Posts with tag: housing crisis

Property Market Activity Falls Further, the RICS Reports

Published On: December 14, 2018 at 10:26 am

Author:

Categories: Property News

Tags: ,,

Property market activity fell further in November, according to the latest UK Residential Market Survey from the Royal Institution of Chartered Surveyors (RICS).

The results of the survey are consistent with a weaker trend in housing sales market activity, with headline indicators on both demand and supply slipping further into negative territory.

Furthermore, forward looking metrics suggest that momentum is likely to continue dropping in the coming three months, although a somewhat stable trend is expected to emerge further ahead.

Housing demand

Starting off with housing demand, the RICS new buyer enquiries gauge fell to -21% in November, from -15% in the previous month. This represents a more cautious approach from property buyers.

The latest figures continue to suggest that the limited choice of properties for sale is likely to be one factor hampering buyer demand.

The new instructions series pointed to a decrease in the supply of properties coming onto the market for the fifth consecutive report.

Significantly, the net balance of -24% in November was the fastest pace of decline in new sales listings noted in 28 months. As a result, average housing stock levels on estate agents’ books remained close to record lows, at 42.1.

Property sales

At the same time, contributors continue to report that new appraisals by property valuers are down in comparison to a year earlier, suggesting that any pick-up in new sales listings is not on the horizon.

Meanwhile, the time taken to complete a sale from initial listing stands at approximately 19 weeks. As such, this represents the longest duration since the series was first introduced in February 2017 and is another sign of challenges in the sales market.

Property Market Activity Falls Further, the RICS Reports

Against this backdrop, the newly agreed sales net balance moved to -15% from -10% in the previous report, pointing to a modest drop in sales transactions nationally. When disaggregated, activity was reportedly subdued in almost all areas of the UK.

Anecdotal evidence continues to suggest that Brexit uncertainty and a lack of fresh stock onto the market are the main factors behind the slowdown in activity.

Moreover, there is little sense that these headwinds will fade anytime soon. Headline sales expectations fell to -23% in November (from -6% previously), indicating that momentum looks likely to slip further over the coming three months.

That said, contributors are expecting sales volumes to stabilise in the coming year, with positive sales trends envisaged across Northern Ireland, the South West and East Anglia in particular.

House prices

Looking at house prices, the headline price net balance came in at -11% in November, which is broadly unchanged from -10% in October. Overall, this indicator is consistent with a modest fall in property values nationally.

Still, the regional picture remains highly varied, with negative price trends across London, the South East and East Anglia contrasting with solid price growth reported in Northern Ireland, Scotland, the Midlands and North West.

Looking ahead, price expectations for the coming three months dipped to -25% (from -17% in October), which is consistent with a decline in national house price growth on a UK-wide basis. The 12-month outlook, however, is broadly flat.

Lettings market

In the private rental sector, the latest figures are indicative of demand from prospective tenants holding broadly steady for the second consecutive month.

Alongside this, the new landlord instructions series remained entrenched in negative territory (net balance of -14%), signalling a decline in the supply of fresh rental stock coming onto the market.

As a result of these dynamics, rent prices are expected to rise modestly over both the three and 12-month horizons.

Further ahead, rent price growth is expected to outpace that of house prices. On average, rents are predicted to rise by 3.1% per year over the next five years, while house price projections stand at an average of 2.3% on the same basis.

Steve Seal, the Director of Sales & Marketing at Bluestone Mortgages, comments on the report: “RICS continues to show that strains within the market are not exclusive to London, nor the south, as some may assume. With the current environment, there is a lot of uncertainty, and many buyers are choosing to wait until the New Year before making the biggest financial decision of their lives.

“As political uncertainty looms, borrowers need to be reassured that affordable lending can still be accessed. For those who are concerned about their finances moving into the New Year, getting in touch with a mortgage broker is a good place to start. Those with credit blips or with irregular incomes may fear that homeownership is unachievable, but there are lenders out there to help.”

Deal or No-Deal: Brexit and the Ongoing Problems of the Housing Market

Published On: December 12, 2018 at 9:56 am

Author:

Categories: Property News

Tags: ,,,

Alexandra Morris, the Managing Director of online letting agent MakeUrMove, outlines the consequences for homeowners and homebuyers of the UK, depending on whether the Government can secure a good Brexit deal, or we leave without one.

A no-deal Brexit would pour fuel on the fire of the current housing market crisis, with house prices falling sharply in the short-term, and a rocky path ahead for homebuyers and sellers alike.

