This is down from 30% in February.

Overall, the NAEA found that demand for homes is the lowest in a year. An average of 343 house hunters registered per estate agent branch in March, a drop from 366 in February.

Almost two-thirds (63%) of estate agents noted a slowdown in the market, the NAEA revealed.1

The NAEA also said that the supply of homes on the market has risen slightly to an average of 48 per branch, compared to 43 in February.

Managing Director of the NAEA, Mark Hayward, says: “We may have seen a slight increase in supply this month, but it is not an ongoing trend or a big enough jump to fill the gap for demand.

“Although our agents have seen the market cooling off ahead of the general election, it will inevitably bounce back again at a rapid rate after May 7th, so it is more important than ever that the party elected focuses on increasing the supply of homes.”1 

1 http://www.dailymail.co.uk/news/article-3062946/Sales-homes-worth-1million-plunged-nearly-FIFTH-amid-fears-mansion-tax.html

 

 

 

 

One In Three Streets in UK have empty homes

Published On: May 6, 2015 at 2:20 pm

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An alarming report has indicated that one in three streets in the UK has one or more homes that have been unoccupied for at least six months.

The report from Nationwide has led the organisation to call on the next government to restore empty properties in order to ensure future occupation.

Absurd

Leigh Pearce is chief executive of the Nationwide Foundation, a charity backed by grants designed to assist in bringing unoccupied houses back into use. Pearce believes that it is, ‘absurd that so many properties remain empty and decaying, while at the same time we have a housing supply crisis, with many people unable to find anywhere to live that they can afford.’[1]

In 2012, the £50m Empty Homes Community Grants Programme was introduced in England. As a result, this has led to nearly 2,000 properties across the country being restored to a livable standard by community groups. However, the programme came to an end in March and campaigners are worried that no alternative has been forthcoming.

One In Three Streets in UK have empty homes

One In Three Streets in UK have empty homes

New homes

Instead, all major political parties have outlined plans to build new houses. The Tories have pressed ahead with their Right-to Buy scheme, opening up the offer to housing association tenants, with a projected £1bn from house sales potentially funding 400,000 new properties. Meanwhile, Labour, the Lib Dems and UKIP have all pledged to construct a minimum of 200,000 homes per year should they come in power.

However, a recent survey from Knight Frank has indicated that just 9% of housebuilders feel that building 200,000 more homes per year is currently achievable.

 

[1] http://www.independent.co.uk/news/business/news/one-in-three-streets-in-britain-has-at-least-one-property-that-has-been-empty-for-six-months-or-more–report-10224685.html

 

 

Number of First Time Buyers Drops

Published On: May 6, 2015 at 12:31 pm

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Young people are still struggling to buy a home as the amount of first time buyers dropped in the past year.

The National Association of Estate Agents (NAEA) found that just one fifth of residential property sales in March were to first time buyers, compared with a quarter in March 2014.

Research found that only 22% of homes were bought by this group, the lowest figure since July 2014. Experts expect that things could get worse for aspiring buyers, as there is a shortage of available homes and prices are still increasing faster than wages.

Property prices in England and Wales have risen by 5% in the past year; surpassing wage increases at 1.8%, found Land Registry.1

Price increases vary around the country; with London experiencing annual rises of 11% and the North East seeing a fall of 3%.

The NAEA’s Mark Hayward says: “Affordability is still a big concern. People’s incomes are not rising as fast as house prices and a lack of supply is driving prices up further. It could get worse for first time buyers.

“We have not yet seen the effect of the pension reforms, which could see people cashing in their pensions and rushing to invest in property, increasing the competition.”1

The Mortgage Market Review, introduced last April, brought in stricter affordability rules for buyers. It is believed that this contributed to the fall in numbers. Lenders are now required to conduct thorough checks on borrowers’ incomes and spending habits.

One of Britain’s leading academics says that the country must build more homes and challenge opposition from locals for the sake of “our children”.

Number of First Time Buyers Drops

Number of First Time Buyers Drops

Dame Kate Barker, former Bank of England (BoE) policymaker, has called for radical reforms to avoid a major housing crisis and help young people to buy a property. She would also like to see more public land made available for housing by tackling complaining locals if their arguments have “no substance”.

At a lecture by the Cambridge University Land Society, Dame Kate said: “The housing system today is unfairly weighted towards those already owning a home, or lucky enough to inherit funds from property ownership.

“Existing homeowners should recognise the stark truth that if they insist on keeping new development away from them, and on keeping all the profits from higher prices, we will not be able to house our children in a fair manner, and in some cases perhaps they will not be housed at all.

“The next government needs to act radically and coherently.”

She said that the general election housing manifestos are not “fully convincing” and that politicians are not brave enough to take bolder action by naming areas that need development, in case they become “unpopular”.1 

The Conservatives have promised 200,000 starter homes for first time buyers by 2020 and Labour will abolish Stamp Duty for first time buyers on homes less than £300,000.

The Centre for Economic Performance (CEP), part of the London School of Economics, resonated Dame Kate’s concerns, stating that Britain’s planning system lets Nimbies – local opponents – “employ endless ways to block new developments.”1

Academics at the CEP said that property prices have risen faster in the UK than almost any developed nation in the past 40 years. The prices of homes in central London per square mile are more expensive than New York, Paris and Geneva.

The CEP’s Christian Hilber says that Government schemes like Help to Buy have driven up demand and pushed up prices rather than helping the supply problem.

He says: “These policies may thus be an ineffective waste of taxpayer money at best, and counterproductive at worst.”

