Tag Archives: london
UK student property investment growing, latest figures show
Investment into the UK’s student housing market hit £3.98 billion in the first half of 2015, well ahead of the £2.35 billion for the whole of 2014, the latest data shows. Within that total, London saw a record £1.98 billion of transactions across the first half of the year, according to research from commercial property and real estate services advisor CBRE. The firm said that these numbers come as many investors begin to see the student accommodation market as a higher yielding way of gaining exposure to London’s PRS, with yields at an attractive margin above conventional residential stock. It adds that the record inflows seen in London have caused the fastest change in student housing yields in the whole of the UK, with yields now at 4.75% on a par with the previous peak in 2007. Student housing supply remains constrained across the UK, as a growing number of students chase a severely limited stock of purpose built accommodation in most university towns, according to Jo Winchester, head of student housing advisory at CBRE. ‘So long as demand outstrips supply, upward pressure on both rents and capital values will continue to make the market an attractive proposition for investors, and we don't expect the market to come off the boil for some time,’ explained Winchester. She added that some investors see student housing as a more cost effective way of gaining access to the PRS, both in terms of higher yields and lower capital values per square foot. ‘Although there are differences between residential and student accommodation operational models, some larger student housing operators and investors in the sector are beginning to explore build to let development and investing in the PRS. As this happens, it is possible that the operational models could become more closely aligned,’ she concluded. Continue reading
Annual price growth in England and Wales slower but prices set new high
House price growth in England and Wales is at a two year low but the average price at £278,849 is a new high, according to the latest index figures. However, annual property price growth slowed to 4.1% in June, the smallest yearly rise since August 2013, says the LSL house price index. But whereas London has been leading house price growth, the reverse is now happening. London ranks only seventh in the regional breakdown with annual price growth down to 1.8%, well down from the 20.7% recorded in July 2014. Sales are also strong, up 15% in June and the firm says that buyers have come back with a vengeance after a lull in the run up to May’s general election. The data also shows that month on month property prices were up 0.3% and overall home values are on average £10,980 higher than a year ago. And overall excluding London and the South East annual price growth is 4.4%. Adrian Gill, director of Reeds Rains and Your Move estate agents, said that sales in June were above the seasonal uplift typically expected at this time of year. ‘This new buoyancy in activity levels bodes well for property market in the coming months. It’s clear the general election distorted the usual tide of the market, with many buyers waiting until afterwards to complete on their purchases,’ he explained. ‘In the first half of 2015, sales are 13% lower than the same period last year. But June’s sharp upward spike shows the start of this calibration back to firmer territory, as confidence in the political landscape solidified with a majority government,’ he added. He explained that it is a slowing of prices at the top end in London that is pulling down the overall average and the lower rungs of the ladder are still dynamic. In the cheapest London borough Barking and Dagenham house prices have risen 15% over the past year. Overall, the lowest priced boroughs across the capital have seen annual price jumps of 10.1% on average, compared to steadier 2.8% year on year rises in the most expensive London locations. ‘It is the pricier south of the country which has seen the most significant slowdown in sales with the volume of properties sold in London and the South East 15% lower than 2014 levels. But healthier activity levels in the North, Yorkshire and Wales should help to balance out some remaining regional disparities in price growth,’ said Gill. ‘It’s encouraging that we’re seeing livelier activity where prices need to get back onto their feet as there are still some pockets of Wales, the North and Yorkshire where house prices are lower than 12 months ago,’ he added. He also explained that with borrowing cheaper than ever, wages recovering, and government schemes and incentives to lean on, buyers’ purchasing power is stronger than it has been for a long while. ‘As a result of this positivity, higher… Continue reading
Warnings over impact of buy to let mortgage tax change announced in UK Budget
The UK property market is set to see a number of impacts as a result of a mini Budget announced in July aimed at stabilising the country’s economy. Perhaps the most controversial announcement by Chancellor of the Exchequer George Osborne was a cut in tax relief on mortgage interest payments for buy to let landlords which some believe will ultimately lead to higher rents. The Chancellor also, as expected, increased the rate at which inheritance tax will be paid on a home to £1 million and increased room rental tax relief to £7,500 per annum. Although phased in from 2017 to 2020, the buy to let tax change will make investment a less attractive proposition for landlords. Indeed, it will discourage investment in the sector which could lead to higher rents and less rental homes available, according to Graham Davidson, managing director of Sequre Property Investment. ‘This is an example of politicians not understanding how the market operates, directly contradicting their apparent goals for an improved private rented sector. Landlords should be free to deduct legitimate costs, just like any other business does,’ he pointed out. Gráinne Gilmore, head of UK residential research at Knight Frank, described it as ‘a significant change in tax status’ for those with a rental portfolio. ‘Those planning to purchase a buy to let property will have to factor these new rules into their calculations, and this could affect the offers they are willing to make,’ she said. 'If the relatively low yield environment seen today, especially in the South of England, is still evident when these changes start to come into force, there could be upward pressure on rents. The need for rental accommodation is strong, and we expect this trend to continue, especially in city centre markets around the UK,’ she added. Jamie Morrison, private client partner at HW Fisher & Company, believes it will lead to higher rents. ‘It will cause many landlords increasing pain which will quickly be passed on to tenants in the form of higher rents. Highly leveraged landlords could pull out of the market too, reducing the supply of rental properties and ratcheting up rents even further,’ he said. According to Russell Quirk, chief executive officer of online estate agent eMoov, landlords are going to be up to 20% worse off as previously enjoyed tax relief rates of up to 45% disappear. ‘Based on the average rent they could be up to £2,000 worse off each year. I can only see the result being an increase in rental prices which in turn further hampers those trying to save to get on the property ladder,’ he explained. Henry Woodcock, Principal Mortgage Consultant at IRESS, pointed out that buy to let has been the key area of growth in the mortgage market and changing its tax treatment is likely to dampen mortgage activity and demand from property investors, which will hit overall lending figures. ‘Equally, we may see a number of landlords leave the… Continue reading
