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Still places in London offering 5% rental yields

Despite clouds of uncertainty hanging over the London market, there are still pockets of the capital like the E6 postcode in East London that offer rental yields as high as 5%, London sales and letting agent, Benham and Reeves has found.

Benham and Reeves looked at data from PropertyData based on the average property price and rental potential of each postcode.

It found the E6 postcode in East London is the best bet for buy-to-let investors in the capital along with IG11 located a little further east covering Barking – with both offering a rental yield of 5%.

Marc von Grundherr, director of Benham and Reeves, said: “The DNA of the London rental market is so complex that it pays to consider where to invest on the most granular level possible when looking at the buy-to-let market.

“There are a whole host of factors that mean the rental desirability of a property can literally change from one street to the next but one of the best starting point to work from is the rental yield available.

“Despite the government’s attempts to dampen the appetite of the sector it remains a lucrative business and for those with the time to commit to it, there are plenty of buy-to-let honey pots out there that will bring a great return on your investment.

“Of course, London’s more prime postcodes are always a safe bet, attracting investment due to their prestigious image and positioning.

“While we may have seen some decline in price growth due to political uncertainty, they remain very much in demand from a rental point of view and so for those with the budget to buy there, a return isn’t hard to come by.

“They also offer better capital growth then London’s peripherals and for those not completely dependent on yield but preferring to opt for more long-term growth, inner London is still the go to place to invest in the capital’s buy-to-let market.”

In fact, this eastbound stretch of London dominates the top 10 most lucrative London buy-to-let postcodes, with RM8, RM9 and RM10 also amongst the best with rental yields of 4.9%.

N18, which straddles the North Circular, is one of the only postcodes outside of East London to make the list with a rental yield of 4.8%. RM13 ranks next with SE28 the only postcode south of the river to appear. E15 and EN3 complete the top 10.

Outside of London, the best in Britain is the L7 postcode in Liverpool with an average price of just £105,000 the area offers an average rental yield of 10.7%.

This is closely followed by the neighbouring L6 postcode where yields are currently 10.4% with Middlesbrough, Manchester, Bradford, Sunderland, Newcastle, Sheffield and Nottingham also home to some of the best postcodes for the highest rental yields.

By Michael Lloyd 

Source: Mortgage Introducer

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UK house prices see further slowdown amid weaker growth in England and Scotland

House prices increased at their slowest annual pace in nearly six years in January as property values tumbled in London but increased relatively strongly in places including the Midlands, Wales and Northern Ireland, official figures show.

England and Scotland saw a slowdown in annual house price growth, while in Wales and Northern Ireland property values are rising relatively strongly.

In Wales, the abolition of the Severn crossing tolls is helping to drive prices up in the south-east of the country, according to the report released jointly by the Office for National Statistics (ONS), Land Registry and other bodies.

Average house prices in the UK increased by 1.7% in the year to January 2019, down from 2.2% in December and the lowest annual rate since June 2013 when it was 1.5%, the report said.

UK house price growth has been slowing for the past two-and-a-half years, driven mainly by a slowdown in the South and East of England.

In London, house prices fell by 1.6% annually, while in the East of England prices fell by 0.2% over the year.

In the East Midlands, prices increased by 4.4% in the year to January 2019, while the West Midlands saw 4.0% growth.

Across the UK, the average house price was £228,000 in January.

ONS head of inflation Mike Hardie said: “While average UK house prices increased over the year, the rate is down from last month, and is at its lowest in almost six years.

“London property prices continued to fall, seeing their steepest drop since the end of the financial crisis, with Wales, the East Midlands and the West Midlands driving the overall growth.”

House prices in England increased by 1.5% annually in January, slowing from 1.9% growth in December. The average house price in England was £245,000 in January.

House prices in Scotland grew at a slower rate than other countries in the UK, increasing by 1.3% in the year to January, down from 2.0% in the year to December, taking the average house price in Scotland at £149,000 in January.

