Jigsaw Homes Group has had a planning application approved to build 49 high-quality affordable homes on the site of a former scrap yard on Pocket Nook Lane in Lowton.
The new development will comprise a mix of one-bedroom apartments, two-bedroom and three-bedroom houses, providing a much needed range of quality affordable accommodation for Lowton.
Jigsaw has committed to carrying out decontamination of the site as part of the development process, turning a derelict and contaminated piece of land into a place fit for habitation.
Funding has been secured from Homes England through its Shared Ownership and Affordable Housing Programme (SOAHP) 2016-21.
Garnet Fazackerley, Jigsaw Group’s operations director for development said: “We are delighted to receive planning permission to develop 49 affordable new homes on a former industrial brownfield site.
“Jigsaw Group is committed to tackling the housing crisis by building new homes for the people in our communities.
“We have plans to develop over 2,000 new homes by 2022 and developments like this one bring us one step closer to that goal.”
Work is due to begin this Autumn, with completion likely to be in 2021.
The new homes will be let and managed by Adactus Housing Association, part of the Jigsaw Group.
Demand for retail property in London is approaching lows last seen after the 2008 financial crash, according to new research.
The latest UK Commercial Property Market Survey results published today by the Royal Institute of Chartered Surveyors (RICS) showed that demand for retail property in London fell for the second quarter of the year.
In an indication of the ongoing malaise in the sector, retail was found to be responsible for pulling the overall figure in terms of demand for property down below zero, with a net balance of -61.
The retail property sector also posted the highest rise in terms of availabilities, with 52% of respondents reporting a “significant rise in availability”.
The survey also found demand from overseas investors continued to drop during the quarter as Brexit loomed, with respondents reporting -9% growth. This represented the third quarter in a row where overseas investor demand fell.
However, the RICS report found a rise in demand for industrial buildings – in particular warehouses for ecommerce.
Rents on prime and secondary retail sites are predicted to fall 3.5% and 7% respectively over the next 12 months.
RICS economist Tarrant Parsons said: “The overall picture remains little changed across the UK commercial property market in Q2, with the disparity between a strong backdrop for the industrial sector and weakness in retail still very evident. While expectations continue to point to solid rental and capital value growth in the former, further declines are expected in the latter.
“Brexit uncertainty also remains a notable headwind, causing caution across both occupiers and investors while they await clarity on the UK’s future trading relationship with the EU.”
The British Pound is said to already be trading at crisis levels, and as a result it will struggle to fall much lower says an analyst at leading global investment bank.
GBP is already “trading at crisis levels, and will struggle to go much lower,” says Jordan Rochester, foreign exchange strategist with Nomura in London.
That the Pound is already low by historical standards, it would suggest it will take successive bouts of bad news to really push new lows.
We wonder where such news might come from.
The Pound has recovered ground against the Euro over the course of the past 24 hours with news that Boris Johnson would replace Theresa May as Prime Minister on Wednesday.
The Pound-to-Euro exchange rate has recovered to 1.1160, having been as low as 1.1047 just last week.
“The Pound was volatile yesterday following Boris Johnson’s victory speech, as well as remarks from the BoE’s Haldane and Saunders who indicated they are not likely to vote for a rate rise in the near term. The Euro is under pressure ahead of tomorrow’s ECB policy announcement. The ECB is expected to prepare the ground for lower interest rates in September, although there is an outside chance of a reduction as early as tomorrow,” says Hann-Ju Ho, an economist with Lloyds Bank.
We would like to say the Pound is rallying exclusively on news Johnson is taking over, but we expect the picture is a great deal more nuanced: markets have known for weeks Johnson was incoming, and we believe they are now awaiting the next decisive moves on Brexit policy for guidance.
Furthermore, markets will be watching to see whether a General Election is likely in the UK before pulling the trigger on further Sterling declines.
Nomura’s Rochester also makes the point that the change at the top of the UK’s leadership extends well beyond the Prime Minister’s office:
“Over the next few weeks and months, the leadership transition will not only include a new Prime Minister, but a complete changing of the guard. In addition to a new PM, the UK can also look forward to seeing replacements for Chancellor, Cabinet, Bank of England Governor, budget and Brexit plan.
