London house price boost
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London house price boost helps overall growth

UK city house price growth has picked up to 2.9% supported by a 1% increase in London house prices, the October Zoopla UK Cities House Price Index has revealed.

Prices have risen by 1% in London over the past year, the highest rate of growth for two years, following a period of year-on-year price falls.

Richard Donnell, research and insight director at Zoopla, said: “After a three-year repricing process accompanied by a sizable decline in housing sales, the London housing market is finally showing signs of life.

“The shift in momentum is clear, resulting from a lack of supply, increased sales and more realistic pricing, which bode well for higher sales activity in 2020, rather than a pick-up in house price growth.

“While the London housing market has been in the doldrums, market conditions in regional cities have been stronger over the last two years with demand supported by employment growth and attractive housing affordability.

“The rate of growth is slowing, and all cities are registering annual growth of less than 5%.

“The announcement of the General Election has brought forward the usual seasonal slowdown, but the last few weeks of the year pre-Christmas tend to be much quieter than after Boxing Day, when consumer interest in housing springs back to life.”

House prices are now registering month-on-month price falls in less than a quarter of London’s housing markets, a huge drop from the 85% of markets registering price falls a year ago.

Over three quarters of London’s homes are in markets registering small month-on-month price increases, which have lifted the overall annual growth rate to 1%.

The shift in London house price momentum is down to a decrease in the number of new properties for sale, which has restricted supply.

This is a trend that has been developing for the last 12 months and has been accelerated by the announcement of the General Election on 12 December.

In addition, there has been a notable increase in the number of sales agreed per agency branch in London.

While this increase is off a low base, it indicates that there is renewed demand for housing in London after a sizable drop in sales volumes over the past three years.

Despite London’s housing market having been through an extended slowdown, accompanied by lower sales, large regional cities are starting to show signs of slower growth.

House price growth since the start of 2017 has exceeded 15% across Edinburgh, Leicester, Manchester and Birmingham, but the pace of growth is slowing.

North of the border, house price growth remains steady in Edinburgh and Glasgow at 4.0% and 2.6% respectively.

By Michael Lloyd

Source: Mortgage Introducer

BTL portfolio UK house prices South London Rental yields low interest rates Leicester Zoopla June 2021
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Leicester leads the way on city house price growth

House price growth in Leicester is currently outstripping other major UK cities, Zoopla’s UK Cities Index has found.

In the year to October 2019 prices rose by 4.7% year-on-year to £180,000 in Leicester, outstripping Manchester (4.6%), Liverpool (4.1%), Edinburgh (4.0%) and Belfast (4.0%).

Josef Wasinski, co-founder of Wayhome, said: “These figures will cause further frustration for aspiring homeowners struggling to afford the deposit needed for today’s property prices.

“With first time buyers and housing at the forefront of party manifestos, we need to move beyond the rhetoric and be confident that the proposals will become policy alongside alternatives which provide realistic pathways to homeownership for those looking to get on the ladder.”

The only major UK city to see house prices fall was Aberdeen, where they are 5.9% lower than last year.

House prices have also stayed the same (0%) year-on-year in Oxford.

Despite the impact of a Brexit slowdown, in the year to October 2019 UK house prices rose by more annually than the corresponding year before, by 2.5% from 2.0%.

BY RYAN BEMBRIDGE

Source: Property Wire

Buy To Let Mortgage Market Brexit deal BTL Tax changes Rental income buy-to-let hotspots Buy To Let Property Sector buy-to-let buy to let property investors Buy-to-let Two bed properties
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Tax changes blamed for rise in repossessions

The tax shake up that abolished mortgage interest tax relief for landlords has been touted as a factor behind the rise in the number of buy-to-let properties being repossessed.

Latest figures from trade body UK Finance showed 800 buy-to-let mortgaged properties were taken into possession in the third quarter of 2019 — 40 per cent up year-on-year.

The total had risen gradually since the end of last year, from 550 in the last three months of 2018 to 590 in Q1 2019 and 640 last quarter.

At the start of this year, the Intermediary Mortgage Lenders Association warned there could be a “watershed” moment during 2019 as landlords begin to feel the effects of the tax shake up.

The changes to mortgage interest relief have been phased into the system since April 2017.