By contrast, house prices in Wales increased by 4.6% annually in January, reaching £160,00 on average.

The report said: “This continues to be driven by strong house price growth in south-east Wales, likely linked to the abolition of the Severn Bridge tolls.”

In Northern Ireland, house prices increased by 5.5% over the year, taking the average house price to £137,000.

Howard Archer, chief economic adviser at EY Item Club said: “Most recent data and surveys have pointed to muted housing market activity, indicating that heightened economic and Brexit uncertainties are weighing down on a housing market that is already under some pressure from overall challenging conditions.”

He continued: “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.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, said: “As always, national average house prices conceal significant regional differences.

“London continues to see the largest annual price fall as those worried about the Brexit fallout err on the side of caution.

“That said, the year has got off to a remarkably good start on the lending front despite ongoing political uncertainty.”

He said several lenders have trimmed rates in an effort to encourage more business.

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors (Rics), said in some areas the market is patchy at best, whereas in others there is more optimism.

“This is borne out perhaps more in the numerous micro markets of London where local factors are often much more relevant than the national picture,” he said.

“Sadly, while political uncertainty remains, stronger demand is likely to remain pent up at least for a little while longer.”

By Vicky Shaw

Source: Yahoo Finance UK

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UK inflation up, London house prices fall by most since 2009

Britain’s main inflation rate ticked up last month but stayed close to January’s two-year low, helping consumers maintain their spending power as wage growth also picked up, even though the timing of Brexit remained uncertain.

Wednesday’s official data also showed house prices rose at the weakest annual pace in 5 1/2 years in January, curtailed by the biggest drop in London prices since September 2009, just after the low point of the global financial crisis.

Consumer prices rose at an annual rate of 1.9 percent in February after a 1.8 percent increase in January, the Office for National Statistics said. A Reuters poll of economists had forecast an unchanged rate of inflation.

Economists said they expected inflation to rise above the Bank of England’s 2 percent target soon, especially as many household utility bills are due to increase in April.

“Inflation picked-up for the first time since August 2018, with rising prices across a range of items, including food and alcohol,” said Suren Thiru, an economist at the British Chambers of Commerce.

“Businesses also continue to report that the cost of imported raw materials is rising. As these high input costs filter through supply chains, they could increase the upward pressure on consumer prices in the short-term,” he added.

Still, British government bond futures rose slightly after the data showed core inflation, which strips out volatile food and energy prices, edged down, leaving the overall picture of domestic price pressures in Britain muted ahead of Brexit.

Weaker inflation, combined with rising wages and the lowest unemployment rate in 44 years, has taken the edge off the uncertainty about Brexit for many households, whose spending drives Britain’s economy.

Data due on Thursday are expected to show that retail sales grew an annual 3.3 percent last month, weaker than just before the referendum in 2016 to leave the European Union but above its average for much of the last decade.

Britain’s modest inflation is also helping the Bank of England as it holds off on raising interest rates while it waits for the outcome of Britain’s Brexit impasse.

Several policymakers at the central bank have said they want to see firm evidence domestic inflation pressure is building before they vote to raise rates.

The ONS said house prices in January rose by an annual 1.7 percent across the United Kingdom as a whole, the smallest increase since June 2013, when Britain was still struggling to shake off the effects of the global financial crisis.

Prices in London alone fell by 1.6 percent, marking 11 months where prices have not risen.

The ONS said prices in the capital were down 3.3 percent from their recent peak in June 2017, compared with an almost 18 percent peak-to-trough fall during the financial crisis.

By Andy Bruce, William Schomberg

Source: UK Reuters

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UK house price growth hits six-year low as experts warn of ‘Brexit downward spiral’

London house prices fell 1.6 per cent in the year to January, official data revealed today, as experts warned a mix of Brexit uncertainty and the death of buy to let are hurting the value of homes.

