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UK rental market more profitable than 159 world nations

The national rental market is more profitable than 159 countries, combined lettings inventory and property compliance specialists, VeriSmart has found.

VeriSmart looked at the average annual rent paid across both the private and social rental sectors in the UK, before multiplying these figures by the total number of rental households in each sector to ascertain the total value of the national rental market. It then compared that to the GDPs of different nations.

Jonathan Senior, founder of VeriSmart, Jonathan Senior, said: “We’ve seen a wavering degree of confidence in the UK rental market of late from buy-to-let landlords and investors and who can really blame them given the relentless campaigns by the government to reshuffle the deck at their expense.

“Despite these attacks, the backbone of the UK rental market remains strong and it’s still one of the safer investments one can make.

“As this research proves there is still a huge appetite for good, honest landlords with suitable rental properties and the collective return available for them is greater than the GDP of over a hundred and fifty global nations.”

With 3.94 million social renters paying an annual sum of £5,304 and 4.52 million private tenants paying an annual sum of £10,128, the combined annual value of the rental market in England is £66.7bn.

In London alone, the annual rental market is worth £21.8bn, with the social rental sector bringing in £4.6bn a year and £17.2bn coming from the private sector.

To put this into perspective, if the rental sector across England were to sit in the GDP global rankings, it would rank higher than 159 world nations and land between Sri Lanka and Ethiopia.

London alone would rank higher than 124 world nations and rank just behind Latvia and one place above North Korea.

Senior added: “I’m not sure how Kim Jong Un will feel about it though. On one hand, he’s facing off with the largest global power in the world and on the other, he’s being trumped for value by the rental value of the London market.”

By Michael Lloyd

Source: Mortgage Introducer

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Number of homes ‘earning’ more than their owners shrinks amid property cooldown

The proportion of homes which are “earning” more than their owners is shrinking as house price growth continues to slow, analysis has found.

The average rise in house prices over the last two years has outstripped post-tax earnings in less than one in 10 (8%) local authority districts, Halifax said.

This proportion is dwindling compared with nearly one in five (18%) in 2017 and nearly a third (31%) in 2016.

Across the UK, the average house price has increased by £14,975 over the past two years, while the average take-home pay over two years has been £46,225 – £31,250 more than house price growth.

Earnings exceeded house price growth consistently at a national and regional level across the UK – from £19,649 in London up to £35,250 in Scotland.

Leafy London borough Richmond-upon-Thames was identified as the local authority area where house price growth outpaces take-home pay the most.

The average house price there has increased by £55,483 more than typical net earnings over the past two years – equating to £2,312 per month – Halifax said.

The next biggest gap was found in Winchester, home to much of the South Downs National Park, in the South East of England – where average house price growth has outpaced average net wages over the past two years by £45,016 according to the research which used the Halifax house price database and Office for National Statistics (ONS) earnings figures.

Russell Galley, managing director, Halifax, said: “The majority of areas where house price inflation outpaced owners’ take-home pay are still to be found in London and the South East.”

Here are the top 10 areas where house price growth has outpaced wages over the past two years, according to Halifax, with the two-year increase in house prices followed by net average earnings over the two years and the difference:

1. Richmond-upon-Thames, London, £119,075, £63,592, £55,483
2. Winchester, South East, £103,196, £58,180, £45,016
3. South Buckinghamshire, South East, £97,806, £56,430, £41,376
4. West Devon, South West, £75,659, £40,198, £35,460
5. Windsor and Maidenhead, South East, £88,437, £60,153, £28,284
6. Wandsworth, London, £90,482, £62,247, £28,234
7. Bromsgrove, West Midlands, £77,621, £52,317, £25,303
8. Chichester, South East, £73,769, £48,778, £24,991
9. North Dorset, South West, £58,289, £43,158, £15,131
10. Harborough, East Midlands, £69,604, £55,167, £14,437

By Vicky Shaw

Source: Yahoo Finance UK

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Investing in student property doesn’t stack up

Don’t be fooled by the attractive yields from investing in student property: the market doesn’t live up to the hype.

