Tag Archives: news
Cost of getting on the rental property ladder in UK set to soar, research suggests
With many private rental sector landlords in the UK requiring a deposit of four weeks’ rent getting on the rental ladder could present similar challenges in terms of cost as buying a home, new research suggests. It says that the cost of the average rental deposit is estimated to grow by 40% by 2026 to £1,111, more than the growth of the average monthly rent which is estimated to increase by 28% over the same period. This will mean that the average monthly rental deposit will be 70% of the average monthly salary, however there will be considerable regional variations, according to the research carried out on behalf of financial comparison website money.co.uk by the Cebr (Centre for Economics and Business Research). In London for example, the average rental deposit is predicted to rise to £2,733 by 2026, amounting to 120% of the average monthly salary, up from 99% in 2015. Deposits are predicted to rise sharply across the whole of the South of England. In the South East the average deposit is estimated to hit £1,469 in 2026, representing 83% of the average monthly salary at £1,761, up from 72% in 2015. In the South West the average deposit is estimated to represent 80% of median monthly earnings at £1,437 by 2026, up 14% from 66% of the average salary in the region in 2015. The research also suggests that based on recent trends, by 2026 an estimated 68% of all deposits requested will be at least six weeks’ rent. This means landlords will be demanding a lot more money from tenants before they sign a tenancy agreement. Average monthly rent is due to increase by 28% by 2026, some 8% higher than the increase in average salaries over the same period which are set to grow by 20% by 2026. The largest increase in rents between 2015 and 2026 is estimated to occur in London with close to 39% growth. Other regions with high estimated growth are the South West and South East where rents are predicted to grow by 32% and 34% respectively over the same period. The lowest increase in average rent is estimated to be in Yorkshire and the Humber with a 17% price rise between 2015 and 2026 and overall monthly salary growth is not expected to keep pace with the rental market Between 2015 and 2026, the average monthly salary is predicted to rise by an average of 20% or £267 to £1,576. This increase is lower than the estimated increase in both monthly rental costs and rental deposits which could mean many individuals will find the cost of renting just as unaffordable as buying. This is despite the fact the financial outlay required to rent is significantly lower than getting on the property ladder. ‘The rapid rise in deposits as well as rents is a double blow for everyone on the rental ladder. With the forthcoming changes to tax legislation and crackdown on… Continue reading
Budget announcements set to boost India’s residential property market
India’s residential real estate market is set to see a boost with moves that will increase the supply of properties for sale and demand. Experts point out that change announced in the 2016/2017 Union Budget will see a reduction for first time buyers of INR 50,000 on interest repayment for loans up to INR 35 lakh where the cost of a house is INR 50 lakh and this will boost the demand for housing at the lower end of the market. This move is also likely to benefit purchasers in tier II and tier III towns such as Surat, Nagpur, Lucknow, Vadodara, Jaipur, Pimpri-Chinchwad, Indore, Chandigarh, Gurgaon, Rajkot, Bhopal, Kanpur, and Thane, according to Shishir Baijal, chairman and managing director of Knight Frank India. On the supply side, a 100% tax exemption on profit for developers and an exemption from service tax for the construction of houses up to 325 square feet in metro areas and 650 square feet in other cities will encourage supply in the affordable housing segment. The budget has also increased the limit of deduction of rent paid under section 80GG which provides for deduction of house rent paid, provided that a deduction for payment of House Rent has not been claimed under any other section of the Income Tax Act, from INR 24,000 per annum to INR 60,000 per annum, thus providing relief to those who live in rented houses. For investors, the abolition of the dividend tax (DDT) means that there will be no barrier to launching REIT schemes. ‘Removal of REITs from DDT will also make this type of investment more appealing to retail investors. In the long run higher transparency levels will ensure that the cash strapped real estate sector will get easier access to funds at a reasonable cost,’ said Baijal. A focus on improving infrastructure and rural development is also expected to give a much needed fillip to the real estate sector. This includes a significant outlay on improving roads, railways and developing smaller airports to improve regional connectivity. Additionally, incentives to MSME, Make-in-India will get a further boost that will benefit the real estate sector in the long run. ‘Additionally, the government’s focus on digitization of land records is a step in the right direction, especially in more rural areas. The move will also lead to higher transparency levels in the real estate sector,’ Baijal added. There is also likely to be more demand from overseas investors with the forthcoming Indian Property Show in London in April expected to be well attended by Indian expats seeking to invest in real estate. They are expected to be interested in smart gated communities which are being developed in major cities such as Delhi NCR, Mumbai, Hyderabad, Chennai, Bangalore, Pune and Kolkata. According to Srividya Rajan, general manager for sales and brand engagement at Sumansa Exhibitions, the Indian Property Market is affordable compared to other international investment destinations and capital appreciation on real estate in India… Continue reading
Asking prices and sales activity grows across the UK
Property markets across the UK have seen activity soar with asking prices and sales moving upward, according to the latest national index. Asking prices rose in all parts of the UK with the mix-adjusted average asking?price for England and Wales up 0.9% month on month and by 1% in Scotland. But the average annual home price rise for England and Wales dipped slightly to 7.0%. The West Midlands shows the largest monthly rise of 1.5% as demand outweighed supply in the region and supply continues to contract overall with a decrease of 4% year on year, according to the Home.co.uk index. Homes are also selling faster. The typical time on market fell to 102 days across England and Wales, some 17 days less than in March 2015. The East of England, London and the South East show huge drops in marketing times as buyers snapped up properties at pre-crisis rapidity. The number of properties entering the market is down 4% compared to a year ago, the index also shows. The hardest hit region was the West Midlands where 12% less new stock arrived on estate agents' books during the last month compared to February 2015. The South West of England is also indicating shortages in supply with 8% less stock registered on agent portfolios last month. Prices also rose in the North and Wales over the last month but in both these regions marketing times continue to be the longest in the UK. ‘As a result, we expect only small seasonal rises in these regions over the coming months. Supply remains relatively buoyant and, consequently, prices show little if any significant upward progress,’ said Doug Shephard director at Home.co.uk. By contrast, he explained that fierce competition between buyers has driven the typical time on the market in the South East and East of England down to 47 and 49 days respectively. ‘The last time we witnessed such short marketing times was back in the pre-crisis summer of 2007,’ he added. ‘The changes in stamp duty for buy to let investors has meant that the property market has had the equivalent of an adrenaline burst to kick start what was already going to be an excellent year for house prices. Following this aberrant phase we may find that prices pause for breath, but the underlying fundamentals of cheap borrowing and tight supply will remain overall,’ he concluded. Continue reading
