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Number of rental properties to be increased through £43 million fund

The Scottish Government has announced it will provide £30 million of funding to help boost the number of properties being built for private rent.

Investment will be provided to Edinburgh property group Sigma through the Building Scotland Fund, which was set up last year to provide loans at commercial rates as a precursor to the Scottish National Investment Bank.

The £30 million will contribute towards a £43 million Scottish Private Rental Sector Fund set up by Sigma to increase the number of rental properties in Scotland.

It is estimated the funding will enable an additional 1,800 properties to be built for private rent across the country.

Communities Secretary Aileen Campbell said: “Renting accommodation is becoming a long-term option for many people, at many stages of life, for example when starting a family or when retiring.

“We want everyone who rents to be able to live in a house that suits their needs and in an area where they want to live, including near family, friends or schools.

“We want people to have the security to make that house their home – whether they are looking for a house for three years or 30 years.”

She added: “The Private Residential Tenancy already offers greater security for tenants, balanced with appropriate safeguards for landlords and investors.

“These additional new properties to the sector can give people long-term security and the confidence they are renting from an experienced, professional management company.

“The additional long-term stability these properties provide will make a huge difference for many households, especially those wanting to create a family home and settle into a community.”

Graham Barnet, Sigma chief executive, said: “We are delighted to have the support of the Scottish Government’s Building Scotland Fund.

“Our approach to housing delivery has been working extremely well in England and is helping to deliver thousands of new houses for the private rental market.

“We see significant demand for our high-quality, professionally managed homes in Scotland and look forward to using this new fund to assist in addressing Scotland’s housing needs.

“We are also continuing to explore other opportunities to extend our business model.”

The planned investment follows First Minister Nicola Sturgeon’s comments at the SNP conference in Edinburgh that a £150 million scheme would be established to provide loans to help first-time buyers with deposits.

The scheme would offer first-time buyers loans of up to £25,000 to fund or top up their deposit.

Source: Herald Scotland

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Brexit delay leaves little scope for Bank of England rate rise

A six-month delay to Brexit gives Britain’s central bankers space to take a broader view of the economy this week, but persistent uncertainty over leaving the European Union makes them unlikely to raise interest rates any time soon.

Since the Bank of England’s rate-setters last met in March, Prime Minister Theresa May has managed to push back the Brexit deadline to Oct. 31, shifting the Brexit cliff-edge further away than at any of their meetings since September.

But even with the immediate risk of a no-deal Brexit shock to the economy removed, most analysts expect the BoE to hold off on raising rates until Britain is out of the EU with some form of deal.

“While we see the need to raise interest rates slowly … the Bank of England is likely to sit on its hands until more clarity on the Brexit outcome is received,” said Nomura economist George Buckley, who predicts a rate rise in November.

None of the 75 economists polled by Reuters expect the BoE’s Monetary Policy Committee to raise Bank Rate from 0.75 percent this month, and only half a dozen predict a rate rise before Brexit is due.

The median forecast is for a rate rise in the first quarter of next year — when Governor Mark Carney will hand over to a successor. A large minority do not expect rates to rise at all this year or next, echoing financial market pricing.

So there is a risk that investors could be thrown by even mildly hawkish noises from the BoE on Thursday.

“The prospect of a hike in coming months is still dim, but less remote than market pricing,” UBS interest rate strategist John Wraith said.


Unlike the European Central Bank, the BoE faces inflation that is soon likely to rise above target, and in contrast to the U.S. Federal Reserve it has only raised rates twice in the current economic cycle, most recently in August 2018.

Wage growth, retail sales, job creation and overall economic growth have been slightly stronger than the BoE’s expectations in early 2019, even if businesses and consumers are downbeat.

“The bar in the macroeconomic data for another rate hike is low … but the BoE would need to find a window in a busy political calendar to deliver a hike this year,” J.P. Morgan economist Allan Monks said.

