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Boris can lead a Conservative council housing revolution

With Boris Johnson now undisputed world king of the post-Brexit scene, the only relevant policy debates are those going on inside the government itself. These are yielding unusual fruit.

Esther McVey, a deep-dyed Thatcherite and an advocate of blue-collar Conservatism, has been arguing for more council housing. The housing minister wants to help those “left behind” voters who broke Labour’s red northern heart.

However, she has reportedly clashed with her boss, housing and communities secretary Robert Jenrick, who is in the more conventional Tory “property-owning-democracy” mould.

But McVey is right — it is time for another look at council housing, and this Conservative government is ideally placed to do it.

Johnson is enthused by regional regeneration, infrastructure projects, and levelling up the UK. His chief aide Dominic Cummings, meanwhile, is deeply interested in applying scientific research and development to solve big problems and create new industries.

If they combine their enthusiasms, Johnson and Cummings could realise a once-in-a-century opportunity to solve the UK’s housing crisis. To do it, they need to revive the One Nation Conservative party tradition of mass council house building, and use it to make the UK a world-leading location for green modular house building. That way, the housing crisis gets fixed, and the country gets a new high-tech industry.

No UK housing shortage has ever been cured without a mass council house building programme. From 1945 to 1979, all British governments knew this and invested heavily in (mostly) good and plentiful council homes.

Unlike private house builders, who are bound by their duty to shareholders, the state can invest to solve housing shortages, not solely to make a profit from them.

Government borrowing costs are currently at an all time low, and the north of the country is lacking both infrastructure and housing. The Prime Minister therefore has a historic chance to borrow both to build council housing and to construct transport links within and between towns and cities across the Midlands and the north.

The new houses could be called “Boris Homes”, to remind tenants of their benefactor. A project like this, which breaks decisively with the “austerity” of the last two Tory Prime Ministers, could help cement Johnson as the long-term electoral friend of Workington man. The “Boris” branding would deal with George Osborne’s old fear that council housing only creates Labour voters.

Of course, governments used to rely on local authorities to build council homes, but that was before the centralising force of Thatcherism forced them to slash their construction capabilities. Most UK local authorities, even if asked, no longer have the resources, experience and manpower to launch a transformative council house building programme.

So the government should set up a platform of all the major UK institutions, working closely with regional mayors and local authorities, to create Council Housing 2.0: a giant joint venture corporation to build 150,000 new council homes a year.

The government could incentivise and match institutional investment to build the homes, and then share (along with the regional authorities) in their long-term rents.

Now that we are definitely leaving the EU — in just one week — the government should also cut the utterly tedious procurement rules that bed-block big projects.

These council houses need to be built quickly, cost-effectively, and sustainably. Cummings has plans to create R&D centres of excellence in the north. To combine that need and his ambition, the government should invest heavily in a campus for the research, development and manufacture of modular housing.

A modern modular factory can build a semi-detached, highly-energy efficient house — that will last 100 years — in 14 days for less than £70,000.

If the government gets this modular R&D cluster right and attracts global investment and talent, it will solve the UK’s housing crisis and incubate a new British modular export industry that can help other countries solve theirs.

For too long, UK housing policy has been held back by prejudice and party politics. Council housing was a dirty word for generations of Conservative politicians. But it is one of our country’s great civilising projects, providing shelter for the poor and vulnerable.

If Johnson is brave, council housing can become an engine for levelling up whole regions and making the UK the global leader in a cutting-edge technological field.

You have ridden a Boris Bike — get ready to live in a Boris Home.

By Bruce Dear

Source: City AM

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Total value of UK housing stock stands at record £7.39 trillion

The total value of the UK housing stock has increased by £2.74 trillion over the past decade, according to analysis.

Property agents Savills, which made the findings, said London and the South of England accounted for nearly three-quarters (73%), or £2 trillion, of the gains.

Across the UK, the combined value of the UK’s housing stock in 2019 was calculated to be a record high of £7.39 trillion after increasing by £101.8 billion over the previous year.

Home owners without a mortgage now account for £2.63 trillion in housing value, or 36% of the total.

The number has grown as older home owners clear their mortgage debt, Savills said.

Lawrence Bowles, senior research analyst at Savills, said: “Established homeowners have been the among the greatest beneficiaries of house price growth over the last decade, many of whom have paid down their borrowing.

“The value of unmortgaged owner-occupied homes has risen 67% over the last 10 years.

“This leaves an unprecedented 46% of home owner wealth in the hands of the over-65s.”

Savills also found some changing trends in what is behind the growing value of the UK’s housing stock.

