Tag Archives: crisis
Landlords in UK urged to stay calm in face of EU exit vote
Residential landlords in the UK are being urged not to read too much into the decision by the country to leave the European Union, having gone through a turbulent period recently. Buy to let landlords are now paying a 3% surcharge in stamp duty on each additional property they buy to add to their portfolios and are also facing further tax changes. Now there are concerns that Brexit could affect their businesses. However, according to Richard Lambert, chief executive officer of the National Landlords Association (NLA), while leaving the EU is completely unknown territory, jumping to conclusions isn’t going to help anyone. ‘We welcome governor Mark Carney’s steadying words and his reassurance that the Bank of England and the Treasury have extensive contingency plans in place to ensure the country’s financial stability,’ said Lambert. ‘Any knee-jerk reaction will have a real impact on our members’ mortgages, tenants’ rents and overall confidence in the market. So we would urge the policy as regards to interest rates should be, to continue the Prime Minister’s analogy, one of steady as she goes,’ he added. In a joint statement, David Cox, managing director of Association of Residential Letting Agents (ARLA) and Mark Hayward, managing director of National Association of Estate Agents (NAEA), said that in the short term the market can weather the uncertainty. ‘The outcome of the EU referendum will create a period of uncertainty among home owners, buyers, investors, landlords and developers. We can expect international investors to look a lot harder at the UK as a market and this will have a consequential impact upon the house building sector as investment may be stalled,’ the statement said. ‘In the short term we believe that both prices, and rents, will remain stable, but we cannot be certain about the next quarter as political instability, and market unrest, could lead through into prices in the housing market,’ it pointed out. ‘We believe that the UK housing market is resilient, as is the supply chain that drives it. But as we indicated in our Brexit report last month, the bigger impact may well be in the skills necessary to drive UK housing development, and this is now a major concern for UK buyers and renters,’ it added. Anne Wilson, senior tax manager of the tax department at Pierce Chartered Accountants, pointed out that tougher buy to let mortgage lending criteria has been announced. The rules will require lenders to carry out stricter stress tests on prospective borrowers or those wishing to re-mortgage to ensure that they have sufficient capital to cover repayments if interest rates increase to 5.5%. In the future, there will also be changes to the way that tax relief for interest payments on the purchase of residential lettings will be given in the tax computation. This will affect individuals, partnerships and limited liability partnerships which let out residential properties. At present there are no proposals for this restriction to… Continue reading
UK property market set to see short term volatility due to EU vote result
The UK property market is facing short term volatility due to the decision by the people to vote to leave the European Union, but over the long term experts predict it will settle down and still be attractive. The main issues seem to revolve around how foreign buyers will react to the leave vote as there had already been signs of a wait and see attitude in terms of overseas investment in property in London in particular where demand and prices were showing signs of slowing. There will be international buyers who may initially give the London market a wide berth, according to Edward Heaton, managing director of property buying and search agent Heaton & Partners. But he pointed out that this could be short lived if the pound drops dramatically, as London will suddenly look much better value to foreign buyers. ‘There is a risk that with a period of uncertainty ahead of us, prices may drop off, but I believe that any fall will be limited and suggestions of a crash are overstated. The effect is most likely to be felt in London and the South East,’ he explained. However, Ian Westerling, managing director of Humberts, believes that continued uncertainty during lengthy negotiations as politicians thrash out what post-Europe looks like for Britain is likely to keep the brakes on the property market for the foreseeable future. He explained that people who have to move house will still do so but many investors and less committed buyers are likely to sit tight to see the economic and social impact of the referendum result. ‘Housing market professionals will need to brace themselves for a new norm in market dynamics, underpinned by the ongoing unknowns. The wait and see period could lead to some price adjustments. The onus will be on the Government to act swiftly to avoid the property market becoming paralysed which would have a knock-on impact on the rest of the economy,’ he said. Adam Challis, head of residential research at JLL, also believes that the London housing market will feel the effects of the decision more deeply. ‘The interconnected trading relationship between London and the rest of Europe means the implications are more complex. This will exacerbate the uncertainty for London’s home owners,’ he said. But he also pointed out that paradoxically, investors may well identify opportunities in this market over the short term, particularly international purchasers that can benefit from the currency arbitrage that has opened up by a weaker pound. ‘While the focus leading up to the Referendum has been on the UK's international trading relationships, we are deeply concerned that domestic politics will now be the key risk to the housing market. The UK has a deep housing supply imbalance and concerted attention from politicians to deliver credible, lasting solutions to the supply conundrum is desperately needed. Protracted infighting within the UK’s political parties will only harm the UK economy and any chance… Continue reading
Sales in US reach highest level for a decade and prices reach all time high
Existing home sales in the United States increased in May to their highest pace in almost a decade and median sales prices reached an all-time high. While the uptick in demand this spring amidst lagging supply levels pushed the median sales price to an all-time high, according to the National Association of Realtors®. All major regions except for the Midwest saw strong sales increases last month. Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, were up by 1.8% to a seasonally adjusted annual rate of 5.53 million in May from a downwardly revised 5.43 million in April. The data from the National Association of Realtors (NAR) shows that with last month's gain, sales are now up 4.5% from May 2015 and are at their highest annual pace since February 2007. ‘This spring's sustained period of ultra-low mortgage rates has certainly been a worthy incentive to buy a home, but the primary driver in the increase in sales is more home owners realizing the equity they've accumulated in recent years and finally deciding to trade-up or downsize,’ said Lawrence Yun, NAR chief economist. ‘With first time buyers still struggling to enter the market, repeat buyers using the proceeds from the sale of their previous home as their down payment are making up the bulk of home purchases right now,’ he pointed out. ‘Barring further deceleration in job growth that could ultimately temper demand from these repeat buyers, sales have the potential to mostly maintain their current pace through the summer,’ he added. Surpassing the peak median sales price set last June of $236,300) the median existing home price for all housing types in May was $239,700, up 4.7% from May 2015 and the 51st consecutive month of year on year gains. The data also shows that total housing inventory at the end of May rose 1.4% to 2.15 million existing homes available for sale, but is still 5.7% lower than a year ago while unsold inventory is at a 4.7 month supply at the current sales pace, which is unchanged from April. ‘Existing inventory remains subdued throughout much of the country and continues to lag even last year's deficient amount. While new home construction has thankfully crept higher so far this year, there's still a glaring need for even more, to help alleviate the supply pressures that are severely limiting choices and pushing prices out of reach for plenty of prospective first time buyers,’ said Yun. The share of first time buyers was 30% in May, down from 32% both in April and a year ago. First time buyers in all of 2015 also represented an average of 30%. Properties typically stayed on the market for 32 days in May compared to 39 days in April, which is below a year ago when it was 40 days and the shortest time since NAR began tracking in May 2011. Short sales were on the market the longest… Continue reading
