Posts with tag: London

Rental Competition is Pushing London’s Commuter Belt Further East

Published On: August 3, 2017 at 9:19 am

Tags: average rent,commuter belt,London,rent prices,tenants

Strong rental competition from tenants looking to leave the capital is pushing London’s commuter belt further east, according to the findings of the latest Landbay Rental Index.

Rents in the East of England grew by an average of 2.35% in the 12 months to July – the fastest rate of any UK region over this period and almost four times the average UK increase of 0.64%.

High rental competition for low-rent accommodation from long-distance commuters is thought to be a contributing factor, pushing rents up by more than 2% in eight of the ten counties in the region, and more than 3% in four of the ten.

Rental Competition is Pushing London’s Commuter Belt Further East

Of the capital’s five hottest commuter belt spots outside of the M25, four are located in the East of England. Luton (+4.23%), Peterborough (+3.75%), Thurrock (+3.56%) and Bedfordshire (+3.19%) all have average rents less than half the London average (£1,873), but have all experienced significant rental growth in the past year. In the capital, rents have dropped by 1.05% over the last 12 months.

The current pace of growth means that a tenant in Luton is now paying £789 for rent each month, compared to £757 a year ago, which is an extra £384 over the year.

The index highlights the growing affordability crisis facing young people working in the capital, suggesting that many are moving further afield to reduce their rent burden, possibly while they try to save for a home of their own.

Transport for London (TfL) recently revealed that Southern Rail trains are now the most overcrowded in the country, with some services carrying more than twice the number of passengers they were designed for. Meanwhile, new figures suggest that more young people than ever, particularly in London, are frustrated by the struggle to save and now feel like they will never be able to buy their own homes.

The study corresponds to recent research, which found that one in four young Londoners plan to leave the capital to buy their first homes.

Less affordable areas in London’s commuter belt – those with higher than average rents, such as the South East – have seen lower levels of rental competition and therefore slower price growth.

While the East of England has seen rental competition drive up prices, just three out of 19 counties in the South East have recorded rent price growth above 2%. It’s telling that those that have – Medway (+3.16%), Kent (+2.28%) and West Sussex (+2.03%) – all have more affordable average rents, at less than half the London average.

Indeed, the two counties in the South East with the highest average rents – Surrey (£1,439), and Windsor and Maidenhead (£1,270) – have both seen rents drop over the past year, by 0.13% and 0.23% respectively.

Elsewhere, already expensive areas surrounding the capital have experienced far lower rental growth. For someone living in Windsor and Maidenhead, traditionally deemed as a desirable location for commuters, rents have seen the greatest slowdown.

Average annual rent price growth across the UK slowed to 0.64% in July – less than half the 1.83% rate recorded last year. Outside of London, the pace slowed to 1.56%, with average rents reaching £756 per month.

Within the capital, especially central London, rents have now been falling for over a year – by 1.05% over the past 12 months.

The CEO and Founder of Landbay, John Goodall, comments: “With rising inflation and rock-bottom interest rates, it is little surprise to see demand in the more affordable Home Counties rising faster than pricier parts of London and the South East. Naturally, these surrounding areas are starting to experience a surge in rental prices, creating a ripple effect out from the capital. There are of course a number of factors at play, but as yields tighten in the capital, landlords may well be branching out to the East of England in a bid to meet this demand.”

Tenants should be wary, however, as new research claims that landlords are cutting back on how many under 35s they accept as tenants. This will only make rental competition more fierce, which will push rents even higher in high-demand areas.

The Top 10 London Postcodes for Buy-to-Let

Published On: August 2, 2017 at 9:21 am

Author: Em Morley

Categories: Landlord News

Tags: buy-to-let property,London,property investment,property investors

Government Publishes Key HMO and Selective Licensing Changes for Rental Properties

Though the majority of the capital offers relatively low rental yields of between 3-4%, there are still some London postcodes that provide landlords with very healthy rental yields…

Estate agent Portico has developed an Interactive Yield Map that gives landlords an indication of the potential income they could earn in all London postcodes.

