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Number of rental properties available for new tenants in UK falls
The number of rental properties available for tenants in the UK decreased in May at a time when demand is increasing and is predicted to keep rising over the next five years. Supply of rental property fell by 7% compared with April with just 179 properties per branch of lettings agents who are members of the Association of Residential Letting Agents (ARLA), the organisation’s latest monthly report shows. The report says it is a worry that London, known for its booming rental culture, has the least amount of rental properties per branch, with only 134 managed in May, compared to 273 properties per branch in Scotland. Whilst overall available rental properties decreased, demand remained the same. ARLA members reported 36 potential tenants registered per branch in May, remaining the same as the previous two months. The report also shows that during May 34% of ARLA agents reported rent increases for tenants. This figure has been slowly creeping up from the start of the year, when just 27% of agents reported hikes for tenants. Those living in the South West were the most affected by monthly rent increases with 49% of agents in the region reporting an increase. The situation is set to get worse with 76% of ARLA member agents nationally predicting that rents will continue to rise over the next five years. ‘It is worrying to see that there such a sharp decrease in supply, when we know there is already a struggle to meet housing needs,’ said David Cox, ARLA managing director. He pointed out that while the months following any major event such as the General Election will always cause uncertainty and shake things up for the property market, the dwindling supply and already high demand is an issue that’s going to continue to plague the property market. ‘We are in desperate need of more housing stock in this country and supply and demand isn’t something that will level out overnight. It’s vital that the new government follows their promise of building more houses, so we can free up rental properties and head on the right path to turning the property market around once and for all,’ he added. Continue reading
Regulation and tax set to impact property markets in Asia Pacific region
Monetary policy, tax, regulations and underlying fundamental drivers such as demographics and urbanisation will have a significant impact on property markets in the Asia Pacific region, according to the latest real estate analysis. The region’s economies are moving at multiple speeds with differing drivers and local dynamics, producing quite a wide range of housing market performance indicator, says the Asia Pacific residential review from international real estate firm Knight Frank. ‘Economic growth can certainly be a reasonable lead indicator as to which way housing markets will go,’ said Nicholas Holt, head of research for the Asia Pacific region. He also pointed out that despite facing many headwinds, the International Monetary Fund is forecasting stronger growth in 2015 for six out of the 11 major countries in the region. ‘While this should be a positive sign for home owners or investors, the reality is that in many cases there has been a divergence between short term economic growth and market performance,’ he added. The report reveals that since last November, the People’s Bank of China has cut interest rates three times, contributing to the first month on month increase in house prices in May this year, after falling for 12 consecutive months. Other countries such Australia, India and South Korea are also pursuing expansionary monetary policy. It points out that with further interest rate rises inevitable in the slow moving market of Singapore, cooling measures introduced previously could start to be reviewed by the government. China and New Zealand have already seen similar moves. And the likely extension of luxury tax and introduction of a super luxury tax have already started to impact market behaviours in Indonesia, as has the announcement of a new capital gains tax scheme in Taiwan. The report also points out that it is not just China that has seen the increasing influence of policy interventions in residential markets, whether fiscal, monetary or regulatory. In New Zealand, for example, authorities have stepped in over recent years. ‘Perhaps now more than ever, property market observers are looking to policy makers, whether Janet Yellen at the Federal Reserve, the Singapore government, the Reserve Bank of Australia, the People’s Bank of China or the Japanese government for clues about how markets will perform. We can expect more of this going forward,’ explained Holt. In Hong Kong the supply of land for development has affected the property market and the report says that until supply catches up with demand the upward pressure on prices will continue in what is already one of the costliest property markets in the world. Indeed, house prices in Hong Kong have continues to defy the ongoing cooling measures by rising 8.4% in the 12 months to the first quarter of 2015, the highest annual price growth in the overall market since the second quarter of 2013. The report suggests that the Reserve Bank of Australia’s recent decision to hold interest rates followed two 25 basis point cuts in the official… Continue reading
Warning over too much mortgage regulation in the UK
Regulators’ determination to reform the UK mortgage market has resulted in a layering effect which threatens to stifle consumer access to credit if it goes unchecked, according to a new report. The cumulative impact of new MMR financial regulations introduced last year and the implementation of the European Union Mortgage Credit Directive, is affecting the lending recovery, says the Intermediary Mortgage Lenders Association (IMLA). The report acknowledges and accepts the need and ‘inevitable’ cost of improving the safety of the banking sector and preventing a repeat of the financial crisis but it warns that the common objective of building a ‘sustainable’ market with enough room to deliver positive outcomes for consumers is threatened by the sheer volume of new rules. It also points out that the overlapping effect may unwittingly tip the balance too far away from consumer choice and it is calling on the Bank of England to establish a in industry panel to guard against too many rules. The report raises concerns over regulators’ potential ‘bias to action’ where they perceive a high cost to their reputation if they are seen to be too permissive, compared with a low risk of being too restrictive. IMLA cites the Financial Policy Committee (FPC) decision in June 2014 to impose interest rate stress tests and limit high loan to income (LTI) mortgage lending as an example of this bias. The actions came at a time when the effect of the MMR on the market was still unclear, and saw the fledgling recovery of 2014 followed by a subsequent downturn in mortgage activity that brought eight successive months of approvals falling year on year. Despite the slowdown, the FPC was given further powers in February 2015 to cap loan to value and debt to income levels for mortgages. These powers are as-yet unused but the IMLA suggests these actions support the view that regulators perceive a ‘normal’ mortgage market to be significantly smaller than that which existed before 2007, which has implications for access to home ownership as the UK population grows. To prevent regulatory layering from choking off the recovery, IMLA calls on the Bank of England to maintain an ongoing review of the new regulatory framework to identify unnecessary overlap and costs. One solution it proposes is a joint Bank of England industry panel that specifically focuses on identifying areas where regulations are unnecessarily complex or duplicative. ‘No-one is questioning the need for continued caution or the regulators’ responsibilities to put boundaries in place to ensure the mortgage market is sustainable in the long term,’ said Peter Williams, executive director for IMLA. ‘You could also argue that regulators and industry will naturally have differing views about what constitutes normal or healthy activity and this is exactly why it’s in consumers’ interests to put a permanent forum in place where the two can put the vast tomes of new regulation under the microscope,’ he pointed out. ‘We must ensure that future regulatory… Continue reading