Despite the expected leadership changes, Rochester notes implied volatility levels in Sterling are still below levels seen back in March when markets were showing notable nerves over the prospect of potential big moves around the original Brexit date, and therefore “a lot of the negative news has been priced into spot,” says Rochester.
In short, the Pound is at levels that suggests it has eaten a decent share of bad news.
“GBP already trades at crisis levels and typically struggles to move much lower,” says Rochester. ‘While we acknowledge that a no-deal Brexit is a risk and would very likely record new lows in GBP, we do not expect the market to assign a higher hard Brexit premium than previously or until parliament returns after the summer break in September.”
Above: GBP/EUR since 2009: Sterling is at already-low levels, and it might struggle to fall lower
We believe the conditions for a recovery in Sterling over coming weeks, that coincides with Parliament’s summer break, is a distinct likelihood.
After all, this is a political currency, and with no politicians to bother it the prospect of a recovery grows.
Euro Hit by Dire Manufacturing Data
The Euro was in retreat from a steady Dollar and stronger Pound Sterling Wednesday after IHS Markit surveys for July pointed to a renewed economic slowdown in the Eurozone in the third-quarter, prompting calls for the European Central Bank (ECB) to support the economy with interest rate cuts and more quantitative easing as soon as this Thursday.
The IHS manufacturing PMI fell to a 79-month low of 46.4 in July, from 47.6 in June, when financial markets had looked for it to remain unchanged.
However it was German manufacturing PMI which proved an eye-opener: the German Manufacturing PMI read at 43.1, well below expectations for 45.1.
Anything below 50 suggests contraction, it is therefore little wonder that Euro exchange rates are in retreat on the numbers:
The Pound-to-Euro exchange rate extended its short-term uptrend on the numbers to record a near-month high at 1.1207.
The Euro-to-Dollar exchange rate fell to close in on a new two-month low at 1.1139.
Meanwhile, the Eurozone services sector PMI fell from 53.6 to 53.3, in line with the market consensus.
The composite PMI, which combines the two previous surveys, fell from 52.2 to 51.5 this month suggesting that while the economy is still expanding it is close to stalling.
New order flows stagnated in the manufacturing sector this month and confidence hit its lowest level since late 2014, leading companies to become more cautious about hiring new employees, IHS Markit says.
Exports were the weakest link again and many companies were forced to begin clearing old work backlogs to sustain output. “The key point here really is that the slowdown in manufacturing is now so severe that it almost surely will hit the official labour market data soon, which could change the political story, re fiscal policy, too. The chart shows that GDP growth rebounded at the start of the year, but incoming data suggest that the party ended abruptly in Q2, and the PMI now suggests a further slowdown in Q3, though it has an opportunity to recover in coming months,” says Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.
The number of mortgages approved in the UK reached one of it’s highest levels in the past two years in June.
Last month the number of mortgages given the go-ahead for house purchases rose to 42,653 up from 42,407 in May and close to April’s two-year high of 42,792, according to data from UK Finance.
Analysts said the spike in approvals could be attributed to the UK avoiding crashing out of the EU at the end of March.
EY Item Club chief economic adviser Howard Archer said: “June’s mortgage data ties in with the view that housing market activity has received some help from the avoidance of a disruptive Brexit at the end of March, but the overall benefit has been relatively limited.
“Improved consumer purchasing power and robust employment growth have also recently been helpful for the housing market.”
Mark Harris, chief executive of mortgage broker SPF Private Clients, added: “Encouragingly, the number of mortgages for home purchase rose in June compared with the same month last year, despite all the continued uncertainty over Brexit.
“Hopefully, the installation of a new prime minister at number ten will effect a positive change for the wider economy and housing market, although it is still very early days.”
Meanwhile, credit card lending growth slowed in June. Net credit card linking contracted from £247m in May to £119m last month.
Gross mortgage lending in the UK fell by 4 per cent year-on-year in June, latest data has shown.
Figures from UK Finance, out today (July 24), showed that £21.9bn of lending across the residential mortgage market took place in June — 4 per cent less than in the same month last year.
High-street banks performed better than the rest of the market, according to the results, as gross mortgage lending from the big lenders only fell 1.1 per cent.