New-build homes are accounting for a growing chunk of the increase in the value of the stock.

This is because house price growth has weakened in recent years while house building levels have increased.

Over the past decade, existing homes have accounted for 87% of the value uplift in the UK’s housing stock.

But, more recently, as housing development has accelerated and house price inflation has slowed, the balance has shifted – with new homes accounting for 40% of the value uplift in 2019.

There has also been a shift towards the North in terms of the parts of the country driving growth.

While London and the South of England accounted for 73% of the housing stock value gains over the past decade, in 2019 90% of the total housing value gains came from outside London and the South.

The Midlands and North of England accounted for nearly two-thirds (64%) of the value uplift, with a further 26% from Scotland, Wales and Northern Ireland combined.

Mr Bowles continued: “London and the South account for almost two-thirds (63%) of the nation’s housing value.

“But the rest of the country is catching up. The North and Midlands accounted for the majority of growth in the value of housing stock last year, thanks to faster house price growth and more development.”

Here are the total values of housing stock across the UK in 2019 and the one-year gain followed by the gain over the past decade, according to Savills Research:

– London, £1.774 trillion, £5 billion, £862 billion
– South East, £1.382 trillion, minus £5 billion, £555 billion
– East, £813 billion, £3 billion, £346 billion
– South West, £679 billion, £8 billion, £236 billion
– North West, £553 billion, £23 billion, £145 billion
– West Midlands, £482 billion, £14 billion, £154 billion
– Scotland, £412 billion, £12 billion, £110 billion
– East Midlands, £401 billion, £12 billion, £142 billion
– Yorkshire & the Humber, £395 billion, £13 billion, £99 billion
– Wales, £236 billion, £9 billion, £61 billion
– North East, £156 billion, £3 billion, £23 billion
– Northern Ireland, £106 billion, £6 billion, £11 billion
– UK, £7.388 trillion, £102 billion, £2.743 trillion

By Vicky Shaw

Source: Yahoo Finance UK

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What next for the housing market?

After three years of political deadlock, December’s General Election result brought greater clarity in the government’s Brexit position and decisive domestic policy.

But with less than a year to agree the UK’s future trading relationship with the EU, scattered clouds of uncertainty continue to hang over the housing market.

UK house prices in November 2019 were just 0.8 per cent higher than 12 months before, according to Nationwide Building Society. Its latest regional indices show values falling in London and the south east. The strongest growth was in Wales and the north west.

A clear parliamentary majority could provide the foundation for accelerated housing market activity in the coming months.

But we also face a backdrop of suppressed gross domestic product and wage growth.

Ongoing uncertainty over the UK’s trading relationship with the EU during the transition period and the impact of a slowing global economy means potential home movers will remain cautious about their household finances, particularly in the second half of the year.

We predict average UK house price growth will remain subdued at 1 per cent in 2020, and house price growth to increase once we have greater clarity over our relationship with the EU in 2021.

Greater certainty should translate into higher growth in wages and GDP, acting as a stimulus for housing demand, while interest rates remain low.

We forecast 4.5 per cent UK house price growth in 2021.

Beyond 2021, continued wage growth will help to support housing demand, while rising interest rates act as a drag on affordability at the point of getting a mortgage. Our forecast is for 3 per cent house price growth in 2022, 2023 and 2024.

Accounting for compound interest, that means we are predicting 15.3 per cent growth in UK house prices by 2024. That is against the context of 15.6 per cent income growth.

This story will vary widely across the UK and different parts of the market, as we see a rebalancing between regions.

In London, affordability is still highly constrained for those buying with a mortgage. We expect just 4 per cent price growth for mainstream properties over the next five years.

Buyers in the prime, central parts of London tend to be less reliant on mortgage finance, however. Prime central London now looks relatively good value, particularly from an international perspective: in September 2019, the effective discount peaked at 42 per cent below its 2014 peak in US dollar terms. Here we expect to see much stronger growth, even in the face of a potential 3 per cent stamp duty surcharge for foreign buyers, promised in the Conservative manifesto.

We predict the north west will see the fastest house price growth over the next five years: 24 per cent. High levels of infrastructure investment and employment growth will support housing demand there, and mortgage affordability is far less stretched than in London and the south.

We also predict strong growth across the rest of the north and midlands, where affordability is less of a constraint and where rental yields are higher, attracting investors. These are also expected to be the strongest performing prime regional markets, with growth at approximately 20.5 per cent.

Historically, rental growth has followed income growth, which drives our prediction of 15.4 per cent UK rental growth over the next five years.

