Tag Archives: finance
Slow broadband can hamper rural commercial leasing, new report says
Slow broadband is a major constraint in the successful letting of commercial workspace in the countryside in the UK and has an impact on rents achievable according to new research. It is also becoming more of an issue in some locations for residential property available to rent, the latest analysis sector survey report from real estate firm Savills shows. The survey reveals that nearly 70% of respondents confirmed slow broadband is a constraint on letting residential property in rural areas and 80% confirmed slow broadband is a constraint on letting commercial workspace. The survey also showed that in many cases a poor speed deters potential tenants from even making an appointment for a viewing and where space is let, on average rents are 16% and 25% less respectively where the broadband speed is slow. ‘Broadband speed is now generally one of the first topics raised by perspective tenants who are looking to rent some commercial office space in a rural area,’ said Ben Knight, director of Savills Rural. ‘Where it is poor vacant periods are often longer and in some cases there is no demand for a building however good the space and other facilities are. And with more people choosing to work from home for at least part of the week it is becoming a more common question from perspective residential tenants,’ he explained. The report suggests that landlords looking to develop commercial space should assess the speed of broadband as part of the viability study and are in cases shelving a project if the speed is poor or taking matters into their hands and creating high speed networks using grant funding where applicable. While the start-up costs are significant around £20,000-£30,000 in the first year, annuity income from those using the broadband is a valuable new income stream and of course the likelihood of finding tenants for the commercial space greatly improves the report says. Two estates which have successfully developed their own broadband schemes are The Alscot Estate in Warwickshire and The Rushmore Estate in Dorset. The Alscot Estate near Stratford-upon-Avon established the network South Warwickshire Broadband in 2014 which has led to a diverse range of businesses occupying premises and a 100 per cent occupancy rate. The tenants all have access to upload and download speeds of up to 36Mb per second plus voice over internet protocol (VOIP) and cloud services. ‘The benefits to the estate of having full occupancy with happy tenants are extremely valuable. Increasingly estates are having to diversify away from agriculture as farm incomes are pressurized by weak commodity prices and former traditional farm buildings provide attractive offices once converted,’ said Knight. ‘At Alscot we were able to immediately connect a gaming business taking one of the serviced offices so that they were up and running within 24 hours, which created a great relationship with the tenant from the outset,’ he added. The Rushmore Estate in Dorset via Wessex Internet is now able to offer residential and commercial… Continue reading
UK residential rent growth slows to match pace of house price growth
Rent price rises in the UK have slowed to match the pace of house price growth in the country after nine months of sustained faster growth, the latest index figures show. It means that rent prices are now 8.5% higher than a year ago for the three months to September 2015 after six months of annual rises over 10%, according to the data from HomeLet. The average rent in the UK for new tenancies in the period was £995 per month but in Greater London it was £1,555 per month although rents dropped here on a month on month basis for the first time since February 2015. The index report suggests that deflation across the economy, and rising real incomes, mean the slowdown in rents could be temporary. A breakdown of the figures shows that nine out of 12 UK regions are still seeing rent prices rise on an annual basis, with the largest increases seen in Scotland at 8.4%, the East Midlands at 7.7% and Greater London at 6.6%. The figures also show three regions in negative annual price movement, with prices in the North West 4.6% lower than a year ago, 2.2% lower in East Anglia and 1.4% lower in Northern Ireland. Comparing September figures to the previous month, the index reveals that only three regions have seen rent prices rise since August. In the three months to September 2015 only Scotland, the East Midlands and West Midlands have seen prices rise by 1.2%, 1.4% and 1.4% respectively. Every other region of the UK has seen rent prices fall modestly in the three months to September 2015, with the largest price reductions seen in the South West, the North East and North West with a fall of 2.4%, 2.3% and 2.2% respectively. ‘The UK economy has dipped into negative inflation which is a boost to consumers' spending power and, ultimately, their real income. Affordability is an important factor in determining rents,’ said Martin Totty, chief executive of Barbon Insurance Group, owners of HomeLet. ‘Depending on what happens with inflation and real incomes over the coming months, could have a bearing on future rental price trends especially where, in certain areas of the country, the supply of rental properties is not keeping pace with demand from those wishing to be private sector renters,’ he added. Continue reading
Steady price growth forecast for London’s prime property market
Homes in London’s prime property market are set for steady price growth in the mid term as the market adjusts to new constraints such as tax and inflation, new research shows. Stamp duty reform at the end of last year, very low inflation and the mortgage market review which came into being in 2014 will continue to moderate London’s prime housing markets over the short term, according to the latest five year forecast from real estate advisor Savills. But the fundamentals of wealth generation and demand point to a steady medium term price growth and the key trend will be different patterns of growth across the different tiers of the prime London market. The prime market covers a broad swathe stretching from Ealing in the west to Canary Wharf in the east and from Highgate in the north to Wimbledon in the south, dictated as much by price band as by location. As such, the higher value markets of prime central London, where the average house price in the Savills index is around £5 million, are expected to remain flat next year, but record five year growth of 21.5% given the medium term forecasts for international and domestic economic growth and wealth generation. Prime central London values are currently showing annual price falls of 4.6% but are expected to have largely absorbed the impact of higher stamp duty charges by the end of 2015, to close 2015 some 2% down year on year. Other prime London markets are less impacted by higher stamp duty charges and are expected to see moderate price growth through next year, rising 2%, the report says. However, tighter lending criteria will continue to be a constraining factor for these more domestic markets, capping five year growth at lower 18.2%. ‘The stamp duty reform of December 2014 was a defining moment for the top end of the prime London market, particularly as it was looking fairly fully priced having grown significantly to outperform the rest of the market over a 10 year period,’ said Lucian Cook, Savills head of residential research. ‘It is fair to say that last year’s Autumn Statement took the market by surprise and has essentially prevented any bounce back in values post-election, leaving little scope for significant value uplift next year, particularly in a low inflation environment,’ he explained. ‘As such, we have pushed out our five year forecast by a year to 18 months, building in a period of little or no growth as the market continues to adjust to a new fiscal and regulatory environment,’ he pointed out. ‘Thereafter, we expect the depth of the market and the maturity of London as a global city, coupled with job creation and economic growth forecasts to return to long term trend rates of real price growth, particularly, but by no means exclusively, in core prime central London… Continue reading