If you’re considering a property investment in the capital, here are the top 10 London postcodes for buy-to-let this summer:

Barking: 6.4%
Erith: 6.4%
Ilford: 6.1%
Dagenham: 5.9%
Edmonton: 5.8%
Canning Town: 5.7%
Beckton: 5.7%
Romford: 5.6%
Ponders End: 5.6%
Freezywater: 5.6%

Mark Lawrinson, the Regional Director of Portico, has explained why each location is a great bet for investors:

Barking – Zone 4

Highest potential yield: 6.4%

Average two-bedroom house price: £270,000

“Barking has been enjoying time in the spotlight ever since it was named the host borough for the London 2012 Olympics. Since then, a number of renovation projects have been transforming the east London town, most notably the Barking Riverside regeneration project, which is creating a brand new neighbourhood with 10,800 homes on the former power station site.”

Erith – Zone 6

The Top 10 London Postcodes for Buy-to-Let

Highest potential yield: 6.4%

Average two-bedroom house price: £290,000

“Erith is a town next to the River Thames, situated east of Belvedere in Bexley. Its remoteness has kept property prices in the area relatively low, but now a ripple of regeneration is spreading from nearby Abbey Wood and neighbouring Woolwich, two big Crossrail winners.

“Developers are now moving into the area, reviving redevelopment plans for the riverfront area of Erith, renamed the Erith Western Gateway.”

Ilford – Zone 4

Highest potential yield: 6.1%

Average two-bedroom house price: £300,000

“Ilford will be one of the first stops to test the new Crossrail trains as they are introduced along the Liverpool Street to Shenfield line this month. New trains will take residents into central London in 25 minutes and to business hub Canary Wharf in just 17 minutes, making it extremely attractive to renters or homebuyers looking for accessibility and affordability. Though property prices have shot up since the news of Crossrail, the average two-bedroom property still stands at a reasonable £300,000 or £1,100 per calendar month.

“We expect the area to undergo significant regeneration and gentrification over the next five to ten years.”

Dagenham – Zone 5

Highest potential yield: 5.9%

Average two-bedroom house price: £290,000

“Dagenham, like its inner London neighbours Hackney, Shoreditch and Bethnal Green, has changed dramatically in recent years, and there are also further redevelopment plans in the pipeline.

“Within 20 years, some 35,000 new homes will be built in the area, with regeneration expected to create 10,000 new jobs. Furthermore, Crossrail will soon begin operating from nearby Chadwell Heath, making getting in and out of central London quicker and easier. These factors will no doubt attract a new wave of renters and homebuyers to the area.”

Edmonton – Zone 4

Highest potential yield: 5.8%

Average two-bedroom house price: £270,000

“This investment hotspot in north London has big plans for its future; Edmonton Green is set to benefit from a £1.5 billion Meridian Water regeneration scheme, which will eventually deliver 10,000 new homes and 6,700 new jobs on 210 acres of former industrial land on the beautiful banks of the River Lea.

“London Mayor Sadiq Khan declared the scheme a ‘win-win’, because land left derelict would be brought back into use to help solve the capital’s chronic housing shortage, while many of the workforce constructing it would be local residents equipped with the skills as part of apprenticeship and training programmes. Construction on the first 725 of those new homes is now underway.”

Canning Town – Zones 2/3

Highest potential yield: 5.7%

Average two-bedroom house price: £600,000

“Canning Town is one of London’s last affordable areas – and it’s getting a facelift. A £3.7 billion regeneration scheme is building 10,000 new homes and two new town centres, which will help to attract more young professionals to the area who are working in nearby Canary Wharf.

“For those commuting into central London, Custom House, which is just a 20-minute walk away, will be served by the Elizabeth line in 2018.”

Beckton – Zone 3

Highest potential yield: 5.7%

Average two-bedroom house price: £350,000

“Property prices in Beckton have increased by nearly 25% in the last two years, but the average house price still stands well below the London average, at £328,460.

“The area is experiencing significant regeneration, and is located perfectly for those working in the City and Canary Wharf.”

Romford – Zone 6

Highest potential yield: 5.6%

Average two-bedroom house price: £290,000

“Romford, the largest of seven town centres in the London borough of Havering, is a top investment hotspot where landlords are achieving extremely impressive yields. When Crossrail arrives in 2017, it will not only improve Romford’s connectivity to the South East and central London, but also bring with it a multitude of opportunities and exciting developments, no doubt increasing demand for property in the area.”

