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Auction houses bid to become bigger players in residential sales market

More auction houses are seeking to recruit estate agents as partners, in what appears to be something of a public relations battle as traditional investors – buy-to-let landlords – increasingly stay away from the market.

IAM Sold, which provides white label services to estate agents and specialises in the modern method of auction, says it anticipates a strong year ahead.

More than a third (1,000) of the 2,937 lots the business sold last year were sold online, it says.

IAM Sold said it saw a total of approximately £322.6m in sales in 2017, compared with £234.2m and 2,387 lots the previous year.

It claims that this has made it the largest independent residential auctioneer in the UK for the second year in a row, according to the EIG league table.

Claiming first place is Auction House, which also operates through a network of estate agents.

It says it sold 3,485 lots last year – a figure up 4% on 2016 and 1,269 more than its nearest rival – and which includes both residential and commercial properties.

It was the fourth year in a row that the group has passed the annual 3,000-lots sold milestone, offering 4,647 lots in 2017 with a 75% success rate, and raising over £443m.

Founder – and ex-estate agent – Roger Lake said that 2018 looks like being a year of huge opportunities for the auction sector. He added: “Disruption looks set to continue in the estate agency arena, and the buy-to-let market still needs to rebalance itself.”

He added: “We hope to attract more first-time buyers to purchase for their own occupation; they have a significant price advantage over investors, and with their confidence building we see positive benefits from their involvement.

“I also see a need for service standards to be raised, property details to improve, and more transparency introduced as the buyer mix changes. As more private purchasers attend salerooms, processes need to be simple and straightforward, and more appropriate to a retail business rather than only playing to the trade.

“After all, if the popularity of auctions is growing, the commitment by those involved to simplify the process should proceed in parallel.”

In the final quarter of last year, rival IAM Sold raised a total of approximately £83.63m on 718 residential lots, compared to £91.7m on 837 lots sold in Q3 2017.

IAM Sold said that while this was down quarter on quarter, the year-on-year lots sold and total raised were up 5.8% and 18.5% respectively, with 676 lots sold in Q4 of 2016 and a sales total of £68.15m.

Jamie Cooke, managing director of IAM Sold, said: “Auctions continue to become more mainstream, and offer agents an alternative method of achieving successful sales for their vendors.

“An increasing number of vendors are choosing online auction as the accessibility opens the market (once only reserved for the professional investor or cash-ready buyer) up to residential purchasers, creating a larger marketplace that generates more interest and activity.”

Meanwhile, auction franchise firm Town & Country Property Auctions says it has attracted four new franchises – all estate agents.

They are:

The franchise, aimed at estate agents who want to add an auction arm to their business, is a white label option, with Town & Country offering the training, auctioneer, website, support and stationery, while the franchisee runs bi-monthly auctions in their chosen territory.

Town & Country has a nationwide agreement with Quality Solicitors to provide legal packs, and referral agreements with various providers.

Sellers do not pay fees and instead the firm charges commission by way of a buyer’s premium at 5% plus VAT. If properties do not sell by private treaty then they may, if appropriate, move across to Town & Country’s auction arm free of charge.

Auction franchises start from £8,500 plus VAT with ongoing fees of 10% of turnover. In its documentation, Town & Country claims  an earnings potential in the first year of £157,730, rising to £221,300 by year three.

The business uses Adam Partridge Auctioneers and Valuers as its preferred auction house.

The new franchisees will undertake auctions at venues appropriate to the location of the office. For the north east, they will be held at Middlesbrough F.C.’s Riverside Stadium, while in the south east they will take place at the Holiday Inn London Gatwick. Venues for Dorset and Hampshire and the west midlands have yet to be announced.

Source: Property Industry Eye

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UK mortgage approvals hit lowest since 2013 in December

British banks approved the fewest mortgages since April 2013 last month and growth in consumer credit slowed, industry figures showed on Thursday, pointing to a weaker housing market this year.

Banks approved 36,115 mortgages for house purchase in December, down some 19 percent from with a year ago and weaker than the 39,007 approved in November, trade association UK Finance said.

Britain’s economy slowed last year as higher inflation triggered by the June 2016 referendum to leave the European Union ate into households’ disposable income, causing the housing market to cool in much of the country.

Thursday’s figures are the first to show what happened to lending after the Bank of England raised interest rates for the first time in 10 years in November, when the government also announced it would scrap a property purchase tax for most first-time buyers.

“December’s marked drop in mortgage approvals suggests that already pressurised housing market activity took a further hit from the Bank of England raising interest rates in early-November,” said economist Howard Archer from the EY ITEM Club consultancy.

Nor was there much sign that the government’s property tax changes in November – which included scrapping purchase taxes for most first-time buyers – had lifted total demand.