The worst-case scenario of a no-deal could see homeowners trapped in negative equity and estate agents struggling due to a lack of properties to sell.

This Sunday, Theresa May is due to present the finalised Brexit deal to the summit of European leaders, and, with many issues – including access to the EU Single Market and Gibraltar – still seemingly unresolved, a firm deal for the UK still appears to be on shaky ground.

No-deal – what happens next?

The biggest impact of a no-deal Brexit in relation to housing is a potential fall in house prices – the Bank of England has warned that it could lead to a fall of up to 35% in house prices, although this is a worst-case scenario. As a result of a fall, many homeowners could find themselves in negative equity, trapping them in properties that aren’t worth as much as their mortgages.

The industry is hopeful that this will be a short-term blow, but it’s expected that the housing market will slow down dramatically in the meantime, as home movers slam the brakes on plans to buy or sell, adopting a wait-and-see policy.

Deal or No-Deal: Brexit and the Ongoing Problems of the Housing Market

A fall in house prices because of a no-deal Brexit may provide some opportunities for property to be bought by first time buyers. However, because it will be a time of uncertainty, it’s likely that people will be more cautious about making commitments, such as buying property, and buying conditions may become more difficult. Instead, it’s likely larger landlords will acquire these properties, as they will be able to spread the risk.

Leaving with a strong deal

On the other hand, if we can negotiate a strong deal with the EU, we could see a buoyant property market for all parties in 2019, with a renewed confidence after a very shaky period for the UK as a whole.

Leaving with a good deal could drive the market upwards in the latter part of next year, as strengthened consumer confidence leads to stability – which is what we need in the industry right now, after a prolonged period of uncertainty.

It is also worth adding that, if Theresa May and her Cabinet negotiate a good deal with the EU, we will have until December 2020 before anything fundamental changes, and, during this transition period (which could yet be extended), we will still be subject to existing EU regulations, giving the industry a much-needed adjustment period. If we failed to reach a deal, we wouldn’t have this adjustment period, and – having exited sharply – things will be far more uncertain for the economy and, as a result, the housing market.

Housing market crisis – deal or not

Although it’s crucial for estate agents and the housing industry to prepare for the worst, the reality of Brexit will hopefully be slightly less dramatic, even if we do reach a no-deal situation. The financial crash of 2007/08 hit our sector hard, and Brexit is predicted to be less harmful for the economy as a whole.

A bigger concern should be that the housing market is currently suffering from market failure. This is one of the biggest problems our economy faces. A major worry about the effect of a no-deal Brexit has to be that the Government is distracted by the task of negotiating our ongoing trading relationship in the transitionary period, taking their attention away from solving the problems we already have in the housing market.

We saw this in the Budget, where, despite the complete failure of the housing market, only small concessions were made on housing. This really needs to be looked at as a priority, as the housing market overall requires a rethink, with significant investment from the Government to boost infrastructure and allow first time buyers to get on the ladder.

The concern is that Brexit, whether with a deal or not, will in the short-term, at least, negatively affect the economy and reduce the Government’s ability to spend. We’ve already seen a huge fundraising drive since the Brexit vote, with tax increases hitting groups like landlords. As the Government scrambles to replace lost revenues in the wake of Brexit, the fear is housing will slip further down the priority list.

Currently, the retrospective, piecemeal approach leaves a lot to be desired, and a joined-up, proactive approach from the Government and lenders needs to be adopted, deal or no-deal.

London Needs Rent Controls, Insists Sadiq Khan

Published On: December 11, 2018 at 11:09 am

Author:

Categories: Lettings News

Tags: ,,,

rent controls in London

The capital needs rent controls in order to stabilise its private rental sector, according to the Mayor of London, Sadiq Khan.

Khan has hinted that he is considering introducing rent controls across the capital in a radical overhaul of private rental laws.

The Mayor told Labour MP Karen Buck that London needs to adopt a “strategic approach to rent stabilisation and control”, as the arguments in favour of capping rent inflation are becoming “overwhelming”.

Although national legislation governs private tenants’ rights, tenancies and rent prices themselves, it is understood that Khan will begin to advocate for fundamental change in order to tackle overinflated rents, in a move that could lead to councils assuming greater powers.

In a letter to Buck, he wrote: “I agree with you that London needs a strategic approach to rent stabilisation and control.

“I have long advocated such reforms; in 2013, I suggested reforms could give renters the right to longer-term tenancies and predictable rents. The housing crisis is now having such an effect on a generation of Londoners that the arguments in favour of rent stabilisation and control are becoming overwhelming.”