Type “invest in student accommodation” into Google and the search results seem compelling. Advertisements claim that in return for a relatively modest sum you can achieve guaranteed returns of anything from 7%-10% a year on a fully tenanted, fully managed buy-to-let investment. But investors should do their homework before parting with their money. Behind the glossy advertisements for purpose-built student accommodation lie high-risk, illiquid investments.

The student “pods” advertised to “savvy” investors are usually top-end, en-suite studios in buildings offering residents services such as high-speed broadband, gyms, cafes, and cycle storage. Buildings tend to be in city-centre locations with units appearing cheap compared with other properties in the same area. But the first problem investors might encounter if they want to buy one is that most mortgage lenders won’t lend on pods. “If a bank doesn’t think it’s a safe bet, then you should stay well clear,” says Robert Bence of the Property Hub forum. “The reason they won’t lend is that if they had to repossess a student pod they wouldn’t be able to sell it.”

Rental guarantees may sound reassuring, but they’re not

Assuming you can muster the cash to buy a student property outright, the rental guarantees offered by developers might sound reassuring – and lucrative: offers returns of up to 10% fixed for up to five years; Urbane Brix advertises average annual yields of 9%; Sterling Woodrow mentions 10% assured income for three or more years. But if these yields sound too good to be true, it’s because they often are. Once the guaranteed period has expired, investors often find the real market rate for rents is much lower than they were initially told. In other cases the guaranteed rents and returns fail to materialise or last as long as they should.

“A quick bit of research will show you that many pods are advertised at a rent much higher than what the market dictates and that’s because the guaranteed rent is baked into the price you pay,” says Bence. Management charges are another factor to take into account. Unfortunately, managing agents of blocks of flats have a reputation for overcharging and under-delivering.

Assuming none of this puts you off and you buy a student unit, you could then run into problems if you want to sell later on. With a traditional buy-to-let property you can sell to the whole of the market. But your options are much more limited if you want to sell a student pod: you’ll need to find another cash-rich investor. The lack of exit options also affect pods’ prospects for capital growth.

Student property is high-performing, but only for some

If student units are such a risky investment, why is this type of accommodation often described as one of the best-performing asset classes? These claims often fail to mention that they’re talking about institutional investment, where pension funds and similar institutions buy whole blocks of units, or lease buildings from a university. They have a lot more control over their investment, enough capital to survive void periods or rent arrears, and an exit strategy that involves selling the block as a whole. The risks to individual investors buying single units are much higher. Especially keen investors might be better off researching the specialist trusts in the sector, such as Empiric Student Property (LSE: ESP), GCP Student Living (LSE: DIGS) or Unite Group (LSE: UTG).

By: Emma Lunn

Source: Money Week

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Expert Panel Unanimous on Future Optimism in UK Housing Market

A panel of experts were unanimous in their belief that there are grounds for optimism in the UK housing market over the next five years, at an opening debate for the Landlord Investment Show 2019 in London Olympia.

The Landlord Investment Show 2019 kicked off at Olympia London on March 21st, commencing with a government panel debate hosted by publisher and broadcaster Andrew Neil. The debate ranged over a wide variety of pertinent topics, such as Brexit and housebuilding, as well as the obstacles homeowners and landlords currently face.

The panel’s three expert panellists were unanimous in voicing optimism for the UK housing market over the next five years, with some of them believing market fundamentals to be strong and supportive, despite apparent political uncertainty in the present.

The panel consisted of four guest speakers, including Iain Duncan Smith MP; Sarah Davidson, knowledge and product editor of This is Money; Paul Mahoney, founder and managing director of Nova Financial Group, as well as Tony Gimple, founder of Less Tax 4 Landlords.

Mr Duncan Smith, former leader of the Conservative party, used the debate as an opportunity to voice his concern about housing policies implemented in recent years. He believed former Chancellor of the Exchequer George Osborne’s economic policies “had led to landlords scaling back or even leaving the sector entirely”.