Mortgage approvals for house purchases increased by 2.9 per cent year-on-year as 48,539 consumers were approved in June.
This marked a slight drop from the 49,683 approvals in May but figures were still above average for the year.
Mortgage approvals — where a consumer is told they are eligible for a mortgage but is yet to actually borrow the money — are typically an indicator of how the future mortgage market will fare as these consumers are likely to go on to borrow the funds in the upcoming months.
Approvals for remortgages dropped slightly, by 1.4 per cent, to 29,415. Consumers remortgaging have bolstered the market in recent years and the number of remortgages is predicted to reach its peak later this year.
Steve Seal, director of sales and marketing at Bluestone Mortgages, said today’s figures didn’t show any “major jump” but that government schemes and attractive remortgage deals were continuing to appeal to borrowers.
Gareth Lewis, commercial director of property lender MT Finance, said the high street banks’ uplift in home purchase approvals was positive but could be down to the more attractive deals lenders were pushing.
He added: “Deals are being done. A colleague recently sold his house in the north of England in two days and this wasn’t because it was priced too cheaply.
“There are people who are willing to get on and buy when an opportunity presents itself.”
Mr Lewis also thought the new prime minister could look at tax and stamp duty to help the property market, noting there were “measures afoot” to help stimulate property sales.
Boris Johnson was announced as leader of the Conservative Party yesterday (July 23) and there have been reports that he would be open to reforming stamp duty.
Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “Encouragingly, the number of mortgages for home purchase rose in June compared with the same month last year, despite all the continued uncertainty over Brexit.
“Hopefully, the installation of a new prime minister at number 10 will affect positive change for the wider economy and housing market, although it is still very early days.”
Mr Harris added that swap rates continued to fall, with a number of lenders, including Nationwide, NatWest and Accord, cutting some mortgage rates in the past week.
He thought this downward pressure on pricing was likely to continue as lenders competed for business.
A select committee has warned that the government has failed to meet its target for releasing land for new homes by “a wide margin”.
Under its Public Land for Housing Programme, the government aims to “increase housing supply by releasing surplus public sector land for at least 160,000 homes” in England between 2015 and 2020.
The Public Accounts Committee however argued in their latest report that by the end of the programme, the government will have failed to sell the land needed for 91,000 of the homes promised.
This is equivalent to 57% of the overall target.
Meg Hillier MP, the chair of the committee, said: “The nation’s housing crisis has been prolonged by the government’s failure to develop a strategy for public land disposal. We are frustrated that this unique opportunity has been wasted.
“The UK needs more houses. As a major land holder, the government is in a unique position to release land for new homes; and yet the objectives of its land disposal programmes are chaotic and confused.
“We are baffled that the programmes were not designed with a view to how many homes were needed of what type, and where – nor how the proceeds will be used.
“Land disposal targets were set without a rigorous evidence base of what could actually be delivered. It is no real surprise, then, that the government will now fail to meet its target to sell enough land by 2020 for 160,000 homes.
“But with a gap of 91,000 fewer potential homes than anticipated, we are extremely concerned that the nation’s housing shortage will only get worse.
“Building affordable homes should be a key part of the objectives of the government’s land disposal strategy. However, we are concerned at the Department’s disregard for how the release of public land could be used to deliver affordable homes, particularly social homes for rent.
“We call on the government to set out a decisive course of action for how it will execute its land disposal strategy so that it translates into actual homes for the people that need them most.”
The select committee said this target was ‘clearly unrealistic’ from the outset and lacked a sufficient and rigorous evidence base when it was originally set.
The Cabinet office is expected to achieve its proceeds target of delivering “£5bn of receipts between 2015 and 2020 through the release of surplus public sector land and property across the UK.
This is despite almost all departments being on course to miss their individual targets.
However, this is because of one large unplanned sale that contributed almost £1.5bn of the £5bn target.
The committee said it is unacceptable for the outcomes of these crucial programmes to be reliant upon luck instead of judgement.
It said that despite just 40,500 homes having been built since 2011, the loose definition from the ministry of housing, communities and local government (MHCLG) of what constitutes a new home has artificially inflated the number of new homes that have been created.