The proposed changes include ending Section 21 evictions, which tenant lobby group Generation Rent claims have been the leading cause of statutory homelessness since 2012.

London Needs Rent Controls, Insists Sadiq Khan

“This law allows evictions with no reason needed, and this is one more reason why we should scrap it,” the organisation said.

Assured Shorthold Tenancies, which are the standard rental agreements for almost all tenants in England, should be replaced with open-ended tenancies, providing greater security of tenure to renters, according to the draft blueprint.

Currently, landlords are able to evict tenants immediately after the initial fixed term – usually six months – without a legal reason.

Rent controls have been entirely dismantled in the UK, despite existing in some form for most of the 20th century, in a process of deregulation that has helped drive sustained rent increases far above inflation.

Further measures to reverse this trend will be laid out in Khan’s London Model, which is due for release in spring 2019.

David Smith, the Policy Director for the Residential Landlords Association, responds to Khan’s claim: “It is curious that the Mayor is considering introducing rent controls at a time when rents in London are falling, according to official data.

“The Labour Party in Wales has previously rejected rent controls, arguing that they reduce incentives to invest in new property when we need more and lead to a reduction in the quality of housing. The same would be the case in London.”

He continues: “All evidence around the world shows that, where forms of rent control are in place, decoupling prices from the value of properties hurts both tenants and landlords.

“In the end, what is needed is a relentless focus on boosting the supply of housing.”

In 2013, Khan suggested that new measures could help tenants assume the right to longer-term tenancies, which would make rent prices more predictable.

In his manifesto for the 2016 London mayoral election, Khan recognised that the biggest issue he faced was the capital’s housing crisis.

He said: “I will fight for the mayor and London councils to have a greater say in strengthening renters’ rights over tenancy lengths, rent rises, and the quality of accommodation.”

Scotland has recently taken steps to introducenew housing regulations, while rent controls across some of Europe’s capital cities have been credited with preventing sudden price rises.

National Housing Summit to Take Place on 8th December

Published On: November 29, 2018 at 10:32 am

Author:

Categories: Landlord News

Tags:

The National Housing Summit: Safe, Secure Homes for All, which has been organised by lobby groups from across the country, will take place on Saturday 8th December 2018.

In the shadow of the Grenfell Tower tragedy and a national housing crisis, politicians still seem unable to act decisively. Campaigners are now coming together to work out the next steps for achieving safe homes for everyone.

The event is backed by: Generation Rent, Defend Council Housing, housing association tenant groups, private sector renters unions, Disabled People Against Cuts, Salford and other tenant groups with at-risk cladding, and the Fuel Poverty and Hazards campaign.

With many workers across the country renting their homes from private landlords, as well as workplaces also being at risk, trade unions are linking up for the event. Supporters include: the national Unison union, Fire Brigades Union, TUC London East & Southeast, NEU teachers, and Unite housing workers.

Grassroots tenants will speak at the summit, alongside Matt Wrack of FBU, Sian Berry from the Green Party, Kevin Courtney, the General Secretary of the National Education Union, and Justice4Grenfell’s Moyra Samuels.

Workshops will debate critical issues, including fire and construction safety, Universal Credit arrears and evictions, the role of housing associations, private tenant organisation, estate demolitions, and investing in council housing.

Eileen Short, of Defend Council Housing and the Homes for All alliance, says: “Ministers talk, but do nothing about the housing crisis. So hidden, temporary and street homelessness blight more lives.

“We’re joining forces to learn, be more effective, and step up action and pressure. A united, national housing campaign can force political change.”

She continues: “We have killed off most of the disastrous Housing and Planning Act 2016, and the Prime Minister is now being forced to lift the cap on more council housing. Now we need fundamental policy change for rent controls, and rights for private renters and the homeless, and more and better council homes.”

The National Housing Summit: Safe, Secure Homes for All will be held from 11am-5pm on Saturday 8th December, at Hamilton House, Mabledon Place, London, WC1H 9BD.

Could Deposit-Free Tenancies Help with Rent Arrears Caused by Universal Credit?

Published On: November 21, 2018 at 9:56 am

Author:

Categories: Tenant News

Tags: ,,

tenancy deposits unclaimed

Ajay Jagota, anti-deposit campaigner and managing director and founder of zero deposit rent provider Dlighted, is urging buy-to-let landlords and letting agents to consider the benefits of deposit-free renting.

With recent issues of increasing rent arrears, thought largely to be caused by the new Universal Credit system, this could be a change that will help many looking for rented accommodation.