Strong turnout at Olympia

As many as 4,300 guests attended the National Landlord Investment Show in Olympia last week. Following the positive verdict on future sentiment in the housing market from the guest panellists at the opening debate, attendees were invited to a variety of seminars, including a special Brexit seminar.

The subject of Brexit was no doubt at the forefront of the minds of many attendees, especially following the developments of preceding days in Westminster. However, Brexit was not the only topic for people to talk about at this year’s event.

Attendees were also invited to attend seminars on the subject of opportunities and threats in the property market for the year ahead, as well as a legal debate chaired by Paul Shamplina, founder and director of Landlord Action. The legal debate centred on topics of great interest to the audience, including the subject of buy-to-let, as well as the private rental sector.

Opportunities for forging new connections

For budding investors keen for some further insights on the subject of buy-to-let, there was a seminar on the subject of being a beginner in property, hosted by a representative from the Property Investors Network.

Buy-to-let proved to be a topic with much coverage during the day, with talks including a morning seminar on the subject of buy to let property investment fundamentals, mistakes and changes, by Paul Mahoney, as well as an educational seminar on how to finance buy-to-let property, held by Jeni Browne, Sales Director at Mortgages for Business.

There were as many as 88 stands erected at the venue for the occasion, giving plenty of opportunities for guests to delve into intriguing ventures and make new connections. Despite the recognition of an overall slowdown in the housing market in the first few months of 2019, National London Investment Show at Olympia was a hive of activity, with attendees showing great keenness to explore new opportunities for the year ahead.

Source: Property118

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England’s housing crisis: Is a distracted government the last to listen to obvious answers?

Chris Bailey of Action on Empty Homes asks if in England’s housing crisis, is a distracted government the last to listen to obvious answers?

In England, it is often said that debate amongst national policymakers is out of touch with reality on the ground (let’s leave Brexit aside for a moment on the reality question). In recent years successive governments have been lambasted by social action and charitable lobbyists over the impact of what has officially been labelled ‘austerity’ and unofficially is more commonly referred to, at least by demonstrators against the policy, as ‘CUTS’.

It is partially to sidestep this binary debate that so many of us now talk the language of investment rather than expenditure. The Coalition for Community Investment (1) is thus in this space, arguing for central government to re-engage with the regeneration of areas of England variously described as ‘left-behind or ‘in decline’ – naturally we prefer the term ‘under-invested’ because we know that it is investment which always makes a difference, short-term, long-term and social impact-wise.

The Coalition for Community Investment draws together organisations from across the housing world. Members include private landlords groups, such as the Residential Landlords Association; social and affordable housing providers like the National Housing Federation, Northern Housing Consortium and National Community Land Trusts Network; and campaigning organisations like Action on Empty Homes, Crisis and Shelter; as well as representative bodies, such as the Federation of Master Builders and Locality.

In looking at these ‘under-invested’ areas of England, some commentators also draw comparisons between industrial decline, low-value property markets and Brexit support. They use this to create a narrative of ‘left behind’ or alienated protest voting. But this is by no means clear-cut; not least because in the last year two-thirds of English councils experienced rising numbers of long-term empty homes. And oddly the subject of Brexit didn’t come up when our research team visited areas of decline blighted by large numbers of empty homes. Paradoxically these are also areas experiencing housing need and with high levels of street homelessness (for all that many of these areas did vote decisively ‘Leave’, some argue as a kind of protest against marginalisation or ‘austerity’ itself).

Writing this on the day that a Cabinet Minister told Parliament that government policy was, in fact, responsible for a rise in the use of food banks, an admission variously described by commentators as ‘bonkers’ and ‘cynical’, it is striking to reflect that we are in the grip of a national housing crisis yet are building fewer social homes than at any time in recent history (or the last 70 years at any rate) (2) and have cancelled all national programmes to invest in bringing empty housing back into use.

