Tag Archives: london
Significant increase in new lending for UK commercial property markets
There was a significant rise in new lending to the UK commercial sector in the first half of 2014 but the recovery has been uneven across the country. Overall outstanding debt held against UK commercial property fell to £171 billion in the six months from £180.3 billion at the end of 2013 as lenders continued to reduce their loan books following the 2009 financial crisis, according to a report from academics at De Montfort University. The report, the most comprehensive analysis of the UK’s commercial property lending market, also found a significant drop in the volume of old loans that were distressed or in breach of financial covenants. However, it noted that organisations much more willing to lend against assets in London than elsewhere, and also more inclined to lend against investment properties rather than new development. New lending accelerated during the period with £19.6 billion of new lending, the highest total recorded by the study since 2008, compared with £13.4 billion in the first half of 2013 and £29.9 billion for the whole of 2013. However, the report points out that the increase in activity generally in the commercial property market was not debt fuelled to the same extent as occurred before the financial crisis when, for example, some £49.2 billion of loan originations were completed in the first half of 2007. It is initially, therefore, most probably equity driven, it explains. The report also found the lending market becoming more diverse, with UK Banks and Building Societies representing 36% of new origination at the mid year point compared with 43% of new lending in 2013, and a share of 54% of the existing stock of outstanding loans. It also outlined significant differences in lending activity and appetite remain across the country. For example, 80% of organisations active in the market reported that they would lend on prime investment projects in London, compared to 46% who would do so in Northern Ireland. While lenders’ appetite for development risk is also improving, it remains a preserve for the specialist, particularly where the project is speculative: 26% of lenders were prepared to provide senior debt to finance such projects at the mid point of 2014, compared to 12% at the middle of 2013. Liz Peace, chief executive of the British Property Federation, said that the outlook for debt finance to support the commercial property market is very positive. ‘The steady reduction of outstanding debt, and of loans with dangerously high loan to value ratios, is very encouraging,’ she explained. ‘Although new lending is growing at a significant rate, the fact that the market seems to be mainly equity driven means that we are unlikely to be living through another 2007. However, we are concerned about the potential implications of the lack of debt finance available for speculative development,’ she pointed out. ‘While lender caution in this area is totally understandable given events in the past few years, there are parts of the country where new, high-quality… Continue reading
Fair compensation calculations needed for good lettings relationship
Calculating the right compensation charges at the end of tenancies is the holy grail of lettings and getting it wrong can lead to unnecessary disputes with tenants, it is claimed. Many landlords and agents are responsible for calculating the cost for compensation charges against a tenant and in doing so, should ensure it is reasonable and fair. However, everyone’s expectations are different. If landlords and agents have to calculate compensation charges themselves, it vital that they have a working knowledge of accepted principles, if they are to avoid a dispute, says the Association of Independent Inventory Associations (AIIC), adding that landlords and agents should also explain to their tenants how they have worked out the compensation deductions. ‘If agents and landlords can prove how they arrived at the proposed deductions from their tenants’ deposits, all parties involved will be happier to accept the decisions. Fewer disputes cause less headaches in terms of wasted time, money and effort all round,’ said Pat Barber, chair of the AIIC. ‘There are a few bits of information that agents and landlords need from the start to aid their calculation, namely the original cost of an item, the age and condition at time of check in, the length of tenancy, average life expectancy of the item and any extenuating circumstances,’ she explained. She pointed out that floor coverings are major bone of contention for landlords, agents and tenants and recent research also shows that accidental damage to flooring is the main cause of insurance claims for tenants at 42%. ‘So for example, if a tenant damages vinyl or laminate flooring with drag marks, deep scratches or scrapes, burn marks and stains, these are considered to be chargeable issues. A small number of surface scratches, nicks and minor indentations are considered to be consistent with fair wear and tear depending on the length of tenancy and original condition,’ said Barber. ‘It is always recommended that care instructions for surfaces such as vinyl and laminate floors be provided to the tenant by the landlord or agent. Laminated flooring can vary in quality from surface ‘photo’ coatings to a thicker laminate top layer. Laminates with a thin surface coating are prone to edge lifting, although excessive washing can also exacerbate the problem and could be chargeable if this can be proved,’ she added. She also pointed out that household circumstances, location, environment, quality, pets, previous wear and so on will all have an effect on the final compensation amount. ‘Landlords and tenants need to put all the evidence together to reach a safe conclusion, one which can be justified in writing at some point if required. Landlords should be able to provide written evidence of the original cost and age of the laminate flooring, or anything else in the property, to enable proper compensation to be calculated,’ Barber concluded. Continue reading
City property values in Australia decreased gradually during 2014, latest index shows
Residential property values in Australian capital cities increased by 0.9% in December to take the annual increase to 7.9%, the latest index data shows. Values rose in all cities except for Darwin where they fell by 0.6% and Canberra where they were also down by 0.6% while values were unchanged in Sydney, according to the CoreLogic RP Data Home Value Index. Over the final quarter of 2014, capital city home values increased by 1.6% with Perth, Sydney and Brisbane recording the greatest quarterly gains at 2.8%, 2.3% and 1.8% respectively, while values fell in Darwin by 1.7% and in Canberra by 3.4%. However, despite the positive result across most cities, the annual rate of capital gain across Australia’s capital city housing market has continued to slow. The capital gain on houses compared to units was higher, with house values gaining 8.4% over the calendar year compared with a 5.1% increase in unit values. According to RP Data senior research analyst Cameron Kusher, detached housing remains in high demand despite the higher price point. ‘Based on the median price across the combined capital cities, houses are attracting a $100,000 premium over apartments,’ he said. He also pointed out that the slowing annual growth rate is further evidence that the housing market is losing some steam with combined capital city home values increasing by 9.8% over the 2013 calendar year compared to a more moderate 7.9% increase in 2014. Based on the December results, the annual rate of capital growth has continued its moderation which has been ongoing since April 2014. After the annual rate of combined capital city home value growth peaked at 11.5% over the 12 months to April 2014, the rate has now slowed to 7.9% in December 2014 which means that combined capital city home values have increased at their slowest annual pace since October 2013. At an individual capital city level, the annual rate of home value growth is now lower than its recent peak. Kusher said this would tend to suggest that peak value growth has now passed. ‘We would anticipate that the rate of growth will continue to slow through 2015 despite the low interest rate environment,’ he explained. Although home value growth has been recorded at 7.9% throughout the 2014 calendar year, the rate of growth has varied between a fall of 0.6% in Canberra to an increase of 12.4% in Sydney. While Canberra was the only city to record an annual fall in home values, Melbourne was the only city other than Sydney to have recorded annual value growth of more than 5% at 7.6%. Looking at the different segments of the market based on dwelling values, the broad middle 50% of capital city suburbs have recorded the greatest value rise over the past year. The most affordable 25% of capital city suburbs have recorded a gain of 7.7% compared to 8.5% across the middle 50% of suburbs and 7.8% across the most expensive 25%. The index… Continue reading
