Tag Archives: london
Monthly landlord survey reveals effect of general election on private rented sector
Three quarters of letting agents are concerned that proposals for the creation of three year tenancies in England and Wales put forward in the run up to this week’s UK general election, a new report reveals. Members of the Association of Residential Letting Agents (ARLA) believe that the proposal put forward by the Labour party will see landlords exit the market and reduce supply. However, over a third of ARLA agents agree the Conservatives’ pledge to build 200,000 new starter homes will benefit the private rental sector the most. The report comes at a time when demand for rental accommodation was down in March, whilst supply rises. Some 72% of ARLA letting agents said three year tenancies, with a cap on rents will see landlords pull out the market, and lead to a decrease in the supply of rental property landlords in the North West and East Midlands most likely to pull out the market, with 84% of ARLA agents in these regions expressing concern. As well as seeing a reduction in landlords and therefore supply of rental housing, 74% believe the proposed three year tenancy agreements with rent controls and strict rules to make it more difficult to evict tenants will not actually benefit tenants at all, up from 69% in February. Meanwhile, 37% of ARLA agents agree that the Conservatives’ pledge to build 200,000 new starter homes offered at 20% discount to first time buyers would be best for the private rented sector. This will enable a segment of the current British renting population to get on the housing market, freeing up more properties for renting, helping to ease supply and demand. The March report also shows how the upcoming election is having an effect on the current levels of supply and demand for the private rented sector, as people hold out to see the outcome. Demand was down by 10% in March with just 36 house hunters recorded, down from 40 in February. Supply is heading in the other direction, with a rise in the number of properties managed per branch at 192 properties in March, up from 184 the previous month. Rents continue to increase for some, as 32% ARLA agents said that rents increased between February and March, the same increase as the previous month. ‘The vast majority of ARLA letting agents are worried that Labour’s proposed three year tenancies with strict caps on rents will only cause the gap between supply and demand to widen,’ said David Cox, managing director of ARLA. ‘Flexible tenancies are what makes the sector work, if this changes, some landlords will be forced to exit the market and tenants are likely to automatically incur rent hikes and feel driven to stay in agreements for longer before getting on the housing ladder; thus not freeing up rental properties for other tenants,’ he explained. ‘The proposals are aimed at reducing opportunities for landlords to raise rents and to create stability for tenants. However, Labour’s proposals aren’t… Continue reading
House building land prices fall for first time since 2012, latest index shows
After several quarters of slowing growth, the average value of green field residential development land in England and Wales fell in the first quarter of the year, the first decline since December 2012. Prices fell by 1.8% in the first three months of 2015, taking the annual change to -0.5%. However the picture across the country is more mixed with the land index from real estate consultants Knight Frank showing that development land prices in prime central London also stalled in the first three months of the year. Land values in price central London remained unchanged in the first quarter, the first time they have not risen since the index began in 2012. But on an annual basis, prime central London development land prices were up 18.5% in the first quarter. This slowdown is the result of a gradual slowing in price growth over several quarters, according to Grainne Gilmore, head of UK residential research at Knight Frank. ‘Across the country, many house builders have been replenishing their pipeline of land over the last 12 to 18 months, both consented and strategic. For strategic land, they have started guiding it through the planning system. As such, demand for consented land has eased. Sites which are oven-ready and perfectly located are still attracting interest however,’ she explained. She pointed out that there has also been a notable trend emerging of an increased appetite for strategic land among larger house builders as this can result in higher margins. But on a short term basis, the development land market, much like the housing market, has also been affected by the upcoming election, with some developers and house builders deferring decisions in recent months until the outcome of the election is clear. ‘All the parties have pledged to boost housing supply in the years to come, through a variety of schemes from brownfield regeneration funds to support for small to medium sized builders,’ said Gilmore. ‘A theme that is set to continue through the election and the rest of the year is the increased cost of building. Material and labour costs continue to rise, and this is also putting downward pressure on land prices,’ she added. Continue reading
Consultants say anti-London political rhetoric is harming the city’s property markets
The uncertainty fuelled by this week’s general election on the London housing market is unparalleled and has resulted in a near flat lining of performance in both the sales and lettings markets, it is claimed. The situation is having a stifling impact on the ability of vast swathes of the capital to retain any momentum, according to leading international real estate consultant Cluttons. While the behaviour of the residential market mirrors what has been seen in previous election years, the anti-London political rhetoric has and is damaging the capital's real estate landscape, the firm says. ‘We are in the midst of one of the toughest forecasting environments in a long time. The likelihood of a hung parliament is just adding to the widespread election anxiety,’ said Cluttons' international research manager, Faisal Durrani. ‘Furthermore, the emergence of London as a scapegoat to win votes is having a damaging impact on the performance of the market, which could have ramifications for the rest of the country,’ he added. He explained that with nearly a quarter of the UK's GDP activity emanating from London, it is difficult to understand why the commercial nerve centre of the UK is being targeted, adding that proposals for a mansion tax has reignited the debate of whether or not London's property millionaires should be taxed, giving further momentum to the anti-London political rhetoric. ‘The mansion tax really is a tax on London and the South East, where almost 90% of the UK's £2 million plus properties are concentrated. Some 27% of the population resides in London and the South East and hard working families will feel the biggest squeeze from any additional tax on higher value properties,’ said Durrani. ‘The reality is that £2 million no longer buys you a mansion in London and hasn't for some time. Two bedroom properties in Shad Thames, St. John's Wood and Pimlico are all in close range of the £2 million barrier and will be netted by any new London housing tax well before the end of the next parliament. A smarter approach might be to make adjustments to council tax pay bands, which no party has been willing to look at,’ he pointed out. Among the Labour Party's housing policy initiatives is a controversial rental cap. The proposal calls for an effective freeze in rents for a period of three years, with CPI-linked increases allowed during this period. ‘In a deflationary environment, this is an easy promise to make, but what happens when inflation climbs above the level of rental value growth, or when rents decline? Our international experience tells us that rent caps are tough to police and artificially choke growth, creating unnatural cycles that are far removed from economic realities,’ Durrani explained. He pointed out that in Abu Dhabi a decision was taken last year to remove the emirate's 5% rent cap as it was artificially holding back the market and was far too broad-brushed and didn't really accurately… Continue reading