On balance we expect housing transactions to remain stable over the next five years at 1.2m a year. But there will be a shift among buyer types: falls in investor purchase as mortgaged buy-to-let tax rules tighten, and stronger growth for mortgaged home movers.

The number of first-time buyers, however, will remain highly reliant on the detail of government’s plans to support them post-Help to Buy.

By Lawrence Bowles

Source: FT Adviser

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UK House Prices in Fastest Increase in 13 Years, More Gains seen in 2020

Halifax data shows UK house prices posted their strongest monthly increase in nearly 13 years in December with a +1.7% month-on-month, taking the year-on-year increase to 4%.

The December General Election result appears to have boosted market sentiment according to some industry insiders, as the Conservative majority delivers the UK some relative political stability when compared to the recent past.

Marc von Grundherr, Director of Benham and Reeves, says “last month’s election helped to reignite the smouldering embers of an otherwise weary property market. Not only is this boost immediately evident within December’s monthly and annual top line growth, but those of us on the front line also enjoyed an almost immediate uplift in buyer interest and commitment to transactions.”

von Grundherr says a large degree of uncertainty remains until a trade deal is officially done between the EU and UK, “but even a mere step in the right direction has been enough to steady the ship considerably and this bodes well for the year ahead.”

House prices Halifax

“While mortgage affordability remains very favourable, we’ve also been promised an economic boost via the first budget in four decades as a non-EU member state, all of which should help build buyer confidence and continue to restimulate house price growth,” adds von Grundherr.

Halifax say they expect uncertainty in the economy to ease somewhat in 2020, which should see transaction volumes increase and further price growth made possible by an improvement in households’ real incomes.

Houses for sale

Also underpinning the increase in prices is a familiar supply-and-demand dynamic whereby a housing shortage means buyers are asked to fork out yet more money for their desired property.

“Longer-term issues such as shortage of homes for sale and low levels of house-building will continue to limit supply, while the ongoing challenges faced by prospective buyers in raising to limit supply, while the ongoing challenges faced by prospective buyers in raising deposits will serve to constrain demand,” say Halifax.

Halifax say they expect a modest pace of gains to continue in 2020.

“An unyielding appetite from the nation’s aspirational first-time buyers and a resolute new build sector have ensured that while the rate of price growth has been muted, there has been no meaningful declines. With the worst now hopefully behind us, these two areas of the market should continue to go from strength to strength over the coming year and help drive performance back to previous health,” says the founder and CEO of Stone Real Estate, Michael Stone.

Written by Gary Howes

Source: Pound Sterling Live

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The best property investing strategy for 2020

Not only is it the start of a new year, but a new Decade, and in a few years time, we will look back at 2020 and realise that it was probably one of the best investing opportunities of this Decade. The question is, are you ready for 2020?

In this first article for 2020, I want to explain why this month (January) in particular is so important and why it will create a huge opportunity for you if you are ready for it. Unfortunately, many people will miss out on this opportunity and I don’t want that to be the case for you, so please make sure you read this article carefully to really understand the opportunity in front of you.

By the end of this month, everyone who is a landlord will need to have submitted their personal tax return for the 2018-19 tax year, and paid any tax that is due from the rental income on their property. This will be the second year that people will see and feel the affect of Section 24, which came into paly in April 2017. As I am sure you know, the Government decided that they wanted to change the way that property investors are taxed. What this means, is that if you own property in your own name (which most long term landlords do) and you are a higher rate tax payer (which most people in property are), then you will be paying more tax on your rental income. If your property is owned in a Ltd Company, instead of your own name, then you will not be effected by Section 24, and if you are a lower rate tax payer, then there is no impact, although some property investors will slip from a lower rate tax payer, to a higher rate tax payer, because of the way that rental profit is now calculated.

So what does this mean for you, and why is it the opportunity of the Decade?

Every month my organisation run 50+ local property investors network meetings all over the UK, and so I am I a unique position to have my ear to the ground in 50 locations around the UK to hear exactly what is going on with investors at a grass roots level. I can tell you for an absolute fact, that in 2019 we had far more long term landlord coming to our pin meetings than ever before because they are looking to sell some, or all of their portfolio, and retire early due to the impact that Section 24 will have on them and their income.

In any market you will also have new investors entering the market and some people retiring and exiting the market, but right now there are more landlords than ever thinking about selling up earlier than they have initially planned, because the don’t want ever decreasing return from their property portfolio.