The sharp price drop in the capital’s housing market meant overall UK house prices rose just 1.7 per cent on an annual basis, the Office for National Statistics (ONS) said today, the lowest rate since June 2013.

London’s decline deepened after a 0.7 per cent drop in December 2018, while homes in the east of England lost 0.2 per cent of their value in January, compared to the same month the year before. This contrasted with growth of 4.2 per cent in the Midlands and 2.8 per cent in northern England.

Although London house prices have fallen, it remains by far the most expensive place to purchase a property in the UK, at an average of £472,000. It is followed by the south east and the east of England, at £321,000 and £288,000 respectively.

Real estate partner at Pinsent Masons, Kevin Boa, said: “It’s no wonder that there is little buyer appetite whilst Brexit uncertainty persists, alongside the death of buy to let, increased stamp duty and the prospect of interest rate rises.”

“Yet regardless of what happens with Brexit, there remains a massive gulf between asking prices and buyers’ ability to afford mortgages, especially in the south east”, he added.

“The bottom line is we are still not building enough homes to meet population forecasts, even if Brexit leads to a decline in net migration. Whatever happens with prices over the coming months and years, this chronic lack of housing is the biggest issue for the UK’s property market.”

John Goodall, chief executive of buy-to-let specialist Landbay, said: “At a regional level, price rises in London continue to lag behind the likes of the east midlands and east Anglia, a sign that demand in the capital is cooling as many buyers migrate away in search of something more affordable.”

Kevin Roberts, director of the Legal & General Mortgage Club, said the figures provide more evidence of a “subdued” market.

“As far as the mortgage market is concerned, however, it’s not doom and gloom at all. The current low-interest climate coupled with increased lender innovation means we’re seeing more and more buyers take their first steps, with the number of first-time buyers hitting a 12-year high last year,” he added.

The ONS also revealed today that growth in London private rental prices remains sluggish, rising by 0.2 per cent in the 12 months to February 2019, up from 0.1 per cent in January 2019.

London’s private rental growth was the lowest in the country, followed by the north east at 0.3 per cent. It weighed on the UK’s overall figure, which was 1.1 per cent in the 12 months to February 2019.

Co-founder of London rental agency Ideal Flatmate, Tom Gatzen, said: “Broadly speaking, the annual rate of rental growth across the UK remains at its most palatable for the last three years.”

He added: “However, these consistent uplifts, regardless of how marginal, continue to put pressure on the already strained cost of living for tenants across the nation.”

By Joe Curtis

Source: City AM

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Sluggish house price growth led by Wales

House prices edged up for the third consecutive month in February, rising 0.5% to take the average value of a home in England and Wales to £302,435.

The Your Move House Price Index showed that price growth was led by Wales, where it increased by 3% annually.

There was a spike in price rises in early last year, explaining why prices are down 0.5% compared to this time last year. Overall, prices remain subdued with an estimated 59,100 sales in February 2019.

There is a distinct North/South divide. Most of the major conurbations outside London continue to see growth, led by Cardiff, up 5.3%.

Oliver Blake, managing director of Your Move and Reeds Rains estate agents said: “Whilst a challenging market it’s a mixed picture with some regions still experiencing price rises; there clearly continues to be demand for property and a need for more homes to come to market.”

As of last month, the North/South divide largely persists in the regions of England and Wales, with annual falls concentrated in the South Eastern corner of the country.

The South East region itself is seeing the fastest falls in prices, with the average house values down 1.7%, despite strong growth in the Isle of Wight (up 7.0%) and Southampton, up 4.2% annually to set a new peak average price.

The picture is complicated by modest growth in the South West (up 0.3%).

There, growth in Bournemouth (up 7.3%) and new peak average prices in Bristol (up 0.3%), Gloucestershire and Somerset (up 3.8% and 3.9%, respectively) remains enough to outweigh downward pressure from Bath and North East Somerset (down 10.2%) and North Somerset (down 5.4%).