It is not wholly unreasonable to assume that the fastest rise in numbers of long-term empty homes in England in a decade is related. Absentee investors soak up huge amounts of property in both high and low-value markets in England, yet incentives to house people in these homes are few and far between. Public policy relies on recently introduced punitive taxation but emasculates much of its impact through three factors:

  1. A two year wait for empty home tax premiums to kick in after it is established that a home is empty for no good reason (owners in care, homes caught in probate disputes, and other reasonable explanations being sensibly excluded from enforcement; and therefore not causing the enforcement clock to start ticking)
  2. A very low level of taxation on residential property due to the unwillingness of any government to grasp the nettle of revaluation of private housing stock in England, for nearly thirty years (since 1991) – years which have seen historically significant rises in value, coupled with increasing shortages of supply.
  3. A wide range of potential evasion routes coupled with under-resourced enforcement. For example, housing declared to be ‘second homes’ can be left unoccupied with no Council Tax Premium payable. At 252,000 these currently out-number England’s 216,000 long-term empty homes – yet many hard-pressed council officers suspect some will, in fact, simply be empty homes, though this is difficult to prove. Given that the identification of empty homes is the council’s responsibility, the one benefit of recent rises in tax premiums may be to gradually incentivise this work and even fund it: though there is no guarantee that income will be ring-fenced for such work.

A recent UCL study covered only a third of Britain but found what it called 340,000 under-used homes and proposed that simply supporting new build was unlikely to end the housing crisis. Summarising the study’s findings the Daily Telegraph reported:

“Housing worth £123 billion is barely used in Britain, researchers have calculated, and have called for a 1% tax on second homes to dissuade people from keeping hold of a mothballed property.

“A new study by University College London (UCL) concluded that building new homes is not the answer to Britain’s housing crisis as they are likely to be bought up as second homes or investments in the most popular areas. Researchers collected information from around one-third of local authorities in Britain covering 40% of the population.” (3)

The dedicated government empty homes funding which ended in 2015 was a £200 million programme which ran from 2012 and included both funding channelled both through local authorities and directly to community-based housing providers. Overall this programme brought nearly 10,000 properties into use for around £24,000 public investment per home. (4)

With all this in mind, The Coalition on Community Investment decided to poll MPs on their attitudes to the housing crisis and the growing blight of empty homes. We also asked their opinion on a range of policy interventions, many of which have already been road-tested by successful but now cancelled government programmes. (5)

Action on Empty Homes can also call on learning from its national programme of effective demonstration projects demonstrating that with financial backing empty homes can provide valuable housing for those in housing need. These community-led projects deliver housing in even the most challenging environments. These are areas the government often calls ‘low demand’, despite their lengthy social housing waiting lists and large numbers of residents housed in property, acknowledged to be inadequate or over-crowded; and often funded wholly or partially by state benefits.

The results of our MP polling were striking, at a time when homeless families in temporary accommodation have hit a ten-year high of over 82,000 (including 120,000 children); while rising levels of street homelessness are a source of national concern.

And as with some other major current policy debates we could mention, we see a striking dichotomy between national government policy and the views of Members of Parliament across the house, regardless, in most cases, of political affiliation.

ComRes polling of MPs commissioned by Action on Empty Homes for the Coalition on Community Investment shows huge cross-party parliamentary support for action on empty homes:

  • 86% of MPs polled agreeing that the government should place a higher priority on tackling empty homes.
  • 72% rank action to bring England’s 216,000 plus long-term empty homes back into use as one of their highest two priorities for combatting the current housing crisis.
  • Over 80% also supported targeted funding for local authorities, charities and local organisations to buy, lease or refurbish empty homes.
  • 68% believe landlords who own empty homes which have been vacant for more than a year should be required to bring them back into use.
  • 77% support charging a council tax premium on empty homes after they have been empty for a year, rather than the current two years.

At Action on Empty Homes and the Coalition for Community Investment, we support a mixed economy approach to solving the empty homes problem. We believe in using both enhanced powers of enforcement and in funding action at local level. We call for significant targeted investment (of around £450 million) set against initial targets for delivery of 20,000 empty homes returned to use and for significant improvements in the worst-hit communities.

Action on Empty Homes also support calls for a major national programme of social housing construction but believe that returning empty homes to use is a potentially easy win for the government, not least now. As the government looks to ameliorate the impact of past decline and current uncertainty on England’s most vulnerable communities. The public agrees with us. Recent polling shows levels of support for action at similar 80% plus levels to those amongst legislators. Now we hope that the government will listen too.