January 2019 was the first time than many landlords realised the true impact of Section 24, when they saw the amount of tax they pay go up, and their accountant will have informed then that things are only going to get worse as the true effect of Section 24 is phased in over a 4-year period. January 2020 will be the second year that people see the effect of Section 24 starting to bite more into profits. This will be the catalyst for even more landlords to seek a solution to this problem and for some of those 1.75m landlords in the UK, I truly believe that early retirement may be the preferred choice for many of them, especially as they have seen tremendous capital growth over the last 10 years.

Whilst Section 24 is obviously very bad news for many landlords, there is always a silver lining in bad news, if you look close enough. For those property investors who want to expand their portfolio and acquire more property, 2020 will be a fantastic opportunity for a number of reasons.

First of all, we will see properties become available for purchase in previously locked down Article 4 areas. In these Article 4 areas, permitted development rights have been removed, so you have to get planning permission to convert a normal house into an HMO (with 3 or more unrelated tenants). However, if you do apply for planning in an Article 4 area, it will be automatically rejected because the local council does not want more HMOs. You can of course appeal and you might get planning permission if it meets all of the criteria, but it is very difficult. However, if you buy an existing HMO in an Article 4 Area, you don’t need to get planning permission. Instead you can just apply for a certificate of lawfulness as long as the property was used and an HMO before Article 4 was introduced in that area and has been continuously used as an HMO. Prior to the introduction of Section 24, in Article 4 Areas, landlords were quite happy keeping their property, knowing that there would not be too much new completion. But now some of these landlords are now considering selling which means that you can get access into theses effectively locked down areas.

The main reason why 2020 will be such a great time to acquire more property is because of the way in which you will be able to add to your cash flow and property portfolio. You see these landlords who decide to retire earlier than planned, have another problem. The main problem is that if they sell all of their properties in one go, they will have to pay a lot of Capital Gains Tax (CGT) on the profit from the sale. The best solution for anyone wanting to sell a number of properties, is to phase the sale over a number of years so that they can claim their personal CGT allowance and so reduce the amount of tax they will pay. But this creates another problem. The landlord will have to hang around until they sell their last property which in fact maybe they would rather be sat on a beach instead enjoying their retirement.

The good news for you, is that there a solution which you can provide these landlords so that they get to sell all of their property over a number of years, minimise the tax, and not have to hang around until the last one is sold. They can do this with the help of an investor like you, who can use Purchase Lease Options (PLOs) to take over the properties and manage them for the owners, with a schedule to buy them over a number of years. This means you get cash flow and potential equity growth on property that you don’t own, whilst providing a fantastic solution to these retiring landlords. You don’t need to have large desposits, or even be able to get mortgages to do this.

The only problem here is the PLOs are a massively misunderstand strategy. Most people who think they know about PLOs, don’t really know about PLOs otherwise they would have does a lot more of them by now. One of the main problems here is that PLOs only work in certain circumstances, namely when the seller does not need the money now and they have what we call favourable mortgage conditions. Luckily for you Landlords normally meet both of these criteria, which is why the strategy works so well for them.

Just in case you don’t know let me give you the basics about PLOs. This is where you enter into a legally binding agreement with a property owner, whereby you have the right (but not the obligation) to purchase their property, for a fixed price (The Option Price) agreed upfront, within a certain time period (The Option Period), and in the meantime you pay them a monthly payment (Monthly Option Fee), for which you are entitled to use the property. There is also a consideration (Upfront Option fee) required to make this a legally binding agreement. This upfront fee can be anything from as little as £1, but can also be several thousand pounds in some circumstances. During the Option Period you look after the property as if it were your own, and take care of all of the maintenance. For example, you might have the right to buy a property, for the current market value of £200k, anytime within the the next 5 years. In the meantime, you pay the owner a guaranteed £600 per month, and take care of all the bills, repairs and maintenance. You could then rent this property out in a way to generate a much higher income, such as an HMO or Serviced Accommodation, and you make a profit on the different between the rent you pay to the owner and the rent you achieve, less all the bills. This is cash flow for a property that you don’t own.

The main benefit for you as the investor, is that you don’t need to put down the typical 25% deposit that you would need if you actually purchased the property. You don’t need to get a mortgage on the property, because you don’t actually own it. You can benefit from positive cash flow during the option period and potential capital grow of the property over the option period. If you value of the property rises from say £200k now, to £250k in five years time, you have the right to purchase it if you want, at the agreed option price of £200k even though it is worth £250k.

How do you find these landlords? Well you can always attend your local property investors network (pin) meeting and ask for referral of landlords who may want to retire, or you can write direct to landlords using your local council list of licensed HMO owners.