Likewise, the North East refuses to conform to the pattern. Prices there are down 1.6, with significant falls in Redcar and Cleveland (falling 7.3%) and Middlesbrough (down 6.5%).

Outside these areas, though, growth continues and the majority of local authorities (59 out of 108) saw averages prices rise. For the most part the increases are modest.

In England, the North West sees the strong growth with average prices up 1.3% annually. This is supported by strong performance in Manchester, which set a new peak average price in the month and where values have increased 3.1% in the last year.

The West Midlands also performs well, with growth of 1.7%, but in the East Midlands and Yorks & Humber regions growth is under 1.0%. The strongest performing region by far, however, remains Wales, where growth of 3.0% remains comfortably ahead of inflation.

Its performance is strengthened by strong growth in the capital Cardiff, where prices are up 5.3% annually at a new peak average of £241,036, benefiting in part from the abolition of the toll on the Severn Bridge.

The same is probably true for Wales’ third city, Newport, another new peak (one of five in Wales), with prices up 6.7% annually.

In London, prices have risen for the last five months, leaving the average price in the capital at £622,494.

By Michael Lloyd

Source: Mortgage Introducer

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Affordable housing finance scheme relaunches to help people at risk of homelessness

A Community Benefit Society working to end the housing crisis by providing affordable and emergency housing to people who need it most is launching the second round of its secure property-based financing arrangement.

Providing an “ethical alternative to buy-to-let”, Reap from Equfund sees ethically minded investors lend their money to provide decent, safe, and affordable housing for people at risk of homelessness.

Reap invests in property to provide affordable rental homes for people in housing need. Every acquisition is rigorously assessed to ensure it can provide a durable and reliable cash income stream for investors. The management of the property is handled entirely by Equfund.

With a minimum investment of £15,000, investors will receive a fixed monthly income (from the rental income) with a flat interest rate of 3% per annum without the associated risks, responsibilities and inconveniences of being a landlord. 100% of the original lump sum is returned to the investor after five years, and the invested amount and their monthly income is unaffected by voids or (maintenance costs) if the property requires maintenance.

The first round of Reap raised over £3,750,000 when it first launched in 2015, double the target amount. In this second round, Reap has transitioned from primarily investing in and refurbishing long-term empty homes to acquiring properties that are ready to move in. This transition, which was brought about by the worsening housing crisis in the UK, allows the company to act with greater speed in providing housing for those most in need and to allocate more investors’ funds against property.

Reap protects investors’ money by only borrowing 85% of the property value and the loan is registered against property at HM Land Registry much in the same way a mortgage is

Unlike many other property schemes, there are no fees involved and Reap guarantees to secure the investment against UK property and does not rely on property price growth to generate an income for investors. Each property has its open market value assessed by an independent chartered surveyor, and investors can arrange to visit a property prior to allocating their funds against it. For further security, and to limit exposure to any single property or locality, investors can request to have their money split and lodged against more than one property.

Reap actively rents to tenants in receipt of Local Housing Allowance or Universal Credit, with the belief that doing so is an important step in breaking the cycle of housing poverty caused by rampant discrimination of people in receipt of housing benefits. Reap goes as far as to assist LHA tenants with the paperwork required to claim their correct allowances and will help to submit this to the local council on their behalf.

Andrew Mahon, director at Equfund, said: “With the government seeking to gain more control over the private rented sector, the buy-to-let market has become progressively complex over the last 12 months, and the next 12 months will see yet more considerable changes to the sector. Investors no longer see much sense in putting their hard-earned money into a market that increasingly offers less rewards and more headaches and exposes them to great risk if they’re not fulfilling all of the new regulations.

“With Reap we’re offering a viable alternative to this broken system that not only tackles the growing housing crisis in the UK with a long-term solution, but also provides a stable and predictable income for socially responsible investors who still want to have a slice of the property market.