Ponders End – Zone 5

Highest potential yield: 5.6%

Average two-bedroom house price: £285,000

“We’re seeing an increasing number of people venture further out of London to get more space for their money, and Enfield is definitely a popular choice.

“Ponders End, a district within the borough, has significant potential for redevelopment and is just a 20-minute train ride from London Liverpool Street station. It’s also a proposed Crossrail 2 station, which would really throw the district into the spotlight and hike up property prices in the area.”

10. Freezywater – Zone 6

Highest potential yield: 5.6%

Average two-bedroom house price: £329,995

“Freezywater is another area in Enfield that offers a very healthy rental yield. There’s a high proportion of renters living in the area and a one-bedroom property goes for around £900 per month.

“The area lacks great transport connections, but residents are just a 15-minute walk from Enfield Lock station, which offers direct trains into central London. There’s also a good mix of both houses and flats, making it an attractive area for professional couples and people looking to start a family.”

Although these London postcodes are the best places to invest in the capital nowadays, a recent study revealed which locations have provided the strongest capital gains over the past 20 years: /house-prices-london-boroughs-soar-500/

Where will you invest next?

House Prices in 9 London Boroughs Soar by over 500% in 2 Decades

Published On: August 1, 2017 at 9:46 am

Author: Em Morley

Categories: Property News

Tags: house price growth,house prices,London,property market

House prices in nine London boroughs have soared by over 500% in the past two decades, according to a new study by Halifax.

House Prices in 9 London Boroughs Soar by over 500% in 2 Decades

New transport links, rising housing demand and a lack of affordable supply mean that today’s aspiring homebuyers are facing prices up to eight times higher than they were 20 years ago, the research shows.

Halifax has uncovered the ten areas in the UK where house prices per square metre have risen the most since 1997. Nine of these locations are unsurprisingly in the capital.

In the east London borough of Hackney, the findings show that the average square metre price has leapt from £814 in 1997 to £6,942 this year – a huge increase of 753% in two decades. This has pushed the average cost of buying a home in the borough above half a million pounds, at £526,835. This growth is almost twice the 402% seen in Greater London over the same period.

Newham, also in east London, has recorded the second greatest increase, with average prices up by 676% in the last 20 years, followed by Southwark (644%) and Lewisham (618%).

The northeast borough of Waltham Forest saw the biggest recent price growth, with average values surging by 93% to £447,979 in the past five years alone.

The report, which compares house prices in 32 London boroughs and more than 300 towns across the country, measures house price growth in each area by dividing the average property value by the average square metre measurement of every home, excluding outside space.

The Managing Director of Halifax, Russell Galley, explains: “House price per square metre can be a useful measure for house price comparison, as it helps to adjust for differences in the size and type of properties between locations.”

Hove is the only area outside of Greater London to make the top ten list. Outside southern England, just 12 towns have recorded price gains in excess of the national average since 1997.

“Unsurprisingly, there are parts of central London that are substantially more expensive than anywhere else in the country,” says Galley. “Over the last 20 years, the gap between southern England, particularly London, and the rest of the country has increased substantially — a trend that has continued during the last five years.”

While double-digit growth has sent house prices spiralling in recent years, a gradual slowdown is being seen across London and the UK following a year of political and economic uncertainty. Wage increases have failed to keep up with house price growth over the last five years, so it’s no surprise that buyers have hit a price ceiling.

The latest House Price Index from Nationwide shows that the average house price hit £211,671 in July – up by 0.3% on June’s figure and 2.9% on July last year.

Do you believe that house prices can continue rising at this rate? Regardless, the latest findings from Halifax show that it’s great news for anyone who invested in London over the past 20 years!

Prime Central London tenants favouring affordability over size

Published On: August 1, 2017 at 9:28 am

Author: Em Morley

Categories: Property News

Tags: landlords,London,prime central london,tenants

Interesting new research has revealed that tenants in Prime Central London are starting favour location and convenience over size, due to narrowing budgets.

