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Retired UK home owners seeing value of property grow
Retired home owners in the UK have seen their property wealth grow by nearly £17.5 billion in the past three months as house prices continue to climb, new research shows. Pensioners who own their homes outright have gained an average of £3,725 each from their houses in the past three months taking their property wealth to a new record high, according to the index from over 55s financial specialist Key Retirement. In the five years since Key started monitoring the housing wealth of the over 65s, in January 2010, total pensioner property wealth has increased by 14% or £111 billion which equates to £23,700 on average for every home owner. The Pensioner Property Index shows over 65 home owners now own property wealth of £891.249 billion outright with pensioners across almost all of the UK benefiting. Key believes the strong growth in property prices will drive expansion of the equity release market further which enables homeowners to release wealth from their homes. Customers releasing property wealth are taking around £68,500 on average, its figures show. Retired home owners in London were the biggest winners gaining an average of around £14,238 each in the past three months, while home owners in the South East of England are more than £8,290 better off and pensioners in East Anglia are £8,524 better off. Key’s figures show a fifth of all pensioner property equity is owned by over 65s in London with total wealth of £178.894 billion. Nearly two thirds of pensioner property wealth is concentrated in London, the South East, the South West and East Anglia. ‘The strength of the housing market is reflected in the growth in the amounts being released through equity release plans which are now an average £68,500, an amount which dwarfs the average pension pot in the UK,’ said Dean Mirfin, technical director at Key Retirement. ‘The success of property investment for millions of over 65s home owners highlights how homes are major assets which should be considered as part of anyone’s retirement planning,’ he explained. ‘Property prices rise and fall but over 65 home owners control more than £891 billion in assets which can make a major contribution to enhancing retirement lifestyles. Pensioners however need specialist advice before accessing their property wealth,’ he added. Continue reading
Investment in student housing set to rise in the UK
London’s full time student population is expected to rise by 50% in the next 10 years while capital flows into student housing is expected to triple reaching £5.7 billion by the end of 2015, new research shows. Indeed, direct investment in the UK student housing market has surged over the past two years, rising from under £500 million in 2010 to £3.8 billion over the first half of 2015 and £1.5 billion in London, says the report by property firm JLL. Non-European Union students have been the fastest growing segment, with numbers increasing by 50% over 10 years and a recent study by London First shows that international students bring a net benefit of £2.3 billion per annum to London's economy supporting 60,000 jobs in the capital. The research further highlighted that rising house prices and constraints on mortgage lending have forced more people into rented accommodation. More students are also renting and 28% of London’s student population are living in Houses of Multiple Occupation (HMOs). The provision of university managed accommodation has not kept pace with the growth in student numbers and the increasing quality and quantity of PBSA stock has provided students with a welcome alternative to the rising rental costs of HMOs, the report points out. Additionally, two of the fastest growing segments of London’s student population are overseas and postgraduate students, who have occupied much of the PBSA (Purpose Built Student Accommodation). ‘We have seen extraordinary growth in UK student numbers over the past 20 years and while UK student numbers are now stabilised, international student numbers set to rise dramatically in the next decade,’ said Philip Hillman, chairman of JLL’s Alternative Division. ‘The provision of good quality student accommodation was traditionally the responsibility of the universities but in recent years, most new accommodation had been provided by private investors and developers,’ he explained. ‘The Gross Value Added supported by student spending throughout the UK is of the order of £25 billion per annum. This represents 1.03% of UK GDP. Put in perspective, this figure is equivalent to one third of the total contribution of the aviation sector to UK GDP,’ he added. According to Himanshu Wani, associate director of UK research at JLL, purpose built student accommodation in the UK has seen a significant rise in investment activity, with projected capital flows into the sector of £5.7 billion by the end of 2015, up from £1.7 billion in 2014. ‘This is especially pronounced in London, with one of the largest student populations globally, supporting strong demand for student housing. Indeed, with the London student population expected to rise by 50% by 2025, one of the main challenges will be developing sufficient supply,’ he said. The report points out that student housing is one of the largest sub-sectors within the ‘alternative’ property asset class. Alternatives comprise all of the real estate sectors beyond traditional office,… Continue reading
Scottish property market still seen as a good investment despite tax changes
The Scottish property market is still adjusting to political and taxation changes but overall remains an attractive place to invest in real estate, according to a new analysis report. Scotland remains comparatively good value for money, and this is the key driver in the majority of buying decisions but the introduction of Land and Buildings Transaction Tax (LBTT ) in April has had an impact. It has contributed to the growth of Scotland’s mainstream residential market, but delayed the recovery of the prime sector in the medium term, says the report from real estate firm Savills. However, Edinburgh is the exception to the rule, where the prime market is attracting buyers from London and overseas who remain cautious about investing outside the capital and the report says that one year on from the Referendum on Scottish Independence, there has been a notable transfer in balance within the residential property market north of the border, with a shift to bottom up growth. The report explains that during the summer of 2014, the Scottish property market was recovering from the economic downturn. The prime residential market was leading the way in the resurgence, with a growing demand for properties above £400,000, particularly in key property hotspots. Consumer confidence was beginning to ripple out, both to other locations and to lower price bands. However, the Referendum raised a number of difficult questions, and the resulting uncertainty stalled the property market. ‘This was felt acutely at the top end, the bracket that had long been boosted by the prevalence of London buyers. A year on, this key target group remains anxious about LBTT and the forthcoming Scottish Rate of Income Tax,’ said Faisal Choudhry, director of Scottish residential research at Savills. ‘In addition, both UK and Scottish Governments have introduced initiatives to support the lower value sector of the market in an attempt to revive both the house building industry and buyers on the early steps of the property ladder,’ he said. ‘Buyers of homes below £400,000 are now receiving further assistance in the form of favourable rates of LBTT. Meanwhile, buyers of more expensive homes are taking on the burden of the new progressive taxation in Scotland,’ he added. The report says that Scotland’s million pound market has felt the biggest brunt of the new taxation changes. The vast majority of sales in this bracket completed prior to 01 April, before LBTT was introduced. While there has been a slight uplift in activity in recent weeks, sales have mostly been focussed on the core locations of Edinburgh, East Lothian, East Renfrewshire and East Dunbartonshire and also in Aberdeen, which saw the most expensive sale since April this year at £2.78 million. ‘As the economy improves, and buyers from both sides of the border adjust to the new taxation structure, we expect this upward trend to continue. While the million pound market is beginning to recover in Scotland’s capital, buyer activity in more provincial locations remains subdued,’… Continue reading