“We’re proud of the work we’ve done. We have a proven track record over the last decade in addressing the housing crisis with ethical and sustainable solutions. This second round of Reap will turbocharge the all-important work we do of putting a roof over the heads of those who most need it.”

Source: Scottish Housing News

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Challenging market continues as house price growth stalls

House price growth slowed for a second consecutive month in February, with just one region beating the rate of inflation.

Data from Your Move shows average prices fell by 0.5% annually last month to £302,435.

This was the same level of annual decline recorded in January.

Prices grew by 0.5% on a monthly basis after two months of zero movement previously.

The fastest growing region in February was Wales, which saw prices grow 3% annually to £188,077.

This compares with the inflation rate of 1.8%.

All other regions either posted annual growth below this rate or registered a decline.

The next fastest growing region was the west midlands, up 1.7% to £227,032.

The largest annual fall was in the south-east of England where prices fell 1.7% to £371,791.

London remained the region with the highest house prices at £622,494, which was down 1.5% annually.

Oliver Blake, managing director of Your Move, said: “Whilst a challenging market, it’s a mixed picture with some regions still experiencing price rises.

“There clearly continues to be demand for property and a need for more homes to come to market.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Zoopla to ban benefits restrictions in rental adverts

Property advertising platform Zoopla is set to change its terms and conditions to prohibit renting restrictions for tenants in receipt of benefits.

The move follows calls by the government and charities for lenders, insurers, property agents and ad sites to review their approach to ‘no DSS’ discrimination.

A campaign to lift such restrictions began last year when one landlord claimed NatWest threatened to revoke her buy-to-let mortgage when the bank discovered she was renting to a benefits claimant.

Helena McAleer, a landlord from Northern Ireland, contacted the bank to discuss releasing equity from her property – but instead Ms McAleer claimed the lender revoked her mortgage citing its policy prevented rentals to benefits claimants.

At the time NatWest’s buy-to-let eligibility criteria read: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

The campaign gained widespread support, with the Residential Landlords Association calling on the government to use its influence as a shareholder in certain banks to end the “discriminatory” practices.

In 2017 research by the RLA found 66 per cent of lenders representing 90 per cent of the buy-to-let market did not allow properties to be rented to tenants in receipt of housing benefit.

At the beginning of this month NatWest lifted all restrictions on its buy-to-let customers renting to tenants in receipt of housing benefits.

Zoopla has now followed suit, announcing it will launch additional measures over coming weeks in support of “further minimising blanket restrictions” which apply to renters who receive housing benefit.

Due for implementation in April, Zoopla will amend its member terms and conditions to “specifically prohibit” the inclusion of “no DSS” restrictions on its site, remove “no DSS” references from listings uploaded on its site and remove the “no DSS” field in its cloud-based software products.

Charlie Bryant, managing director of Zoopla, said: “We fully support the recommendations of the National Landlords Association and the Residential Landlords Association, which oppose blanket bans against tenants in receipt of housing-related benefits, and are pleased to be taking action which clarifies this position.

“All tenants who are looking to rent a property deserve the chance to be fully assessed for their suitability and matched to a home that suits both their and the landlord’s circumstances.

“We proactively sought the views of our largest lettings-focused agents to ensure the above measures were undertaken on a collaborative basis and received significant support in respect of our proposed additional measures.”

Natwest and Co-op banks, Kensington Mortgages, Nationwide Building Society have been invited to give evidence on their policies in relation to tenants in receipt of benefits – the date was originally set for March 20, but this has now been postponed.

By Rachel Addison

Source: FT Adviser

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Housing market spring season off to subdued start amid Brexit uncertainty

The usual spring bounce in the housing market is being delayed by Brexit uncertainty, reports show.

The average house price is 0.8% lower than it was a year ago, with Rightmove saying the average asking price in March stands at £302,002.

Despite this, prices have edged up by 0.4% – or £1,287 – month on month.

Rightmove said this was the lowest month-on-month increase seen at this time of year since 2011 and “considerably lower” than the 0.9% average increase seen over the past seven years.

