Tag Archives: real estate
Industry professionals believe supply shortage is holding back UK property market
The vast majority of property professionals in the UK believe that the residential housing market is being held back, with a shortage of stock the main problem. Overall 90% of those surveyed said the market is being held back and 47% said the shortage of homes for sale is the reasons, according to a poll by conveyancing services firm myhomemove. It says that this suggests that improved confidence from sellers in the wake of the decisive election result could ensure increased stability and predictability that will deliver more confidence, pushing the number of house sales up. The data also shows that 24% of respondents blame a lack of mortgage availability, perhaps reflecting concerns about the impact of affordability rules on lending to older borrowers and 16% said that a lack of new build properties was holding back the market, reinforcing the need for developers to keep building. There was strong support for extending the Help to Buy scheme for new build purchases to 2020. A strong majority of 80% of respondents supported the policy, compared to a mere 8% who opposed it. On top of this some 65% said they support the Conservative Partys’ starter homes scheme put forward in its manifesto in the run up to the general election with just 3% opposed. But the property professionals were divided on one of the other main housing policies of reducing inheritance tax on the family home. Some 42% said they support the policy, while 38% opposed it. The research also found that 38% believe that a target of building 200,000 new homes is achievable. The new Conservative Government promised to build 200,000 starter homes for first time buyers in its manifesto. They think that the new Government will find it easier to implement its Right to Buy scheme for tenants of housing associations than it will to deliver its Right to Build programme. Both policies were outlined in the party’s manifesto. And 43% said that a Right to Buy scheme for housing association tenants was realistic, with 27% not sure. There was, however, greater uncertainty over whether the party could implement the Right to Build scheme with 26% thinking that this policy was achievable, whilst 41% were not sure. ‘Property professionals are clearly concerned about the obstacles that are holding back property transaction numbers. The good news is that the decisive election result could provide a confidence boost to consumers that will mean more properties are put on the market,’ said Doug Crawford, chief executive officer of myhomemove. ‘The main housing policies outlined by the new Conservative Government in its manifesto are, for the most part, popular within the industry. The question now is whether the Government can deliver on its promises and how quickly it can do so. Some policies, like extending Help to Buy, are far simpler to deliver than others, like the proposed Right-to-Build scheme. This will undoubtedly be a big topic of debate at our conference, just one week… Continue reading
UK residential rents up 4.7% in last 12 months, latest research shows
The cost of renting a new home in the UK has increased 4.7% over the last 12 months while tenants renewing their contract saw their rent increase 1.8%, new research shows. It means that squeezed yields, particularly across London and the South East, have led to more landlords looking to buy rental properties with a tenant already in situ to preserve their return. Indeed, the proportion of properties in the UK bought by landlords with a sitting tenant has reached the highest level since 2005, according to the latest report from Countrywide Residential Lettings. Last year 11% of all rental properties bought by a landlord came with a sitting tenant, a fourfold increase on 2008. Landlords are increasingly recognising the value of keeping a reliable, long term tenant and are prepared to reward them with longer contracts, the report points out. Tenants in properties sold as occupied have lived in their home significantly longer than the average tenant. A quarter of these tenants signed contracts of two years or longer compared to just 5% of tenants overall. This means for a growing number of renters, the decision to sell by their landlord does not affect their living conditions. Across every region of the UK, the proportion of sales with a sitting tenant rose, with over quarter of all purchases by landlords in the Capital coming with a sitting tenant, up from 12% in 2008. It is in London and the South East where yields are lowest and where the proportion of landlord purchases with a sitting tenant is highest. Here, landlords are most likely to buy a property with a sitting tenant to ensure they receive a rental income immediately, improving their return. This is achieved by landlords buying directly from other landlords who are selling up, rather than buying from an owner occupier and having to find a new tenant. Between 2008 and 2014, the North East of England saw the largest uplift in landlords buying with a tenant already in place. Given the limited growth in house prices since 2008, landlords attach great importance to the yield they are able to achieve. Selling with a sitting tenant allows a vendor to demonstrate the yield they are already achieving and means the new landlord will receive an income immediately in a market where it takes longer than average to get a tenant. Equally the new landlord won’t incur search costs or suffer any void period. ‘It seems that the secondary market of landlords selling investment properties to other landlords is growing. Landlords are increasingly recognising the long term value attached to keeping a reliable, high quality tenant,’ said David Fell, research analyst, Countrywide plc. ‘Properties sold with a tenant in situ, which offer a readymade guaranteed income, can even trade at a premium. At Countrywide, we are able to assist landlords in their quest to find a landlord… Continue reading
UK property market picks up but shows signs of pricing expectation gap
The UK property market is set to see a pick-up in activity due to an election result that was positive for real estate markets but there is evidence of an ‘expectation gap’ emerging, new research suggests. Buyers and vendors have different expectations when it comes to pricing, according to the latest market update report from property firm Knight Frank. It shows that UK house prices rose by 1% in April, taking the annual increase to 5.1%, while prime central London prices rose by 0.3% in April, an annual uptick of 2.8%, and prime outer London rose by 0.4%, and are up 4.8% year on year. Overall prime country house prices rose in value by 2.5% in the year to March, while prime properties in Scotland climbed 1.2%. Meanwhile, the rental market in prime central London is showing continued growth, outpacing that seen in the sales market with growth of 4.1% while overall UK rents rose 2.1% in the year to March. Rates of growth are not uniform across different areas, for example there has been 6.2% growth in Kensington and just 0.1% in Mayfair. Rents in the Home Counties climbed by 4.7% in the year to the end of March. ‘Uncertainty had been the byword in most corners of the market in the run-up to what was considered the most closely fought election in decades. Now, with a majority government, there is clarity on the way forward on housing policies and a Conservative majority means that the approach is likely to be largely a continuation of what we have seen over the last five years,’ said Grainne Gilmore, head of UK residential research. She pointed out that housing supply will continue to be a priority as the current levels of new homes being delivered is far below the generally agreed target of 240,000 homes a year. Indeed, Knight Frank’s recent house building report revealed the measures house builders and developers think should now be a priority for policymakers to boost development and these include beefing up planning departments and releasing more public sector land. ‘The Conservatives have already pledged to extend the Help to Buy Equity Loan to 2020, something which has encouraged developers to take on larger schemes. Their plans to extend Right to Buy to more Housing Association tenants will provide the opportunity for home ownership among this group,’ explained Gilmore. ‘However in terms of housing supply, the policy of replacing each home purchased with another, new, home available for rent must be implemented, otherwise the scheme will result in a net loss of affordable homes,’ she added. Knight Frank expects sales to pick up. ‘In terms of activity and pricing in the market, it is likely that transactions will pick up now that the uncertainty in many parts of the market, especially the prime market which is no longer dealing with the prospect of a mansion tax,’ said Gilmore. ‘However, there is evidence that an expectation gap in pricing may be starting to… Continue reading