A spokesperson from MHCLG added: “We have an urgent mission to build more homes for the next generation so they can realise the dream of home ownership.
“Last year saw us deliver 222,000 new homes, more than in all but one of the last 31 years.
“Government departments have identified enough surplus public sector land for 160,000 new homes and our development accelerator Homes England is providing expert assistance to get these built more quickly.”
The proportion of homes let by a company landlord in the UK has been rising steadily since 2016 to reach the highest level in eight years, according to new figures.
In H1 2019, 12% of homes were let by a company landlord, reaching the highest level since 2011 and up from 9% in 2015 (before the tax changes).
Residential estate agent and property services company Hamptons International estimates that company landlords own 641,480 homes in Great Britain this year. This is 42% more than in 2015 when 452,600 homes were let by company landlords. The increase is partly due to the rise in the proportion of homes let by company landlords, but also due to the increase in the overall size of the rental sector.
% of homes let by company landlords
1Y change
Change since 2015
London
13%
1%
1%
Scotland
12%
3%
6%
South (exc. London)
12%
1%
3%
Midlands
12%
1%
1%
North
11%
3%
5%
Wales
8%
2%
-1%
Percentage of homes let by company landlords by region (H1 2019)
Source: Hamptons International
London landlords are most likely to own a buy-to-let property in a company structure. In H1 2019, 13% of new lets were owned by a company landlord, up from 12% in 2015 and 2018. Meanwhile, landlords in Wales are least likely to own a buy-to-let in a company name. Scotland has seen the biggest increase in the proportion of homes let by a company landlord since 2015 (+6%), followed by the North (5%) and South of England (3%).
Rental growth continues to accelerate, reaching the highest level since April 2016. The average cost of a new let in Great Britain increased to £986 pcm in June, up 3.1% year-on-year. The South West recorded the strongest rental growth, with rents rising 4.5% annually. Rents in London increased by 4.3% year-on-year. However, June 2019’s figures are compared with a period of weak rents in June 2018 when rents in the capital started falling for three consecutive months. Meanwhile, average rents on newly let properties rose in six out of eight regions, with Wales (-0.4%) and the East (-0.2%) recording small year-on-year falls.
Region
Jun-19
Jun-18
YoY
Greater London
£1,737
£1,666
4.3%
South West
£821
£786
4.5%
South East
£1,078
£1,041
3.6%
Scotland
£655
£639
2.6%
Midlands
£685
£679
0.9%
North
£631
£628
0.5%
East
£950
£952
-0.2%
Wales
£668
£671
-0.4%
Great Britain
£986
£956
3.1%
Great Britain (Excluding London)
£787
£774
1.7%
New lets (pcm) Source: Hamptons International
Aneisha Beveridge, head of research at Hamptons International, said: “More than one in ten rental properties are now owned by private companies, an indication that the sector continues to professionalise. Increasing taxation for private landlords combined with the growth of the build to rent sector has meant that more companies are letting homes than at any time since our records began.
“London, where landlords tend to have higher levels of debt and often the most to gain from corporate ownership, has the largest proportion of homes let by a company. However, it’s not always more profitable to put a buy-to-let into a company as other associated costs come into play.
“Strong rents in the South drove rental growth in Great Britain in June. Low stock levels, particularly in the South, continue to put pressure on rents. Rents rose in six out of eight regions in Great Britain, with the East and Wales recording small falls.”
House sales crashed 16.5 per cent in June, as the property market took a “wait-and-see” attitude to transactions amid Brexit uncertainty.
Monthly HM Revenue and Customs (HMRC) figures showed British residential property sales fell to 84,490, more than one-sixth down on the same period last year.
The figure represents a 9.6 per cent monthly drop between May and June this year.
Analysts were quick to point out the figures are reported with several months’ lag, meaning the transactions relayed are those accepted in March.
Benham and Reeves director Marc von Grundherr said: “With many of us, perhaps foolishly, believing we would be exiting the EU at the end of March, it stands to reason that the vast majority of buyers may have refrained from a sale until this event had passed.
“Therefore any dip in transactions should be viewed as a momentary stutter and with many other market indicators suggesting a return to form and growing levels of buyer demand over the last few months, we should start to see the number of properties being sold climb from here on in.”