As well as no end to the Brexit impasse, risks that could delay a rate rise include a serious challenge to May’s leadership from within her Conservative Party, a fresh national election or a second referendum on leaving the EU, Barr said.

The economic outlook is uncertain too. Some of the growth in early 2019 came from businesses stockpiling to protect themselves against a no-deal Brexit.

Carney did not sound in a rush to raise rates when he spoke in Washington earlier this month, hours after the Brexit delay.

But he highlighted how Brexit uncertainty had hammered business investment in Britain, which fell in every quarter last year for the first time since the financial crisis.

“This is starting to feed through to productivity statistics, and will have broader consequences,” he warned.

Weak productivity growth limits rises in living standards over the long term and can push up prices.

Inflation has been below the BoE’s 2 percent target for the past three months, but is likely to rise above target soon due to higher household energy bills.

The BoE is likely to increase slightly its growth and inflation forecasts on Thursday, giving scope for a more hawkish tone from Carney and other MPC members.

“There is at present less than a 30 percent probability of a 25 basis point rate hike priced in by the end of 2019, and we think the MPC will view this as too complacent,” UBS’s Wraith said.

Reporting by David Milliken; Editing by Catherine Evans

Source: UK Reuters

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Buy To Let Rent Returns Remain Stable Across UK

Rent returns have remained stable across the UK over the last 12 months according to the latest Your Move Rental Tracker.

Average UK rent returns are now £860 per calendar month, the same as last March and 0.1 per cent down month-on-month.

However, this figure masks regional differences, as regions such as the East of England have seen prices fall while the South West has seen rent returns growing at 3.6 per cent annually, demonstrating faster growth than any other region surveyed. The average rent in the South West is now £701.

Other areas to post strong growth include the West Midlands, where rent returns grew by 3.3 per cent to reach £638, and in the Yorkshire and the Humber region, which has average rent returns of £589 following a 2.3 per cent increase in the last 12 months.

On a non-seasonally adjusted basis, average rent returns across England & Wales were £820 this month, down 1 per cent compared with March 2018.

Buy to let property Investors in southern regions are now looking north for higher returns, as properties in northern areas continue to outstrip rival regions.

In the North East the typical property returned 5 per cent while in the North West that figure was 4.8 per cent. This contrasts with an average yield of just 3.2 per cent in London and 3.3 per cent in both the South East and South West.

The average rental yield across all of England and Wales was 4.3 per cent – the same as in February but down from the 4.4 per cent recorded a year ago.

As rent returns remained stable, so did tenant finances, with the proportion of tenants struggling with their finances remaining below 10 per cent in March.

Around 9.4 per cent of all tenancies were in arrears during the month, exactly the same ratio as found in February. The proportion of tenants in arrears remains well below both the recent and all-time highs recorded by Your Move.

The all-time high of 14.6 per cent was recorded in February 2010, while the most recent high of 13.7 per cent was in July 2017.

Martyn Alderton, National Lettings Director at Your Move, commented: ‘Yields continue to perform strongly, with just one region offering lower returns this month than in February.’

He continued: ‘We continue to see landlords in the south of England looking further afield for their next rental opportunity, as northern properties deliver stronger yields. The growth of the urban rental market has created yield hotspots for private landlords in northern cities like Manchester and Liverpool.’

Source: Residential Landlord

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UK Commercial Property Set for Rebound

There’s a lot of cash on the sidelines waiting to snap up UK property assets once certainty on Brexit is known, according to real estate investment trust managers. However, they warn the market could see some short-term pain in the meantime.

Equity investors have been vocal in putting forward their expectation of cash flowing into the UK stock market once Brexit is resolved, no matter what deal we get. While it’s unlikely to be as dramatic in property, the asset class remains more resilient than many expected.

