Tag Archives: real estate
British private rental sector producing good investment returns
British Landlords have seen total annual returns of £111.5 billion in the last year, as the private rented sector continued to grow, according to a new buy to let report. The sector grew by nearly 150,000 households in the year to March, with rented accommodation accounting for 77.4% of new households created across all tenures, says the report from Kent Reliance. This rapid growth has led the firm to forecast that on present trends, the sector will increase from 4.8 million households in Great Britain to 5.5 million by 2020. The expansion of the sector has supported the rise in its value. At the end of March, the total value of property owned by landlords in Great Britain stood at £990.7 billion, increasing by 11% in the last year. The sector’s value is now equivalent to 43.1% of the value of the UK’s Stock Market, up from just 12.2% 15 years ago. House price inflation also contributed towards the increase in the sector’s value, the report says. Although slower than its recent peak last year, annual inflation remains brisk at 7.5%. This is also supporting gross total annual returns. By the end of March, the average property generated return of £24,221 in rental income and capital gains, just £1,000 less than the average salary over the past 12 months, equivalent to 12.5%. Across the country as a whole, this meant that annual returns seen by property investors totalled £111.5 billion, some £67.2 billion in capital gains, and £44.3 billion in rents. In total, this figure was £5.8 billion higher than the £105.7 billion landlords saw in March 2014, although it represented a decline compared to the recent peak of £137.5 billion in September, when capital gains were at their highest in at least seven years. Andy Golding, chief executive of OneSavings Bank, which trades under the Kent Reliance and InterBay brands said it shows that buy to let has come of age, moving from a niche asset class to one big enough to rival the stock market. ‘Landlords are seeing the benefit of a structural change in Britain’s housing market, with tenant demand ever strengthening. Yes, house prices are showing signs of steadying somewhat, but growth remains brisk,’ he explained. ‘Long term price inflation is not in danger, given the gaping chasm between growing demand for housing and the number of houses being built each year. Combined with the dearth of high LTV lending to first time buyers, this will continue to buoy demand for rental accommodation, as well as landlords’ returns, and the sector will continue to expand,’ he pointed out. ‘Supporting the growth in the number of experienced landlords with growing portfolios is crucial to providing the investment necessary in the sector to match demand. The mortgage market is playing its part, with remortgaging vibrant, and an increasing array of second charge… Continue reading
Spanish property market recovery fastest in the Balearic Islands
The Spanish Balearic Islands, which reported some of the lowest house price falls in Spain during the six year economic downturn, is now experiencing the fastest and highest rises in the country. The strong property market is being supported by a healthy tourism sector and a multi-national house buying population, according to Alejandra Vanoli, managing director of Mallorca Sotheby’s International Realty. She pointed out that Calvia alone has 19,000 non-Spanish residents from 100 different countries and this year the firm is selling more houses than ever. In Ibiza it is a similar story. According to Glynn Evans, the firm’s managing director in Ibiza the international buyers are attracted by exciting culinary business ventures from multi-Michelin starred chefs, supercar and powerboat championships, 70 metre plus berths for the finest private mega yachts and several new five star hotels. On top of this, at the end of April, the Bank of Spain confidently declared an end to the property crisis. José Luis Malo de Molina, said that ‘the adjustment in the housing sector, in principle, is complete’ and ‘the process of price adjustment, in principle, has already bottomed out’. The mortgage market is also well into recovery. Data from Spain’s National Institute of Statistics show that property loans in the Balearics, for example, were up 36.2% in February 2015 over the previous year, above the national average of 29.2%. Meanwhile, the Spanish rental sector is also improving. Average rents increased by 0.2% in April, compared to the previous month, to €6.98 per square meter per month, according to the data from property portal Fotocasa, and year on year they increased by 1%. ‘In the last few months we have gone from registering widespread declines in home rental prices, to registering increases in every region except one. Rental prices, therefore, are starting to increase in most of the country,’ the Fotocasa report said. But rents are still down 31.1% since the peak of the rental market in May 2007 when it was €10.12 per square meter per month and all regions have seen serious declines since the peaks before the economic downturn. Rental prices have fallen the most in Aragon with a decline of 41.9%, are down 37.8% in Cantabria, down 36.5% in Valencia, down 35.9% in Castilla-La-Mancha, down 34.8% in Murcia, down 30.5% in Rioja, down 30% in Asturias and down 29.5% in Andalucia, since the peak of the market. However, prices increased in April month on month in all regions except in Castilla-La Mancha where they fell by 0.1%. Rental prices increased the most in La Rioja with growth of 4.2%, they increase by 3% in the Balearic Islands, and by 0.9% in Madrid. Continue reading
Home lending in Scotland falls in first quarter of 2015
Lending for homes in Scotland decreased in the first quarter of 2015 by 20% compared to the fourth quarter of 2014 and down 1% year on year, the latest data from the Council of Mortgage Lenders shows. These loans reflected lending of £1.7 billion, down 13% compared to the previous quarter but up 15% on the first quarter 2014. First time buyers took out 5,400 loans in Scotland, worth £580 million, down 23% by volume compared to the fourth quarter of 2014 and down 24% by value. Compared to the first quarter of 2014, the number of loans decreased by 7% but the amount borrowed increased by 2%. The CML data also shows that first time buyer affordability changed slightly in Scotland quarter on quarter with first time buyers typically borrowing 2.86 times their gross income, less than the 2.9 income multiple in the fourth quarter 2014 and less than the UK average of 3.37. The typical loan size for first time buyers was £94,795 in the first quarter, down from £97,200 in the previous quarter. The typical gross income of a first time buyer household was £33,499 compared to £33,965 in the previous period. There were 6,700 loans to home movers valued at £1.1 billion, down 17% in volume and down 6% in value compared to the fourth quarter 2014. Compared to the first quarter of 2014, there was an increase of 5% in volume and an increase of 24% by value. Seasonal factors play a part in the lull commonly seen in lending activity during in the beginning of the year, according to Linda Docherty, chair of CML Scotland. ‘What is encouraging is that home movers have been increasing year on year and first time buyer and remortgage levels are relatively consistent with last year,’ she said. ‘It is likely that we will see an upward trend in lending moving forward as we approach the summer months. The introduction in Scotland of the Land and Buildings Transaction Tax will mean the majority of new borrowers paying less tax, which should also provide a boost to the market,’ she explained. She also pointed out that while overall loan numbers are relatively on par with last year, the value of this lending has climbed 15% as the value of Scottish homes continues to rise. ‘Now that the Land and Buildings Transaction Tax has come into force, buyers will be looking to capitalise on the new savings on offer, as well as competitive loan rates. Combined with the lenders’ appetite to lend, this should assist the housing market bounce back post-election as we enter the summer months,’ she added. Christine Campbell, managing director of Your Move Scotland, also pointed out that lending in the opening three months of the year is typically lower as the mortgage market is more lethargic before getting back into a rhythm. ‘In light of that, and despite having to negotiate an unpredictable general… Continue reading
