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Glasgow beats Edinburgh for property deals

INVESTMENT from Asia helped the value of commercial property deals in Glasgow exceed Edinburgh for the first time since 2015.

However, the overall value of deals continued to fall in the second quarter, according to the Scottish Property Federation (SPF).

Deals worth a total of £172 million were concluded in Glasgow in the second quarter, up from £104m for the same period last year, compared with £108m in Edinburgh, down £14m.

It was the first time the value of deals in the west exceeded the capital total since the first quarter of 2015, with the market in Glasgow boosted by the £48.4m purchase of 110 St Vincent Street by South Korean investors. The building is occupied by Bank of Scotland.

While deal values rose in Glasgow, the overall value of sales in Scotland slipped to its lowest in five years, at £641m.

SPF director David Melhuish said: “Glasgow was very impressive this quarter, outperforming Edinburgh for the first time in four years against a wider Scottish market that saw a reduced value of sales activity.

“Glasgow’s sales increase was fuelled by a number of £5m-plus deals, totalling £129m, whereas Edinburgh only secured £33m in the same category.

“A notable feature of Scottish commercial property investment in the Q2 period was the rise of capital sourced from Asia, which topped £250m for the first time on record, according to CoStar data.”

By Scott Wright

Source: Herald Scotland

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U.K. Mortgage Approvals Jump to Highest in More Than Two Years

Demand for mortgages jumped last month to the highest since early 2017, according to data published Monday.

Loans for house purchases rose almost 11% from a year earlier to a seasonally adjusted 43,342, lobby group UK Finance said. The report covers seven high street banks representing around 60% of total mortgage lending, data on which are due to be published by the Bank of England on Aug. 30.

Meanwhile, credit card spending was 8.2% higher than it July 2018, while borrowing grew by 3.8% in the year. Spending hit a record 12 billion pounds in the month, while repayments reached a record. UK Finance said this shows that consumers are “managing their finances effectively overall.”

By David Goodman

Source: Bloomberg

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Study reveals rental costs before buying a first home

The average adult in Britain will pay out more than £63,000 in rent before they get onto the property ladder, a new study has found.

Researchers found that people who have bought their first home within the last five years had typically paid £625 every month in rent to their landlords.

And on average, it takes renters almost eight and a half years before they finally save up enough to buy their own home, spending a total of £63,225 in rent, according to the study from home builder Keepmoat Homes.

This means they’ll have already spent the equivalent of more than a quarter of the average £228,903 property in the UK, it points out.

‘For many people, renting is an important first step towards home independence. It offers benefits like flexibility, allowing you to test different areas and types of home, before you commit to buying somewhere,’ said Tim Beale, the firm’s chief executive officer.

‘However, this research highlights the considerable cost of renting and therefore it isn’t surprising to see that for over half of people asked, say they feel as if the dream of home ownership will never be possible,’ he explained.

‘In reality home ownership can cost less than your rent. For example with our average selling price of £156,000, the standard monthly mortgage repayments would make you approximately £100 a month better off than paying the typical £625 rent,’ he added.

The study also found that of those who had bought their first home in the last five years, or who are still renting, some three quarters believe it is ‘impossible’ to save for a home while renting.

Of those who have bought a home, they spent almost five years saving before putting down an average deposit of £24,033 on their property, more than 80% of the average adult’s salary.

However, four in 10 were able to lean on their parents for financial support when it came to their deposit, while a fifth relied on an inheritance and a quarter even ended up moving back in with their parents to save on rent while 24% considered it but were able to avoid it.

For those respondents still renting, they think it will be at least another four years before they are in a position to think about buying their own home. Researchers also found 18% of renters have taken on two jobs in a bid to save for a deposit while paying out monthly to a landlord.

One in four have forsaken holidays, and a third have cut back on luxuries like magazines, flowers in the home and TV and movie costs while 30% said that they started taking a packed lunch to work and 18% tried to do all of their shopping in the reduced section of the supermarket rather than paying full price.

Unsurprisingly, three quarters of those polled, via OnePoll, believe something needs to be done when it comes to the cost of renting to help those trying to save for their own home.