Before 2017, landlords could deduct all mortgage interest payments from their tax bills. This meant they were taxed on their profits, not their turnover, so reduced the overall bill.

But the rule changes meant tax relief on mortgage interest was phased out and instead landlords receive a tax-credit based on 20 per cent of the interest payments.

Based on a property yielding £950 in rent and a £600 mortgage per month, the landlord’s income could drop by about 57 per cent after the rule changes, as the shown in the table:

Tax yearProportion of mortgage interest landlords can deduct from their tax billsTax billPost-tax and mortgage rental income
Prior to April 2017100%£1,680£2,520
2017-1875%£2,040£2,160
2018-1950%£2,400£1,800
2019-2025%£2,760£1,440
From April 20200%£3,120£1,080

Source: Which

David Smith, policy director for the Residential Landlords Association, said: “We said at the time people would be blindsided [by the tax changes].

“Some landlords would have been unaware of the tax changes until they felt them and by that point, they were halfway through an even more challenging tax year.”

Mr Smith thought the government had failed at speaking directly to landlords about the changes, adding he was “massively concerned” about the future of the buy-to-let market.

Dan White, director at Champion Hall and White, agreed. He said: “This may well be the effects of lack of preparation, knowledge and understanding of the tax changes which could well be a result of higher tax bills which were not budgeted by landlords.”

Mr White also said landlords looking to exit the market could be struggling the sell in a stifled property space, resulting in unoccupied properties, arrears and more repossessions.

L&C Mortgages’ director of communications David Hollingworth said it was crucial landlords took advantage of the competitive mortgage rates on offer to manage their costs as well as possible as the changes to tax relief were “feeding through”, while Nick Morrey, product technical manager at John Charcol, said some landlords had probably “thrown in the towel” over the tax changes.

Alan Lakey, director at Highclere Financial, said the market had experienced a “vile mix” of changes which were a “recipe for repossessions”.

Other changes to the buy-to-let space included a 3 per cent stamp duty surcharge for second homes and more stringent affordability testing from the Bank of England.

Martin Stewart, director of the Money Group, said: “I would suggest this a very worrying trend, not only for buy-to-let but for the wider lending environment.

“The good ship UK has been taking on debt for the past ten years and with the seas about to get choppy, I just hope there are enough lifeboats for everyone.”

The Treasury declined to comment due to pre-election restrictions but has previously said the rationale for the policy was that the previous tax system had supported landlords “over and above” ordinary homeowners.

In the Summer Budget of 2015, when the rules were announced, the Treasury stated the ability to deduct mortgage interest costs put investing in rental property “at an advantage”.

By Imogen Tew

Source: FT Advised

UK mortgage approvals
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UK Finance: Mortgage approvals rise

Both mortgage approvals for purchases and remortgage approvals rose in October, the UK Finance Household Finance Update has revealed.

Mortgage approvals for home purchases by the main high street banks in October were 3.0% higher while remortgage approvals were up 12.7%.

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As we head towards the end of the year, and lenders jostle for what business there is out there, there are some incredible deals on the market to attract borrowers.

“There was an uplift in people taking advantage of these, with mortgage approvals for home purchase some 3% higher than October last year, while remortgage approvals were 12.7% higher.

“Gross mortgage lending has fallen slightly compared with last October, reflecting perhaps the high level of uncertainty that continues to hamper the housing market as a whole.

“Until the General Election result and Brexit are settled, it looks unlikely that the lack of confidence this is instilling in the market will change.”

Andrew Montlake, managing director of Coreco, said the high street banks have got cash to burn at the moment, so it’s no surprise to see their share of mortgage lending increase.

He added: “The price war on the high street continues to rage and consumers are making the most of it.

“Buyers and homeowners alike are being driven on by the ridiculously low rates available, especially medium- to long-term fixed rates, which will help them ride out the uncertainty that the years ahead will bring.

​”Despite the manifesto rhetoric from both sides of the political spectrum, consumers don’t believe that anything will markedly improve in the housing market and question some of the promises made around house building and affordable homes.”

Gross mortgage lending across the residential market in October was £25.5bn, 0.9% lower than in the same month in 2018.

Sam Harhat, head of financial services at Andrews Property Group, said the Brexit tempo increased significantly in October and yet buyers and homeowners showed the same level-headedness they have throughout most of 2019.