UK Finance described the figures as showing “a healthy mortgage market in a traditionally quiet month” and said there was an underlying upward trend in the number of first-time buyers, boosted by previous government initiatives.

Annual growth in consumer credit slowed to 0.7 percent from 0.8 percent, the weakest reading since UK Finance started publishing a new version of this figure in April last year.

More comprehensive lending figures from the Bank of England are due on Tuesday.

Source: UK Reuters

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Connells predicts further house price growth in 2018

Connells ended 2017 with slowing sales but higher house prices, the agent has revealed.

The group – which spent much of last year battling Agents Mutual at the Competition Appeal Tribunal on behalf of Gascoigne Halman – hasn’t provided any hard figures but said sales activity dropped at the end of the fourth quarter of 2017 but overall house prices at completion were up by 4% across its 600 UK estate agency branches.

The agent is now predicting house price growth this year of up to 3%, which goes again the grain of other analysts such as Nationwide, which has forecast a flat market with growth at around 1% at best.

David Livesey, group chief executive of Connells Group, said: “At the start of 2017 we predicted that house prices would rise by 3.5% when most were predicting a year of lower increases, and some predicting that prices would fall.

“Despite a more challenging market, particularly during Q4 2017 where sales activity faltered, we ended the year with overall house prices at completion up by 4%.

“There is still a shortage of property for sale, low interest rates, lenders with appetite to lend, Stamp Duty that supports first-time buyers and a continued demand for homes.

“We therefore see a similar outlook for the market in 2018 and, with positive signs in the first three weeks of business, we predict that house price inflation will continue to increase and potentially up to 3%.”

Source: Property Industry Eye

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Portfolio landlords find it harder to secure mortgage finance post PRA rules

Seven out of ten portfolio landlords have found it more difficult to secure a mortgage since changes were introduced by the Prudential Regulatory Authority (PRA).

According to figures from Foundation Home Loans, based on research by BDRC Continental, 70% of UK landlords with four or more buy-to-let mortgages said they had found obtaining finance a challenge since the regulation came into effect on 30 September 2017. Half (51%) owning between one and three buy-to-let mortgages felt the same.

All the figures are based on feedback from 817 landlords that have applied for a mortgage or remortgage since the changes came into effect.

The PRA regulation means lenders must introduce changes to the way in which buy-to-let mortgage applications are underwritten for portfolio landlords. Borrowers with four or more mortgaged properties will be classified as portfolio landlords and subject to the new standards, such as a requirement to submit a forward-looking business plan.

As a result, almost half (48%) of landlords aware of the PRA changes think they will slow down the process of securing a mortgage.

Two thirds of those who own 11 or more properties believe the range of mortgage products available to them will be reduced. Furthermore, 28% believe the changes will make it more likely for their mortgage application to be rejected.

Jeff Knight, marketing director at Foundation Home Loans, said: “Whether these figures are to do with a natural period of adjustment or become the new norm remains to be seen. Nonetheless, in order to make this as smooth a transition as possible, brokers and lenders must work together to ensure things do not become unnecessarily challenging.

“Our research last year proved that, at the end of the day, brokers and landlords are after pragmatic and straight forward processes. Considering the significant take-up from this group, we devised a proposition to make application as simple as possible – for example, with no need for evidence of a business plan.”

Source: Mortgage Finance Gazette

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Developers believe 19 parking spaces will be enough for 71 new flats in Tonbridge town centre

Plans to build 71 new flats with just 19 parking spaces in the centre of Tonbridge have been unveiled.

F Estates, which specialises in affordable rented property development, wants to extend the existing block at The Bank House on Medway Wharf Road.

But some residents have come out against the plans saying the “overcrowding” would “ruin” the riverside area with bedsits.

The five-storey building would incorporate 71 rented studio flats which, when added to the existing 64, would mean a total of 135 on site. The parking provision would increase from 52 to 71 spaces.

A similar scheme for 72 flats on the plot was thrown out by Tonbridge and Malling Borough Council in September on the grounds of overdevelopment.

But in a statement to the council, planning consultants Barton Willmore claimed previous concerns had been addressed.

It said: “The proposed development seeks to provide a high-quality living environment, extending the successful conversion of the existing Bank House building undertaken by the applicant.

“The proposals would provide much needed new homes – of a particular type and nature identified as being locally deficient – assisting with the council’s undersupply of five-year housing land supply.”

An artist’s impression of the rear of the site

The statement adds 40 per cent of the flats would be affordable homes let out at 80 per cent of market rate.

Objections

Despite the assurances, the plans are courting controversy locally with residents citing over-development, a lack of parking spaces and fears the building would block out neighbouring properties’ sunlight.

