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Private rental sector identified as a growth area in UK property markets
The changing lifestyles of people aged under 35 and a shift in sentiment towards property ownership are set to contribute to a surge in the UK’s private rental sector, it is claimed. It could actually be the solution to the country’s housing problems, according to experts speaking at an annual property seminar hosted by Midlands law firm Lodders Solicitors. ‘We need to have a shift in attitudes towards renting, and the private rental sector could be the solution to the UK’s housing problems,’ said Jon Bellfield, managing director of the Barberry Group, a privately owned property development and investment company. The event’s speakers independently identified the private rental sector as an important and emerging sector, and where the growth is likely to be. Indeed, the sector could account for 30% of the housing stock by 2020, the seminar was told. It heard that the UK is building fewer new residential homes than in 1926, and this short supply is also contributing to the creation of a large rental market, with the difficulty for first time buyers to enter the property market fuelling demand, although the Help to Buy scheme has had a positive impact. People are changing how they want to live and use their town and city centres, and the potential challenge is for developers to build the accommodation these people want, to include quality apartments complete with concierge, secure internet purchase rooms, gym and pool facilities, and easy access to bars, restaurants and shops. Recent research by Savills, for example, has revealed an increase in development activity across the country, and rising demand for land, with values starting to increase. Amongst the under 35s, there’s a growing shift in sentiment around property ownership, which they see as not as important as it was four or five years ago. ‘We expect the private rented sector to grow faster as mortgages are constrained and become less affordable and the annual housing costs for the under 35s is already dominated by private rents,’ said Simon Horan, head of residential development in Birmingham at Savills. Another issue that emerged is the Community Infrastructure Levy (CIL) which local planning authorities need to have in place by April of next year. According to Savills’ planning specialist Michael Davies only a few have it in place. ‘LPAs need to consider the impact of the restrictions on the delivery of infrastructure in their area, and developers and house builders should work with LPAs to identify key pieces of infrastructure needed for the delivery of housing sites, with Section 106 agreements that refer to specific named projects,’ he explained. However, he added that further guidance from Ministers is essential, as failure to do so could have significant impact on the delivery of both infrastructure and housing. Lodders’ chairman George Campion concluded that while the economy seems to be recovery it is not uniform across the country and the biggest challenge will be getting developments over the line. Continue reading
UK residential property tax changes widely welcomed
Sweeping reforms to the Stamp Duty Land Tax (SDLT) in the UK have been announced which take effect immediately and will mean many people, especially first time buyers, will pay less property tax. The reform announced by the Chancellor of the Exchequer George Osborne abolishes the previous archaic bandings with a more progressive system designed to help young professionals and families get on the housing ladder. The new charge will only apply on a portion of value that is above each new level. So there will be no SDLT up to £125,000, 2% up to £250,000, 5% up to £925,000, 10% up to £1.5 million and 12% over £1.5 million. Osborne pointed out that only on purchases of more than £937,000 will buyers end up paying more than they have done. It is also likely that the chances of a mansion tax should be introduced are much diminished. The move has been widely welcomed by the property industry with experts saying it was long overdue. ‘The abolition of the archaic slab system will take the sting out of the tail for thousands of buyers on the lower rungs of the ladder. The new graduated system should help brighten the UK housing recovery in regions outside of London, where property prices are still battling back to pre-recession levels,’ said Peter Rollings, chief executive of Marsh & Parsons. But he pointed out that it will add to the weight of the tax burden shouldered by those buying more expensive homes. ‘In prime parts of London, where 56% of property is worth £1 million or more, this will impact a significant proportion of ordinary working families,’ he said. But he also said that he expects any additional strain on the top tiers of the housing market to be absorbed, and the natural rhythm of the property market won’t be disrupted as buyers investing in prime London property are accustomed to having to pay a higher price than elsewhere across the country and the unparalleled returns and capital growth on offer more than make it worthwhile, so demand won’t be quashed. ‘London property taxes have historically been cheaper compared to other world cities, so this overhaul brings it into line with rival global centres of investment and although, one-off purchase costs are always a bitter pill to swallow, it won’t deter people from snapping up their dream home in a desirable location. Buyers will soon adjust and it will simply become the norm,’ he added. Peter Mackie, senior partner at independent buying agents Property Vision, pointed out that the change will help 98% of people trying to get onto the property ladder but the impact of the changes will be greater at the lower end of the market where buyers rely on borrowed money, rather than the higher end where if a buyer can afford to pay cash for a £50 million house they can afford the Stamp Duty. ‘The increases in Stamp Duty over £1.5 million… Continue reading
First time buyers and renters in UK underestimate their outgoings, research finds
The majority of first time buyers and renters in the UK underestimate their monthly outgoing by almost £200 a month, suggesting they could have problems if their income reduced. Only 14% of first time buyers and renters are able to accurately calculate how much their outgoings will be from the outset, according to ongoing research from discount online firm VoucherCodesPro. It polled 1,673 people aged 18 to 30 from around the UK, each of whom had either bought their first home or rented a property for the first time in the last six months. Respondents were asked about their bills in the early stages of living in their property. Everyone taking part was asked ‘When taking into account the first month after you’d moved in to your current property, did you underestimate, overestimate or accurately calculate what your monthly outgoings would be for bills?’ The majority of respondents, 63%, said they underestimate how much their first round of monthly bills would be. When these people were asked how much they’d underestimated the amount by, the average answer was £198. When asked what bills they’d underestimated, specifically, the most popular answer was 42% gas and electricity, 27% water and 21% entertainment and television. Some 23% of the total respondents said they had overestimated how much their monthly outgoings would be in the initial stages of living in their home, with the average overestimation figure being stated as £167. Just 14% of the respondents said they accurately calculated how much their bills would cost them from the outset. When told to take into account their financial situation at the time of the poll, respondents were asked if they ‘lived comfortably’, ‘just managed to make ends meet’ or ‘struggled’. The majority, 54%, said they ‘just managed to make ends meet’, whilst 31% said they ‘struggled’ with the cost of living and 15% said they ‘lived comfortably’. ‘Moving out of home into your own place for the first time can be a bit of a learning curve, especially when it comes to bills,’ said Nick Swan, the firm’s chief executive officer. ‘Managing your money correctly and making sure you’ve accurately worked out how much everything is going to cost you is really important. When setting budgets and working out the cost of bills, it’s always best to overestimate and then you can put an excess into savings,’ he added. Continue reading
