Posts with tag: London

Rent Prices Hit an All-Time High in London, Rightmove Reports

Published On: January 18, 2019 at 9:09 am

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Rent prices hit an all-time high in London in December, due to a worrying lack of supply of rental properties, according to the latest data from Rightmove.

Figures from the property portal for the period from October to December show that rental listings dropped by 22% on an annual basis in London, and have fallen by 10% outside of the capital.

This lack of supply has pushed the average asking rent up by 2.7% year-on-year, although it has declined by 0.6% on a quarterly basis, to £798 per month.

In London, the average asking rent hit an all-time high in December, of £2,034 a month, which follows annual growth of 5.4% and a quarterly increase of 2.1%.

Rightmove predicts that asking rents will rise by 3% outside of the capital this year and 4% in London.

Up to the end of 2018, Hertford recorded the greatest increase in tenant demand outside of London, while East Ham saw the biggest rise in the capital.

This widening supply-demand imbalance has led to a lack of choice for tenants, leading to the new all-time high rent prices, which surpass the peak seen in 2016.

The Commercial Director and Housing Market Analyst at Rightmove, Miles Shipside, says: “The increasing rents in London reflect that demand has been exceeding supply over the past year.

“When the Government introduced higher Stamp Duty on second home purchases back in 2016, it deterred many landlords from investing in the buy-to-let market, which, in turn, has exacerbated this ongoing dearth of available properties, and we’re yet to see any significant boost in stock from the many build to rent programmes. In addition, the more punitive treatment of tax reliefs has meant some landlords are also exiting.”

Outside of London, it is parts of the North West that have experienced the greatest increases in tenant demand, with six towns from the region making the top ten in 2018.

The top five comprises Hertford, Bootle, Bracknell, Winsford and Prenton.

In the capital, east London dominated the top five: East Ham, Forest Gate, Biggin Hill, Elephant and Castle, and Chadwell Heath.

Hayes, Notting Hill, Hammersmith, Canary Wharf and Highgate all featured in the top five London areas where the average asking rent has increased the most, with Newbury, Swansea, Dundee, Dudley and Hinckley being the spots where rent prices rose the most across the rest of the country.

Shipside believes: “We forecast that average asking rents will continue to slowly strengthen further in 2019, by perhaps 3% outside London. In the capital, there are no signs of an increase in buy-to-let activity, which may lead to asking rents growing further by around 4%.

“A mutually beneficial plan for both buy-to-let landlords and tenants is to strike up a genuine rapport. It eases landlords’ concerns if they have a tenant in situ for several years, while a tenant with a good relationship with their landlord will stand a better chance of negotiating more favourable rents.”

London Tenants Could be £1,800 Better Off Due to Brexit

Published On: January 15, 2019 at 10:00 am

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London tenants could be £1,806 better off since the UK’s vote to leave the EU in June 2016, according to the latest Rental Index from Landbay, which is powered by MIAC.

Using a conservative projection, rent price growth in London is now 2.84% lower than expected back in June 2016, but this could be as high as 4.15%. This higher estimate would leave London tenants with an extra £1,806, due to subdued rent prices, or £1,218 for the mid-point calculation.

The capital’s property market, which has arguably suffered disproportionately from uncertainty since the EU referendum, saw average rent price growth drop from 1.26% in June 2016 to a low of -0.33% in June 2017, before starting a slow recovery in February 2018 (+0.05%), up to 0.58% in December last year.

The rest of the UK has largely stayed in line with expectations for growth, with the decline in rent price inflation being confined to London.

The average UK rent price rose by 0.96% in the year to December, Landbay reports. Nationally, growth continues to be weighed down by slower inflation in London on otherwise resilient increases in the rest of the UK (1.16% excluding the capital).

Rent prices in Wales (1.57%) and Scotland (1.48%) were growing more than 55% faster than the rest of the UK, and almost twice the rate of growth for Northern Ireland (0.75%).

On a regional level, rent price growth in the East Midlands (2.19%), West Midlands (1.48%), and Yorkshire and the Humber (1.40%) continues to lead the way, while growth in the North East (0.01%) continues its downward trend towards falling rents.

John Goodall, the CEO and Founder of Landbay, says: “It’s hard to ignore the impact that the vote to leave the EU has had on property market in London. While tenants are better off, without necessarily realising it, uncertainty in the market has caused a conundrum for landlords.

“Many landlords will have been looking to offset the Government’s punitive tax regime by raising rents, however, the uncertainty surrounding Brexit has forced the vast majority to forfeit this to maintain a steady income.”

He believes: “Employment and immigration are the two main concerns for the housing market when considering Brexit. While nobody is any clearer about Britain’s future relationship with the EU, it’s clear the impact of a no-deal Brexit would be significant for the UK economy and property market.”

The findings arrive as MPs prepare to vote on Theresa May’s Brexit deal today.