There’s money waiting to buy UK real estate, predicts Calum Bruce, manager of the Ediston Property Investment Company (EPIC), from both domestic and overseas buyers. “Once there’s some clarity, there will be a period where people will just digest what’s happen, formulate a strategy and then look to implement that strategy,” he tells

Simon Marriott, investment director at London & Scottish Investments, agrees, though has sympathy with those continuing to hold off committing just yet. “I’m a believer when there is some certainty, anything other than no-deal, prices are going to get stronger,” he says.

Bruce explains that there is plenty to like about UK property, particularly for overseas investors looking for a safe haven in an uncertain world. “The UK ticks a lot of boxes for these investors,” he adds. These include a stable economy, favourable political climate for the asset class and yields higher than many other cities both in Europe and elsewhere.

“But why would they invest now if they think there’s going to be a slip in value and their euro or dollar will go further in a few months’ time? That’s why we need some clarity so these investors can go ‘right, now’s the time to come in and invest’.”

However, it seems likely it will be some time until that Brexit fog clears. While Prime Minister Theresa May’s extension to the Brexit deadline is flexible, odds are it will, again, go right down to the wire on October 31.

Therefore, this predicted pick-up in activity is likely to be a 2020 phenomena. Indeed, Nick Montgomery, manager of the Schroder Real Estate Investment Trust (SREI), thinks we’ll see a correction before any recovery comes about.

“Are we at the top of the cycle? If you look at the average for the market, we think values will fall,” he explains. “We’re not expecting a return to 2009 where values fell by multiples of 10%, but we are expecting a correction.”

As a result, he’s been selling some of his lower-yielding assets, including most of his retail portfolio, in order to build some cash and give him firepower once that correction comes.

Despite being late-cycle, Montgomery says there are plenty of opportunities around with “immense polarisation” between sectors. Below, we highlight three areas REIT managers are seeing, or expect to see, opportunities in the UK property market.

Regional Offices
Being the big hub, particularly for financial services firms, and capital, London will garner many headlines when it comes to the outlook for UK offices. However, many are now seeing opportunities some of the other larger cities in the UK.

Both businesses and the Government are beginning to spread their workforces around the country. The BBC has recently set up camp in Salford, while accountancy firm PwC has a new 80,000 square foot office in Leeds.

“These cities are not back-office locations anymore,” says Marriott. “These are all high-quality locations in their own right, with highly qualified workers who have made life changes [to] move out to the provinces because it’s closer to where they were brought up or their quality of life is better [than in London].”

With the UK one of the world leaders in artificial intelligence, companies are looking for more office space around university cities, too, like Oxford, Cambridge, Bristol and Durham.

Montgomery says Schroders is one of the biggest owners of commercial real estate in Manchester, having identified it as one of the “winning cities” in the UK moving forward.

“[Manchester has] great public sector leadership and a disproportionate share of public sector investment, which has drawn people into the city centre, with the population doubling over the course of the last 10 years or so,” he explains.

Retail Warehousing
Unsurprisingly, many are downbeat on the future for retail. Structural headwinds, including the increasing move to online shopping, have meant a lot of retail firms have either gone bust or are on shaky ground.

Those that have survived are now looking to downsize their store estate or reduce the rents they pay as shoppers increasingly eschew a trip to the high street or their local shopping centre.

However, there are still opportunities in retail. Bruce is the most bullish, arguing that the doom and gloom headlines don’t tell the whole story. “Retail is evolving; I don’t think it’s in terminal decline,” he says.

True, he cautions, retailers that have failed to adapt, evolve or change to the new environment will fall by the wayside, but others have done so and are well set to take advantage. Indeed, Bruce likes out-of-town retail parks in places like Hull, Barnsley or Sunderland, which lend themselves most to the click-and-collect model..

As ever, it’s all about good stock selection, of course: “not all retail warehousing is equal”. While the likes of Next and others are known to be looking at decreasing the rent they pay, they are also happy to increase their costs for units in good, profitable locations.

“We have a retail park in Prestatyn and have completed four rent reviews with River Island, Next, Card Factory and Costa and have got an increase on all of them because it’s a good park in a good location,” says Bruce.