He said: “Activity levels aren’t off the scale, but the property market is ticking over exceptionally well given the political environment we’re in.

“Remortgage activity remains particularly strong as people seek to lock into a lower rate before we leave the EU.

“5-year fixes are proving especially popular as they offer a robust hedge in the medium term.

“Mortgage approvals are also up slightly, as Brexit makes prices more affordable and people, especially first-time buyers, make the most of the competitive rates available.

“Aware that the current uncertainty is their window of opportunity, first-time buyers are particularly active at present.”

John Goodall, chief executive and co-founder of buy-to-let specialist Landbay, added: “While these figures are disappointing, they come as no surprise, considering the economic and political pressures the market has been facing.

“The reality is that lenders are (and have been) ready and willing to lend, instead it’s would-be buyers who need that final nudge to make their move.

“Looking forward, with the election looming, we may finally see the cloud of uncertainty begin to lift – assuming there is a clear parliamentary majority.

“If this does happen, we could see a spike in demand as those who were holding off in recent years consider making their move in 2020.

“With their genuine appetite to lend, lenders will be gearing up to facilitate any increase in demand.”

Jonathan Sealey, chief executive, Hope Capital, said that although the main banks continue to take the lion’s share of mortgage lending, it appears that borrowers are looking at alternatives to find the funds they need such as bridging finance.

He said: “Confidence is still being knocked by the uncertainty of what will happen as far as Brexit is concerned and the purchase market has stagnated.

“As a bridging lender we are seeing more borrowers and investors looking for finance to refurbish and improve property rather than moving or selling.

“It appears that until things are finally sorted out homeowners and property investors would rather sit tight, only moving or selling if they have to rather than because they want to.”

By Michael Lloyd

Source: Mortgage Introducer

Mortgage
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UK mortgage lending dips as buyers hesitate due to Brexit uncertainty

UK mortgage lending dipped in October as buyers hesitated due to economic and political uncertainty caused by Brexit and the upcoming General Election.

Gross mortgage lending across the residential market last month was £25.5bn, a dip of 0.9 per cent compared to October 2018.

Mortgage approvals for home purchases by the main high street banks increased three per cent and remortgage approvals soared 12.7 per cent, according to the latest data from UK Finance.

Credit card spending, which amounted to £11bn in October, was 2.3 per cent lower than last year, and repayments were in line with expenditure, demonstrating that consumers are managing their finances responsibly.

Personal borrowing through loans increased 7.4 per cent, and overdraft use was 1.2 per cent higher than the same time the previous year.

John Goodall, chief executive at buy-to-let specialist Landbay, said: “The reality is that lenders are (and have been) ready and willing to lend, instead it’s would-be buyers who need that final nudge to make their move.

“Looking forward, with the election looming, we may finally see the cloud of uncertainty begin to lift – assuming there is a clear parliamentary majority.

“If this does happen, we could see a spike in demand as those who were holding off in recent years consider making their move in 2020. With their genuine appetite to lend, lenders will be gearing up to facilitate any increase in demand.”

Mark Harris, chief executive at mortgage broker SPF Private Clients, added: ‘Gross mortgage lending has fallen slightly compared with last October, reflecting perhaps the high level of uncertainty that continues to hamper the housing market as a whole.

“Until the general election result and Brexit are settled, it looks unlikely that the lack of confidence this is instilling in the market will change.”

By Jessica Clark

Source: City AM

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Getting Brexit done will not help UK economy, say academics

Carrying out Brexit will not improve the UK’s struggling economy but will usher in years more uncertainty about Britain’s trading relationships, a new report has said.

The hard Brexit that Prime Minister Boris Johnson is proposing will also limit the size of the UK market and raise trade costs, making it a less attractive place for investment, according to at the London School of Economics (LSE).

The report says the UK economy has suffered a “lost decade”. Productivity – output per hour worked – is 24 per cent below its pre-financial crisis trend and real wages are yet to return to 2008 levels.

A major factor has been low levels of investment, the report says, which was suppressed in part by austerity and more recently by Brexit uncertainty.

Johnson has said that leaving the European Union with a Brexit deal would boost the economy. Professional services firm KPMG said in September that a Brexit deal would mean “investment recovers some ground”.

