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Demand from buy to let landlords for remortgages likely to rise in 2016
Buy to let remortgage transactions outstripped purchases by more than two to one in 2015 but this could be reversed in 2016, according to the latest industry sector index report. Remortgages for vanilla buy to let property accounted for 64% of transactions with Houses in Multiple Occupation (HMOs) and Multi-Unit Freehold Blocks (MUFBs) seeing even greater remortgage activity at 78% and 88% of transactions respectively, the data from specialist brokers Mortgages for Business shows. The results aren’t surprising, according to David Whittaker, managing director of Mortgages for Business. ‘For some time now landlords have been making considerable savings through remortgaging. Many have also been releasing equity to make improvements and plan further purchases,’ he said. ‘However, I anticipate that we will see a reversal of this trend in the first quarter of this year as landlords hurry to expand their portfolios before the stamp duty surcharge kicks in on 01 April,’ he explained. ‘The number of enquiries for purchase finance is already well ahead of where we were this time last year, particularly from those looking to sell their personally owned property into a corporate vehicle,’ he added. Although yields across all property types rallied in the fourth quarter of 2015, in real terms they continue to plateau as rental income fails to keep pace with rising property prices. However, returns for the more complex properties remain healthy and well above the psychologically important 6% mark. The number of lenders operating in the market remained static at 33. However, the number of buy to let mortgage products available to borrowers grew slightly to an average of 975. ‘It is unlikely that this average figure will be topped going forward unless new lenders enter the market, or some of the existing providers start to offer products to limited companies. Of course, that figure is only an average, at one point at the beginning of December our tracking system showed 1,168 products,’ Whittaker pointed out. Continue reading
Asking prices in UK still going upwards, latest index shows
The average asking price England and Wales has increased by 8.2% year on year while the total stock of property had dropped to a new record low, according to the latest residential index. Month on month prices increased by 0.3%, the highest such rise observed for January since the onset of the financial crisis and is at odds with the normal seasonal trend, the data from Home.co.uk shows. The index report says that growth in the property market is due to a lack of supply and low mortgage rates and the typical time on market is 117 days across England and Wales, nine days less than in January 2015. Despite a small uptick in supply, the total number of properties on the market has fallen to a new low. Just over 386,000 properties are currently for sale, some 47% less than in 2008. This trend looks set to dominate the UK property market in 2016, the report says. ‘Sellers know full well that there is a shortage of supply and therefore see no need for cautious pricing. Consequently, prices jumped nearly a percentage point over the last month in Greater London, which corresponds with an additional £15,000 on the average home value,’ said Doug Shephard, director at Home.co.uk. All the regional property markets have shown significant improvements in marketing times over the last year. The biggest improvements were in the South East and East of England where competition is fierce and these two regions also experienced the largest price hikes outside of Greater London in 2015. ‘We expect that home values in these regions will rise further this year before cooling as prices become out of reach of most buyers, thereby subduing demand. Perhaps surprisingly, the next best improved markets in terms of reductions in median time on market were the formerly lacklustre North East and Yorkshire regions,’ Shephard explained. ‘This serves as a strong indication that a recovery, until now notably absent, is beginning to take place in these regions as properties begin to move through the market more quickly and the supply demand balance tips in favour of the vendor,’ he pointed out. ‘We expect the first significant price rises post-crisis to be observed in these regions in 2016. The recovery in home values in the West and East Midlands is already well underway and their marketing times continue to improve. We expect increased price rises in these regions this year due to a combination of increased scarcity and buyer demand,’ he added. Shephard also pointed out that the North West property market is also showing signs of incremental improvement and is expected to see price rises in 2016 higher than last year. ‘It is interesting to note that Greater London heads up the four regions which have the least improved marketing times over the last year. Overall, the London market appears to be in a mature post-recovery phase where the breath taking price hikes of the last six years have… Continue reading
New report challenges development in London to consider regeneration
London needs to build some 50,000 new homes a year over the next 20 years and some of this requirement can be accommodated by increasing the density of existing places, including local authority housing estates, it is suggested. Many such estates require updating and this can be done in a way that creates many more homes, a significantly improved living environment for existing and future residents, and better value for local authorities, according to a new report. This would be achieved by rebuilding estates in a street based pattern, fully integrated into the urban network of neighbouring streets, says the analysis by real estate adviser Savills which highlights the potential to deliver more housing by increasing density in well-connected areas as well as the benefits of building sustainable urbanism. The report estimates that at least 54,000 and up to 360,000 additional homes could be accommodated within existing local authority housing estates through a new approach to estate regeneration. It assumes that every existing resident would be re-housed under the same terms on the new streets. The report proposes a new ‘complete streets’ model, based on a permeable and well-connected streetscape, which Savills says would improve density and achieve a better outcome for all existing and future residents and greater value for local authority stakeholders. Many of London’s local authority housing estates were built at a time when London was depopulating, so were not built at optimum density. The report estimates that, had they been built in the 1960s and 1970s to the same density as complete streets, they would have housed a further 480,000 households. But, the report argues, low density has not equated to a higher quality of place in the majority of cases. Many of the capital’s estates were constructed in a manner that means they are cut off and poorly integrated with the rest of London and neighbouring local communities. The conventional approach to estate renewal, often controversial at a local level, is based on replacing the existing site with new high-mass blocks and towers in a similar layout but at higher density, which does little to improve the neighbourhood or create new place value. Savills has modelled this ‘contemporary regeneration’ approach against a ‘complete streets’ alternative, based on a detailed study of six estates across London. The alternative, ‘complete streets’ model proposes rebuilding estates in a street-based pattern, fully integrated into neighbouring streets and community. The analysis estimates that approximately 1,750 hectares of London’s estimated 8,500 hectares of local authority housing estates might be capable of regeneration using this approach. This could private somewhere between 190,000 to 500,000 homes, representing an increase over the number of existing homes of between 54,000 and 360,000. And because this approach creates opportunities for mixed use development and is fully integrated into the broader city, it also creates greater life chances and employment… Continue reading