The London & Scottish Investments team, which runs the Regional REIT (RGL), have only a small portion of their portfolio allocated to retail and that is overhang from portfolios they have bought.

Despite taking the decision not to consciously invest in retail when they launched their product back in 2013, they also have no plans to sell their two properties, which comprise a shopping centre in Bletchley and retail park in Swansea, any time soon.

“These are yielding well north of 8% so there’s no reason for us to sell them,” says managing director Derek McDonald. “We’ve got one very small void at Bletchley and none at Swansea and we’ve not had any CVAs, so why rush to sell them when they’re not hurting you?”

Central London Offices
Clearly, this one’s most at the mercy of the outcome of Brexit negotiations – and the UK leaving without a deal would not be positive for the asset.

But Bruce says the office market in the capital has been more resilient than expected. “There are people hedging their bets, but I don’t think it’s been as dramatic an exodus as people expected.”

True, the market has hitherto been too expensive for Bruce to justify getting stuck into, and pricing is still not there just yet. However, he’s encouraged that “more things are coming across our desk which we’re interested in doing something with”.

“Rents are probably under pressure more than they are in other parts of the country, but in the main there’s been pretty good take-up and supply is at a reasonable level.”

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UK property: why house prices are so high

House prices across the UK have risen substantially over the past quarter-century. In some parts of the country it is now a real struggle for first-time buyers to step onto the property ladder.

UK house prices grew faster on average over the 40 years from 1971 to 2011 than any other OECD country. But prices really took off in the mid-1990s.

Land Registry data shows that the average UK house price in January 1995 was £55,437, a similar level to the beginning of the 1990s.

By March 2019, the average price was £223,610, a 303% increase over that period.

To give a sense of just how large that number is relative to the cost of living, if the average house price in 1995 had risen by the rate of inflation each year, it would only be around £105,000 today.

So why exactly have things gotten so out of control? Well, there are two parts to the housing market story: supply and demand.

Easy mortgages and booming demand
Let’s start with demand. Over the past few decades, demand for house purchases was supported by a booming economy and easy access to mortgages.

People had well-paying jobs and, up until the financial crash in 2008, banks were very keen to approve mortgages to both homebuyers and buy-to-let investors — too eager, in fact, which contributed to the economic crisis.

The number of mortgage approvals for house purchases peaked in December 2003 at 132,737. Some buyers were able to secure 100% mortgages at the time and borrowed debt that was a substantial multiple of their income, much higher than the four or five times available today.

Irresponsible lending to both homebuyers and buy-to-let investors fuelled a demand boom in the housing market.

Even today, in the aftermath of the crisis, mortgage approvals still hit 64,337 in February 2019, despite affordability issues for young house hunters. While the number is well down from the peak, it’s still buoyant.

Demand is currently supported by ultra-low interest rates and schemes such as Help to Buy and shared ownership, though buy-to-let investor demand is curbed by a number of tax rises, including higher stamp duty on additional property purchases.

Severe housing supply shortage
But the bigger problem in the housing market is supply.

Set against hot demand for property over the past two decades is an ongoing and severe shortage of housing supply across the UK. This shortage is most acute in London and south-east England, but also affects other areas, particularly urban centres.

“Estimates have put the number of new homes needed in England at between 240,000 and 340,000 per year, accounting for new household formation and a backlog of existing need for suitable housing,” according to a House of Commons briefing paper.

“In 2017/18, the total housing stock in England increased by around 222,000 homes. This was 2% higher than the year before — and the amount of new homes supplied annually has been growing for several years — but is still lower than estimated need.”

The number of homes built has consistently fallen substantially short of demand for a while, a problem that deepens each passing year. So why can’t we build enough homes?

The most fundamental problem is the country’s strict planning laws, particularly in England, where a tangle of complex regulations hinder development. Planning laws have a bias against development and put a lot of power in the hands of local communities to block construction.

Local planners are at the mercy of the communities they serve. The politics of planning make it hard for them to approve developments without facing a substantial backlash. Councillors on planning committees are keen not to upset their voters.

