Posts with tag: investors

Property demand rises by 3% during Q2 of 2016

Published On: July 4, 2016 at 10:03 am

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The latest National Hotspots Index for the second quarter of 2016 has today been released by estate agent eMoov.co.uk.

This Index looks at property demand levels across Britain, recording the changing supply and demand for the UK’s most popular locations. It monitors the number of properties sold in contrast to those actually on sale.

Rising demand

Figures from the latest Index shows that property demand in the UK has risen by 3% from quarter one to stand at 40%. Homeowners in London saw demand fall by 2% to 39%.

Despite the rise in demand ahead of April’s Stamp Duty deadline, changes to this tax have had a detrimental effect on the capital’s property market as a whole.

If London is removed from the national figures, demand for property has actually risen by 8% since the first three months of the year.

Hotspots

The London borough of Bexley is the hotspot for UK property demand, with 71%. Outside of the capital, Bristol leads the way for demand, with 69%.

In the North East, there has been a resurgence in terms of interest in housing. Stockton-on-Tees (47%), North Tyneside (46%), Gateshead (42%) and Durham (37%) have all seen notable increases in demand from the firs quarter of the year.

Property demand rises by 3% during Q2 of 2016

Property demand rises by 3% during Q2 of 2016

Stamp Duty impact

Russell Quirk, founder and CEO of e.moov.co.uk, said, ‘the changes to stamp duty tax brackets for those looking to secure a second home or buy-to-let property seem to have hit the London market harder than the rest of the UK.’[1]

‘Despite London tending to drive the UK market as a whole, it would seem for once, it has taken a back seat whilst the rest of the UK has enjoyed upward growth on the first quarter of this year. That said, national demand is still lower than the levels seen at he back end of last year and the big decider on which way it goes now will be Britain’s choice to leave the EU’, he continued.[1]

Concluding, Quirk said, ‘there has been a lot of talk about the consequence of this vote on the UK property market with many forecasting a detrimental impact on house prices. We don’t believe this to be case and I’m certain that come Q3, our Index will show a further increase in property demand across the nation.’[1]

[1] http://www.propertyreporter.co.uk/property/property-demand-up-3-in-q2-says-emoov.html

Northern Powerhouse scheme in danger after Brexit

Published On: June 28, 2016 at 9:11 am

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Categories: Property News

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Fears are growing that the Northern Powerhouse scheme could be in danger following the momentous EU referendum result.

The scheme, designed to rival London and the South East as the main economic growth driver, is in doubt following the resignation of David Cameron and uncertainty over George Osborne’s future. Chancellor Osborne, the main thinktank behind the Northern Powerhouse, could soon be on his way out of office.

Shift in (Northern) Powerhouse

However, according to one onlooker, the outcome of the referendum makes the case for the Northern Powerhouse more compelling than before. Martin Venning, director at UK Northern Powerhouse, runs the UK Northern Powerhouse Conference, which took place at Manchester earlier in 2016.

Mr Venning noted, ‘the result of the EU referendum makes the case for the UK Northern Powerhouse more compelling. Our stakeholders will continue to contribute to the process of building a stronger, more productive and stable Northern economy. The challenges of growth post Brexit will require innovation and new forms of collaboration which can create new opportunities for all. We expect to play our part in shaping that agenda.’[1]

Interest

The scheme has already attracted much potential investment, in particular from China. This has served to assist in pushing up property prices and rents across the North West.

Ged McPartlin, sales director at Manchester-based dales firm Ascend Properties, observes that, ‘while the initial shock might be hard to swallow for some, the reality is that Manchester’s economy has never been stronger-and will only continue to grow.’[1]

‘The level of internal investment pouring into the city has reached many millions of pounds, spanning new homes, commercial ventures, offices and infrastructure. Manchester will also be seeing investment from China which will be going into Airport City, testament to the strength of the Northern Powerhouse. We are confident for the future,’ he added.[1]

Northern Powerhouse scheme in danger after Brexit

Northern Powerhouse scheme in danger after Brexit

Life-changing

Mr Graham Davidson, managing director of Manchester-based Square Property Investment, offers a more optimistic view of the referendum result.

Davidson noted, ‘The decision to leave is truly a once-in-a-lifetime decision and should now be embraced. The UK economy is going from strength to strength and the people of the UK have decided that now is the time for us to break away from the rest of Europe and gain back more control on our own future. Our economy continues to develop, particularly outside of London in light of the Northern Powerhouse agenda which is key to growth.’[1]

‘Investment in Manchester over the past 12 months for example has been unprecedented and this month it was announced that MediaCityUK is set to double in size, with investment from UK companies creating thousands of new homes and job opportunities – a show of confidence in what we can achieve on our own. It’s safe to say The Northern Powerhouse agenda is well underway, and the referendum results being announced in Manchester’s town hall was testament to this.’[1]

Concluding, Mr Davidson noted, ‘The reasons for investing in UK property won’t change, with returns still outperforming all other forms of investment. Our own business is testament to this – enquiry levels have not declined despite what much of the media has portrayed; people understand that property investment can be highly rewarding, whether you are topping up your pension, saving for your children’s future or looking for additional regular income.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/6/does-brexit-mean-the-end-of-the-northern-powerhouse

Investors could pay £10,000 more to secure mortgage

Published On: June 16, 2016 at 8:53 am

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Buy-to-let landlords are set to fork out a further £10,000 to secure a mortgage, following a crackdown on so-called dangerous debts by British lenders.