I do hop you can see the incredible opportunity you have right now by helping these retiring landlords finding a win win solution

Invest with knowledge, invest with skill

By Simon Zutshi, Author of Property magic and Founder of property investors network

Source: Property118

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What the new government may mean for housing

As the dust settles on the General Election and the Queen’s Speech that quickly followed we’re all keen to find out what the new government will mean for us, writes Wayne Gethings, Group Chief Executive of The Wrekin Housing Group.

As individuals we all have interests and issues that we’d like to see the government prioritise or push forward in some way, and one thing we can all relate to is housing; we all need a place to live.

Demand for housing is not going away. The new government’s approach to housing will impact many thousands of people across the West Midlands.

So, what direction can we expect housing policy to move in? There seem to be three main areas of focus. The supply of affordable housing, the promotion of the tenant voice and the main focus of the new government, as outlined in the Queen’s Speech, is going to be around the promotion of home ownership with several measures put forward to support this ambition.

The government would like to see funds generated from planning conditions, known as Section 106 contributions, used to fund discounted homes for sale. The First Homes programme, which will be consulted on in the New Year, will covenant properties, locking in their discount for local buyers and key workers, such as nurses, forever. Discounts of up to 30 per cent on market value will be offered.

At Wrekin we would like to see whether existing homes can be included in the programme. This would have three key benefits, providing a discounted home for local buyers, funding the building of a new home for affordable rent all fuelling the local economy and providing opportunities for people.

Solution

The new government is keen to promote shared ownership as a route to home ownership. In their manifesto they committed to investigating how shared ownership can be simplified, creating a single standard for all housing associations to use across the country and making it easier for buyers to make the right purchase for them.

This was reinforced in the Queen’s Speech where the government confirmed it will introduce a reformed model that will be more transparent, enabling buyers to progress to full ownership.

There had been a suggestion that a ‘right’ to shared ownership might be offered but I’m pleased to see this wasn’t included.

Instead, there a proposal in the manifesto to further pilot the Voluntary Right to Buy scheme which ran in the Midlands in 2018 and saw 33 Wrekin tenants purchase their properties from us. We use the funds generated by these sales to build new properties, providing much-needed family homes at affordable rents. This proposal doesn’t seem to have made it through to the Queen’s Speech, so it remains to be seen if the proposal will be rekindled later in the lifetime of this Parliament.

It is important for us to remember that, as a housing association with properties to rent, we should also be part of the solution, enabling people to purchase homes, if that is what they want to do.

At Wrekin, we provide over 12,500 homes for social and affordable rent and we’re keen to do more of this so I welcome the commitment to supporting the continued supply of social housing. We welcome the renewal of the Affordable Homes Programme, this gives us the confidence to continue investing in building new properties and our existing properties. We will build 500 new properties each year up to 2025, growing our overall housing stock to 16,000.

Proud

We also welcome the announcement of a new £10 billion Single Housing Infrastructure Fund that will provide funding for roads, schools and doctors surgeries to support the expansion of communities.

The government has also signalled its intent to end rough sleeping by the end of this Parliament. We pride ourselves on engaging those at risk of homelessness and those who are already homeless through local charities. We work with them to find the most appropriate accommodation for the individual.

In the social housing sector, we have been waiting for the publication of a new white paper for social housing for almost 12 months so we welcome the Government’s commitment to bringing this forward. We expect it to focus on the supply of housing and on tenant empowerment.

At Wrekin we have signed up to the National Housing Federation’s Together with Tenants initiative putting us at the forefront of working with customers to involve them in how we are run. We are very proud that our involved tenants and group board work together directly to shape the services that we provide to make a difference to people’s lives.

A key commitment around tenant empowerment and building safety is the full implementation of recommendations from the Hackitt Review and the first phase of the Grenfell Inquiry. The government will introduce specific legislation around fire safety and building safety. It’s something we will be watching closely to ensure we are, as a minimum, in line with the new legislation.

Source: Shropshire Star

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The city Brits most want to move to outside London

Bristol is the most sought-after area in the UK among potential buyers and renters looking for homes outside the capital on Rightmove, new figures suggest.

Data from the property listing site shows the city in south-west England was searched for more than anywhere else outside the capital in 2019.

York, Glasgow, Edinburgh, and Sheffield made up the rest of the top five among prospective buyers. Manchester, Liverpool, Cambridge and Glasgow were the most popular for potential renters, according to the data published on Tuesday.