One example is the “green belt” protections. It is incredibly hard to build housing within green belt areas, even if some of the land within them is not considered “green,” such as fields used for environmentally-damaging intensive farming.

Planning restrictions limit the supply of land available for developers to build on and increase the building cost even on land where housing is permitted. This drives up the price of land for developers, so they build fewer homes.

House prices would be 35% lower on average if all regulatory constraints on housebuilding were removed, according to a 2013 academic study titled “The Impact of Supply Constraints on House Prices in England.”

“Our findings point to the English planning system as an important causal factor behind this ‘affordability crisis,’” the study’s authors Christian A. L. Hilber and Wouter Vermeulen wrote.

In short, a boom in housing demand fuelled by loose lenders and severe constraints on supply have pushed house prices higher and higher.

Source: Yahoo Finance UK

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Mortgage approvals up nearly 10%

The number of people being approved for a mortgage increased by nearly 10 per cent in March.

The latest data from UK Finance showed the number of approvals for home purchase were 9.3 per cent higher in March 2019 than the same month the year before.

Year-on-year, the number of people getting approved to remortgage increased by 11.1 per cent.

Gross mortgage lending across the residential market in March 2019 was £20bn – 0.5 per cent lower than the same month in 2018.

This fall was mainly seen in high street banks, where lending dropped by 3.5 per cent year-on-year.

Gareth Lewis, commercial director of property lender MT Finance, said the subdued lending in the first quarter came as no surprise due to the uncertainty surrounding Brexit.

He said: “There was never going to be a huge growth in lending in the first quarter. However, as far as the second quarter of the year and beyond is concerned, if the levels of activity we are seeing are anything to go by, the picture may be changing.

“With Brexit pushed back, far enough away for people to forget about it a little, and with fewer column inches in the papers, this is all a positive as it stops people from worrying about it too much.

“They are getting on with life, looking at opportunities to improve their portfolios – from an investment point of view, Brexit is getting less attention now, which has to be a good thing.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “Mortgage approvals for home purchase are always a useful lead indicator of future market activity and these are no exception.

“They confirm what we have been seeing on the ground and in other surveys — that transactions are holding up reasonably well despite political and economic distractions as might be expected at this time of year.

“However, it is still tough to find common ground between even realistic buyers and sellers, and sales are certainly taking considerably longer, not least because as we are finding, buy-to-let investors have not been replaced completely by first-time buyers.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

By Imogen Tew

Source: FT Adviser

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Bank of England set to freeze interest rates amid Brexit ‘fog’

BANK of England policymakers are set to hold rates firmly at 0.75% next week as the “fog” of Brexit continues after the six-month EU departure delay.

The bank’s latest rates decision – which will be accompanied by its quarterly Inflation Report forecasts – comes amid signs that Brexit stockpiling has boosted recent economic growth figures.

Data suggests the economy may have expanded by 0.4% in the first quarter, up from 0.2% in the final three months of 2018.

But this was largely due to “no deal” precautionary stockbuilding ahead of the original March 29 Brexit deadline and relatively mild weather, which experts believe will unwind in the April to June quarter.

Until the “fog” of Brexit – as Bank governor Mark Carney put it earlier this year – is lifted, policymakers are seen as remaining in wait-and-see mode for some time yet.

Investec economist Philip Shaw said: “The committee as a whole is likely to remain fretful over downside risks to the economic outlook.”

He added: “The committee’s immediate concerns over a disorderly Brexit could be eased somewhat by the new 31 October exit date.

“However its worries over the global economic background seem set to remain.

“Indeed it is probably this latter point which is likely to provide the main argument for keeping rates steady this time.”

But economists are increasingly expecting pressure building for the MPC to consider raising rates later in 2019.

Investec believes one member – Michael Saunders – may vote for a hike on Thursday.