Source: Property Industry Eye

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Property sales fell considerably in July, official figures show

Residential property sales have fallen considerably in the UK, with official data showing a fall of 8.5% month on month between June and July and a year on year decline of 12.4%.

The data from HMRC shows that overall there were 86,630 residential sales and 9,760 non-residential sales in July 2019. Non-residential sales also fell, down by 2.8% on a monthly basis and 5.8% lower than July 2018.

The figures suggest that there are a number of barriers preventing people from buying and Kevin Roberts, director of the Legal & General Mortgage Club, believes that it is not just Brexit.

‘While Government schemes have helped thousands of first time buyers onto the property ladder, we need to think about those further up the ladder too. To stimulate the market, the Government needs to build more housing across all types of tenure. This will provide second steppers and last time buyers with more choice and in turn, families can up or downsize accordingly,’ he said.

But it could be the usual summer slump exaggerated by Brexit uncertainty, according to Marc von Grundherr, director of Benham and Reeves. He also thinks sellers are reluctant to accept lower prices.

‘Although mortgage affordability remains fairly good, the huge stamp duty costs facing many buyers will do little to stimulate demand at the other end and continue to act as a financial anchor for those looking to climb the ladder,’ he explained.

But Joseph Daniels, founder of modular developer Project Etopia, does put the blame on Brexit. ‘Brexit has cemented caution into the attitudes of buyers and sellers and the sales slump is all but nailed on now until the political uncertainty settles down,’ he said.

Neil Knight, business development director of Spicerhaart Part Exchange and Assisted Move, believes it is more complicated than that. He pointed out that the figures follow the recent construction output figures which showed that overall construction output dropped by 1.3%, and the UK Finance mortgage trends report which showed levels of remortgaging, home mover mortgages and first time buyers all fell in June.

‘It feels like a fairly gloomy picture for the housing market. However, when you take into account that the drop in construction output was mainly driven by a 6% decline in private housing repair and not new housing and that while nationally, mortgage transitions are down, actually, when you look at a regional picture, it is only London where the market is struggling, it paints quite a different picture,’ he said.

He also pointed that the latest figures from the National House Building Council show that builders and developers registered the highest number of new homes for 12 years during the last three months.

‘These figures tie in much more with what we are seeing. While overall, the housing market may be subdued, the new homes market is much more buoyant. At Spicerhaart Part Exchange and Assisted Move, we are busier than ever, working with developers across the UK to offering part-exchange and assisted move services. We are being led to believe that the house building industry as almost ground to a halt, but that is simply not true,’ he added.

‘The demand is there and the activity is too and it is great to see such confidence in new-build housing despite uncertain economic and political times. Let’s hope it filters through to the rest of the market,’ he concluded.

Source: Property Wire

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UK economy on course to stagnate in third quarter, says Bank of England governor

Bank of England governor Mark Carney has said that the UK’s economy is on course to stagnate in the third quarter.

He also said that underlying growth looked muted even with Brexit volatility stripped out.

Carney said Britain’s economy was “currently close to equilibrium, operating just below potential” in a speech at the Jackson Hole gathering of global central bankers.

The economy shrank in the second quarter for the first time since the global financial crisis a decade ago, due in part to companies preparing for the original Brexit deadline of end of March.

Earlier this month, the Bank of England forecast 0.3 per cent growth for the current quarter, but August business surveys have painted a bleaker image.

“The UK economy contracted slightly last quarter and surveys point to stagnation in this one,” Carney said. “Looking through Brexit-related volatility, it is likely that underlying growth is positive but muted.”

Despite this, the job market is still going strong with the fastest wage growth in 11 years and unemployment at near record-lows.

Meanwhile, Carney also said that weak business investment was an obvious result of Brexit uncertainty in the lead up to the 31 October leave date.

“There is overwhelming evidence that this is a direct result of uncertainties over the UK’s future trading relationship with the EU, and it serves as a warning to others of the potential impact of persistent trade tensions on global business confidence and activity,” Carney said.

The governor reiterated that the Bank of England may have to ease monetary policy to help the economy in the event of a no-deal Brexit, but added that there were limits to how much it could tolerate a rise in inflation caused by a falling pound.