It said the usual spring bounce in the housing market is, at best, being delayed by Brexit uncertainty.

Rightmove director Miles Shipside said: “While March marks the start of spring, temperatures have yet to rise in the housing market.

“Buying activity remains cooler than usual, with hesitation as some buyers await a more settled political climate.

“There’s greater resilience the further away you get from the London market, and there’s a sound bedrock of demand for the right property at the right price, reinforced by ongoing housing needs combined with cheap mortgage borrowing.”

In Scotland, asking prices have jumped by 3.1% month on month – the biggest increase in March of all Britain’s nations and regions, followed by the North West of England with a 2.2% increase.

In Wales, asking prices are up by 1.4% month on month.

Asking prices in London are down by 1.1% on the previous month, while the only other English region to record a monthly fall is the North East of England, down by 1.3%, with elsewhere in Britain seeing an increase.

London asking prices are 68% higher than they were 10 years ago, while those in the North East of England have increased by 8% over the past decade.

Mr Shipside said: “London and some of its commuter belt are suffering from a post-boom hangover, with prices now having to be far more sober to attract buyer interest.”

Rightmove said the number of sales agreed by estate agents in February was 7% below the same period in 2018, compared with a year-on-year fall of 4% recorded in January.

But search activity on Rightmove remains steady, with the number of visits to the website staying level in the year to date.

It said this indicates that home movers are “keeping a watching brief” which could lead to an eventual bounce if and when the uncertainty subsides.

Mr Shipside said: “The closer you get to the wire without the clarity of an agreed way forward, the greater the propensity for buyers to wait and see rather than acting now.

“This could be a temporary pause, and indeed market slowdowns at election time and around the original referendum result bounced back pretty quickly.

“Markets and people do not like uncertainty, though, while sales agreed numbers are down by 7%, that means they are still running at 93% of last year’s levels.

“Most potential buyers are getting on with their lives or seeing a price lull as an opportunity to get on to the housing ladder or move to the next rung, with average national asking prices being 0.8% cheaper than a year ago.”

By Kirsty Bosley

Source: Kent Live

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Hammonds’ solution to a broken housing market: a sticking plaster on a gaping wound

Despite reiterating that the economy remained “robust”, during the delivery of the Spring Statement on 13 March 2019, Chancellor of the Exchequer Philip Hammond MP emphasised that the UK is currently shrouded in a “cloud of uncertainty”.

The National Federation of Builders (NFB) remains unconvinced by the chancellor’s latest announcements on housing and planning which include an Affordable Homes Guarantee Scheme and the use of the forthcoming Environment Bill to mandate biodiversity net gain for developments in England.

As we approach the 2020 deadline by which the Government had pledged to deliver one million homes, including 200,000 starter homes, it is becoming increasingly clear that both targets will be missed.

Now, it appears the Government’s solution is to throw money at the challenge – up to £3 billion for the delivery of 30,000 affordable homes through housing associations, to be precise.

Firstly, those figures make no economic sense. If the Government, its agencies, such as Homes England, and planners had been developing sustainable relationships with lower volume house builders to deliver the numbers of homes we need, it would not be in a last-minute panic.

Further, a stumbling block to increasing demand for, or the provision of, affordable housing is the cost. As long as the cost of affordable housing is set in legislation at £450,000, it will continue to remain unaffordable.

The House Builders Association (HBA), the house building division of the NFB, expresses concerns about the chancellor’s announcement that biodiversity net gain will become compulsory for developments across England.

Rico Wojtulewicz, head of housing and planning policy for the HBA, said: “With biodiversity net gain in its infancy and the consultation barely completed, there is a real danger that mandating it, without thinking about its real world consequences, makes it a tax and not a positive outcome for the environment. For that reason, it is a serious concern that a timeline for implementation has already been set.”

Written by: National Federation of Builders

Source: Politics Home