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Supply of homes to rent falls in UK as demand rises
The supply of rental accommodation in the UK is the lowest since records began a year ago, while demand for accommodation rose slightly in January 2015, the latest data shows. After a period of gentle decline, the number of properties registered per letting agent branch dropped by 5% to 172 in January, some 10 fewer than in December, according to the report from the Association of Residential Letting Agents (ARLA). A breakdown of the figures shows that supply in Scotland stands above the national average, with 280 properties available per member branch, while the supply of rental properties in London is 59% with only 116 properties per branch. However, London has seen a slight increase in the number of properties available over the last month, rising from 108 in December 2015. Demand for rental accommodation picked up in January following a seasonal lull in December, with an average of 31 prospective tenants now registered per branch. However, it has not returned to the high levels reported in January and February last year, when there were 38 and 40 tenants registered per branch respectively. In line with growing demand, the number of agents reporting rent increases for tenants increased in January, with 30% reporting an increase in rent, the highest since September 2015. ‘Supply of housing continues to be a problem and tenants bear the brunt of this with more people competing for properties at higher prices. The majority of tenants find that it is impossible to save very much at the end of the month to put towards buying their own home,’ said David Cox, ARLA managing director. He pointed out that ARLA’s recent Cost of Renting report found that a fifth of those renting in the UK do not expect to ever be able to afford to buy a home, and unless we act soon to build more properties, this number will only get higher. The report also reveals that 63% of ARLA members think the Chancellor’s stamp duty reforms for buy to let properties will push landlords out of the market, which will in turn cause supply to drop further and 58% believe the reforms will push up rent costs. However, 47% of ARLA agents reported that they have seen an uplift in interest from buyers looking to invest in buy to let properties before the 01 April, a rise from 24% from last month. ‘A few weeks into the new year and the April deadline for the stamp duty surcharge is looming and interest from buyers looking to invest in buy to let properties and beat the deadline is ramping up,’ said Cox. ‘The final details of the new tax will be revealed at the Budget in March but we are not expecting to see the Government back down on this policy. The findings from our members echo our concerns that efforts to penalise… Continue reading
Buy to let investors put off by UK government tax changes
Around one in four of people in the UK who were considering investing in a buy to let property have been put off by the Government’s plan to introduce a 3% additional stamp duty and cut tax relief on their finance costs, according to new research. Overall some 9% have given up on aspirations to own a buy to let property and 14% of existing landlords say they will sell one or more of the properties in their current portfolio because of the changes. The research by online investment platform rplan also found that 30% say they are planning to invest their buy to let deposit in an ISA instead. Under the changes, the stamp duty on buying a £250,000 buy to let property will rise from £2,500 to £10,000 from April, while that for a £400,000 property will more than double from £10,000 to £22,000. Also, from 2017, the tax relief currently allowed on finance costs such as interest payments on mortgages and loans to buy furnishings will be gradually reduced over four years. Those planning to invest in buy to let were going to use savings and investments worth an average of £43,592 to buy a property. Instead, 39% of these adults will use the money to save in a cash account, 30% will invest in an ISA, 20% will put it into their pension and 13% will put it in other stock market investments. Latest figures in the Bank of England’s Credit Conditions Survey have revealed a rush for buy to let properties before the new tax is introduced. Lenders reported that demand for secured lending for house purchase increased slightly in the fourth quarter of 2015 and is expected to increase in the first quarter of 2016. But within this, demand for buy to let lending increased significantly in the last three months of 2015. ‘The British have strong faith in property as an investment and many see it as a means of providing a pension income. But the government clearly has a policy to dis-incentivise BTL and the sharp increase in landlord mortgages revealed by the Bank of England credit survey will probably be a last rush before the gate slams shut,’ said Stuart Dyer. ‘Having a buy to let property can also mean an over exposure to one asset class for many investors, who should strongly consider the alternative of investing in a diversified portfolio for the long term, especially if this can be achieved through a tax free ISA wrapper,’ he added. Continue reading
UK residential sales down 2.8% month on month but up almost 10% year on year
Residential property sales in the UK fell by 2.8% between December 2015 and January 2016, according to the latest data published by HMRC, the UK’s taxman. However, the seasonally adjusted sales figure is 9.7% higher compared with the same month last year, with transactions reaching 105,940. Doug Crawford, chief executive officer of My Home Move, believes that it is significant than January sales are up considerably year on year. ‘This could be accredited to a spike in purchases by additional home buyers looking to escape the rise in stamp duty, set to be introduced in April. This may continue to provide a short term boost for a matter of weeks,’ he said. ‘However, we are now explaining to new clients that it is too late to guarantee completion before 01 April. Looking ahead, the question is whether the market will sustain this level of activity. Supply is likely to be the biggest constraint, so new house building will remain critical,’ he added. However, the figures are published as property experts are being asked what effect the newly announced referendum on the UK’s position in the European Union might have on housing markets. According to Peter Rollings, CEO of Marsh & Parsons, sales activity often cools in times of political uncertainty and the London housing market usually bears the brunt of it. ‘First and foremost, foreign investors may be more tentative given this latest turn in events, especially as it follows hot on the heels of higher Stamp Duty for million pound properties,’ he said. ‘But history shows us that the market recovered quickly from this short term ambiguity in 2015 and in fact, home sales have really been building momentum over the past year. The property market is chock a block with eager buyers, who are being propelled on by cheap mortgage finance and government support schemes,’ he explained. ‘Given the extent of buyer demand, it’s a great time for existing home owners to be thinking about their next step up the ladder, which should drive further purchase activity. For investors, the change in Stamp Duty for second homeowners in April will be an incentive to make purchases quickly over the next month,’ he added. ‘It remains to be seen how much of an impact the EU referendum will have on these current levels of confidence but go or stay, London remains an attractive safe haven in times of uncertainty,’ he concluded. According to real estate services firm Savills the fact that the referendum has been announced now means that the relatively long lead in should minimise the potential impact on property market. ‘We’ve already seen a number of short-term factors impact investors’ sentiment this year, however appetite for UK property remains healthy. Chinese investors remain active in the market and negative interest rates in Japan will also benefit global real estate,’ said Mark Ridley, Savills chief executive officer UK and Europe. ‘As we saw in the run up to the 2015 General Election, one of… Continue reading