One objector, whose name has been redacted from planning documents but lives in nearby Cannons Wharf Road, said: “I am shocked and disappointed that the same company that wishes to build a 14-storey building down our road now wishes to double the size of an existing building and again not provide adequate parking. The additional traffic will burden a local infrastructure already under strain.

“It is unrealistic to assume that in this age of mass car ownership that the people who move into the proposed extension will either want or be able to rely on local bus services, so the question remain, where will these people park?”

Another, a serving police officer, feared the development could “ruin” life for existing residents, adding: “I object to this quite simply due to overcrowding. I work as a police officer in the Met and often see how disruptive a block of flats of this scale in an already busy area can be, often ruining many residents’ lives to the point they will move.”

Source: Kent Live

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Rise in demand for commercial property at end of 2017

NORTHERN Ireland was one of only two regions in the UK to report an increase in occupier demand for commercial property at the end of 2017 according to new industry figures.

The latest RICS (Royal Institution of Chartered Surveyors) and Ulster Bank Commercial Market Survey has revealed that occupier demand for commercial property in the north picked up in the final quarter of the year, driven by rising interest in retail and office premises.

The rent expectations indicator for retail was also positive, bucking the UK trend, whilst the outlook for office and industrial rents picked up.

On the investment side, interest from potential investors in office and retail property edged upwards after falling in the third quarter 2017, according to respondents, however the data suggests that investor enquiries for industrial premises remained flat.

Expectations for capital values strengthened across the board, owever, the survey’s indicator for foreign investor interest was negative for the seventh quarter in succession, though only marginally so, suggesting that the number of enquiries from foreign investors continues to edge lower.

RICS Northern Ireland commercial property spokesperson, Tracy Flanagan said: “It appears that overall the Northern Ireland commercial property market ended 2017 much as it had started it, with sustained levels of occupier demand and investor enquiries; albeit that demand softened in the quarters in between.”

Looking ahead the CBRE director added:

“As we move into 2018, we hope to see expectations for rents and capital values strengthen but political uncertainty remains, and how the year pans out will be influenced by what emerges from the ongoing Brexit negotiations.”

Relationship director of commercial real estate at Ulster Bank, Gary Barr said the market enters 2018 on a “relatively firm footing”.

“Surveyors are reporting rising demand from both occupiers and investors, particularly in the office sector. This suggests that the market has picked up following a lull in the mid part of the year, and that it enters 2018 on a relatively firm footing, albeit that there are challenges ahead. At Ulster Bank, we continue to support a wide range of property deals and see firm demand from investors in quality assets.”

Source: Irish News

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Housebuilder plans to build 2,800 homes across Yorkshire during 2018

A housebuilder has announced plans to open 19 new sites across the Yorkshire region in 2018, creating 2,800 new homes and over 1,000 associated jobs.

Barratt Developments Yorkshire West, which includes the David Wilson Homes brand, said sites will be in Leeds, Barnsley and Huddersfield. New employment will be in construction trades such as bricklayers, electricians and landscapers, through to head office support roles.

In the 2016/17 financial year Barratt Developments supported 610 sub-contractor companies and 370 supplier companies. The company intends to continue to support the local environments in which it builds. During 2017, more than 3,110 trees or shrubs were planted or retained on developments and 19.2ha of green space was created through public open spaces or private gardens, equivalent to 759 tennis courts.

The housebuilder recycled 95 per cent of its construction waste. Ian Ruthven, managing director at Barratt Developments Yorkshire West, said: “We’re delighted to continue contributing to the regional economy through local jobs for local people across our 19 new sites.

“We’re committed to investing in and supporting tradesmen across the region and look forward to working with them over the next year to build even more quality homes.

“As well as creating more jobs, the communities in which we build we be supported through our S106 contributions. In the 2017 financial year we provided over £13 million in local contributions to the areas surrounding our developments, which goes towards facilities such as public open spaces, school and educational facilities, public transport measures, and recreational facilities, as well as many other projects.

We look forward to continue helping create thriving communities over the next 12 months.”

Source: Wakefield Express

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UK property market a global weak spot

The UK is one of just three countries likely to see no house price growth this year, according to a report by credit agency Fitch Ratings.

The report looked at 22 countries and said growth is likely to slow in most markets as the prospect of higher interest rates pushes up mortgage costs. However, only Norway, Greece and the UK are expected not to see price rises this year.

Fitch said the UK market would be flat in 2018 as high prices, low income growth and the weakness in the financial sector post-Brexit would lead to small falls in house prices in London and the southeast, while the regions would remain stable. It added that the impact of buy-to-let (BTL) changes including lower tax deductibility of rental income would also hit UK prices.

Suzanne Albers, senior director, structured finance at Fitch Ratings, said: “Arrears are at very low levels in most markets. They will only move in one direction as mortgage rates rise slowly due to higher policy rates and more expensive bank funding from the gradual unwinding of quantitative easing.”