Carney maintained that a no-deal Brexit was “not a given” despite its increased likeliness just two months out.

By Michael Searles

Source: City AM

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Scottish housing market hits 11-year high despite Brexit fears

SCOTLAND’S property market has soared to an 11-year high despite ongoing fears surrounding Brexit, new research indicates.

Property transactions worth more than £8 billion were recorded between January and June this year, the best for a six-month period since 2008, according to Aberdein Considine’s quarterly property monitor.

High sales in the second quarter, from April to June, have been credited with driving the trend.

A total of 25,806 sales concluded in these three months, up by almost1000 (4%) on the same period last year. The additional activity pushed the average price of a Scottish home up by 1.6% to £172,189, despite the market stalling elsewhere in the UK.

Jacqueline Law, managing partner at Aberdein Considine, said buyers have retained a “degree of confidence” amid political uncertainty.

“Buying a house is not something people do with tomorrow or next year in mind,” she said.

“It’s a considered decision which most purchasers take with a medium to long-term view – and these figures suggest people are looking beyond the current political and economic headwinds with a degree of confidence.”

Edinburgh remains the most expensive place to buy a home in Scotland, with the average cost being recorded at £264,943.

The capital is followed by East Lothian, where prices have risen by 15.2% to £260,399 – the largest increase in Scotland. East Dunbartonshire came in third at £250,017, up by 4.1%, with East Renfrewshire in fourth place with an average price of £244,902 – a 3.9% drop.

East Ayrshire recorded the lowest average price at £117,676, a 3.3% decrease, while the largest percentage decrease was in South Ayrshire, which fell by 8.4% to £146,984.

Law added: “The regions with the highest property prices – Edinburgh, East Lothian and Glasgow’s more affluent suburbs – have a common tie, which is a lack of homes for sale. Average sale prices in these areas are reflective of the high demand for what limited stock is coming to market.

“Regardless of what kind of deal – if any – the UK leaves the EU with on October 31st, many Scots are pressing ahead with purchase decisions in order to provide short to medium-term security.

“However, in many areas, there are simply not enough homes on the market to meet that demand, which in turn is driving up prices for the ones which do.

“We’ve seen a similar pattern in cities like Stirling and Perth over recent quarters, where prices are edging towards the £200,000-mark despite sales falling.”

By Tom Jarvis

Source: The National

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Over half of landlords letting to Universal Credit tenants experiencing arrears

Universal Credit is causing tenants to fall behind with their rent, according to new research for the Residential Landlords Association.

It reports that 54% of private landlords who have let to tenants on Universal Credit in the past 12 months have seen them fall into rent arrears.

Of these, 82% said that the arrears only began after a new claim for Universal Credit or after a tenant had been moved from housing benefit.

Almost seven in ten (68%) landlords said that there was a shortfall between the cost of rent and the amount paid in Universal Credit.

Private landlords renting to Universal Credit claimants can apply to have the housing element paid directly to themselves when a tenant has reached two months of rent arrears.

This is known as an Alternative Payment Arrangement (APA).

The RLA’s research shows that it took landlords an average of almost 8.5 weeks for an APA to be arranged – meaning that landlords can be left with almost four months of rent arrears before they begin to receive the rent they are owed.

The research further found that 36% of landlords said that they had buy-to-let mortgage conditions which prevent them from renting to benefit claimants.

The RLA is calling on the Government to do more to prevent rent arrears occurring in the first place, including:

Giving all tenants from the start of a claim for Universal Credit the ability to choose to have the housing element paid directly to their landlord.
Ending the five week waiting period to receive the first Universal Credit payment.
Ending the Local Housing Allowance freeze to ensure it reflects the realities of private sector rents.
David Smith, policy director for the RLA, said: “Today’s research shows the stark challenges the Government still has in ensuring Universal Credit works for tenants and landlords.

“The system only provides extra support once tenants are in rent arrears. Instead, more should be done to prevent tenants falling behind with their rent in the first place.

“Only then will landlords have the confidence that they need that tenants being on Universal Credit does not pose a financial risk that they are unable to shoulder.