He also finds that places with the worst housing issues, in London and the South East, generally have stricter planning restrictions. It is often easier to gain planning permission in the north as unemployment levels are higher and developments could bring jobs.

Hilber continues: “If the South East, the most tightly regulated English region, had the regulatory restrictiveness of the North East of England, house prices in the South East would have been roughly 30% lower in 2015.”

He also says that planning laws should be changed to “allow developers to compensate Nimbies in an attempt to gain planning permission.”1 

Estimations suggest a decline of 20,000 first time buyers between the first quarter (Q1) of 2015 and Q4 2014. Your Move expected the amount of sales to first time buyers in Q1 2015 to be around 61,000, the lowest quarter for two years.

It says: “A lack of new homes is catching up with the property market.”1

Housing charity Shelter’s Chief Executive, Campbell Robb, says: “Yet again, we see in black and white the huge hurdles aspiring homeowners are facing thanks to our housing shortage.

“There might be talk of a cooling market, but the millions of people saving hard for a stable future will know a very different reality: their dream of a home has jumped another £9,000 out of reach.”1

1 http://www.dailymail.co.uk/news/article-3063372/Fresh-housing-gloom-time-buyers-one-five-house-sales-people-buying-property-12-months.html

 

Generation Rent calls for ‘rent tax’

Published On: May 6, 2015 at 11:56 am

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The head of campaign group Generation Rent has called for a new initiative to be introduced in order for funds to be raised to build new homes.

Alex Hilton believes that private landlords should be subjected to a, ‘rent tax,’ which he believes could raise £9bn for a house-building fund.

Criticism

Writing for Inside Housing, Mr Hilton pulled no punches over his assessment of the housing crisis and the upcoming general election. He described landlords as the beneficiaries of the problem and stated that without change, ‘millions’ of tenants would be affected.

Turning his attention to the election, Hilton said that the next government’s housing policy, ‘will be woeful,’ and that all manifesto pledges were, ‘marginally more useful than a chocolate teapot.’ He went on to say that, ‘we know something else about the new government. It will be weak; either a fragile minority or coalition government or possibly a small majority-but weak either way. And that’s the right time to make real demands from a Prime Minister. When they’re weak.’[1]

Generation Rent calls for 'rent tax'

Generation Rent calls for ‘rent tax’

Solution

Continuing his scathing attack, Hilton said that he was, ‘fed up of hearing that there’s no easy way to end the housing crisis.’ He believes that, ‘we’re not short of options, we’re short of direction and leadership.’ Rectifying this, Hilton says, ‘is easy.’[2]

Mr Hilton said that the country needs, ‘three clear objectives’ to solve the housing problem. He believes that these are the regulation of housing, cheaper house prices and a substantial amount of cash. Furthermore, Mr Hilton called for a Secretary of State for Housing, stating that, ‘we need to know the name of the person responsible for ending the crisis and whose career hangs on the success or failure of that mission.’[3]

Concluding, Hilton said that the, ‘whole housing sector should muster their strength, because the alternative is inaction and vacillation.’ The consequence of this, according to Hilton, ‘will be millions of people living in exploitation still waiting for the end of the crisis a generation later.’[4]

[1-4] http://www.propertyindustryeye.com/generation-rent-calls-for-landlords-to-pay-rent-tax-to-fund-house-building/

 

 

 

MP renters rise by a third

Published On: May 6, 2015 at 10:47 am

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On the eve of the closest general election in decades, an interesting study has revealed that the number of MP’s earning an income from renting out a property has increased during the last parliament.

The report from the Guardian indicates that the number of MP’s owning a rental property has increased by a third during the last five years. Prime Minister David Cameron, Chancellor George Osborne and Housing Minister Brandon Lewis are 3 of 153 members of parliament who declared an income from rental property in 2015. This was up from just 36 members in 2010.[1]

Anger

Statistics from the report indicate that one in four MP’s earn an income from at least one rental property. This data has been met with anger from housing campaigners, who argue that politicians in Britain are more bothered about maintaining equilibrium as opposed to helping improve tenants’ rights.

Alex Hilton, director of Generation Rent, believes that MP’s are not doing enough to combat rogue landlords. Hilton said that,’ there has been a quiet cross-party consensus in parliament in favour of landlords for decades. It’s time for full transparency, a full disclosure of all legislators’ land and property assets and a commitment to bar MP’s from voting on issues where they have significant financial and personal advantages from doing so.’[2]

MP renters rise by a third

MP renters rise by a third

Mr Hilton went on to state that, ‘MP’s often say that they’re also tenants in their second home so have balanced view. But setting aside the fact that the taxpayer is paying their rent, unless they are in cramped and damp bedsits, they really don’t have a clue.’[3]

Expenses

Of the increased number of parliament members renting properties, many have chosen to do so in the south-east in England, where the market gives the most substantial yields. However, many MP’s are renting out properties that have been subsidised by parliamentary expenses.

A Conservative spokesman however was bullish on the report, stating that, ‘official statistics show that rents have fallen in real terms in this parliament. They argue that the Conservatives are, ‘increasing investment in new build private rented accommodation, clamping down on bad practice by the small minority of rogue landlords and strengthening consumer protection.’ Additionally, the spokesman said that the Conservatives are, ‘supporting renters who want to step up to home ownership through our Help to Buy scheme.’[4]

[1-4] http://www.theguardian.com/politics/2015/may/06/number-of-mps-who-earn-from-renting-out-property-rises-by-a-third