Tag Archives: crisis
Uncertainty creeping into UK housing market likely to be short term
Uncertainty is set to creep into the UK housing market due to stamp duty changes, the European Union referendum and forthcoming regional elections, it is claimed. Overall short term confidence in the market has flattened following the rush from buy to let investors to beat the extra 3% imposed on additional homes at the start of April, says the latest monthly survey report from the Royal Institution of Chartered Surveyors (RICS). Survey respondents say that the uncertainty is fuelled by stamp duty changes, a weaker pound, the UK potentially leaving the EU (Brexit) and devolved elections in Scotland and Wales and local elections in England. The report also shows that the rate of house price inflation is slowing with indicators pointing to more modest house price gains and house prices have fallen further in London than elsewhere. These factors have been most strongly felt in central London, where 38% more respondents expected to see house prices fall over the next three months. The report also says that across the UK, while expectations around the number of new house sales peaked following the Chancellor’s Autumn Statement, this trend has reversed with 2% more respondents expecting to see the number of sales fall rather than rise over the coming months. Confidence around house price inflation has also dampened with 17% of respondents (net balance) expecting to see prices rise over the next three months, compared to 44% (net balance) in December. However, the longer term outlook suggests that prices will still be expected to rise by more than 4% each year for the next five years across England and Wales, with prices in London projected to grow by a broadly similar amount rising by 3% each year over the same period. Despite, the increased rates of stamp duty tax, now expected to be paid by prospective landlords, rent inflation, while expected to increase, is not predicted to rise any faster than it has in previous months. Although over the next five years respondents continue to anticipate rents will increase by an average of 4.5% per annum, there is no indication yet that tax increases are being passed on to the tenant. The expected rate of rent of inflation has remained constant for the past year at around 3%. ‘As expected, the buy to let rush has now run its course and, as a natural result, the market is starting to slow. But there are other significant factors that are currently weakening short term confidence in the UK property market,’ said Simon Rubinsohn, RICS chief economist. ‘Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception. Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular,’ he added. ‘However, all indications suggest that whatever the outcome of the forthcoming elections and referendum, in the long term, the imbalance between demand and… Continue reading
Storm damage and burst pipes cause the most damage in UK buy to let properties
Storm damage, burst pipes and damage from break-ins were the top reasons that buy to let property investors make insurance claims, new research has found. The most common claim was for storm damage, which cost an average of £1,500 to repair, followed by damage to ceilings, walls and carpets caused by burst pipe with an average £4,500 repair bill. The analysis of data from 100,000 policies by Simple Landlords Insurance also found that the third most common reason for making a claim was property damage caused by burglars with an average claim of £2,300. The most expensive claim in the top 10 is £25,000 to repair the damage caused by an electrical fire and the report also explains how insurance premiums can vary significantly according to property type, location, and tenant type. Andrew Weston from Simple Landlords Insurance said the research is useful for landlords as it helps them to find out the practical measures they can take to avoid the hassle and time of making an insurance claim, all of which will benefit them further by keeping premiums low. ‘Saving money will become even more important for landlords in coming years as tax increases announced by the Chancellor are phased in, which for many investors could make the difference between profit and loss,’ he pointed out. ‘Buying insurance is often one of the last things buy to let investors consider. Having a clear understanding of the key factors that can influence a premium will save landlords money in the long run,’ he added. The report warns landlords about damages that are not covered by insurance policies. The most common reason that a landlord did not have cover was that they hadn’t purchased accidental damage cover in their policy. The report also explains that while you never know where a storm will hit, certain features can make properties particularly vulnerable to harsh weather conditions. Properties with conservatories attached and dormer windows are especially likely to be damaged by high winds and excessive rain during a storm. An example is a property in Edinburgh which needed more than £11,000 worth of repairs, including Perspex roof covering to the buildings’ exterior and solid oak flooring to its interior after two panels from its conservatory roof were ripped off during high winds in January 2015. In Keighley, West Yorkshire, another landlord sustained damage worth just under £5,000 when their conservatory roof was replaced after every single roof pane was punctured by hailstones during a storm in July 2015. A landlord in the West Midlands was contacted by his student tenants following a break in. The burglars smashed through the back door and tried to enter all the bedrooms upstairs. All the doors were locked but the thieves damaged the doors and frames with the damage amounting to almost £5,000. Continue reading
Property market activity soars in England and Wales in March due to stamp duty change
Property sales in England and Wales have seen their strongest March for nine years with transactions up 30%, some 80,000 home sales, the latest index data shows. House price growth also accelerated, up 6.9% year on year and 0.6% month on month, taking the average price to £291,650, the figures from the Your Move house price index also shows. It means that a typical home is now worth £18,745 more than a year ago. When London and the South East are left out of the calculation prices were up 5.1%, suggesting that the market is still strong outside these two growth areas. Indeed, the London market saw the fastest growth of any region as house prices rose 8.2% or £44,548 year on year. Bath and North East Somerset saw the largest March pick-up in property prices, climbing 5.3% or £18,603 month on month According to Adrian Gill, director of Reeds Rains and Your Move estate agents, the impending stamp duty rise for additional properties that was introduced at the start of April helped March record the strongest homes sales for the month since 2007. ‘The surge was widespread across England and Wales. This goes beyond any normal seasonality, with second home and buy to let investors rushing to beat a bigger tax bill,’ he explained. Overall some 73% of local authorities in England and Wales experienced a monthly upswing in home values, the highest proportion of areas seeing positive property price rises since July 2014. ‘This will be welcome news for homeowners, who now have a fantastic opportunity in the current sellers’ market. The pervasive shortage of homes on the market is still driving up values, as buyers have to compete for each available property. If they are going to make it easier to get a foot on the property ladder, the Government will have to double down on its help to first time buyers, or let up on landlords,’ said Gill. He also pointed out that after a bit of a downturn over the winter months, the London property market is growing again with prices up 8.2% higher than a year ago. ‘The lift in London’s house prices seems steep. But we’re actually in a much calmer position than previous years, with the current rise still well below London’s record 20.6% year on year growth, established in July 2014,’ Gill said. He also pointed out that the growth in London property values means it is once again pulling away from the rest of the country, with London and the South East now dragging up national house price growth by 1.8%, double the rate seen at the end of 2015. ‘As a result, we’ve returned to a two speed housing market, as growth in the rest of the country is easily outpaced by London and the South East. But it’s not all about London, as house prices are still advancing in the Northern cities, with the average… Continue reading