The most searched-for areas of London were leafy Wimbledon in the south-west of the capital for would-be buyers, and the business district of Canary Wharf to the east for renters.

Separate analysis by Zoopla earlier this month showed the most affordable cities, such as Glasgow, Liverpool, and Belfast, had seen growth twice as fast as the UK average over the past decade.

The past three years have seen a slowdown in the housing market, particularly in the capital and the south-east as Brexit uncertainty, stamp duty changes, and a weaker economy have curbed growth.

Why is Bristol getting more popular and pricey?

The average property in Bristol now sells for £316,410, according to Rightmove.

Asking prices have grown by 2.3% over the past year, far higher than nationwide growth of 0.8%. Properties sell more quickly than anywhere else in the south-west, typically spending 50 days on the market before being sold.

“There’s high demand for suitable housing in Bristol and the surrounding area, as it’s a vibrant regional centre with a strong local economy,” said Miles Shipside, director of Rightmove.

The city’s economy has grown faster than average in recent years, with employment levels generally higher than in other large cities.

It has seen some of the highest rates of business startups, with creative industries booming and strong banking, insurance, and professional services sectors.

But the local council says economic growth has put a strain on housing in a city of almost half a million people, as well as increasing congestion and pollution.

“Though this is good news for those already on the property ladder, it makes it harder for first-time buyers to get onto it,” said Shipside, who predicts price trends will continue.

“Historically, there has not been enough new house building to cope with the shortage of homes, resulting in prices rising at a faster pace than many other cities in the UK,” he added.

Bristol’s population has increased by 11.7% since 2008, faster than the national average.

Its population is expected to rise by a further 21% by 2041 from 2016 levels, also far higher than the national average.

The average home cost more than nine times average local earnings in 2018, according to Bristol council, the highest of any of England’s so-called ‘core cities.’

Average property prices increased by £118,000 in the decade to 2019, analysis by the council suggests. That marked a 74% increase, versus an average of 47% in England and Wales.

The most popular cities to buy outside London

  1. Bristol
  2. York
  3. Glasgow
  4. Edinburgh
  5. Sheffield
  6. Cambridge
  7. Manchester
  8. Norwich
  9. Birmingham
  10. Nottingham

The most popular cities to rent outside London

  1. Bristol
  2. Manchester
  3. Liverpool
  4. Cambridge
  5. Glasgow
  6. Leeds
  7. Nottingham
  8. Birmingham
  9. Edinburgh
  10. Sheffield

By Tom Belger

Source: Yahoo Finance UK

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House prices 2020: How will the UK property market fare next year?

It’s been a rocky year for the property market, as protracted political uncertainty and affordability problems left house prices largely stagnant in London and across the UK.

But with a resounding victory for Boris Johnson in the General Election earlier this month, and the prospect of an end to the Brexit saga in sight, 2020 may offer some hope of a turnaround.

So as the sector turns its eyes to the future, City A.M. asked top property experts whether they think 2020 will be boom or bust for the housing market.

Lee Pickett, real estate partner at global legal business, DWF

“Given the scale of the Conservative party’s victory in the general election, and the immediate reaction of both sterling and the stock market it’s entirely possible, likely even, that we will see a short-term Boris bounce for the economy and, as a result, house prices.

“There remains the fundamental problem that at nearly eight times average wages, house prices are already beyond what would normally be considered breaking point. But these are not normal times and mortgage rates are at record lows, which could well add a dose of rocket fuel to the housing market and house prices as a result at the start of the year.

“However, further into 2020 the spectre of uncertainty could make an unwelcome return. Much will depend on the government’s ability to negotiate a new free trade agreement with Brussels before the end of the year. If it can’t then Britain will either leave without a deal or the government will have to ask for an extension to the transition period, probably by June at the latest. Neither option is appealing and the return of political and economic uncertainty will have an obvious impact house prices. Maybe 2021 might bring better news.”

Marc von Grundherr, director of Benham and Reeves

“Previous to the EU referendum we were seeing annual growth as high as nine per cent nationally, hitting double digits within the capital. While it will take time for this momentum to return, six per cent growth across the UK is very attainable for the coming year, should the election play out as expected.

“London will see a return to positive territory”

“London as a whole will also see a return to positive territory and although it has fallen behind of late, once it turns it will turn quickly and so we expect to see house price growth for the region exceed the national top line in 2020 to hit seven to eight per cent.

“Prime central London may have seen the most drastic decline but over the last few months, parts of the top end market have also seen the largest revival. Now that we’ve seen the bottom of the market, this revival will continue with the hottest pockets expected to climb by as much as ten per cent in the next 12 months.”

