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Prime property prices in central London rise for first time in five months
Prices in prime central London rose for the first time in five months in February, boosted by price growth in markets with a higher proportion of properties that would not be subject to a proposed mansion tax. It saw a marginal increase of 0.1%, the first since September 2014 but annual growth slowed to 4%, which is half of the 2014 average of 8.1%, according to the latest report from Knight Frank. The firm says that it is a market where activity has been kept in check by the potential of a mansion tax on properties worth more than £2 million after May’s general election. Stronger performing markets included Islington and the City and Fringe in the eastern area of prime central London, where prices grew by 1.3% and 1% respectively in February. Both recorded annual growth of 9.1%. The Riverside market, which was included in the index six months ago to reflect the high quality of developments in areas like Battersea and Vauxhall, has also risen 0.4% this year. Elsewhere, there were declines in more traditional prime markets with higher value properties, including a fall of 0.8% in Chelsea, a drop of 0.2% in Notting Hill and a fall of 0.2% in South Kensington. The existence of a two speed market was underlined by the fact values for properties worth in excess of £5 million and £10 million declined by 0.1% in February. Meanwhile, prices in the £1 million to £2 million price bracket grew 0.4% in February, up 6.8% in the last year. ‘We estimate that 46% of £2 million-plus properties are located in the prime central London boroughs of Westminster and Kensington and Chelsea. However, eight out of 10 properties on the £2 million mansion tax threshold would be located outside the two boroughs in areas of suburban London and the Home Counties,’ said Tom Bill, head of London research at Knight Frank. ‘Though any tax would be lower in value and there is more clarity on the potential levy for properties worth between £2 million and £3 million, it underlines the mistaken belief the mansion tax would start to bite in prime central London,’ he added. Continue reading
First time buyers lending in Scotland up 23% last year
Lending for homes in Scotland fell in the final quarter of 2014 but there were more mortgages going to first time buyers compared to the same period the year before. The latest data from the Council of Mortgage Lenders shows that overall lending was up 23% last year but mortgages fell at the end of the year. Scotland accounted for 6.6% of UK wide annual house purchase activity, down from 6.9% in 2013. Lenders advanced 27,700 loans to first time buyers in Scotland totaling £2.9 billion, 16% up in volume compared to 2013, and 23% up in value. A breakdown of the figures show that there were 7,000 first time buyer loans in Scotland, worth £750m. This was down compared to the third quarter 5% by value and 4% by volume. Compared to the fourth quarter of 2013, the number of loans increased by 3% and the amount borrowed by 9%. There were 8,000 loans to home movers, valued at, £1.2 billion, down 8% in volume and down 9% in value compared to the third quarter. Compared to the fourth quarter of 2013, there was a decrease of 8% in volume and a decrease of 5% in value. The total number of remortgage loans declined in the fourth quarter to 5,700 loans at £650 million, which was down 3% in volume but unchanged in value on the third quarter. Compared to the fourth quarter of 2013, activity was down 17% in volume and 13% in value. First time buyer affordability changed slightly in Scotland quarter on quarter with first time buyers typically borrowing 2.90 times their gross income, less than the 2.94 income multiple in the third quarter and less than the UK average of 3.38. The typical loan size for first time buyers was £97,200 in the fourth quarter, down from £98,600 in the previous quarter. The typical gross income of a first time buyer household was £33,965 compared to £33,520 in the third quarter. The relatively low level of interest rates saw first time buyers' payment burden remaining relatively low in the third quarter at 16.8% of gross income being spent to cover capital and interest payments, higher than the third quarter's 17.3%. Home mover affordability changed fractionally, with home movers typically borrowing 2.64 times their gross income compared 2.62 in the third quarter and to 3.03 for the UK overall. The typical loan size for home movers was £128,244 in fourth quarter, down from £130,000 in the previous quarter. The typical gross household income of a home mover was £50,773 in fourth quarter compared to £50,971 in the third quarter. Home movers' payment burden remained relatively low in Scotland at 16.5% of gross income being spent to cover monthly capital and interest payments, less than the 16.9% in the third quarter and considerably less than the 18.4% UK average. Overall for 2014, remortgage lending in Scotland was 23,400 loans reflecting a value of £2.6 billion. This was 14% down in volume compared to 2013,… Continue reading
Londoners set to cash in on short term rental law change
With the Deregulation Bill currently working its way through the UK parliamentary system, a new analysis shows that London homeowners could earn thousands by renting out spare rooms in their homes. The bill, first announced in 2013, would end rental rules imposed in 1973 but now largely viewed as outdated. These currently prevent Londoners from renting out their homes, or rooms within their homes, on a short term of three months to visitors. Unlike other residents across the UK, Londoners require planning permission if they let a room or home on this basis. When it becomes law, probably in a few months’ time, it will allow London home owners to rent out rooms or their entire property, for up to three months of the year. According to central London lettings agency E J Harris, a home owner renting out their two bedroom apartment in prime central London could potentially earn anything from £2,000 per month up to over £5,000 per month, depending on location, netting themselves a potential additional income over three months of anything from £6,000 up to £15,000 or more. At the very top of the luxury housing market in locations such as Knightsbridge or Mayfair an owner of a penthouse could earn themselves £10,000 per week, or up to £120,000 over a three month period. E J Harris adds that if a home owner decided just to rent out a room in their apartment, then at the top end of the market, rental income for an en-suite bedroom in Knightsbridge could earn them up to £6,600 over a three month period. Renting out a room in a two bedroom Mayfair apartment could potentially earn £500 a week or £6,000 for a three month let. In St John’s Wood a room in a two bedroom property could earn £250 a week, or up to £3,000 over three months. However, it is not only home owners in luxury addresses who could benefit significantly. E J Harris, estimate that renting out a room without an en-suite bathroom in a typical apartment in inner London could earn the owner around £100 per week, allowing the owner to bring in an extra £1,200 over three months. Despite the huge sums of money that a wealthy owner in Knightsbridge or Mayfair could earn from a very short term apartment let or room share, Elizabeth Harris, the firm’s managing director, thinks it is unlikely that anyone at this end of the market will choose to enter the short let or room share marketplace. ‘For a super wealthy oil Sheikh or Russian Oligarch an extra £120,000 is pocket change and people who live in addresses such as One Hyde Park or The Knightsbridge really don’t need to room share,’ she said. ‘However, I do forecast that there is a strong potential market from young professionals aged in their late 20s to late 30s who… Continue reading