Source: Open Access Government

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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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UK house prices rise in February – Halifax

UK house prices grew more than expected in February, according to the latest data from lender Halifax.

Annual house prices rose 2.8% in the three months to February, up from the 0.8% increase seen in January and beating expectations for a 1% jump.

On the month, house prices were up 5.9%, which was well above the 0.1% increase analysts had pencilled in. In the latest quarter, meanwhile, prices were 1.8% higher.

Halifax managing director Russell Galley said the shortage of houses for sale will certainly be playing a role in supporting prices.

“People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that right now, he has little confidence in Halifax’s index as a reliable indicator of the housing market.

“Its extreme volatility – February’s gigantic increase follows a 3.0% month-to-month decline in January – undermines its validity. Like others, the index is seasonally adjusted, but it uses an outdated methodology which potentially is contributing to its excessive volatility.

“All other indicators suggest that house prices essentially are on a flat trend, not rising at the 1.8% three-month on three-month rate reported by Halifax. The support to house prices from the combination of faster growth in nominal wages and extremely low unemployment is being offset, for now, by anxiety about Brexit.

“The housing market likely will revive for a short period if, as we still expect, MPs sign off a Brexit deal by the summer. But a Brexit deal also will give the green light to the MPC to push through further increases in Bank Rate. With loan-to-income ratios at a record high, even modest increases in mortgage rates will greatly dampen house price growth. As a result, we still expect the official measure of house prices to rise by just 1.5% over the course of 2019.”

Howard Archer, chief economic advisor to the EY ITEM Club, agreed that Halifax house price measure’s monthly movements have been out of kilter with other measures.

Nationwide estimated annual house price inflation at just 0.4% in February and while the Bank of England reporting that mortgage approvals rose to a three-month high in January, most data and surveys point to a weak housing market.

“February’s spike in house prices reported by the Halifax does not fundamentally change our view of the housing market,” Archer said. “If the UK ultimately manages to leave the EU with a “deal” at the end of March, we expect UK house prices to eke out a modest gain of 1.5% over 2019.

“If the UK leaves the EU at the end of March without a Brexit “deal”, house prices could fall by around 5% in 2019.

“If Brexit is delayed for a few months, ongoing uncertainty is likely to weigh down on the housing market and could very well see house prices stagnate over 2019 or even fall slightly.”

By Iain Gilbert

Source: ShareCast

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UK Investment Property Rental Growth Slowing

Investment property rental growth in the UK is slowing according to the latest Landbay Rental Index.

Annual rental growth in the UK without London is at its lowest point in nearly six years at 1.16 per cent, the lowest since the 1.13 per cent seen in February 2013.

Rental growth in London has seen relative stagnation over the last couple of years since the Brexit vote, but across the other English regions total rental growth has been seven times that of London (3.69 per cent to London’s 0.52 per cent).

However, the latest indications show that the rest of the UK is also seeing a slowdown in rental growth. Wales is currently at the lowest it’s been since April 2014 (1.39 per cent) and in Northern Ireland growth of 0.54 per cent is the slowest since the Rental Index began collecting data in January 2012.

Scotland, however, has seen annual rents grow at 1.66 per cent, having steadily grown over the last six months. The average rent in Scotland is now £746, higher than Northern Ireland (£573), Wales (£656), and creeping up to the English average excluding London (£776).

This Scottish growth is led by high annual growth in Edinburgh City (5.88 per cent), Inverclyde (3.56 per cent), and Glasgow City (2.49 per cent). Only Aberdeen City (-6.62 per cent) and Aberdeenshire (-5.42 per cent) are dampening the Scottish rental growth rate.

CEO and founder of Landbay, John Goodall, said: ‘Falling rents in London have masked relatively strong growth in the rest of the UK since the Brexit vote, but we are now firmly in the midst of a nationwide rental growth slowdown. This may be some relief to renters, but the cost of renting a property remains high. House prices continue to outpace wage growth, dampening the ability of aspiring homeowners to save for a property of their own, meaning demand for rented accommodation remains robust.’