Michael Stone, founder and chief executive of Stone Real Estate

“We’ve seen the property pedigree of the new build sector continue to outperform the wider market not only over the last year but since the EU referendum itself, and this is a trend that will continue well into 2020.

“Across the UK, new build house prices have increased by 4.6 per cent in the last 12 months alone, compared to just 0.6 per cent across the wider market. While this increase is smaller in London at 1.9 per cent, the capital’s wider market has declined by -1.2 per cent during the same time.

“This has been due to a sustained level of demand from first-time buyers in particular and a four per cent price gap between the two sectors is likely to remain, although we should see the market pick up over the coming months, with London enjoying a notable return to health.

“All things considered, we could see new build price growth lift another six per cent over the coming year, and while London may take longer to thaw, a three per cent jump is the least new build homebuyers can expect to see for the year ahead. Although this could be much higher depending on buyer sentiment levels.”

Patrick Alvarado, director of prime central London estate agency Nicolas Van Patrick

“Presuming Brexit happens, we would expect house price growth of around three per cent in prime central London in 2020. The continued surge in transactions we’ve seen in the last quarter should continue. As more supply comes to market over the year, pent-up demand will be satisfied and prices will level off. This will be more pronounced if Boris Johnson implements the extra three per cent stamp duty surcharge on foreign buyers as indicated in his recent manifesto.

Jeremy Leaf, north London estate agent and a former RICS residential chairman

“As far as impact on the housing market is concerned, the election is likely to result in a short-term bounce at least. However, the strength of this bounce will largely be determined by early clarification of the Brexit timetable.

“Demand can’t be pent up indefinitely and the clearest message we have received on our doorstep over recent months is that many people are fed up with waiting to move. That sentiment is reflected in greater-than-usual interest in pre-Christmas market appraisals.

“Nevertheless, I would be very surprised if there is a significant increase in values despite many sellers telling us it will happen. Prices have been underpinned for some time by a shortage of supply so any rise is likely to be more than outweighed by a stock increase in most price ranges.”

Howard Archer, chief economic advisor to the EY Item Club

“The housing market may get a modest leg-up should the UK leave the EU with a deal by 31 January. We believe an easing of uncertainties could see house prices rise by around 2 per cent in 2020. Housing market activity – and possibly to a lesser extent prices – could be given a modest lift in 2020 if the government introduces specific measures aimed at boosting the sector in the Budget.

“However, the economy still looks set for a challenging 2020 even if there is a Brexit deal so that the upside for house prices is likely to be limited. Furthermore, Brexit concerns could very well pick up again as 2020 progresses due to concerns over what will happen at the end of the year if the UK and EU have failed to reach agreement on their longer-term relationship and the transition arrangement is due to end (both sides have to agree to an extension of the transition arrangement and Boris Johnson has stated that he will not seek an extension).

“Should the UK ultimately leave the EU without a deal, we believe house prices could quickly drop around five per cent amid heightened uncertainty and weakened economic activity.”

By James Warrington

Source: City AM

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Housing Forecast 2020 highlights need for Government to prioritise housing policy

The Royal Institution of Chartered Surveyors (RICS) Housing Forecast 2020 highlights the need for Government to prioritise housing policy, in order to inject activity into the market and create a favourable environment for developers to help address the housing crisis. The 2020 forecast predicts that there will be little change in sales volumes for the year ahead, despite the new certainty around Brexit.

In 2019, the RICS survey data consistently showed that the market was plagued by a shortage of stock, with average stock levels on estate agents’ books hitting a new all-time low in June. This coupled with a continued decline in new properties being listed for sale – as respondents cited sellers caution over selling during the Brexit period – and stretched affordability in parts of the country – means the likelihood of a material pick-up in activity during 2020 seems unlikely.

This lack of impetus in sales activity, suggests house price growth will rise modestly throughout the year with the forecast predicting a 2% rise.

Tarrant Parsons, RICS Economist, said: “Momentum across the UK housing market has remained relatively subdued, with new buyer demand showing little impetus going into the New Year. That said, with the Conservative party winning a clear majority, the Withdrawal Agreement will very likely be ratified in the coming weeks. This could see some confidence returning, at least for a brief spell, meaning activity may see some uplift.”

“Challenges around affordability and low stock levels will continue to drag on the market, and Brexit uncertainty could resurface as the next deadline draws closer. As such, we expect house prices to rise by just 2% next year, with the outlook for overall sales volumes broadly flat.”