Another study claims that UK rents are expected to increase by an average of 11.4% by 2024.

Is Buy-to-Let in Prime Central London Experiencing a Resurgence?

Published On: January 14, 2019 at 9:00 am

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There has been increased demand for buy-to-let in prime central London in recent months, and this trend looks set to continue in 2019, as rental yields improve, according to Black Brick.

The independent buying agency points to the latest data released by Knight Frank, which shows that rental yields in prime central London are currently at a six-year high – an attractive proposition for buy-to-let landlords.

The average rental yield in prime central London in December was 3.35% – the highest level recorded since April 2012 – as a result of rising rents and downwards pressure on prices, reports Knight Frank.

The property firm found that lettings activity across prime London markets has remained firm, despite the current uncertain political backdrop, with the number of new tenancies in November increasing by 12.3% on the previous year.

Knight Frank’s report shows that the average rental yield in prime central London increased by 1.1% in December, in response to falling levels of supply, prompted by landlords seeking to sell their properties in response to recent tax reforms.

But, while supply continues to decline, the number of new prospective tenants registering in prime central London has been on an upwards trajectory since the start of the year, suggesting that rents will rise further in 2019.

There has been similar upwards pressure on yields in prime outer London, as rent price decreases bottom out. An average gross yield of 3.5% in December was the highest recorded since March 2015.

Caspar Harvard-Walls, a Partner at Black Brick, comments: “We are seeing something of a resurgence in buy-to-let enquiries compared with a year ago, and we are sourcing deals offering yields between 4-5%.”

However, he adds that, with reductions in mortgage interest tax relief, such investments are considerably more attractive to landlords who can buy mostly or entirely with cash.

“With rents set to rise perhaps 15% over the next five years, this part of the market should see a bounce,” Harvard-Walls concludes.

Demand for Prime London Properties to put Pressure on Prices

Published On: January 4, 2019 at 9:59 am

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New demand for prime London properties is expected to put pressure on house prices in high-end parts of the capital, according to the latest Prime London Sales Index from Knight Frank, which covers December 2018.

The property firm found that the average house price in prime central London fell by 4.4% in the year to December, compared to a decline of 4.8% in prime outer London.

On a monthly basis, property values were down by an average of 0.5% between November and December in prime central London, while prime outer London saw a greater month-on-month decrease of 1.8%.

Over the quarter, however, prime central London recorded a fall of 1.7%, while prime outer London experienced a decline of 0.6%.

Knight Frank also reports that new demand for prime London properties continues to rise in relation to new supply. The number of new prospective buyers per new property listing rose in the second half of last year, which could put upwards pressure on prices, once the current political uncertainty recedes.

Although property sales volumes dropped over the course of 2018, the number of new prospective buyers rose in the last few months of the year, and was 8% higher in November than in January 2017. This divergence suggests that pent-up demand is forming, the firm believes.

As asking prices increasingly reflect higher transaction costs, prospective buyers are submitting offers in greater numbers, Knight Frank claims. In November 2018, the number of offers made per office exceeded the figure recorded in the same month four years ago, ahead of the hike in Stamp Duty on £1m+ properties.

Asking prices for £20m+ homes in prime central London adjusted more quickly to higher transaction costs, the report explains. Combined with the recent weakness of sterling, this drove rising activity in the £20m+ London market in the second half of last year.

Employment figures for the capital paint a resilient picture of London’s economy, which Knight Frank expects to underpin demand in the prime sales and lettings markets. The number of people in employment in the capital reached a record figure of 4.8m in August 2018.

Has your interest in prime London properties accelerated of late? It may be wise to secure a deal before prices rise!

London Central Portfolio Index Shows Gloomy State of Market

Published On: December 18, 2018 at 10:29 am

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The latest Residential Index from London Central Portfolio (LCP) shows the gloomy state of the UK property market in November.

Looking at the markets across prime central London, Greater London, and the whole of England and Wales, the real estate investment firm has recorded decreases in both property values and sales.

Prime central London

The average house price in prime central London (excluding new build homes) was £1,859,365 in November. This follows a monthly decline of 2.7% and quarterly decrease of 5.9%.

Annually, transactions in the market have dropped by 14.7%, to 3,703, which is down by a substantial 45% on 2014.

The average new build home price was £3,390,716, representing a whopping premium of 72.7% over existing stock. Quarter-on-quarter, new build sales have plummeted by 44.2%, to just 133.

Naomi Heaton, the CEO of LCP, comments: “Annual transactions stand at 3,703 – just above 71 sales a week. This represents a fall of 14.7% over the year and is the eighth consecutive month that annual sales have dipped below 4,000. To put this into context, transactions during the Global Financial Crisis (GFC) fell below this figure for only four months.

“The historically low levels of transactions are now not only having a tangible impact on estate agents, but also the Treasury. The revenue from Stamp Duty for the first three quarters of 2018 is down by £685m on 2017.

