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Institutional investors being priced out of London market, index suggests
Yield compression, foreign investment and a lack of supply have led to institutional investors being priced out of the London market, according to the latest IPD UK Annual Residential Property Index. The UK as a whole saw a total return of 13.5% in 2014, putting extra strain on investors hoping to enter the market, particularly in London. The strongest districts for overall returns were to be found outside of prime central London, with returns in inner London and outer London the highest in the UK, driven largely by capital growth. The Index results show that the net yield in central London has fallen to 1.8%, its lowest level since the start of the index, and the first time that the figure has fallen below 2%. Across the UK the net income yield has fallen to 2.4% across all residential market lets. ‘If you invested in London residential at some point during the last 10 years, the chances are that you’re laughing all the way to the bank,’ said Mark Weedon, vice president and head of alternatives at MSCI. ‘However, if you are looking to put money into the sector now, our data shows that investors seeking income will find themselves’ priced out by foreign investors and owner occupiers when trying to buy existing stock in London,’ he explained. ‘There is now a de facto exclusion loan on central London for most institutional investors, at a time when concern over access to housing has seldom been higher,’ he added. Inner London delivered total returns of 24.4% in 2014 with a comparatively small rise in rental values of 3.1%, while outer London saw returns rise to 21.1% and rental growth of 3%. Central London (zone 1) returns slipped to 9.8% from 14.7% in 2013, while rents also increased by 4.8% in this area. Outside of the capital, the South West and Midlands performed the strongest, returning 9.7%. Northern England and Scotland also saw an improvement in returns to 3.5%, the first time returns have entered positive territory in those areas since 2007. This area also experienced a rise in rental growth from 1.5% to 2.4%, the only region outside of London to see this. Comparatively, commercial real estate returned 17.8% in 2014 according to the IPD UK Annual Property Index. Bonds and equities returned 11.8% and 0.5% respectively. ‘It is clear that market forces not related to the underlying rent generating capability of residential property are affecting values and that this is pricing large investors seeking long term stable income out of the London market,’ said Weedon. ‘It is no surprise that investors are now considering building to let which will enable them to achieve a decent percentage income return in areas of high employment and strong owner occupier demand,’ he added. The IPD UK Annual Residential Property Index is based upon properties let on modern residential leases, primarily assured short hold tenancies, the index now has 14 years of historical data. The index… Continue reading
British govt releases enough unused land for over 100,000 new homes
Enough unused public sector land has been released in England to build over 103,000 new homes, it has been announced. Communities Secretary Eric Pickles said that the amount of land sold by the government surpasses the original commitment set by the Prime Minister, and is expected to rise again by the end of March this year. Now, the government is calling on councils and developers to help turn it into housing as soon as possible, and is urging local authorities up and down the country to follow this example and sell their redundant sites and buildings. ‘House building is at the heart of the government’s long term economic plan. That’s why, rather than leaving surplus public sector land idle, we are putting it to good use by releasing it to build new homes across the country,’ said Pickles. ‘I now want to see councils following Whitehall’s example and explore what they can do to release land and deliver new homes and savings for local taxpayers,’ he added. Housing Minister Brandon Lewis pointed out that housing starts are at their highest annual total since 2007, but acknowledged that more homes are needed. ‘That’s why for the last four years we’ve pulled out all the stops to release formerly used surplus public sector land for house building meaning we have now exceeded our own target,’ he added. On top of this, there are plans to release land with capacity for 150,000 homes between 2015 and 2020. Lewis also pointed out that the government has already taken major steps to boost house building and get more people into a home of their own by simplifying the planning system, making it easier to convert empty buildings into new homes and prioritising development on brownfield land. ‘The results are clear as house building starts are now at their highest since 2007, empty homes are at their lowest level since records began and government backed schemes have helped nearly 192,000 people buy or reserve a property since 2010,’ he added. The land released to date comprises of 899 sites across England, and includes Ministry of Defence land at Aldershot in Hampshire where planning permission has been granted for up to 3,850 homes as well as road improvements, two new primary schools, extensions to two secondary schools, two new pre-schools and day care centres and 110 hectares of new managed green space, play areas, sports and community facilities. At Norton Barracks, site of the former Army archives in Worcestershire, sold by the Ministry of Defence to Rooftop Housing Group in partnership with Wychavon district council, is now the site for 10 new affordable homes for returning services personnel and those who have retired from the Armed Forces. Bexhill former galley sidings, a derelict former oil storage depot with railway sidings site sold by the British Railways Board, now has permission for 64 properties on the site, a mixture of two three and four bedroom properties, including affordable homes. At Stratford City former railway land, sold… Continue reading
Thousands sign up for new property alert service in England and Wales
In its first year, over 19,000 people have signed up to the UK Land Registry’s free Property Alert service which provides an early warning of possible suspicious activity on someone’s property. The aim of Property Alert is to help people protect their home from fraudsters. ‘There are many people who have no idea that someone could steal their home from under them, but unfortunately it can and does happen,’ said Tracey Salvin, Property Alert service manager. ‘For example, someone may pretend to be you using forged documents and sell or mortgage your home. While this is not common, when it does happen it can have devastating consequences for the victim. Imagine finding out that someone else has sold or mortgaged your property without your knowledge and disappeared with the money, leaving you to pick up the pieces,’ she explained. A case study involved a Ms Anderson (names have been changed) who signed up for the Property Alert service and placed an alert on her property. She received an email alert the very next day saying that an application to transfer her property had been made. Ms Anderson knew nothing about this and contacted Land Registry’s property fraud reporting line. On investigation, they found that the application had been made by Ms Anderson’s father and contained evidence claiming to show that Ms Anderson’s identity had been checked by a solicitor. Ms Anderson claimed she had never been to see this solicitor and denied signing any transfer of her property. She also alleged that her father was intercepting her mail and at one time had taken her passport. When the Land Registry contacted the solicitor concerned, he confirmed he had met someone claiming to be Ms Anderson but who, it turned out, must have been an imposter. ‘As a result of Ms Anderson contacting Land Registry, we formally notified Ms Anderson’s father of her objection to his application. As we didn’t receive any response from him, we cancelled his application. This allowed Ms Anderson to proceed with selling her property as she had planned to do,’ said Salvin. Property fraud can happen in many ways. For example, fraudsters may steal someone’s identity and attempt to gain ownership of a property by using forged documents. The fraudsters may then raise money by mortgaging the property without the owner’s knowledge before disappearing with the money, leaving the owner to deal with the consequences. Land Registry has stopped fraud on properties worth more than £70 million since 2009. Those wishing to join will need to set up an online account with Land Registry which is free They will then be able to monitor up to 10 registered properties in England and Wales. Email alerts will be sent when there is certain activity on the property and people can then judge whether or not the activity is suspicious and if they should seek further advice. People who are not online can also sign up for Property Alert by calling… Continue reading