Rents are also expected to rise in 2020, and at a faster pace. As the sector continues to struggle with a lack of supply, the RICS survey data suggests rents will rise by 2.5%. In fact, the number of new landlord instructions has been stuck in negative territory for fourteen successive quarters, which is the longest run since 1999. In London, rents are expected to rise at an even faster pace of 3%.

Hew Edgar, RICS UK Head of Engagement and Cities Strategy, said: “In the past, many Government administrations have implemented a piecemeal approach to housing and tinkered around the edge of the main issues. This needs to stop in order to make real and substantive enhancements to the UK’s housing sector – whether that is the pace and quantity of housing delivery, quality standards, or energy efficiency. Mr Johnson’s parliamentary majority provides an ideal opportunity to do this; but he, and his team, must grasp the nettle.

“It is imperative that the new administration hits the ground running and makes headway into the plethora of housing pledges within the Conservative manifesto – ensuring they actually deliver holistic policy, as well as moving the housing sector forward with a consistent and long-term approach.”

Source: Property118

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General Election result ‘should give confidence boost to housing market’

The Conservatives’ General Election victory could trigger a new burst of housing market activity as confidence flows back into the market, according to estate agents.

Various reports have indicated that housing market activity has been on hold while potential buyers and sellers waited for the political situation to become clearer.

But some property professionals said they now expect to see those who have previously been holding back doing deals before Christmas.

The Tories aim to deliver a million more homes in the next five years.

The party has also promised to introduce “lifetime rental deposits” so down payments can be transferred from one property to the next.

It will also review new ways to support home ownership following the end of the Help to Buy scheme in 2023.

The most important thing for the housing market is that the result brings some stability, albeit short term, at least until we see a clearer timetable for Brexit. This should generate a return of confidence to the market, which is what we have been looking for

Jeremy Leaf, north London estate agent

Jeremy Leaf, a north London estate agent and a former residential chairman of the Royal Institution of Chartered Surveyors, said: “The most important thing for the housing market is that the result brings some stability, albeit short term, at least until we see a clearer timetable for Brexit.

“This should generate a return of confidence to the market, which is what we have been looking for.”

He said he now hoped to see more government moves which would go towards increasing the supply of homes, particularly affordable ones to buy and rent.

Mr Leaf continued: “What we really want to see is more supply and transactional activity.

“This is good for the housing market and for the wider economy as it improves social mobility.

“People have been holding back for some time and demand can only remain pent up for so long – people want to get on with their lives.”

Patrick Alvarado, director of Knightsbridge, London, estate agency Nicolas Van Patrick, said: “We expect buyers who are currently under offer and who might have been holding off in exchanging contracts prior to the election, now getting on with it and exchanging prior to Christmas.

“Foreign buyers who might have hoped for a further reduction in prices and the currency should we have woken up to a hung parliament or Jeremy Corbyn victory will realise this is no longer an option and those wishing to buy will also get on with it.”

Mark Manning, managing director of Leeds-based estate agency chain Manning Stainton, which has branches across Leeds, Wakefield and Wetherby, said: “Today’s result is great news for the housing market – we really needed a majority Government who could push Brexit through and end the uncertainty we’ve experienced for the past three years, and that’s what we’ve got.

“There’s so much pent-up buyer demand in the market, caused by potential sellers sitting on their hands and waiting for the result of the election and more clarity on Brexit before making a move.

“I think, now things are clearer, we’ll see lots of movement in the market as those people who’ve been thinking about selling put their homes up for sale.”

We expect the housing market to benefit in the year ahead as everyone from first-time buyers to seasoned investors who have otherwise been anxiously waiting to see where we stood as a nation can now get on with their lives

Joshua Elash, MT Finance

Joshua Elash, director of property lender MT Finance, said: “We expect the housing market to benefit in the year ahead as everyone from first-time buyers to seasoned investors who have otherwise been anxiously waiting to see where we stood as a nation can now get on with their lives.

“We expect transactional volumes to increase significantly as certainty has been delivered.”

But Richard Donnell, research director at Zoopla, said the election result does little to change the underlying fundamentals of the housing market.

“The challenges for housing vary across the country and there are no simple, national solutions,” he said.

“Record low mortgage rates have boosted house prices, while affordability challenges remain across southern England.

“At the same time, housing has become less liquid, with the average home-owner moving once every 19 years.

“This is a result of long-run economic factors and demographic changes compounded by stamp duty, which is a major barrier to movement, especially in southern England.

“Housing policy needs to cater to the different challenges across the country and focus on barriers to movement and increasing choice across all tenures.”

Source: Shropshire Star