This new clamp down on worrying debts by lenders is pushing up mortgage costs for buy-to-let landlords. It is thought that banks and building societies will begin to make the substantial fee changes from September 2016.

PRA crackdown

Industry watchdog, the Prudential Regulation Authority (PRA), is concerned that some buy-to-let landlords are stretching themselves too thinly and will as such face difficulties when interest rates eventually rise.

As a result, the PRA is to force lenders to enforce stricter criteria tests, to ensure their investor can afford the repayments on the loan.

At present, investors must prove they can earn enough from their rental yields to cover their repayments. However, the new plans will require plans to see whether or not they could continue to meet these payments, should rates rise by 2%.

Tests

Under these new tests, banks and building societies will demand evidence of a yield of at least 5.2% to qualify for a 25% deposit loan. In essence, this would mean that a borrower would have to earn £7,800 per year in rent on a £150,000 home before paying their mortgage.

This means that investors would either have to raise rents or cut borrowing to ensure that they are covered.

Peter Armistead, of Armistead Property, believes savvy investors will be able to cope with these changes by purchasing cheaper property, with greater yields.

Mr Armistead said, ‘clearly, the investors most at risk are those with smaller deposits who buy property in parts of the UK where rents are low compared with house prices.’[1]

Investors could pay £10,000 more to secure mortgage

Investors could pay £10,000 more to secure mortgage

Regional rates

Continuing, Armistead said, ‘this is a particular problem in places such as London and the South-East where the average annual returns between 2010 and 2015, was just 4.86% in outer London and 4.71% in the City, according to LendInvest. House prices in London are about five times what they are in parts of the North West, but salaries are only 30% higher.’[1]

‘Manchester and Liverpool deliver some of the best rental yields, with Manchester recording average annual rental yields of 6.02% over five years, followed by Liverpool with 5.15% yields. An average residential property in Manchester is just £155,000, while a flat in a good area, costs as little as £120,000. A property in Manchester can provide a 5% minimum cash rental yield and a typical 12% total cash yield, including 7% capital appreciation. Demand for rental accommodation is strong and by comparison with other regions, housing is cheaper,’ Armistead added.[1]

Concluding, Mr Armistead said, ‘Landlords will find the best returns in urban areas, with a concentration of students and young professionals. If investors can purchase cheaper properties with better yields, they will have the opportunity to protect and boost their profits in the longer term.’[1]

[1] http://www.propertyreporter.co.uk/landlords/pra-crackdown-sees-btl-investors-pay-an-extra-10000.html

Stamp Duty should be scrapped for professional investors

Published On: June 6, 2016 at 1:55 pm

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The Better Renting for Britain campaign have called for professional investors to be made exempt from the 3% Stamp Duty surcharge.

Some of the most recognisable investors in the country have written an open letter to the Housing Minister Brandon Lewis. The letter asks for an exemption from the extra surcharge, introduced on April 1st.

Stamp Duty

Institutional investors who have invested significant sums of cash in Build to Rent schemes were deterred when Chancellor Osborne announced that they would be subjected to the additional charge.

The letter to Mr Lewis has been signed by 11 companies and outlines a three-point action plan that could see 250,000 additional homes built for rent. This in turn would help to deliver on its promise to build one million homes by 2020.

Signatories to the letter include Grainger Plc, Essential Living, LaSalle Investment Management, Fizzing Living and Hermes Investment Management.

Facing facts

Martin Bellinger, chief operating officer at Essential Living said, ‘until we face up to the fact that promoting home ownership at all costs will lead us nowhere, Britain will not overcome its housing shortage. The housing minister has been very supportive of Build to Rent, but what’s crucial is that the prime minister and chancellor recognise the contribution this could make to helping them keep their promises on building a million homes by 2020.’[1]

Helen Gordon, chief executive at Grainger Plc, feels that it is vital that the Government does all it can to housebuilders to develop more homes.

Gordon said, ‘our vision is for a better rental market, underpinned by good value for money for our customers, supporting economic growth and housing supply. We are looking to invest hundreds of millions of pounds into new rental homes, designed specifically for the renting, which we will directly manage for many years to come.’[1]

Stamp Duty should be scrapped for professional investors

Stamp Duty should be scrapped for professional investors

Potential

Chris Taylor, head of private markets at Hermes Investment Management, believes that experience from countries such as Germany and Holland shows that there is potential for a profitable Build to Rent market here in the UK.