Recently, we reported on the BBC Panorama research into the problems that tenants claiming Universal Credit are facing. The figures show that such tenants have more than double the rent arrears of those who are still receiving benefits through the old system.

A survey looking at Universal Credit claimants shows that in every local authority area in which the switch has been made, these claimants owe their landlords an average of £662.56. This is in comparison to the £262.50 owed by those still receiving support through Housing Benefit.

On top of that, the results suggest that there has been a 55% increase in evictions, within the single year of Universal Credit being rolled out.

A report from the Citizen’s Advice Bureau has also revealed an increase in the number of tenants seeking advice about rent arrears. This has risen by 47% since Universal Credit was first introduced.

The Government is aiming to have almost seven million people on the new system by the end of 2023. However, many have seen delays to the payments, leading to the new Work and Pensions Secretary Amber Rudd admitting that it “can be better”.

Despite Rudd expressing an acknowledgment that the new system needs to be adjusted, Ajay Jagota is still concerned.

Jagota has said: “There’s a lot to be said for Universal Credit’s intention of making our benefits system simple and fairer, but there’s no getting away from the fact that its implementation is yet another thing that landlords and letting agents alike have to come to terms with.

“The deposit protection industry tells us that old-fashioned tenancy deposits are the only way to keep yourself safe from rent arrears – but in reality they only cover you for a month of rent arrears. What happens if you’re owed two months rent? Or three months?

“All the evidence suggests that there is a strong link between Universal Credit and rent arrears, and if deposits won’t protect you if your income is hit when Universal Credit arrives in your area.

“Deposit free renting is something which could be a real benefit to landlords and letting agents who find themselves faced with rocketing arrears following the rollout of Universal Credit in their area, offering them hundreds of thousands of pounds of protection against unpaid rent, property damage and legal fees, while also making it easier and quicker to find new tenants if eviction becomes unavoidable.”

High Cost of Housing Causes Boom in Self-Storage Units

Published On: November 20, 2018 at 10:59 am

Author:

Categories: Property News

Tags: ,,

The high cost of housing across the UK has caused a boom in self-storage units, with many households now renting self-storage units long-term because their homes are too small.

The BBC spoke to Angela Andrew, who rents a self-storage unit in east London for £120 a month.

“It’s a bit of a rip-off really,” she laughed.

In the unit, she keeps her collection of records, costumes from her work as a performing artist and other keepsakes. The items may not have monetary worth, but have “nostalgic value”.

When she took out the space, Angela expected to keep it for just a year, but has now had her unit for two years, using it to supplement her small living space.

High Cost of Housing Causes Boom in Self-Storage Units

High Cost of Housing Causes Boom in Self-Storage Units

“The amount of money I pay to sub-let plus this works out at a normal monthly rent,” she explains.

For Angela, self-storage units are about more than not being able to part with items; hers has also given her some security. When she started using the unit, she had no permanent living space, so it was a way for her to keep all of her things in one place.

“This little box is also my home,” she says.

But she’s not the only person willing to shell out for extra space to store their things.

There are now around 1,500 self-storage sites in the UK, with use of them up by around 9% last year on 2016, according to the Self-Storage Association UK (SSA).

The contents of these giant warehouses, which can often be found on busy road junctions or industrial parks, are typically the mundane realities of day-to-day life, such as cooking equipment, books or mattresses.

Most people turn to them at a significant crossroads in their lives – they’ve had a baby, got married, or divorced – or because they’re moving home or redecorating and need somewhere to store their things temporarily.

But, for an increasing number of people, like Angela, self-storage units have become a longer-term option. Almost a third of customers have had their unit for more than three years, while over a quarter (27%) say that they use their storage because there is no room for the items where they live.

The average household in the UK is 2.4 persons, which is larger than both Germany and France, yet we have the smallest average property size, making the UK population “one of the most squeezed in Europe”, according to the SSA.

So, it’s not surprising that people are turning to self-storage units, with it cheaper to rent extra space than it is to buy or rent a larger home, explains the SSA’s Chief Executive, Rennie Schafer.

He describes it as a “room away from home”.

“People know their stuff is safe and, with most self-storage units offering 24-hour access, they can get to their goods whenever they want to,” he adds.

However, it’s not cheaper. Schafer estimates “as a very general guide” that a 90-square foot unit, which would accommodate the contents of a three-bedroom house, would be around £150-£200 per month in London, and £100-£150 a month in the north of England.

Nevertheless, as with Angela, it may be cheaper to rent a smaller property and add the cost of a self-storage unit on, than it is to rent a larger home.

Would a self-storage unit be an option for you?