Data from a report by London Central Portfolio suggests that there is increasing demand for smaller properties, dubbed micro-apartments. These dwellings offer a more affordable option for renters who wish to be closely situated near to their place of employment or study.

Fragmentation

Similar to the prime London sales market, where properties have been impacted on by changing tax alterations and Brexit uncertainty, now the prime London rental market is fragmenting by size and price.

During the last year, 42% of properties let have been either studios or a one- bedroom accommodation. This shows that tenants are prioritising lifestyle and transport links over square footage of their property.

This said, demand has been significantly slower for larger rental properties, with families now considering less central options, offering better value and increased space.

As Naomi Heaton, Chief Executive of London Central Portfolio observes: ‘Tenants are now looking for more affordable options, choosing central locations and an easy commute to work or university. This is reinforcing the new trend for the globally mobile to seek highly specified micro-apartments, with well optimised space, whilst families tend to opt for more suburban locations where smaller budgets can stretch to larger homes and ideally the possibility of outside space. Indeed, significant discounts to asking rent of over 10 per cent for the most expensive, luxury rentals are now being reported.’[1]

Prime Central London tenants favouring affordability over size

Market Listings

In addition, it is taking much less time to source tenants for these micro-apartments.

During the last year, the average marketing times for two-bedroom properties has jumped 85 days, increasing to 98 days for three-bedroom and 119 days for three-bedroom plus dwellings.

This is 42% greater on average than the time taken to let a one-bedroom studio, which are seeing heightened demand from single tenants and couples. In fact, 63.9% of London Central Portfolio’s current tenants are single dwellers.

What’s more, another indication of the trend in prime London towards micro-apartments is the number of properties being rented by price band.

More than one-third of properties let have rents under £500 per week, with only 3.2% of units rented for more than £2,000 per week. 70% of units being let are presently commanding rents of under £750 per week.

[1] https://www.lettingagenttoday.co.uk/breaking-news/2017/7/prime-london-tenants-seek-smaller-rental-units-with-better-amenities

London market is proving to be ‘strange’

Published On: July 27, 2017 at 11:49 am

Author: Em Morley

Categories: Property News

Tags: London,prime property market,sales,Stamp Duty

London is undoubtedly a buyer’s market at present, with those looking to purchase prime property in the capital becoming more pragmatic.

Vendors therefore are being more realistic about property prices or being more prepared to negotiate, in order to achieve a sale.

Withdrawals

However, while some sellers now understand the need to factor in stamp duty and economic uncertainty into their expectations, this is not the case for all. Indeed, some vendors would rather withdraw their property from the market, if they feel they are unlikely to hit their bottom-line price.

Some 58% worth of properties withdrawn from the market in central London so far in 2017 were withdrawn as opposed to being sold, according to data from LonRes. This is not only restricting supply from prospective purchasers, but also much needed stock for estate agents.

Marcus Dixon, Head of Research at LonRes, observed: ‘This gives you an idea of just how sluggish the market is. There are large numbers of people in properties they would really rather sell.’[1]

London market is proving to be ‘strange’

The level of withdrawals is an, ‘important barometer of the market,’ Dixon want on to note. He also observed that a lack of forced sellers have not been coupled with a decline in the economy, unlike during the economic crash.

Concluding, Mr Dixon said: ‘The housing market has slowed considerably but not a huge amount of people are losing their jobs or finding themselves unable to pay their mortgages.’

‘It creates a strange market in which lots of people are staying in properties that aren’t very suitable for them anymore.’[1]

[1] https://www.propertyinvestortoday.co.uk/breaking-news/2017/7/london-is-a-strange-market-filled-with-people-living-in-unsuitable-properties

Foreign Investment is Pushing London House Prices Out of Reach of First Time Buyers

Published On: July 27, 2017 at 9:30 am

Author: Em Morley

Categories: Property News

Tags: first time buyers,foreign investors,house prices,London

Foreign investment into new build second homes and buy-to-lets in London could be pushing house prices way out of reach for the capital’s first time buyers, found the latest research by eMoov.co.uk.