Mr Taylor said, ‘crucially, this investment will typically be long term institutional programmes committed to providing institutional quality and professionally maintained, purpose built rental blocks. Designating sites as suitable for Build to Rent in local plans, as well as identifying public land sites, will greatly assist new supply.’[1]

[1] https://www.landlordtoday.co.uk/breaking-news/2016/6/investors-want-extra-stamp-duty-scrapped

Barclays offers 100% mortgage

Published On: May 4, 2016 at 1:38 pm

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Categories: Finance News

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Barclays has today announced that it is to offer a  100% mortgage-a three-year fixed rate deal for buyers with no deposit

However, there is a catch!

The lender is offering the deal at 2.99% for buyers who earn more than £50,000 per year.

Celebration

Barclays has made changes to its Family Springboard Mortgage, on the third anniversary of its launch. Previously however, borrowers were required to put down a deposit of at least 5%.

As part of the deal, family or friends of the borrower will be required to deposit the equivalent of 10% of the property’s purchase price into a savings account. This must then be kept there for at least three years.

At the end of this period, the family member or friend will receive this money back, with interest, equivalent to the base rate plus 1.5%.

Barclays offers 100% mortgage

Barclays offers 100% mortgage

Affordability

Jody Baker, Head of Money at comparethemarket.com, noted, ‘the government’s commitment to building new starter homes, the introduction of the Help to Buy ISA and changes to stamp duty, has shown its efforts to make housing more affordable to first time buyers and its encouraging to see the industry getting in on the act too.’ [1]

‘Whilst Barclays’ move adds a viable option for those looking to buy a home, there is, of course, a note of caution. Loans of this sort require prudence on the part of the borrower, ensuring that they have not over-extended themselves. We would always recommend to anyone that is taking a mortgage works out a detailed budget of their monthly household expenses and assesses in some depth their incomings and outgoings. Equally, we would expect these products to remain few and far between at the fringes of the mortgage lending universe by necessity – after all, it was riskier lending which caused the financial crisis in the first place.’[1]

However, buying agent and housing market commentator Henry Pryor, was less complimentary, describing the move as, ‘a financial grenade.’[1]

[1] http://www.propertyreporter.co.uk/hero/the-100-mortgage-returns.html

Property sales in nine year high in March

Published On: April 14, 2016 at 9:22 am

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Sales of property in England and Wales saw their highest monthly performance for more than nine years in March, with transactions rising by 30%, amounting to 800,000 more deals.

Data from the latest Your Move house price index also shows house price growth rose by 6.9% year on year and by 0.6% month on month. This took the average price of a property in the UK to £291,650.

Home hikes

The average price of a home in Britain is now £18,745 more per than at the same period one year ago. When London and the South East are excluded from the calculations, prices were still up by 5.1%, which suggests that market is still thriving outside of these two predominantly strong growth regions.

London’s property market saw the fastest growth of any area in the UK, with house prices climbing by 8.2% or £44,548 per year. Bath and North East Somerset saw the highest price rise in March, with property values up by 5.3% or £18,603 month on month.

Stamp Duty surge

Adrian Gill, director of Reeds Rains and Your Move estate agents, noted that the impending stamp duty rises for additional properties introduced at the beginning of April was a key factor in the price hikes.

Gill said, ‘the surge was widespread across England and Wales. This goes beyond any normal seasonality, with second home and buy-to-let investors rushing to beat a bigger tax bill.’[1]

Figures from the report show that 73% of local authorities in England and Wales have seen an increase in property values since July 2014.

Mr Gill believes this is, ‘welcome news for homeowners, who now have a fantastic opportunity in the current sellers’ market. The pervasive shortage of homes on the market is still driving up values, as buyers have to compete for each available property.’[1]

Continuing, Gill said, ‘if they are going to make it easier to get a foot on the property, the Government will have to double down on its help to first time buyers, or let up on landlords.’[1]

Property sales in nine year high in March

Property sales in nine year high in March

Capital gains

Mr Gill also noted that after a slight Winter slump, the London property market is on the rise again. Prices are 8.2% greater than twelve months ago. Gill observes, ‘the lift in London’s house prices seems steep. But we’re actually in a much calmer position than previous years, with the current rise still well below London’s record 20.6% year on year growth, established in July 2014.’[1]

This growth in London’s property prices is once again seeing the capital start to pull away from the rest of the country. In fact, London and the South East are driving house prices up by 1.8%, more than double the rate seen at the end of last year.

‘As a result, we’ve returned to a two speed housing market, as growth in the rest of the country is easily outpaced by London and the South East. But it’s not all about London, as house prices are still advancing in the Northern cities, with the average property price in Manchester hitting a record high of £174,448, up 3.5% annually,’ Gill concluded.[1]

[1] http://www.propertywire.com/news/europe/england-wales-property-ndex-2016041411792.html