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Demand for property in prime central London from overseas remains high
Demand for prime central London real estate remains high and Chinese interest continues to grow, according to a new analysis of the sector, despite stamp duty reform and the looming election. According to the report from independent property buying agency, Black Brick, a rise in the US dollar against the pound has boosted international demand, while record low mortgage rates are encouraging domestic demand. Black Brick has signed new clients from Hong Kong, Saudi Arabia, Russia, Cyprus and the UK so far in 2015, with budgets varying from below £1 million to above £10 million. ‘At first glance, the global backdrop hardly seems positive for the prime central London market. Renewed concerns about the Eurozone, heightened geopolitical risks, and plunging oil prices, add in the changes to stamp duty land tax and it is not hard to see why vendors are now having to be more realistic,’ said Camilla Dell, managing partner of Black Brick. ‘It is no co-incidence that the falls reported at the top end of the capital’s property market equate roughly to the additional 5% in stamp duty that buyers must now pay. Importantly, while price adjustments have been the order of the day for deals already in progress, there has been scant evidence of deals falling through due to the stamp duty changes. Though very early days, we believe this bodes well for the market’s ability to absorb the higher tax rates and adjust accordingly,’ she explained. The firm said it has seen continued interest in prime central London property from its client base across the world as stamp duty reform and the impending election have not deterred them. Shorter term supports include the sterling’s recent weakness, particularly against the US dollar. The 14% decline in the value of the pound against the US dollar since the summer is a significant boost to many overseas buyers with dollar assets. Meanwhile, the changes to stamp duty are providing a welcome fillip to potential property buyers at lower price bands. ‘Chinese interest in London property continues to grow apace. According to figures recently released by the government, the number of so-called investor visas granted to Chinese nationals doubled in the year to the end of September. Chinese nationals accounted for 43% of all investor visas, the highest proportion of any country. It’s no surprise that we have seen continued growth in interest from this market,’ explained Dell. To cope with the firm recently hired Grace Ding, a fluent Mandarin speaker who will focus on assisting Black Brick’s fast growing Chinese client base and on developing its business network across Asia. As far as other trends for 2015 go, the firm believes that home owners with existing large basement extensions will now be able to command a significant premium over neighbouring properties given the restrictions announced on future development by the London Borough of Kensington and Chelsea. ‘The… Continue reading
Rent rises in Scotland tumbled during 2014, latest index shows
The pace of annual rent growth in Scotland dropped by two thirds in 2014 with average rents now just 1.2% or £6 higher than a year ago, the latest index figures reveal. This follows a monthly drop in average residential rents, down 0.4% in December to £536 per month, according to the Scotland Buy to Let Index from Your Move, one of Scotland’s largest lettings agent networks. It means that growth has slowed from a 3.9% annual jump in rent prices seen in 2013 but Edinburgh and the Lothians has bucked the trend with annual rent growth over the past year from 2.5% in December 2013 to 4.5% in December 2014. ‘Annual rent growth braked sharply over 2014, reducing the speed of rent rises to a sustainable and affordable pace. This is providing some welcome relief to the thousands of renters itching to jump on the housing ladder, who are already faced with enough hurdles to saving a deposit,’ said Christine Campbell, regional managing director of Your Move. ‘This wider downturn in growth during 2014 marks a return to the natural market rhythm. Scottish rents were holding fast on an even keel throughout 2011 and 2012, until the abolition of tenancy fees in November 2012 sparked a new tide of unnaturally steep rent hikes,’ she explained. ‘This should act as cautionary tale for policymakers considering further constricting changes to lettings legislation. The rental market is thriving by its own hand, and too much undue intervention may poison the current climate of affordability,’ she pointed out. ‘Scaring landlords out of the rental market would exacerbate the current housing shortage, and wound thousands of tenants as competition hots up. Buy to let investment is a vital remedy for the current housing shortage, and for the health of tenant finances,’ she added. A breakdown of the figures shows that overall, rents are higher than a year ago in three out of five regions of Scotland. After a strong acceleration in the pace of growth during 2014, average rents in Edinburgh and the Lothians have seen the fastest year on year increased at 4.5% in the 12 months to December. A 2.2% annual rise in Glasgow and Clyde takes the average monthly rent to £559, however this still represents a significant deceleration in the pace of annual rent growth, declining from 7.3% a year previously. While rents climbed consistently across all regions of Scotland during 2013, the slowdown in rent growth witnessed during 2014 has been more severe in some cases with two regions experiencing annual falls in rent prices. Average monthly rents in the Highlands and Islands are now 2% lower than December 2013. The South was the only other area of Scotland to experience an annual fall, with average rents down 1.8% over the past 12 months. The average monthly rent in the South of Scotland now stands at £484, down from £493 a… Continue reading
Landlords warned not to rely on good capital gains in UK buy to let sector
Landlords’ confidence in capital gains has almost trebled over the last two years, according to the leading landlord association in the UK. It has risen from 18% to 52% over the last two years but the survey by the National Landlords Association (NLA) also shows that 32% of landlords say they might not be able to meet their mortgage repayments if interest rates were to rise in the near future. Despite the survey findings the NLA is talking down capital gains prospects and has warned against relying on capital gains as a primary investment strategy. The warning comes after the Financial Times recently reported the estimated capital growth of private rented housing stock to be of £177 billion over just the last five years. ‘It certainly feels like a great time to be looking at buy to let a means of additional income but you cannot simply rely on the prospect of capital gains as an investment strategy,’ said Carolyn Uphill, NLA chairman. ‘A lot is being made of capital growth but landlords must remember they are in the business of providing homes for people. It’s a risky investment and the prospect of capital gains is only realised if and when the property is sold,’ she explained. ‘With house prices levelling off and inevitable rises to interest rates as the economy improves, anyone considering investing in buy to let should think carefully before taking the plunge. This means planning for the long term and looking to sustainable yields, not hoping for a windfall in capital appreciation,’ she added. The news comes as the NLA launches the second part of its latest campaign; Rent, Risk Resolve, which aims to highlight the potential risks of rising interest rates. To accompany the campaign the NLA has produced a guide on how to prepare for rising interest rates. Continue reading