Using recent data from the Land Registry, the online estate agent looked at the gap between the average first time buyer house price in the capital and the average price of a London new build since 2012. The analysis found that, not only has there been a consistently increasing deficit of 11-13% between 2012 and 2016, so far this year, that gap has already escalated to over 18%.

Despite recent hikes in Stamp Duty for second and buy-to-let homes, and Britain’s decision to leave the EU, a report by York University on behalf of the London Mayor, Sadiq Khan, has found that foreign investors are snapping up thousands of new build homes, which are suitable for first time buyers.

Foreign Investment is Pushing London House Prices Out of Reach of First Time Buyers

The boroughs with the highest percentage of foreign buyers were Westminster, Tower Hamlets and Greenwich, with between 9-11% of all London homes sold overseas.

Kensington and Chelsea (8.4%), Southwark (8.4%), Hackney (7.4%), Lewisham (6.2%), Hammersmith & Fulham (4.2%) and Newham (3.7%) also ranked in the top ten.

Over 50% of all London properties sold abroad were also below the £500,000 mark.

In 2012, the average first time buyer in the capital paid £264,682 for their property, however, the price of the average London new build was already over £30,000 more than this threshold, at £297,587 – a difference of 11.06%.

As London’s market continued to over-inflate, this gap grew marginally but consistently larger, stretching to 11.89% in 2013, 12.34% in 2014, 12.59% in 2015 and 12.98% in 2016. However, the recent influx of foreign investment may well have widened the gap beyond reach as, so far in 2017, the difference between the affordability of a London first time buyer and the capital’s new build homes is now 18.21%.

Largest current deficit

Newham is by far the worst offender in terms of the gap between the borough’s average first time buyer house price and the cost of a new build. Since 2012, the gap has exceeded 22% (22.5%), again growing steadily from 22.76% in 2013, 22.72% in 2014, 22.81% in 2015 and 23.26% in 2016, before accelerating to 27.91% in 2017 alone.

Westminster is home to the second largest gap, currently at 16.87%, having sat between 10.79% and 12.43% since 2012.

Greenwich has the third greatest deficit, at 16.18%, having yo-yoed between 10.77% and 11.82% since 2012.

Southwark (15.37%), Wandsworth (14.72%), Lewisham (13.60%) and Hackney (12.11%) also have a current gap of over 10%. Hammersmith & Fulham (7.39%), Tower Hamlets (7.33%), and Kensington and Chelsea (1.82%) are home to the smallest differences.

Biggest changes

Although currently home to some of the smallest differences in price, prime central London has seen the greatest turnaround in the first time buyer to new build price gap over the past five years.

The high cost of property in Kensington and Chelsea means that the average first time buyer house price in the borough has actually been higher than that of a new build – over 6% higher in 2012. However, this gap has slowly closed and finally reversed in 2017, with new build prices now exceeding first time buyer costs by 1.82% – the biggest turnaround of all boroughs.

In 2012, the average first time buyer house price in Hammersmith & Fulham was also marginally higher than a typical new build (0.33%), but has since been outstripped by a consistent increase in new build house prices – the second largest turnaround in the capital.

Lewisham has also seen one of the greatest changes in the last five years, with a 129% change and fourth largest in the last year, at 66%.

Tower Hamlets ranks third behind the prime central London boroughs, with the gap widening by 134% since 2016 alone.

The Founder and CEO of eMoov, Russell Quirk, says: “Worrying signs for London’s first time buyers and signs that aren’t just restricted to London’s high-end market, with Tower Hamlet’s seeing some heavy levels of overseas investment as one of the capital’s more affordable boroughs.

“It’s clear that new build affordability has been an issue for first time buyers over the last five years, but this gap seems to have exploded over 2017 alone. Yes, foreign investment brings with it many benefits, including a trickle-down effect of funding for other housing initiatives at lower levels and, in fact, the nationality of a buyer is not the issue.”

He explains: “The issue is a buyer utilising a property as a second home or a buy-to-let in an already cutthroat rental market, while aspirational buyers remain in the doldrums of said rental market, prohibited from making that first step onto the ladder as a result.”

With these findings, it is no surprise that one in four young Londoners plan to move out of the capital to buy their first homes: /young-londoners-plan-move-capital/