Tag Archives: london
New UK stamp duty rates subdue sentiment in high value home markets
Prime London house prices rose by an average of 2.6% in 2014, but for the first time since the credit crunch the UK’s prime regional markets marginally outperformed the capital with growth averaging 3.2%. According to the latest analysis from Savills 2014 was a year of two halves for the prime London residential market. Prices rose by 4.9% on average in the first half of the year and fell by a net figure of 2.2% in the second half, its prime London index shows. The firm says that the increased rates of stamp duty introduced by the Chancellor in his Autumn Statement resulted in an adjustment in values at the top end of the market, most notably in prime London and parts of its high value extended commuter belt. As a result, the average all prime London index where values average £2.6 million recorded a 2.6% fall in the final quarter of 2014. However, London’s prime markets up to £1 million and in the £1 million to £2 million range were less adversely affected by the stamp duty changes and would also be less affected by opposition proposals for a mansion tax. As a result, they saw annual price growth of 6% and 2.5% respectively. The greatest impact of the stamp duty increase was seen in the most valuable markets of prime central London, which have seen the strongest price growth in recent years. In these central markets, where prices average £4 million, values fell by 4.2% in the last quarter of the year, contributing to small falls of 1.3% year on year. ‘It will take time for the effect of the stamp duty changes on prices to become clear, early signs are that the additional cost is predominantly being borne by sellers through price adjustments at a level similar to the extra stamp duty,’ said Lucian Cook, Savills UK head of residential research. ‘Prices were easing before the Autumn Statement, so for the very top end of the market the stamp duty rise coincided with some of the froth coming off pricing earlier in the quarter. Our analysis suggests that even without the stamp duty changes, values were on track to soften by around 1% in this last quarter, in part due to general pre-election uncertainty around high value property taxation,’ he explained. Early indications are that the prime markets outside London have been less impacted by the new stamp duty rates and would also be less affected by further taxation in the form of a mansion tax. In the sub £1 million prime market across the UK, average prices rose by 4.6% in 2014, fuelled by particularly strong growth in the first six months of the year. These lower value prime markets, particularly those that are well-connected to London, are forecast to see the strongest growth over the next year and… Continue reading
Tenant finances getting worse in the UK private rented sector
Tenants in the UK have felt a financial setback with the number falling into serious rental arrears rising on an annual basis for the first time since 2012, according to the latest tenant arrears tracker report. The data from the estate agency chains Your Move and Reeds Rains, part of LSL Property Services, shows that in the fourth quarter of 2014 there were 68,100 tenants in severe rent arrears of more than two months, an annual rise of 7.2%. However, on a quarterly basis the setback is less severe, with 1,700 more cases of severe arrears in the quarter compared with the last quarter of 2013, a quarterly increase of 2.6%. Despite this recent deterioration, the longer term trend for tenant arrears remains positive, the report suggests as improvements seen in 2013 and at the start of 2014 remain overwhelmingly large in comparison. As a result, since reaching a peak of 116,600 tenancies in the third quarter of 2012 the number in severe arrears has dropped by 48,500 as of the fourth quarter of 2014, an improvement of 42%. In terms of the proportion of all tenants now in severe arrears, there was no significant setback in the last quarter. As a percentage of all tenants, 1.4% owed rent arrears of more than two months in the fourth quarter, the same as in the third quarter of 2014 and the fourth quarter of 2013. This leaves a remaining 98.6% of tenants who have consistently avoided serious rental arrears. A slight deterioration in the most serious rental arrears is consistent with figures for overall levels of late rent including shorter lapses on payments. According to the latest Buy to Let Index from Your Move and Reeds Rains, overall tenant arrears of any duration stand at 7.5% as of November, up from 6.6% of rent late in November 2013. However, as with severe arrears, even after November’s slight deterioration, rent arrears remain considerably lower than in previous years, since peaking at 14.6% in February 2010. ‘Escaping the worst deprivations of the financial crisis has taken half a decade and even now, for so many households every month is still a difficult month,’ said Adrian Gill, director of estate agents Your Move and Reeds Rains. ‘But just as the occasional setback is inevitable, the long term trend is increasingly clear. Since the sharpest pinnacle of tenant difficulties in 2010 the number in serious rent arrears has practically halved,’ he pointed out. ‘As rising wages start to combine with much lower levels of unemployment, the fundamentals of the economy have started to turn in favour of tenants. If that can continue, then so can the trend away from arrears, as renting becomes more affordable,’ he added. The report also shows that eviction rates have improved. In the third quarter of 2014 some 28,400 tenants faced a court… Continue reading
Research reveals widespread confusion over interest rates among UK home owners
Whilst January is traditionally the time to get finances in order and plan for the year ahead, new research reveals that there is widespread confusion around UK interest rates and when they might rise. Some 46% don’t know that the current Bank of England base rate and 88% are unaware of its interest rate forecast for a rise in October 2015, according to research from Barclays Mortgages produced in partnership with the Centre of Economic Business Research (Cebr). Some 61% of home owners are uncertain when interest rates might rise and half with variable rate mortgages aren’t aware their repayments could rise, the research also shows. And overall 76% are not putting money aside to be able to cope with interest rate increases despite the Cebr predicting a minimum total mortgage payment rise of £723.8 million across the UK. The research reveals that home owners cite different political and regulatory statements, conflicting family views and changing market commentary as the main reasons behind this widespread uncertainty. The lack of awareness may contribute to UK mortgage holders experiencing financial difficulties in 2015, according to the research. Just under half, 49.5%, of those with a variable rate mortgage don't expect or aren't sure that their mortgage repayments will rise in 2015, despite the Cebr predicting that home owners across the UK could face a potential £1.1 billion total increase in mortgage repayments by the end of 2015. This is based on the Cebr's 'sharp but potential' model suggesting three rate rises in 201 (taking the base rate from its historic low of 0.5% to 1.25% by December 2015, something which is not considered unfeasible by economic experts and which would increase average mortgage repayments for individuals by £118.974. The second 'medium' model focused on a single interest rate rise of 0.25% in May 2015 and would see home owners across the UK paying an additional total of £904.2 million in their mortgage repayments by the end of 2015 averaging at £101.33 per home owner. At a very minimum the Cebr predicts an average annual £81.12 increase in mortgage payments for individuals by the end of 2015. When looking at the UK as a whole, this 'gentle model' would result in a total £723.8 million annual increase in repayments. The research report says that whatever the increase in repayments, it is clear that people are underprepared for any interest rate rise. The survey also found 45% felt they may have missed out on better mortgage rates and therefore paid out more because they weren't sure whether or not to fix or change their mortgage. ‘Our report shows there is widespread confusion over interest rates and we encourage home owners to review their current situation and get advice on what their next mortgage step should be,’ said Andy Gray, Barclays managing director of mortgages. ‘We want our customers to remain financially fit in the face of potential interest rate rises in 2015, and believe the impending rise that… Continue reading