He continued: ‘Rental growth may be slowing, but the pace of change varies wildly between regions. Landlords and brokers alike need to be tuned into these variations in order to maximise their profits, using variations in rental growth and yields over the past year to pick out some of the most promising regions for buy to let. Consistent rental demand will obviously drive returns in the long-term, but by selecting the right location yields will be even greater.’

Source: Residential Landlord

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Owners of new-build homes ‘spend £200 more on energy after standards axed’

Owners of newly built homes are being hit with higher heating bills because tough new energy efficiency standards were scrapped, a report has said.

If the “zero carbon homes” policy had been implemented as planned in 2016, people moving into new homes would be saving more than £200 a year on their energy bills, the Energy and Climate Intelligence Unit (ECIU) study said.

The zero carbon homes policy was first devised in 2007 as a requirement that new-build homes would not result in the net release of any carbon dioxide into the atmosphere, and was set to be implemented in 2016, the report said.

But it was scrapped in July 2015 by then chancellor George Osborne – after having been watered down since it was first announced – as part of plans to boost productivity, including increasing house building.

The report from ECIU said building a home to zero carbon standards would in theory add 1-2% on to the purchase price.

But it suggested the impact of the help to buy scheme, which critics have said enabled sellers to ramp up prices because buyers only need to find a small deposit, on house purchase costs is much greater.

The extra costs of the more efficient homes would be recouped through energy bill savings within a few years and may even have been absorbed by developers, the study argues.

As well as future-proofing new homes, the policy would have saved families money, reduced Britain’s vulnerability to energy supply shocks, and cut carbon emissions

Dr Jonathan Marshall, ECIU

Since the beginning of 2016, some 380,000 homes have been built, and their heating efficiency falls short of what would have been needed to meet the zero carbon homes standards.

Current new-build homes require more than twice the energy to heat than a zero carbon home would have done – which based on current retail gas prices will have cost a cumulative £122-£137 million in England, the report claims.

Families who moved into their homes at the start of 2016 will have been paying on average an extra £208 to £233 a year per year to heat their houses, it said.

If current house-building rates continue, by the end of 2020, the amount of wasted energy to heat these less efficient homes will be more than £2 billion, using up enough extra gas to fuel 3.3 million homes for a year.

And it makes it harder to cut carbon emissions from homes, a necessary part of tackling climate change, and one where experts say the first step should be increasing efficiency.

Dr Jonathan Marshall, ECIU head of analysis, said: “Successive governments have struggled to devise effective domestic energy efficiency policies, meaning carbon emissions from homes are rising, but zero carbon homes could have made a real difference.

“As well as future-proofing new homes, the policy would have saved families money, reduced Britain’s vulnerability to energy supply shocks, and cut carbon emissions.

“Tackling new-build homes is one of the easiest ways of improving the UK’s leaky housing stock, and reintroducing this policy could also deliver a boost to firms involved in insulation and low-carbon heating.”

Paula Higgins, chief executive of the Homeowners Alliance, added: “Homes should be built to the highest standards to be fit for this and future generations. Government and industry need to recognise that it’s in everyone’s interest to get this right.”

Minister of State for Housing Kit Malthouse said: “I don’t agree with the assertion that energy efficiency regulations have been watered down – in fact new homes built in England have increased in efficiency by over 30% since 2010.

“As well as cutting carbon emissions to tackle the threat of climate change, our efforts have actually put an average of £200 a year back into the pockets of families.

“There is more we can do to secure more efficient homes and, following our ongoing review of Building Regulations, we will likely consult on further energy saving proposals later this year.”

Source: Shropshire Star

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House prices in the UK are now falling – which is great news

House prices in the UK are now falling.

In the three months to the end of January, prices fell by 0.6% compared to the previous quarter, according to Halifax.

And on an annual basis, prices were up by less than 1%. Which means they are falling in “real” terms (ie after inflation).

It’s good news if you’re in the market for a house. And it’s good news if you think Britain could do with being a little less property-obsessed.

