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UK’s private rented sector sees evictions rise to record high
A rise in evictions in the private rented sector and the use of Section 21 accelerated possession procedures is a stark insight into the severity of the UK’s housing shortage, it is claimed. It is also a reflection of the impact increased legislation is having on the private rented sector, according to Paul Shamplina, founder of specialist landlord possession services firm Landlord Action. The latest figures from the Ministry of Justice show that total evictions last year reached a record high of 42,728. Whilst overall possession claims fell during the year to 148,043, the number of accelerated possession cases continued their upward trend reaching 37,663 in 2015, up 4.5% on 2014 and up 10.5% on 2013. ‘Rising rents and welfare cuts are undoubtedly to blame for the growing number of evictions. With a shortage of affordable properties, particularly in the capital, the imbalance of supply and demand has pushed rental inflation well beyond the levels at which tenants’ wages have risen,’ said Shamplina. ‘Many simply can’t keep pace and are falling into arrears. We’re seeing more subletting scams and cases of tenants renting out properties on holiday websites in order to cover their rent than ever before,’ he added. According to the figures the proportion of claims made using accelerated procedure has increased from 7% in 1999 to 25% in 2015. Shamplina explained that there are several reasons for this including rising house prices, uncertainty over future buy to let tax implications and concerns over increased legislation such as Right to rent and the Deregulation Act which have been the catalysts for many self-managing landlords to consider selling up. They use Section 21 as a way to gain possession of their property as quickly as possible. In other circumstances, where tenants are in arrears, Landlord Action says many landlords still opt to use a section 21, instead of Section 8. Some landlords feel they won’t be able to collect rent arrears so this allows them automatic right of possession without having to give any grounds (reasons) once the fixed term has expired. Other landlords are being forced down the Section 21 route because local councils are advising tenants to remain in properties until a possession order has been granted by the courts. This means they can apply for re-housing and do not make themselves voluntary homeless. ‘A section 21 usually enables landlords to gain possession much quicker on a no-fault basis, so they can re-let the property, which is often more financially viable than chasing arrears. I believe use of the Section 21 process for landlords will continue to grow year on year because of councils’ pushing the problem back onto private rental sector landlords,’ said Shamplina. Continue reading
New home sales and lending in Australia ended 2015 strongly
Seasonally adjusted new home sales in Australia finished last year strongly, recording a 6% increase in December, according to the latest data from the Housing Industry Association. The growth has bee driven by both the detached house and multi-unit segments of the market. Data shows detached house sales increased by 2.2% while multi-unit sales were up by 21.1%. HIA chief economist Harley Dale said the current healthy national construction volumes are expected to continue throughout the first half of 2016 but there are likely to be very large differences in new housing conditions across States. ‘The updates we receive for leading indicators in coming months will be closely watched to determine the magnitude of any risk that the second half of 2016 is materially weaker for new home building than the first half of the year,’ he added. A breakdown of the figures show that detached house sales increased in three of the five mainland states, up 5.2% in Queensland, up 5% in Western Australia and up 1.1% in Victoria. Sales fell 2.1% in South Australia and by 0.1% in New South Wales. During the December 2015 quarter detached house sales increased in Queensland by 4.3% and by 0.3% in New South Wales. Sales fell 15.4% in Western Australia, 10.2% in South Australia and 4% in Victoria. Meanwhile, the latest figures from the Australian Bureau of Statistics show that the monthly volume of new home loans to owner occupiers hit a six year high during December 2015. That means that the pipeline of new home building is likely to remain strong during early 2016, according to HIA senior economist, Shane Garrett. He pointed out that the December data is the best since November 2009. ‘This time around, new home building is benefitting from record low official interest rates, strong demographic demand and resurgent labour markets in New South Wales and Victoria,’ he added. During December, the number of owner occupier loans for the construction of new homes increased by 1.8% with growth of 12.4% in loans for newly constructed homes. Compared with a year earlier, total owner occupier loans for the construction and purchase of new dwellings are 5.3% higher. ‘During November, the major banks unilaterally increased their variable mortgage interest rates. While the figures seem to suggest no immediate impact on new home lending, the risk remains that such tactics could undermine our industry’s ability to meet Australia’s long term housing needs,’ Garrett explained. A breakdown of the figures shows that the number of new home loans increased, in annual terms, most strongly in the Northern Territory with growth of 29.3%, up 21.7% in New South Wales and up 12.3% in Victoria. New home lending volumes also rose in Queensland by 4% but lending volumes fell in Tasmania by 29.6%, in Western Australia by 19.8% and in the Australian Capital Territory by 0.5%. Continue reading
UK property prices broadly stable with policy changes and a potential EU vote on horizon
Average UK house prices rose by 0.3% in January, and are up 4.4% year on year, remaining broadly stable, according to the latest analysis report. Prime central London prices rose by 0.1% last month to take annual growth to 1.2% while prime central London rents dipped by 0.3%, says the report from real estate firm Knight Frank. The data also shows that price growth for prime property in some regional hubs continues to outperform the wider prime country house market. The stability in UK property prices is likely to be underpinned by a further period of ultra-low interest rates and a solid, although slowing, economic recovery but the report warns that the political outlook is less clear as an European Union referendum draws closer. Grainne Gilmore, head of UK residential research at Knight Frank, pointed out that interest rates being left unchanged by the Bank of England for the 83rd consecutive month in February was not a surprise. ‘But the data released by the Bank when announcing its decision has led economists and markets to change their expectations about when rates may start to rise. Whereas many had forecast a rise around the middle of the year, the verdict is now that rates are on hold until the final quarter of the year, if not 2018,’ she said. ‘This change was prompted by the Bank’s forecasts, showing muted inflation and wage growth in the coming years as well as a downgrade in forecast GDP growth. The central bank now expects 2.2% GDP growth this year, instead of 2.5%. The slower growth is attributed to global economic conditions, not least the effect lower oil prices are having on many economies around the world,’ she explained. ‘However, senior bank officials were clear that the UK economy was still experiencing a solid recovery and that the fall in oil prices was a net good for UK consumers, helping boost consumption and therefore wage growth,’ she added. Households expect prices to continue rising this year according to the latest House Price Sentiment Index (HPSI) from Knight Frank and Markit Economics. Any reading above 50 on this index, which is a bellwether for house prices, suggests prices are rising, or are set to rise. The future index has now been above 50 for 35 consecutive months. However, Gilmore also said that the outlook for 2016 must take into account the policy changes and political decisions which will be made this year, not least another change to the stamp duty regime in April, the Mayoral Elections in London in May and a possible decision on whether the UK should stay in the European Union. ‘As seen following the stamp duty changes in December 2014, and last year’s General Election, the market can adjust to political and policy changes, but periods of uncertainty can take their own toll on market activity,’ she added. While prime central London property prices edged up by 0.1% in January, taking the annual increase to 1.2%, a breakdown… Continue reading