“Without such changes, benefit claimants will struggle to find the homes to rent they need.”

By ROSALIND RENSHAW

Source: Property Industry Eye

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House prices are going up – yet properties becoming more affordable in priciest cities

Property buyers in UK cities and major towns are having to pay up to 13 times their salaries to get a home.

London is the most expensive city in terms of the salary to house price ratio, but Cambridge, Oxford, Bournemouth and Bristol are not far behind.

Across 20 UK cities and major towns, buyers are paying a house price that is an average of 6.7 times their earnings.

In all of these cities, with the exception of Aberdeen, house prices have risen.

However Zoopla – which produced the figures – says that affordability is actually improving in 12 cities, including the most expensive four, where earnings growth is outstripping house price inflation.

Richard Donnell, research and insight director at Zoopla, said: “Housing affordability is slowly starting to improve in London as earnings growth outstrips house price inflation.

“There has been a clear downward trend in the ratio of house prices to average earnings over the last two years.

“However, the scale of improvement is relatively modest.

“While welcome news, the gap between earnings and prices needs to close further in order to make a material difference to would-be purchasers.

“The changing picture is not limited to London. There are 12 cities where the annual growth in house prices is below the growth in average earnings which is running at 3.7%.

“Lower-priced cities in northern England are actually getting less affordable than their southern counterparts when you consider that the annual percentage growth in house prices is outstripping earnings growth.”

By ROSALIND RENSHAW

Source: Property Industry Eye

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New figures show UK economy a little larger than thought

Britain’s economy is slightly larger than previously thought, according to new official estimates published on Tuesday that take into account new methodology and data.

The Office for National Statistics added around 26 billion pounds to the size of the world’s fifth-biggest economy in 2016, a rise equivalent to around 1.3% of gross domestic product and bringing total output to just under 2 trillion pounds.

The ONS regularly updates its methods for measuring the economy, which usually results in slight increases to its size.

The latest estimates used new surveys on costs faced by businesses and “significant” changes to the way capital assets such as buildings and machinery are measured.

Average annual growth in the economy between 1997 to 2016 is now estimated at 2.1%, up from 2.0% previously.

“These new figures are produced using new sources and methods, giving significantly improved estimates of how money moves around the UK economy,” Rob Kent-Smith, head of GDP at the ONS, said.

“While these figures are calculated using more and better information than was previously available, overall, they paint a very similar picture about the size and growth in the economy to our current estimates.”

The new figures showed the economy contracted by 6.0% during the financial crisis, a smaller drop than the 6.3% estimated previously. The economy also returned to its pre-crisis peak in early 2013, slightly sooner than thought beforehand.

Reporting by Andy Bruce; Editing by William Schomberg

Source: UK Reuters

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Five innovative ways to combat the housing crisis

From modular commuter villages to innovative finance models, developers are finding new, inventive solutions to tackle the UK housing crisis.

Modular commuter villages

Located on the periphery of overcrowded urban centres, can provide affordable new housing stock while alleviating the inner-city housing crisis, according to Project Etopia.

Its first modular village, under development in Corby, Northamptonshire, includes 47 turnkey homes equipped with in-home internet of things technology, renewable energy, and intelligent heating and cooling systems.

The houses, which are fully mortgageable and have a lifespan of 60 to 100 years, are constructed offsite – four houses can be built in 34 days – and shipped worldwide. They are also affordable; a four-bedroom house in the Corby development costs between £320,000 and £350,000, compared with £450,000 to £575,000 for new, nearby brick-and-mortar houses, according to the company.

“Modular commuter villages the wage benefits of working in the capital, but without the high property costs,” says founder Joseph Daniels.

Etopia Corby is the company’s first project, but it is already developing others in the United States, Spain, Namibia and Kuwait. Mr Daniels says the company is also acquiring land in the UK to build a series of connected eco villages that will facilitate smart energy-sharing.

Specialist senior housing

Providing good quality accommodation for over-65s can free up large under-occupied family homes for younger generations to help tackle the housing crisis. Yet only around 3 per cent of homes in the UK are built specially for older people, even though around 18 per cent of the population, around 12 million, are aged 65 and over.