Long-term fixed-rate loans are less exposed to increasing rates, but fewer re-financings mean lower lending volumes, so lenders may relax their borrowing criteria to boost volumes, subject to regulatory limits.

The report reflects the recent weakness in the UK housing market. The most recent Halifax report showed weakness in London, with growth slowing in the rest of the country.

Source: Your Money

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Renting by the room brings biggest yields

Houses of multiple occupation (HMOs) – properties which are rented by the room – produced the highest buy-to-let yields in 2017, according to the latest figures.

Data compiled by Mortgages for Business showed average yields of 8.9 per cent for houses were many people rent rooms individually.

However, this represents a fall, and the first time that yields for this type of property have dipped below nine per cent since the  Mortgages for Business index was launched in 2011.

Experts at the firm said that the fall was due to the increasing popularity of this type of property with landlords, which is pushing up prices.

“The attractiveness of HMOs as a buy-to-let investment has increased in recent years not only because of the higher yields on offer but because serious investors are keener to diversify their portfolios,” said Jeni Browne, sales director at Mortgages for Business.

“With more landlords vying for these properties, prices have been pushed up more quickly than the rents which, I would suggest, is one of the main reasons we are seeing their yields drop, although, I suspect that the granting of fewer new HMO licences is also having an impact.”

She added the figures showed landlords opting for cheaper ‘vanilla’ properties.

Defined as normal 2 to 3 bed houses and flats, usually fitting the general lending criteria of mainstream buy-to-let lenders, these properties produced average yields of 5.6 per cent in 2017.

The average value of a vanilla buy to let property in 2017 was £305,283, a 19 oper cent decrease on the average in 2016 (£375,409).

Ms Browne added there was anecdotal evidence landlords are looking further afield, where prices are cheaper.

Whilst there was no change in the number of lenders operating in the sector in Q4 2017, the number of mortgages available continued to rise, the figures showed.

There has been a 444 per cent increase in buy-to-let mortgage products since the index was launched in 2011.

Ms Browne said this rise resulted from lenders responding to the growing popularity of buy to let by offering a seemingly ever-expanding range of products to suit a variety of properties and borrowing requirements.

However, she said that this was likely to have reached its peak.

“Looking forward, it is widely anticipated that buy to let lending will contract this year in response to the tax and regulatory measures being imposed on the sector.

“As such, I would expect product numbers to peak in Q1 2018 and we have already seen some lenders trimming their ranges, leaving a core of great products which have been designed to reflect the changing needs of landlords,” she said.

Source: FT Adviser

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Local councils ‘continue to ignore’ building affordable homes on farmland

Local authorities are continuing to ignore ways to deliver much needed affordable homes for local people across the countryside, according to a rural organisation.

New government data shows that despite a 9% increase in affordable homes built in small rural communities across England, only 51 more than the previous year were built on rural exception sites, farmland not usually granted planning permission but used for affordable housing developments.

The CLA, which represents landowners and farmers, welcomed the overall increase but said local councils across England could use these sites more effectively to help solve the rural housing crisis.

CLA Housing Adviser Matthew O’Connell said housing need is “widespread” throughout rural England.

“The increase in the total number of affordable homes being built is encouraging, however, large discrepancies between local authorities mean that certain councils are doing more than others,” he explained.

‘Missing a trick’

According to the data, Cornwall Council leads the way in number of homes built, whilst other councils lag behind.

Mr O’Connell believes local authorities are “missing a trick” by not using rural exception sites to their full potential.

“Rural exception sites are a key means of providing affordable homes in rural areas where a landowner provides land at below market value to build affordable homes for local people.

“We know that 27% of CLA members want to build affordable housing and many are keen to manage their own affordable properties. To harness this ambition, local councils and housing associations must engage with rural landowners to help bring more sites forward increasing the range of housing options for people in rural areas.

‘Hold the key’

Mr O’Connell added that rural landowners “hold the key” to easing the shortage of rural housing.

“Without challenging a few orthodoxies we are not going to solve the rural housing crisis. New build rented housing, affordable home ownership and affordable rented homes are all crucial to maintaining a living, working countryside,” he said.

To help increase the supply of affordable homes across the countryside the CLA is calling on the Government to formalise the process for landowners to manage affordable homes and implement the Housing White Paper proposals on rural exception sites.

The Housing White Paper proposed to give stronger support for rural exception sites and the role they can play in providing affordable housing for the community, even if this relies on an element of general market housing.

The CLA is also urging the government to exempt properties provided as affordable homes from liability for Inheritance Tax, and exempt the value of land sold for affordable homes from Capital Gains Tax.

Source: Farming UK