“These already low and falling levels in transactions and prices have, no doubt, been exacerbated by the toxic atmosphere created by the UK Brexit negotiations. The recent leadership challenge, whilst voted down, can only add to uncertainty.

“There is, however, a significant weight of capital poised to make its move. There is clear evidence that more experienced investors are returning to the market to capitalise on extremely discounted prices and sterling depreciation. There have been several instances in recent weeks where assets have attracted competitive bids and transacted in a matter of days.

London Central Portfolio Index Shows Gloomy State of Market

“It is possible that this is the first sign of a long awaited bounce back.”

Greater London

In November, the average property value in Greater London (excluding new builds) was £625,457. This follows a quarterly fall of 0.4% and annual growth of just 0.8%, which is the lowest level recorded since the GFC.

Year-on-year, sales have continued to fall (by 4.1%), to just 90,106. New build transactions have seen far greater falls, however, of 19.6% over the year to November.

The average new build price was £734,701 in November, which represents a 20.2% premium over existing stock.

Heaton looks at the market: “Average prices in Greater London now stand at £625,457. Prices have fallen 0.4% over the last quarter. They have stagnated over the year, with a nominal increase of 0.8%. This is the lowest level of growth since the GFC, and the current political climate is hardly conducive to any upward movement.

“Transactions on an annual basis now stand at 90,106 – a drop of 4.1% over the year. They have fallen over 26% since the introduction of the 3% additional rate Stamp Duty on second homes on 1st April 2016.

“Whilst investors may be motivated to buy into a globally attractive market when prices are softening, for the majority of domestic buyers, this is not good news. Coupled with the Brexit chaos and its implications for the local economy, one can foresee continuing falls in transactions and price stagnation.”

England and Wales

Across England and Wales, the average house price in November was £257,666 (excluding new builds), following a monthly decrease of 1.0% and quarterly decline of 3.1%. Annually, prices have risen by an average of just 2.4% – the lowest growth since 2013.

Annually, transactions stand at 807,503, marking a further fall of 1.0%.

The average value of a new build home was £297,986 in November, which represents a 15.0% premium over existing stock. Year-on-year, new build sales have increased by 4.5%, but have declined by 2.5% over the past quarter.

Heaton gives her views: “England and Wales (excluding Greater London) is showing the same price suppression as the capital, with a third consecutive monthly fall in value. Average prices now stand at £257,666 and fell by 3.1% over the quarter. Annual growth at just 2.4% is the lowest since 2013.

“Transaction levels throughout England and Wales also continue to fall and now stand at 807,503 – a drop of 1.0% over the year. It appears that we are now seeing the uncertainty that has been permeating the London market spreading to the rest of the UK, as we approach the Brexit D-day.

“With transactions falling, average prices stagnating, a series of residential taxes over recent years and a deferred vote on the current Brexit deal, the UK housing market is in the middle of a perfect storm. Without a clearer picture of what to expect after 29th March 2019, it is unlikely that there will be any material change to the status quo.”

Overseas-Based Landlords Leaving the British Rental Sector

Published On: December 18, 2018 at 10:00 am

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Overseas-based landlords are leaving the British private rental sector, according to the latest index from Hamptons International.

The estate agent found that the proportion of let properties in the UK owned by overseas-based landlords is now at its lowest level in almost a decade.

The number of homes let by international landlords has dropped sharply from 14.4% of all properties in the first half of 2010 to 5.8% in the first 11 months of 2018, Hamptons found.

Every region in Great Britain recorded a fall in overseas-based landlords, but London has seen the most significant decline, with the proportion of homes let by international landlords dropping by 15.5% since 2010, to reach one in ten (10.5%) homes. This is down from just over a quarter (26%) of all properties in 2010.

However, the capital still has the highest proportion of homes let by overseas-based landlords than any other region.

Elsewhere, the proportion of international landlords has fallen by 10% in the South East over the same period, and by 6% in both the North East and East Midlands.

Outside of the capital, Yorkshire and the Humber has the highest proportion of homes let by overseas-based landlords (6.7%), and this region has only seen a 4% decrease in international investors since 2010.

Western Europeans account for the largest group of overseas-based landlords (34%), followed by Asians (20%) and North Americans (13%). However, since 2010, the proportion of Western European-based landlords has fallen by 2.1%, compensated by a pick-up in Asian landlords (2.1%). The number of Middle East-based landlords has also risen by 1.4% over the same period, now accounting for 11% of all international investors.

Hamptons International also found in its latest index that the average cost of a new let in Great Britain increased by 1.1% in the year to November, to hit £968 per month.

Every region of the country recorded growth in average rent prices, but the East of England saw the strongest (2.9%), followed by Scotland(2.5%) and Wales (1.9%).

Meanwhile, Greater London saw the slowest rent price growth of the year, at just 0.1%.

Are you an international landlord? If so, we’d love to hear your thoughts on the number of overseas-based landlords declining.