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Buy to let surges in UK as first time buyer activity retreats
May has seen an acceleration in property valuations for buy to let landlords, while first time buyer activity has retreated, according to the latest research. There were 33% more buy to let valuations conducted in May than at the same time last year. Conversely, valuations for first time buyers declined by 4% over the same period, the data from Connells Survey and Valuation shows. On a monthly basis, May’s buy to let valuations were up 3% on April, while valuations for first time buyers fell 2% between the two months and the buy to let market is booming, according to John Bagshaw, corporate services director of Connells Survey and Valuation. ‘Would be landlords are eager to enter the sector and current landlords look to expand. However for first time buyers, May was not just less positive than the rest of the housing market, but also disappointing in comparison to the previous month. Previously, valuations for new buyers had proved resilient in April, even with uncertainty about the impact of the election result on home buyers,’ he said. He explained that fewer people are looking to buy their first home means more tenants sticking to the rental sector. ‘As such, new landlords enter the market and those already in the sector grow their business to capitalise on the increased demand. Yet what remains unclear is how long this contrast in fortunes will continue,’ he added. May’s remortgaging figures also outperformed the overall housing market, with these valuations up 9% on April’s figures. This equates to a 31% increase on the number of remortgaging valuations since May 2014. Meanwhile, valuations for those existing home-owners looking not to remortgage but to move to a new property posted a 4% increase since April. This has contributed to an 8% increase in the number of home-owner valuations since May 2014. ‘Remortgaging is going from strength to strength right now. Record low mortgage rates are the main reason for this, and with inflation still near zero and flirting with a negative reading, the Bank of England is likely to play it safe and keep rates at bargain-basement levels for the foreseeable future,’ said Bagshaw. ‘Yet the recent cooling in home mover activity points at another cause for the remortgage rush. Increasingly, home owners are opting to upgrade the property they already have, be it through a loft conversion, conservatory or major face lift, rather than sell up and get a new one. In short, people are improving not moving,’ he pointed out. He believes that people feel financially secure enough to use their home as a guarantee against which to raise big capital, a sentiment that was absent for some time immediately after the economic crash. ‘However, they still don’t feel the property market overall is safe enough to risk trading up what they already have. For a government reliant on movement… Continue reading
Prime London lettings market sees demand exceed supply post-election
The prime London lettings market has experienced a complete shift this month from a quiet lull before the election to a mass influx of new applicants registering since polling day. The latest market report from agency W.A. Ellis, part of the JLL Group, indicates that while the mid-term break is normally a quiet period this year the firm has seen a 20% increase in tenancies starting year on year with the seasonal student market in full swing and demand exceeding supply. However, Lucy Morton, director at the firm, pointed out that when trying to secure accommodation for the start of the school year in September, few landlords will agree to their property sitting empty until then so it may be necessary for students to wait until July or August before starting their search, or take their chosen property now in order to secure it. ‘Our market share in super prime continues to rise month by month with huge success in the super prime sector of the London lettings market recently,’ she explained. This included a six bedroom house in Herbert Crescent with a guide price of £8,950 per week and a seven bedroom house in Justice Walk with a guide price of £8,500 per week. ‘This time last year we informed you of Mayor of London Boris Johnson’s launch of the London Rental Standard (LRS). People differ in opinion as to whether this scheme has been a success or not, however, the Mayor’s office has pointed to figures showing 331 lettings agents managing an estimated 121,000 properties have already signed up. We fully support the initiative,’ added Morton. Continue reading
UK’s regional office investment market strengthening
The UK’s regional office investment market experienced a slow start at the beginning of the year but investor appetite strengthened, according to the latest analysis of this market. Indeed, turnover in the investment market reached £1.48 billion in the first quarter of 2015, s almost double the turnover during the same period last year, and 5% higher than the previous quarter and the highest single quarter since the end of 2006. The regional office market report from Knight Frank also shows that Birmingham and Manchester proved to be the most popular destination for investors in the first quarter of 2015 with two major transactions of £131 million and £92 million. The report points out that given the substantial weight of money targeting regional offices, and following further yield compression both Birmingham and Manchester now command a premium over the UK’s other core markets, at 5%. These cities are closely followed by Bristol and Leeds, at 5.25%. At the other end of the spectrum prime office yields in Sheffield moved up 50 bps to 6.75% in the first quarter. This gives a 175 bps spread of prime yields, which is the largest seen in over 10 years since the fourth quarter of 2003. However the report also points out that prime headline rents remain under upward pressure. Two markets saw headline rents increase during the first quarter, with Birmingham rising to £30.50 per square foot and Leeds to £26 per square foot. The firm anticipates further rises in office rents during the remainder of the year and given current named requirements of 4.58 million square feet, which is the highest in five years, it expects to see higher levels of occupational demand in the second quarter back above the five year average. ‘We could potentially be heading towards a perfect storm of improving occupational markets and sustained capital markets, which hopefully will trigger new developments .With the growth of PRS also, this will be provide a major boost to regeneration schemes,’ said Stephen Hodgson, head of regional offices, Knight Frank. Continue reading
