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Prime property buyers in London down by 30%, new data suggests
London’s residential prime property market is seeing fewer buyers than a year ago and stock levels are up by 60%, according to new data. The December market barometer from Douglas & Gordon shows that buyers are down by 30% but prices are holding up with values down only 15% year on year. The firm says that this is an indication that the appetite to move amongst prospective vendors is still there but there is clear evidence to suggest that political uncertainty ahead of next May’s general election is playing on buyers’ minds. It also says that vendors are waiting until after the election to put their house on the market in the hope of greater stability and records a resurgence of gazundering for the first time since 2009. ‘Significantly, the fall through rate is down, so buyers are showing tenacity in securing their property. It’s unlikely to become a common trend however, as most sellers are happy to wait for the return of market stability post-election, although the broadly beneficial Stamp Duty reforms could signal a return of confidence even earlier, said George Franks, sales director. ‘In this new paradigm, when the world economy wobbles, London smiles and, given international deflationary pressures and interest rates remaining low long term, we anticipate next year as being very good for both the prime and emerging prime markets,’ he added. The lettings market is proving to be the polar opposite of sales with applicants up 33% and stock down 30%, indicating that 2015 will sustain the recovery of rental values that has been so eroded in recent years. An uncertain sales market has helped to bolster activity with 26% fewer tenancies ending compared to this time last year, signalling that tenant are staying put, according to lettings director Virginia Skilbeck. She pointed out that at the beginning of December the first phase of the ‘right to rent’ scheme came into force in the West Midlands, whereby landlords will face fines of up to £3,000 if they fail to check on the immigration status of their new tenants. The Home Office says it expects to continue with the phased introduction of the scheme across the UK next year, but she does not expect a decision on whether it will be extended throughout Britain until after the general election in May. ‘Seasonally, the beginning of January is a very busy time in the lettings calendar and with some of our offices having half as many properties available to let compared to this time last year, combined with a surge of applicants registering in the New Year, we can expect to see increased competition for fewer available properties,’ she said. Continue reading
Many UK landlords unfamiliar with new immigration checks
UK landlords do not fully understand the new immigration checks they are being required to undertake and those already doing so are not happy about it, new research shows. Landlords in the West Midlands are already compelled to check the immigration status of would be tenants under a pilot scheme that is set to be rolled out across the country next year. However, as study, conducted by online letting agent PropertyLetByUs, has found that nine out of 10 landlords don’t fully understand the immigration checks and a further nine out of 10 landlords believe that the new immigration legislation places too much responsibility on them. The research also reveals that 100% of landlords intend to rely on their letting agent or reference agency to conduct the checks and 93% of landlords don’t feel confident making the checks themselves. What’s more, over a quarter of landlords think that the legislation will lead to a rise in unscrupulous landlords renting ‘beds in sheds’, a fifth believe it will make it much harder for immigrants to find a property to rent and 10% of landlords think the new legislation will cause homelessness for some immigrants. The vast majority of landlords say they will be much more wary about taking on immigrant tenants. ‘It is clear that landlords aren’t comfortable with the legislation and will be relying on letting agents and reference firms to help them comply with the new rules,’ said Jane Morris, managing director of PropertyLetByUs. ‘The pilot in the West Midlands will hopefully iron out many of the issues and that when the new rules are rolled out nationally in 2015, landlords will feel more comfortable with what is required of them,’ she explained. The firm points out that it is important that landlords prepare themselves for the new ‘right to rent’ checks, as any non-compliance will mean that landlords could face a £3,000 fine. The Immigration Act requires landlords to check whether prospective tenants are in the country legally. Landlords will have to see ‘evidence’, for example a passport or a biometric residence permit, an official form of identification provided by the Home Office. The new rules will require landlords to check whether potential tenants and occupants over 18 have a ‘right to rent’ before entering into a new tenancy agreement. All adults who will occupy the property as their main home, not just named tenants, should be checked. If they turn 18 during the tenancy, no initial or follow up checks are required. These rules apply to new tenancies only. Renewals are excluded if all parties remain the same and there has been no break. ‘The Home Office will carry out checks on individual properties and landlords if they receive information from a workplace, a raid, a tip-off from neighbours, follow up on an immigration application and/or if the landlord has been identified as… Continue reading
Positive outlook for UK regional commercial markets
UK regional office markets have seen subdued rental growth over the last few years but the outlook is now more positive as a broadening economic recovery is feeding through to improved occupier demand. This together with the diminishing availability of Grade A stock and lack of significant speculative development completions over the last few years is driving rental growth across the regions, according to the latest report from Knight Frank. The real estate firm expects to see strong rental growth in the majority of regional city centres over the next 12 months, with new development completions securing higher prime rental levels. Manchester, Birmingham, Newcastle and Aberdeen will see the strongest growth while all other centres, apart from Sheffield, will see positive growth. Prime headline rents in Manchester and Aberdeen are expected to reach record highs of £34.00 per square foot by the end of 2015, representing corresponding increases of 10% and 6% over the year. Birmingham offices will also see rents rise by 8% to a seven year high of £32 per square foot. While there is unlikely to be any rental growth in Sheffield in 2015, Sheffield rents are expected to rise more sharply up to £22 per square foot by the end of 2016. Given the diminishing availability of Grade A stock and lack of developments, vacancy rates are likely to fall or at least remain stable, with the exception of Aberdeen where the level of speculative development is higher, the report points out but the firm is also anticipating a slight softening of incentives over the next 12 months. ‘As economic growth spreads to the regions we expect to see prime office rents rise across regional city centres in 2015. Lack of supply at the prime end of the market will add further upward pressure on both prime and secondary rental growth,’ said Louisa Rickard, associate, commercial research, Knight Frank. According to James Robert, Knight Frank’s chief economist, office rents will rise across regional city centres in 2015. ‘Lack of development to date could quickly migrate growth from prime to secondary,’ he says in the firm’s latest UK market outlook report. He explained that while the punchy rebound seen by commercial property in 2014 is encouraging, the recent figures from IPD are not sustainable in the long term. ‘The total return numbers may accelerate a little further, but we expect them to drop back early in 2015, perhaps picking up again in the autumn on rental growth. This will be due to slower capital growth as investors acknowledge that prices have rebounded from the double dip period. The slow and methodical business of increasing value by asset management then begins. Note though we are predicting a deceleration not a decline,’ Robert said. ‘A year ago one could only speak meaningfully of rental growth in central London, but in 2014 we saw it re-emerge for prime in many M25 towns, Birmingham, Glasgow, and Leeds. The economic recovery… Continue reading
