Tag Archives: london
Central bank to get new powers of direction over UK housing market
The UK government has confirmed that the Bank of England’s Financial Policy Committee will have new powers of direction over the country’s housing market. City Minister Andrea Leadsom confirmed that the FPC will be given new tools to ensure the ongoing stability of the housing market through setting limits on debt to income ratios and loan to value ratios for mortgages. The FPC recommended it be given these powers after the Chancellor announced his intention in his 2014 Mansion House speech to give the FPC the necessary powers to tackle future housing market risks. The government’s announcement follows separate Treasury consultations on granting the Bank of England additional powers to address any emerging risks to financial stability from the housing market. ‘The Bank of England will have further powers to safeguard the stability of Britain’s financial system from any future risks posed by our housing market or banks,’ said Chancellor George Osborne. ‘Curbing Britain’s age-old vulnerability to banking and housing booms is one of the goals I recently set for the next two decades of Britain’s economic policy, and this announcement of new powers for the Bank of England shows our determination to achieve this,’ he explained. The additional powers over the housing market are commonly held by the Bank’s counterparts in other countries. Loan to value limits are used extensively in countries including Canada, New Zealand and Norway. Several other countries, including the Netherlands, Switzerland and the US have already introduced leverage requirements for systemic firms. The legislation sets out the new powers of direction that the government will grant the FPC over loan to value limits and debt to income limits for owner occupied mortgages, as requested by the FPC in October 2014. The government intends to consult separately early in the new Parliament on the FPC’s recommendations for it to have new powers over the buy to let market, with a view to building an in depth evidence base on how the operation of the UK buy to let housing market may carry risks to financial stability. According to Andrew Tyrie MP, chairman of the Treasury Committee and former Chairman of the Parliamentary Commission on Banking Standards, said that the setting of limits on debt to income ratios and loan to value ratios for mortgages could help to tackle the economic and financial stability risks posed by an overheating housing market. ‘However, there are limits to what can be expected of regulators: the identification of the cycle is an inherently extremely tough task. It could turn out to be insuperable. These new powers will affect millions of taxpayers and households across the country. The FPC is still largely unknown to the public and it is therefore crucial that it is transparent about how it reaches its decisions,’ he pointed out. Peter Williams, executive director of the Intermediary Mortgage Lenders Association (IMLA), that the Bank must think very carefully before bringing its new powers of direction to bear on the… Continue reading
US and Chinese set to dominate London commercial property market in 2015
Chinese and US money is set to dominate London’s commercial property market in 2015 after Chinese investors accounted for more inward investment in 2014 than all European buyers collectively. Of the £21 billion spent in the London market, some £14.6 billion or 70% was attributed to foreign buyers. US investors spent £3.4 billion, Chinese £2.2 billion and Qatari investors £1.2 billion, according to a new analysis from international real estate advisor Savills. China Life was one of the biggest new entrants of the year with its deal at 10 Upper Bank Street. Chinese investors were the biggest buyer group from Asia, with developers such as Shanghai Greenland, Ping An Trust and China Overseas Land Investment purchasing properties. The Savills report also shows that these investors are not limited to single transactions, and anticipate more activity. US investors including Blackstone, Kennedy Wilson and Hines have secured some of the larger deals such as Alban Gate, 111 Buckingham Palace Road and 25 Cabot Square, with Northstar entering the UK for the first time purchasing a property in Woking before going on to purchase a 1.1 billion euro portfolio which included four assets in London. Other new entrants, who Savills is acting for, include parties from Taiwan, Turkey, Singapore, Israel and Yemen. ‘Debt is a significant factor in drawing in these international parties, falling swap rates and competition between lenders is making borrowing cheaper,’ said Rasheed Hassan, director of cross border investment at Savills. ‘Aside from that there is genuine confidence in the strength of the occupational market with rents steadily rising. These pull factors are further boosted by push factors such as the returns in the bond markets as compared to property and some economic instability across other geographies,’ he added. According to Eric Zhao, Savills Chinese Capital Markets Specialist, Chinese investors coming into the UK market are mainly developers and insurance companies. ‘The top Chinese developers are being driven by challenges in the domestic market and global branding needs,’ he said. ‘Insurance companies are beginning to diversify their huge capital outside of China after the restriction on overseas investment was lifted by the regulator. We have already seen the top Chinese firms make a statement in London and we are expecting more to follow,’ he added. The report reveals a rise in private investors entering the London markets and points out that appetite from these parties has not been restricted to smaller lot sizes, with the Savills sale of The Gherkin to the Safra family, as the most significant larger private investor transaction as well as others from China, Spain and Hong Kong. ‘Whilst further in-flight of capital will keep turnover levels high, very few of the international institutional type investors have demonstrated a willingness to go to the initial yield levels that have been seen on the UK prime assets,’ said Stephen Down, Savills head of Central London . ‘Whether they will go to these levels depends on further rental growth coming through… Continue reading
Rental home loan deposit scheme for certain employees in UK widened
The UK government has announced wide support for a new rental deposit loan scheme that will become available to thousands of potential tenants. Housing Minister Brandon Lewis said that the aim is to create a bigger, better private rented sector through a scheme that offers deposit loans to Whitehall staff looking to take up new tenancies in the private rented sector. The scheme, which works in the same way as a staff season ticket loan, will allow employees to borrow some of their salary upfront in order to pay for rental deposits, which is then repayable from salary payments over up to a year. It is available to be taken up in both the public and private sectors. The Department for Communities and Local Government last October became the first government department to roll the scheme out to its staff, with ministers pushing other parts of government and the public sector to follow suit. The department is working with the Department for Business Innovation and Skills to increase availability across the private sector. ‘This move will mean thousands of people will be offered a helping hand to rent privately through season ticket style loans from their employers. I hope to see more employers in the public and private sector joining the scheme in the near future,’ said Lewis. The scheme was created by the homelessness charity Shelter and the Greater London Authority was another public body to introduce the scheme for its staff. The tenancy deposit scheme can be adapted by different employers to suit their needs, but generally employees are offered interest free loans to pay their deposits when they move into a privately rented home, which are then paid back through their salary over the course of up to a year. Continue reading
