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Rents in UK likely to grow at a slower pace in 2016
Rents for newly let homes in the UK continued to grow in 2015 albeit at a slower pace than in 2014, according to the latest index report. Average rents grew by 3.1% over the year, taking the average monthly rent to £919 per calendar month, according to the data from property services group Countrywide. Rents rose in all regions of the country with the East of England seeing the highest growth, up 6.5%, and the c London market seeing the lowest with 0.5% growth. The report also shows that 34% of tenants who renewed their tenancy faced higher rents, an increase of 7% from last year. However, the average rent for renewing tenancies only grew by 1.3%, less than for those moving into a new home. Rental growth over 2015 was supported by increasing demand for rental homes and low stock of homes available to rent. This imbalance between supply and demand has intensified competition for homes in the market. The average property is now let within 20 days of being instructed; two days quicker than it was in 2014. The time to let has fallen across the country, but homes in the North of England and the Midlands are now let almost three days quicker. Greater London as a whole saw a slowdown in rental growth in 2015 compared with 2014, but rents still rose by 4.7%. As rents have risen in recent years, tenants have increasingly looked to cheaper areas in Outer London. As a result the proportion of under 25s living in the rental sector in London fell by 4% in 2015, the continuation of a longer term trend. As rents continue to increase and outpace earnings in the capital, younger people and those in lower income brackets, have found it harder to remain in the capital, particularly in central areas. Surrounding regions in the South of England have seen small growth in the proportion of under 25s in their market, as Londoners look further afield for more affordable markets. ‘A mix of steadily increasing demand and a lack of homes to rent supported rental growth in 2015, even though wage growth remained subdued. In London rising costs meant renters were more likely to move to outer London or the commuter belt in search of more affordable places to live,’ said Johnny Morris, research director at Countrywide. ‘2016 looks to be a complicated year for landlords as the government focuses its efforts on boosting homeownership. The additional 3% stamp duty charge, stricter regulation and changes to tax relief from 2017 onwards will all take their toll on investor sentiment and impact behaviour,’ he explained. ‘With stock at a premium, the smaller landlords who decide to sell up will add upward pressure to rents, although any rises will be tempered by affordability pressures,’ he added. Continue reading
£140 million to be spent on regenerating housing estates in the UK
Some of the UK’s most rundown housing estates will be replaced with attractive and safe homes with a new fund for regeneration projects, it has been announced. Prime Minister David Cameron released details of what he called a comprehensive approach to estate regeneration with the creation of a new £140 million fund. He said that the government will work with 100 housing estates across the country to either radically transform them or, in the worst cases, knock them down and replace them with high quality new homes. ‘Within these so-called sink estates, behind front doors, families build warm and welcoming homes. But step outside in the worst estates and you’re confronted by brutal high rise towers and dark alleyways that are a gift to criminals,’ Cameron explained. Secretary of State Greg Clark said that there is a belief that the worst estates offer huge potential to be revived so that they become thriving communities and places which people want to live and work in. ‘That’s why we’re so determined to kick-start work which will benefit the lives of thousands of people by providing high quality homes,’ he added. To help tackle the problem the nationwide strategy will be supported by a new Estate Regeneration Advisory Panel, which will be chaired by Lord Heseltine, the former Deputy Prime Minister who has long championed the regeneration of Britain’s inner cities. The Panel will report in detail by this year’s Autumn Statement. The Prime Minister’s announcement comes ahead of a report from property advisor Savills which will show the approach to regeneration could help catalyse the building of hundreds of thousands of new homes in London alone. ‘For decades, sink estates had been seen as something simply to be managed. It’s time to be more ambitious at every level. The mission here is nothing short of social turnaround, and with massive estate regeneration, tenants protected, and land unlocked for new housing all over Britain, I believe we can tear down anything that stands in our way,’ Cameron added. Yolande Barnes, Savills research director, explained that the research shows that housing estates can deliver more homes and be made into better neighbourhoods by re-integrating them into the wider street network and creating or repairing the streetscape. The British Property Federation (BPF) welcomed proposals and praised the Government for ensuring that binding guarantees will be put in place for tenants and homeowners, to ensure that that their right to a home is protected. ‘There are some very old council estates that are in need of regeneration, but that process must treat existing residents fairly,’ said Ian Fletcher, director of policy for real estate at the BPF. ‘The Government is therefore right to put some sorts of guarantees at the forefront of its policy and encourage a partnership approach. There are investors in our membership, pension funds and the like, who will be very interested in how they can contribute to those partnerships,’ he pointed out. ‘Communities need not only… Continue reading
Fewer Chinese and Russians buyers likely for prime central London market in 2016
There is likely to be fewer Chinese and Russian buyers in the prime central London property market in 2016 but a rise in interest from the Middle East, particularly Iran, is forecast. Overall there is unlikely to be much growth in this market which has been hit by increased property tax charges with more set for second home and buy to let buyers in April. ‘We are cautiously optimistic about 2016, however the market is unsettled and liquidity is down. We don’t expect much growth in the central London market as a whole, except for the very best stock which we believe will keep increasing in value,’ said Rory Penn of property agents VanHan. ‘Prices at the top end of the market may adjust to compensate for increased tax costs. We expect there to be fewer Russian and Chinese buyers in the market than in previous years; the strength of the pound means that London is not currently considered to be such good value for money,’ he explained. ‘It is expected that sanctions against Iran will be lifted next year, and we are already seeing interest from wealthy Iranians looking to buy property in central London but we expect to see a drop in demand for some new build developments, such as Battersea Power Station, as the market is becoming over saturated,’ he added. One area where the firm does expect to see continued demand is Mayfair. ‘There is a lot of development going on and a high level of interest from foreign buyers who are still attracted to the social aspect,’ said Penn. Sales were better than expected for the firm in 2015 with seven residential sales in the £10 million to £50 million with an average transaction size of £16 million which included a £50 million house in central London, one of the largest residential transactions in the area. But it also points out that it remains to be seen what effect property tax will have in the coming months. ‘The slowdown in the prime residential markets last summer had less to do with the election and more to do with the changes in taxes relating to buying and holding residential real estate, although this has had less impact at the very top end of the market,’ said Penn. ‘As the luxury market has become more saturated, discerning buyers are increasingly looking for a boutique, bespoke service. Sellers are increasingly looking to sell properties off-market,’ he added. Continue reading