However, John Van Reenen, professor of economics at LSE and an author of the report, said: “It is a mistake to believe that ‘getting Brexit done’ will improve things.

“First, there will be continued uncertainty due to years of negotiation over what form the UK’s future trading relationship with Europe will actually look like. Second, a hard Brexit is certainly bad for the economy compared with remaining in the EU.

“The UK will be a relatively smaller market with higher trade costs with our closest neighbours, so a less attractive place for investment.”

To address Britain’s “abysmal” performance on productivity and “pitiful” wage growth, more public and private investment is required, the LSE report said today.

All the major parties have promised to increase government spending in their manifestos ahead of the 12 December General Election, with Labour’s radical, but much-criticised, plans promising by far the most.

Van Reenen said: “It is welcome that the main parties are promising increases in spending to finance public investment, so long as such investments are based on solid evidence rather than political gimmicks and ministerial whims.”

By Harry Robertson

Source: City AM

new-builds New build homebuyer demand
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HFS: More SME home builders required if Scottish housing growth to be sustained

With housing completions in 2018 exceeding 20,000 for the first time in a decade, Homes for Scotland (HFS) has stressed the need for more SME home builders if growth is to be continued.

In a new report entitled ‘Small Scale Home Builders: Increasing Supply’, which was published following a year-long special project, the trade body highlights how smaller firms were impacted by the financial crisis and have been slower to recover than larger players in the industry.

HFS chief executive Nicola Barclay said: “Despite the strong demand for housing that exists, smaller builders are delivering some 2000 fewer homes per annum than before 2008. Encouraging more into the market is crucial, not just in terms of volume but particularly in relation to increasing diversity of product, creating local employment opportunities and sustaining more rural communities.

“Smaller companies generally have fewer resources and limited routes to finance which make the challenges of home building all the more difficult to overcome.

“Thanks to their insight, and working alongside other key stakeholders such as the Scottish Government and Heads of Planning Scotland, this report identifies solutions and prioritises the action required to support and grow the small scale home builder sector.”

The report comes as HFS begins tracking quarterly housing completions for 2019 against those of last year. With 15% growth achieved in 2018 compared to the previous year, maintaining such levels of improvement would see a return to the pre-recession build rate average of 25,000 new homes per annum that HFS believes Scotland requires within the next two years. However, this can only happen if the right conditions are in place to support them.

The organisation is also monitoring the volume of new build transactions and planning consents in the pipeline, and on which Barclay added: “We will be keeping a close watch on these two metrics, given the importance of continuing growth to achieving Scotland’s housing and sustainable growth ambitions.”

Source: Scottish Housing News

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Tories pledge to ‘re-balance’ housing market towards home ownership – and Labour to fine bad landlords £100,000

The Tories will help people buy and rent with the market ‘re-balanced’ towards home ownership, the Conservative manifesto declared yesterday. Meanwhile Labour is today set to unveil detailed new policies on the private rented sector.

The Tory policies – all widely leaked beforehand – contained no surprises but confirmed that if re-elected, the Conservatives will abolish ‘no fault’ evictions – a process already under way.

The manifesto, which devotes comparatively little space to housing, says: “This will create a fairer rental market: if you’re a tenant you will be protected from revenge evictions and rogue landlords, and if you’re one of the many good landlords, we will strengthen your rights of possession.”

It goes into no details as to how these would be beefed up. There is also no mention in the manifesto of reversing recent ‘landlord bashing’ moves, such as tax changes.

A new Tory government would also require only “one lifetime deposit” from tenants.

The manifesto will have major implications for the burgeoning deposit replacement market and also for how disputes are resolved at the end of tenancies.

The manifesto does not mention whether there could be a possible ‘topping up’ of lifetime deposits if the tenant’s first rental home was, for example, a studio but if the tenant progressively moved to larger and more expensive rental homes.

The manifesto also promises to encourage a new market in long-term fixed rate mortgages, which “will slash the cost of deposits, opening up a secure path to home ownership for first-time buyers in all parts of the United Kingdom”.

New homes developers will be used via the planning process to discount homes “in perpetuity” for a third of local people who cannot afford to buy in their areas.

The manifesto says that this could be used to prioritise key workers such as police, nurses and teachers.