The bank is expected to nudge its 2019 growth forecasts higher in the accompanying inflation report, up from the 1.2% predicted in February thanks to the stockpile-boosted first quarter.

It may also up its inflation outlook due to energy prices, despite the Consumer Prices Index remaining steady at 1.9% in March.

“The MPC will find a case for higher rates increasingly compelling as the year draws on,” said Shaw.

He is pencilling in a hike to 1% in November, although this is based on a Brexit deal being reached.

The bank’s rates announcement also comes after the Treasury announced it had kicked off the hunt to find a replacement for Carney.

Source: The National

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Sterling headed for worst week in a month as Brexit drags on

The British pound was headed for its biggest weekly drop in a month on Friday, dragged down by growing concern about stagnant Brexit talks.

A broad dollar rebound this month — it has gained against all its major rivals — has also undercut the appeal of the pound before a Bank of England policy meeting next week where policymakers are expected to leave interest rates unchanged.

Sterling – stuck around $1.29 – has struggled this week as lawmakers returned from an Easter recess with little sign of progress in Prime Minister Theresa May’s efforts to convince lawmakers to back her Brexit deal.

Graphic: Trade-weighted sterling since Brexit vote

Britain’s departure date from the European Union has been pushed back until as late as the end of October. The protracted divorce is hurting the British economy and poor productivity is hindering growth, Goldman Sachs said.

Sterling edged 0.3 percent higher to $1.2932, its weakest since mid-February. Against the euro, the pound traded flat at 86.3 pence. On a weekly basis, it is set to decline 0.6 percent, its biggest drop in four weeks.

Graphic: World FX rates in 2019

The dollar, which rose towards a two-year high on an index of major currencies, also weighed on the pound. So did the prospect of a fresh push for Scottish independence.

“Renewed debate about the choice of currency for an independent Scotland will rekindle uncertainty. Sterling risks $1.2800 in the current strong dollar environment,” said Chris Turner, head of foreign exchange strategy at ING.

Differences over Brexit have strained relations with the British government, and Scotland will start preparing for an independence referendum before May 2021, First Minister Nicola Sturgeon said on Wednesday.

Scots rejected independence in a 2014 referendum and support since then has stuck at around 45 percent, opinion polls say.

Sterling positions:

Reporting by Tom Finn; Additional reporting by Saikat Chatterjee; editing by Larry King

Source: UK Reuters

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Goldman Sachs says dragged-out Brexit is doing deeper damage to UK economy

Britain’s protracted divorce from the European Union is hurting the world’s fifth largest economy as dwindling company investment, signs of a looming labour market shock and poor productivity hinder growth, Goldman Sachs said.

The United Kingdom was due to have left the EU on March 29, though Prime Minister Theresa May has been unable to get her divorce deal approved by parliament. Now the new deadline is Oct. 31, more than three years since the 2016 referendum.

It is now unclear when, how and even if Brexit will happen.

Goldman Sachs said in a note to clients that its base scenario was the divorce deal would be ratified by May 22 but that there was a risk of Britain’s exit being delayed until much closer to the new Oct. 31 deadline.

“The politics of Brexit have become more protracted and, as a result, the side-effects of Brexit on the UK economy have intensified,” Goldman said in a note entitled “Brexit — Withdrawal Symptoms”.

“From both a top-down and a bottom-up perspective, Brexit has taken a toll on the UK economy — even though it has not yet happened,” Goldman said.

It said Britain’s economy has underperformed other advanced economies since mid-2016, losing nearly 2.5 percent of Gross Domestic Product relative to its pre-referendum growth path, in large part due to weaker investment.

Bank of England Governor Mark Carney said in February that Britain had lost around 1.5 percent of GDP compared with the central bank’s expectations before the referendum. Carney said this month that uncertainty facing British businesses has gone “through the roof” due to Brexit.

Capital expenditure by businesses has been particularly subdued, Goldman said, and strong employment data masks a deepening misallocation of resources to labour rather than capital which will ultimately make the economy less efficient.