ExtraCare Charitable Trust has developed that it claims have freed up more than 750 local family homes.

To make its projects viable, the trust has focused on economies of scale and being a dedicated healthcare provider, which means it has access to government funds to help pay for often uneconomic communal spaces.

For example, it’s £48-million Longbridge Retirement Village in Birmingham, built on a disused car factory, comprises 260 one and two-bed apartments, plus a village hall, bar, bistro, gym and more.

“Good retirement living requires community spaces, but funding this while . However, we’re seeing exciting models enter the market, such as providing other services such as healthcare,” says Louise Drew, head of real estate at law firm Shakespeare Martineau, which worked on the Longbridge development.

Besides freeing up housing stock, senior housing can have other benefits. According to a recent study with Aston University, ExtraCare residents reduced their dependence on GP and hospital services, resulting in a 38 per cent reduction in NHS costs per person each year.

Building up, not out

Using existing rooftops to build upwards instead of outwards and provide 180,000 new homes, including 60,000 atop public assets, in London alone, according to housing developer Apex Airspace.

The company currently has plans to build 3,000 new homes in the capital, half of which will meet the government’s affordability guidelines.

By mitigating the need to purchase land for development, airspace projects are on average 35 per cent cheaper, according to the company. Furthermore, units are developed 95 per cent offsite using modern construction methods and then craned on to buildings which reduces construction costs.

A project under consideration in Bermondsey aims to deliver 31 residential apartments on two Lambeth and Southwark Housing Association-owned and currently occupied buildings by incorporating a double-storey rooftop extension and “bookend building” at either side.

As well as adding value to existing buildings for councils and private owners, managing director of the company Val Bagnall, says rooftop development can help pay for or share the cost of building upgrades, such as

Apex aims to deliver 10,000 homes over the next ten years, but Mr Bagnall says the potential for airspace homes could be increased by 25 per cent with a revision in planning permission law.

Pocket homes

Housing developers Pocket Living are helping the so-called squeezed middle get on the housing ladder by offering specially designed “Pocket homes” at a 20 per cent discount compared to the market rate.

The 38-square-metre modular factory-built apartments are cleverly designed for compact living. Each has an open-plan kitchen-living room, separate double bedroom and a wet room.

The company subsidises these homes by selling two and three-bedroom properties in the same developments at full market price. Costs are kept down with and modern manufacturing methods, according to the company.

Modular off-site construction has also enabled it to develop heavily constrained sites. Pocket Living’s latest project, a 27-storey, 89-home tower in Wandsworth, London, called Mapleton Crescent, was possible to develop because the housing units could be craned into the heavily restricted riverside site.

“Modular homes are better quality than traditionally constructed ones because they are made in factory-controlled conditions and they also create less disruption for neighbours as they come completely finished,” says associate and project architect on Mapleton, Jonathan Drage.

To date the company has developed 650 Pocket homes and plans to build thousands more over the next 18 months.

Mortgage-free part-home ownership

A house in the UK typically costs eight times more than the average wage, which means mortgage deposits are often prohibitively expensive for average earners.

Startup Unmortgage hopes to tackle this problem and help alleviate the housing crisis by offering first-time buyers gradual home-ownership without a mortgage.

Instead of saving for a full mortgage deposit, which at 20 per cent of the house price can be around £80,000 in London on average, Unmortgage customers can enter into a shared-ownership partnership with the company to purchase as little as 5 per cent – at a minimum cost £12,500 – of an Unmortgage-approved home. They then pay market-rate rent on the rest of the property.

Buyers can then increase the equity they own in their home by up to 5 per cent a year and, when they have enough to secure a mortgage, the property can be purchased outright.

Conrad Holmboe, chief information officer at Unmortgage, says the finance model can bridge the gap between renting and buying, while also providing long-term housing security.

“We aim to create a virtuous cycle where the more someone buys, the less rent they pay and the more equity they have,” says
Mr Holmboe.

Unmortgage is financed by Allianz Global Investors, which is reported to be providing £500 million, connecting pension funds and properties in a new way in the UK. With the first tranche of money, Unmortgage intends to fund “a couple of thousand” properties.

Source: Raconteur