Tag Archives: london
Lenders offering more deals to UK residential property developers, new survey finds
Lenders to residential developers in the UK are taking on more risk as property markets stabilise after the financial crash, a survey of more than 50 major institutions has found. The respondents, which include a mix of banks, institutional investors and private equity funds, are increasingly funding schemes outside London, plan to grow their loan books over the next year and are more open to planning risks and higher loan to value lending. The findings of Knight Frank’s latest survey marks another step on the return to a more liquid lending environment following the financial crisis, when banks retreated from the sector. It points out that the UK economy is tentatively returning to health and the prospect of a normalised interest rate environment. In September, the Office for National Statistics said the country’s economy was 2.7% larger in the second quarter of the year compared to its pre-crisis peak. ‘This was reflected in the number of lenders who intend to grow their loan books over the next year, with the figure rising to 78% in the third quarter of 2014 against 75% in the third quarter of 2013. Furthermore, the amount of respondents that would consider a scheme with planning risk increased to 60% from 50% last year,’ the report says. ‘However, there is no sign banks are returning to the years of higher risk lending that preceded the financial crash and they are joined by other lenders including hedge funds and other institutions that are attracted by relatively high returns in a world of low yielding assets,’ it adds. It points out that this increased competition has forced down the cost of debt. Indeed, some 36% of respondents said they had reduced their pricing as a result of this increased competition while more than a quarter said they were prepared to take on more planning risk or boost the loan to gross development value ratio. However, as more lenders enter the market following the retreat of the banks, some are struggling to lend in sufficient quantity or at the returns of about 13% that they envisaged. As a result, many so-called alternative lenders, who planned to offer higher yielding mezzanine finance, have been forced to provide senior debt. As these lines blur, with High Street increasingly open to mezzanine finance and specialist funds providing senior debt, and Peter MacAllan at Knight Frank Finance warned the lending market could not become much more crowded after the transformation it underwent following the financial crisis that brought a range of new entrants. ‘I have a feeling we are reaching saturation point. There are too many lenders chasing the same deals,’ he explained. The report also points out that the sustainability of house price inflation is a concern for lenders, particularly in London, despite recent signs of moderation. Some 83% said they would consider schemes in zone 1 of London while 89% said they would consider zone 2 and beyond. That compares to 97% who would consider schemes… Continue reading
Most UK regions see strong annual rental market growth
Nine out of 12 UK regions saw rental price rise in November compared to the same month last year, according to the latest rental index. However on a month on month basis there was the traditional autumn with nine out of 12 regions recording lower rental prices compared to October 2014, the findings from the Home Let index shows. It means that the average monthly private rent in the UK is £874 per month or £702 excluding London and Scotland saw strong rental price growth with an 8.7% increase in November 2014 compared to the previous month and 11.7% up on the same month last year. Overall the regions that have experienced the highest growth compared to this time last year include Scotland, Greater London, and the West Midlands, with rental prices 11.7%, 11% and 8.7% higher than this time last year, respectively. Regarding the autumn dip, with the exception of Scotland, the East Midlands and the South West all saw lower rental prices in November than in October. Scotland recorded a monthly increase in rental prices of 8.7% with the East Midlands and the South West recording monthly increases of 1.5% and 1.4% respectively. The index report says that the recent dip in prices reflects typical seasonal movement in the rental market and sits within the context of a market that remains strong. Annually, only three regions of the UK recorded lower rental prices in November 2014 compared to the same month last year. The North West dropped 3.6%, the North East fell by 2.5% and Wales was down 2%. ‘We see the autumn’s moderation in rental growth as broadly in line with the typical seasonal effect that often sees rental prices balance or even slip into reverse in many areas of the country at this time of year,’ said Martin Totty, chief executive officer of the Barbon Insurance Group of which Home Let is part. ‘The outlook for the private rented sector remains positive for several reasons, the pace of house building is unlikely to have a significant effect on the supply of property to buy or to rent in the short term, high house prices, and a mortgage market where lending criteria remains constrained, are combining to ensure that the demand from tenants needing rented accommodation remains strong,’ he explained. ‘In terms of seasonal highs we see Scotland bucking the trend of the rest of the country, the rapid growth in the Scottish rentals market reflects the strength of the economy north of the border, particularly in oil-rich Aberdeen, which has a thriving rentals sector, but also in other Scottish cities and throughout the country,’ he added. Continue reading
England and Wales house prices showing strongest annual growth since 2005
House prices in England and Wales increased by 0.8% in November with values climbing across all regions taking the average price to £280,733. The LSL Property Services/Acadata index also shows that annual growth accelerated to 11.3% but it points out that strong growth is buoyed by London and the South East. Excluding them takes the annual growth to 5.7%. But it does mean that the average house price has now exceeded £280,000 for the first time and annual growth is the strongest it has been for almost a decade. However, completed house sales have been squeezed by slow supply. ‘Annual house price growth across England and Wales has more than doubled over the last 12 months, accelerating from 5.4% in November 2013, to 11.3% during the past year,’ said David Newnes, director of Reeds Rains and Your Move estate agents. ‘These figures are spurred on by London and the South East, where the housing recovery has been fast tracked. When these regions are removed from the calculations, a calmer 5.7% annual rise in house prices materialises, the largest divergence on record,’ he explained. ‘After a temporary hiatus at the highest tiers of the property market, growth has rallied again in the capital with values in prime spots such as Kensington and Chelsea, and Hammersmith and Fulham surging 5.3% over the course of the month, hitting new price records along the way,’ he added. He also pointed out that overall, average house prices in London are now 1.9% higher than September, rebounding back from a more moderate 0.8% increase the previous month, and driving annual price rises to 19.7% in the year to October 2014. However, after a solid advance in activity throughout 2014 to date, completed house sales withdrew last month, from a particularly busy October. House sale completions in November also dipped below the level witnessed a year previously. ‘This doesn’t undermine the strength and stability of the growth in activity experienced over the year as a whole in some locations. For instance, completions have jumped 58% in Slough in the last year, propelling an 18.5% increase in average house prices in the area over this time,’ said Newnes. He also explained that the changes to Stamp Duty should also allow activity to build further at the bottom rungs of the ladder, facilitating hefty savings. ‘This should help erode the upfront barriers of purchasing a home for the significant majority of buyers and sellers may feel the benefit of weightier demand, as well as being able to price their homes more realistically, without having to tactically negotiate threshold barriers,’ Newnes said. ‘Meanwhile, the impact on the top end of the market isn’t as black and white as it may seem at first glance with properties ranging between £1 million and £1,125,000 liable for less stamp duty than before although above that there are no winners,’ he added. ‘In the year to September 2014, some 69% of completed house sales on properties worth £1,125,000 or more were in London, and a… Continue reading