Right to Buy will be maintained for all council tenants, while it will be “voluntary” for housing associations, with new pilot areas testing out the scheme.

Shared ownership will be reformed, and there will also be reforms to leasehold – all flagged up under the previous Tory administration. The Tories would also bring forward a Stamp Duty surcharge on foreign buyers, again already flagged up. There does not appear to be any other mention of Stamp Duty.

A new Conservative government would deliver at least a million more homes “of all tenures” over its lifetime, and they would be “beautiful, high-quality” properties.

The Green Belt would be protected and self-build encouraged.

tps://assets-global.website-files.com/5da42e2cae7ebd3f8bde353c/5dda924905da587992a064ba_Conservative%202019%20Manifesto.pdf

Labour meanwhile is today due to announce the detail on new policies which will “put bad landlords out of business”.

Jeremy Corbyn and housing spokesman John Healey will announce that all landlords must complete an annual property inspection, with all rental homes compulsorily meeting a decent standard.

It will be illegal to let homes without a rental inspection being completed and passed. Fines of up to £100,000 will be levied for a single offence, with landlords having to repay rent.

Labour would also cap rents in line with inflation.

Corbyn says: “Labour will be on the side of tenants and take on dodgy landlords who have been given free rein for too long.”

Healey says Labour would legislate in its first year.

By ROSALIND RENSHAW

Source: Property Industry Eye

Scotland’s commercial property sales
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Edinburgh rebound boosts Scottish commercial property sales to £1.2bn

A Scottish Property Federation (SPF) analysis of the latest commercial property sales figures has shown a rebound in the total value of sales in Scotland in Q3 (July to September) 2019.

In total, £1.2 billion was transacted in the quarter, nearly double the total value of commercial property sales in Q2 (April to June) 2019.

Edinburgh was a key driver of the increase in the value of commercial property sales, with sales in the capital more than tripling to £462 million in Q3 2019 when compared to the previous quarter. Partly as a result of several high-value transactions, Edinburgh dominated the commercial property market in Q3 2019, with a 38% share of the Scottish market by value.

Glasgow also continued the positive momentum with £216m transacted in the city during Q3 2019. Its total value increased by £44m on Q2 2019 and £63m against the same period in 2018.

Commercial property sales in Aberdeen remained steady at £32m. Aberdeen’s total value of sales rose slightly on Q2 2019 (by £2m) but remained £20m below values recorded in the same quarter last year.

Responding to the latest sales figures, David Melhuish, director of the Scottish Property Federation, said: “Q3 2019 was a strong quarter for commercial property sales; however, it comes on the back of a subdued first half of 2019, and the current one-year rolling total is still 3% lower than in the same period in 2018.

“We will be watching closely to see if this momentum can continue in the last quarter of the year, against the headwinds of continued political uncertainty and low economic growth.”

Cameron Stott, director at commercial property agency JLL, added: “The large volume by value has been driven by substantial asset sales which have offered investors either long secure income or the asset is in a prime location.

“This volume also reflects how attractive Edinburgh continues to be notwithstanding the political uncertainty.

“It is also interesting to note the continued interest from foreign investors no doubt seeing the UK as value for money but also benefiting from a more attractive yield compared to many other European cities.”

Scottish commercial property investment volumes also rose sharply on both a quarterly and an annual basis, according to property data experts CoStar UK. Investors spent £798m in Q3 2019, the highest quarterly amount since Q1 2018.

CoStar also highlighted that Scotland attracted more investment than any other UK region outside of London and the South East, with volumes heavily supported by a continuing flow of capital from overseas. It was reported that foreign investors were behind over half of all acquisitions by value, with European and American investors involved in sizeable purchases.

Source: Scottish Construction Now

Manchester’s rental market
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Manchester’s rental market booming

Lettings agency Manchester Apartments has achieved its highest number of lets ever.

As of November 2019, 99.5% of 800 studio and 1-3-bedroom apartments in the Manchester Apartments portfolio have been let to students and professionals in Manchester.

This is in comparison to 75% in the same period last year.

According to research from the Manchester Brain Drain, 51% of students from Manchester’s universities remain in the city after graduation.

In addition to this, 57% of students from Manchester who left the city for their studies, returned to Manchester after graduation.

Source: Property Wire