Since the referendum, firms have hired workers rather than invest in capital, Goldman economists said.


Business investment has grown by just 0.3 percent in cumulative terms since June 2016, and 2018 was the first year in at least half a century during which business investment contracted in every quarter without a recession, Goldman said.

An increasingly tight labour market – with unemployment at its lowest since early 1975 and pay growing at its joint fastest pace in over a decade – could also be a sign of strain rather than resilience.

“The balance between weaker demand for workers and a shorter supply of workers bears the hallmarks of a Brexit-induced labour market shock,” Goldman economists said.

Low investment combined with a tight labour market are likely to hurt the economy’s overall efficiency and thus “accentuate the chronic underperformance of UK productivity,” they added.

Britain’s productivity has lagged that of the U.S., Germany, and France, for the past decade.

Business leaders have already triggered contingency plans to cope with additional checks on the post-Brexit UK-EU border they fear will clog ports, silt up the arteries of trade and dislocate supply chains in Europe and beyond.

Opponents fear Brexit will make Britain poorer and divide the West as it grapples with both the unconventional US presidency of Donald Trump and growing assertiveness from Russia and China.

Brexit supporters say there would be short-term disruption but in the long-term the UK would thrive if cut free from what they cast as a doomed experiment in German-dominated unity and excessive debt-funded welfare spending.

“Until the UK’s departure from the EU is resolved, it is difficult to have conviction in a strong rebound in growth,” Goldman said. “In 2020, with Brexit resolved, we do expect a pick-up in activity as uncertainty abates.”

Editing by Thyagaraju Adinarayan, Guy Faulconbridge and Andy Bruce

Source: UK Reuters

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Mortgage approvals made to home buyers jumps to nine-month high

THE number of mortgage approvals made to home buyers in the UK jumped to a nine-month high in March, figures from a trade association show.

There were 39,980 approvals for house purchase, marking the highest total since June 2018, according to UK Finance.

Meanwhile 29,448 re-mortgage loans got the green light in March – the highest figure since August 2018.

UK Finance said personal deposits grew by 0.4 per cent in the year to March, with savers’ money held in instant access accounts growing at a faster annual rate, of 2 per cent.

This reflects consumers’ preference to keep cash close at hand amid ongoing economic uncertainty, UK Finance said.

Howard Archer, chief economic adviser at EY ITEM Club said: “UK Finance reported mortgage approvals for house purchases somewhat surprisingly edged up to a nine-month high of 39,980 in March.

“The housing market has been constrained for an extended period by overall challenging conditions – relatively limited consumer purchasing power, despite recent improvement, after an extended squeeze and fragile consumer confidence.

“It should be noted that the overall national picture has been dragged down by the particularly poor performance in London and parts of the South East.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said looking ahead, mortgage lending is likely to continue to “flatline”.

“Mortgage rates look set to hold steady, keeping the proportion of home buyers’ incomes absorbed by loan payments at historically low levels,” he said.

“Nonetheless, households’ overall confidence still is low and surveys show a marked deterioration in households’ view that housing is a good investment, which only will have been strengthened by the recent slowdown in house price growth.

“It’s hard to see lending returning to 2013-to-15 levels any time soon.”

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said:

“It is still tough to find common ground between even realistic buyers and sellers, and sales are certainly taking considerably longer, not least because as we are finding, buy-to-let investors have not been replaced completely by first-time buyers.

“The picture is very patchy and can vary considerably between areas which are quite close together and between London and elsewhere.”

Andrew Montlake, director of mortgage broker, Coreco believes there has been a “marked improvement” in the property market in the past month or so.

“Something has changed, and this week in particular has seen a huge surge in mortgage inquiries,” he said.

“There’s always a surge in activity levels during the spring but this year it has been accentuated by the pent-up demand caused by Brexit.

“Those who aren’t buying are re-mortgaging in order to improve their homes, and many are picking up an even more competitive rate as they do so,” he added.

Source: Irish News