But will the good news continue?

House prices in the UK are in decline, however you look at it

The latest figures from the Halifax are actually a bit more upbeat than the last report from its nearest rival index, published by Nationwide. According to the building society, house prices rose at an annual rate of just 0.1% in January. That’s the slowest pace of growth in six years, and a “real” terms fall of more than 2% (depending on which inflation measure you prefer).

But one way or another, prices are flat or dipping.

This will be blamed on Brexit, because everything at the moment is being blamed on Brexit. But to be clear, this does not appear to be down to a massive drop in sales (“despite Brexit”, as the saying goes). In December, says Halifax, there were 102,330 house sales, which is “very close to the five-year average of 101,515.” Mortgage approvals are pretty close to the five-year average as well.

I’m not saying Brexit will have no effect. I’d be very surprised if we don’t at least see a “Brexit blip”, where people hold off making big decisions about moving until after a deal is done (assuming one does get done, of course). But the roots of the slowdown go deeper – put it this way, even if we had no intention of leaving the EU, I’m pretty sure the trajectory for house prices would be the same right now.

The fundamental problem for prices is that they went up too much. With banks a little more cautious on lending than they were during the bubble era pre-2008, and interest rates incapable of going any lower, prices had to hit a ceiling at some point.

On top of that, it has become much more expensive for certain groups of buyers to invest in UK residential property. Landlords are slowly having any tax benefits taken away from them, which has hugely reduced the appeal of property.

Indeed, I’m wondering how long it’ll be before the celebrity money interviews up the back of the Sunday supplements start to reflect this (when offered the choice between “property or pension” – a silly question on lots of levels – 99% still answer “property”, as you’ll see if you follow my colleague Merryn on Twitter – @MerrynSW).

But they’re not the only ones. Rich buyers of all kinds, but particularly rich foreign buyers, have been hit hard too – stamp duty on high-priced properties, plus an annual tax on property owned by companies (typically done by overseas buyers). As a result of all this, Savills reports that sales of properties over £5m have dropped by a third since 2014. More than anything else, this is what has hit the London market hardest.

What could make house prices crash?

Now that prices are falling, that tends to feed on itself. Just as in the stockmarket, everyone wants to buy at the bottom. When prices are rocketing, people panic to get in. When prices are falling, they take their time.

Yet, as I’ve said before, if the economy remains in decent shape, and employment stays as high as it is, it is hard to see any reason why prices would crash outright – to get a full-on crash, you need a large number of forced sellers, and at the moment, I don’t see an obvious way for that to happen.

One route to a crash is that people who own houses can no longer afford to keep them. This can occur in one of two ways. Either the mortgage holder loses their job (and thus their income) or interest rates shoot up, driving up the cost of all variable-rate home loans beyond affordability. These two are not mutually exclusive – indeed, they often go hand in hand.

But there is no obvious reason right now why we should expect a surge in unemployment or a surge in interest rates. There are scenarios in which these things become possibilities – a truly catastrophic Brexit for example, or a truly radical Jeremy Corbyn-led government. But for now those are low probability events.

The only potential significant contingent of forced sellers I can see is perhaps that subset of overstretched landlords who were taken by surprise by their tax bills this year. That is probably having some effect on the market, but not to the extent where we’ll see 1990s-style repossessions.

Another potential route to a crash is that the availability of credit dries up. This means that buyers simply can’t afford to pay the asking prices because the level of debt is not available to them. Again, though, in the absence of much higher interest rates, this seems unlikely. And in any case, a credit drought would usually lead more to a freeze rather than a crash – most sellers just sit on their homes rather than sell at a big loss.

So I can’t see a crash coming. But with buyers no longer gripped by property fever, and interest rates likely to rise modestly if Brexit doesn’t end in apocalypse, then I reckon we can expect prices to continue moving in the right direction – slowly downwards.

And that’s good news. If you want to take some of the heat out of the political anger gripping the nation, then rising wages and modestly declining house prices are one good way to do it without causing a lot of disruption. Fingers crossed.

Source: Money Week