Non-residential transactions were also down 7.2 per cent month-on-month.
‘A fragile market landscape’
Springbok Properties founder Shepherd Ncube added: “A lull in transactions will come as a cause for concern in what is currently a rather fragile market landscape, however, the broader picture simply doesn’t suggest a market that is on its knees.
“Homebuyer appetite is alive and well and while many may not want to fill up on bread until the main course of Brexit is finally served, we are on course to see a healthy level of properties transact this year regardless.
Joseph Daniels, founder of modular developer Project Etopia, added: “Sales volumes have walked off a cliff, crashing hard as the Brexit deadlock becomes the ball and chain fixing the housing market to the spot.
“What you’re seeing is a wait-and-see attitude among sellers and many buyers becoming endemic.”
Paragon Banking Group reported another quarter of strong growth. The latest update shows a total of £1.90 billion of new lending across all business lines in the nine months to 30 June 2019. This represents a 20% increase on the previous year. Within this total, Paragon’s mortgage lending grew from £1.13 billion to £1.19 billion.
Paragon’s specialist focus on professional landlords enabled it to increase its share of the market, with 89% of completions being from complex landlords, compared to 76% in 2018.
It was a particularly strong quarter for buy-to-let, with the new business pipeline reaching £733 million, up from £711 million in the previous quarter. Annualised buy-to-let redemptions continue to be encouraging at 8.6%, down 2.1 percentage points from the previous year.
John Heron, Managing Director of Mortgages at Paragon, said:
“Paragon is performing well. We have delivered strong new lending across all our business lines and the buy-to-let pipeline has grown despite the uncertain economic backdrop. We’re confident of meeting our objectives for the year as we continue to focus on the needs of larger, more complex and specialist landlords.”
Paragon’s Commercial Lending division, which includes development finance, has grown its new lending to £0.71 billion, up 58% from the previous year.
This growth reflects Paragon’s commitment to supporting more British SMEs in specialist lending markets.
Paragon has continued to strengthen its asset finance and development finance divisions. The development finance business has enhanced its product range following the acquisition of Titlestone Property Finance last year. Since then, Paragon has funded multiple projects in the South-East of England and has revealed plans to expand its services to small and medium sized property developers throughout the UK.
The above is an example of how the market is switching from small nonporfolio BTL borrowers to the larger professional landlords and borrowing in Ltd companies especially.
The proportion of homes let by company landlords have risen steadily since the removal of mortgage interest tax relief for non-company landlords was announced in 2016, Hamptons International has found.
It estimated that company landlords own 641,480 homes in Great Britain this year. This is 42% more than in 2015, when 452,600 homes were let by company landlords.
Aneisha Beveridge, head of research at Hamptons International, said: “More than one in 10 rental properties are now owned by private companies, an indication that the sector continues to professionalise.
“Increasing taxation for private landlords combined with the growth of the build to rent sector has meant that more companies are letting homes than at any time since our records began.
“London, where landlords tend to have higher levels of debt and often the most to gain from corporate ownership, has the largest proportion of homes let by a company.
“However, it’s not always more profitable to put a buy-to-let into a company as other associated costs come into play.
“Strong rents in the South drove rental growth in Great Britain in June.
“Low stock levels, particularly in the South, continue to put pressure on rents. Rents rose in six out of eight regions in Great Britain, with the East and Wales recording small falls.”
The increase is partly due to the rise in the proportion of homes let by company landlords, but also due to the increase in the overall size of the rental sector.
London landlords are most likely to own a buy-to-let property in a company structure. In H1 2019, 13% of new lets were owned by a company landlord, up from 12% in 2015 and 2018.
Meanwhile landlords in Wales are least likely to own a buy-to-let in a company name. Scotland has seen the biggest increase in the proportion of homes let by a company landlord since 2015 (+6%), followed by the North (5%) and South of England (3%).
Rental Growth Rental growth continues to accelerate, reaching the highest level since April 2016. The average cost of a new let in Great Britain increased to £986 per month in June, up 3.1% year-on-year.
The South West recorded the strongest rental growth, with rents rising 4.5% annually. Rents in London increased 4.3% year-on-year.
