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Private rental sector identified as a growth area in UK property markets
The changing lifestyles of people aged under 35 and a shift in sentiment towards property ownership are set to contribute to a surge in the UK’s private rental sector, it is claimed. It could actually be the solution to the country’s housing problems, according to experts speaking at an annual property seminar hosted by Midlands law firm Lodders Solicitors. ‘We need to have a shift in attitudes towards renting, and the private rental sector could be the solution to the UK’s housing problems,’ said Jon Bellfield, managing director of the Barberry Group, a privately owned property development and investment company. The event’s speakers independently identified the private rental sector as an important and emerging sector, and where the growth is likely to be. Indeed, the sector could account for 30% of the housing stock by 2020, the seminar was told. It heard that the UK is building fewer new residential homes than in 1926, and this short supply is also contributing to the creation of a large rental market, with the difficulty for first time buyers to enter the property market fuelling demand, although the Help to Buy scheme has had a positive impact. People are changing how they want to live and use their town and city centres, and the potential challenge is for developers to build the accommodation these people want, to include quality apartments complete with concierge, secure internet purchase rooms, gym and pool facilities, and easy access to bars, restaurants and shops. Recent research by Savills, for example, has revealed an increase in development activity across the country, and rising demand for land, with values starting to increase. Amongst the under 35s, there’s a growing shift in sentiment around property ownership, which they see as not as important as it was four or five years ago. ‘We expect the private rented sector to grow faster as mortgages are constrained and become less affordable and the annual housing costs for the under 35s is already dominated by private rents,’ said Simon Horan, head of residential development in Birmingham at Savills. Another issue that emerged is the Community Infrastructure Levy (CIL) which local planning authorities need to have in place by April of next year. According to Savills’ planning specialist Michael Davies only a few have it in place. ‘LPAs need to consider the impact of the restrictions on the delivery of infrastructure in their area, and developers and house builders should work with LPAs to identify key pieces of infrastructure needed for the delivery of housing sites, with Section 106 agreements that refer to specific named projects,’ he explained. However, he added that further guidance from Ministers is essential, as failure to do so could have significant impact on the delivery of both infrastructure and housing. Lodders’ chairman George Campion concluded that while the economy seems to be recovery it is not uniform across the country and the biggest challenge will be getting developments over the line. Continue reading
First time buyers and renters in UK underestimate their outgoings, research finds
The majority of first time buyers and renters in the UK underestimate their monthly outgoing by almost £200 a month, suggesting they could have problems if their income reduced. Only 14% of first time buyers and renters are able to accurately calculate how much their outgoings will be from the outset, according to ongoing research from discount online firm VoucherCodesPro. It polled 1,673 people aged 18 to 30 from around the UK, each of whom had either bought their first home or rented a property for the first time in the last six months. Respondents were asked about their bills in the early stages of living in their property. Everyone taking part was asked ‘When taking into account the first month after you’d moved in to your current property, did you underestimate, overestimate or accurately calculate what your monthly outgoings would be for bills?’ The majority of respondents, 63%, said they underestimate how much their first round of monthly bills would be. When these people were asked how much they’d underestimated the amount by, the average answer was £198. When asked what bills they’d underestimated, specifically, the most popular answer was 42% gas and electricity, 27% water and 21% entertainment and television. Some 23% of the total respondents said they had overestimated how much their monthly outgoings would be in the initial stages of living in their home, with the average overestimation figure being stated as £167. Just 14% of the respondents said they accurately calculated how much their bills would cost them from the outset. When told to take into account their financial situation at the time of the poll, respondents were asked if they ‘lived comfortably’, ‘just managed to make ends meet’ or ‘struggled’. The majority, 54%, said they ‘just managed to make ends meet’, whilst 31% said they ‘struggled’ with the cost of living and 15% said they ‘lived comfortably’. ‘Moving out of home into your own place for the first time can be a bit of a learning curve, especially when it comes to bills,’ said Nick Swan, the firm’s chief executive officer. ‘Managing your money correctly and making sure you’ve accurately worked out how much everything is going to cost you is really important. When setting budgets and working out the cost of bills, it’s always best to overestimate and then you can put an excess into savings,’ he added. Continue reading
Prime property sales outside of London benefits from ripple effect
The number of properties in England and Wales which are worth £1 million or more and located outside of London has increased by 38% over the last year, new research shows. Using sales data from the Land Registry and price performance at a local authority level over the year to September 2014, real estate firm Knight Frank has identified the areas where the largest number of property millionaires have been created over the last 12 months. The biggest growth, in terms of households, has been in markets on the outskirts of the capital such as Elmbridge, Guildford and Windsor and Maidenhead. These markets have been the biggest beneficiaries of price growth rippling out from central London, while rising demand for family homes from both Londoners looking to move out of the capital and buyers wishing to trade up in the local area has helped to boost property values. The UK’s economic resurgence over the last year, which has played its part in boosting buyer’s confidence, together with increased activity in the mainstream property market have also been factors, the report suggests.. The data also shows that the number of properties sold for £1 million or more outside of London during the first six months of 2014 was 44% higher than the corresponding period last year. Overall country house prices have risen in value by 5.6% since the market low in 2009 and currently sit 16% below the previous peak. In contrast, in prime central London prices have grown by 74% and are 32% above their previous peak, making the country good value for those wishing to trade up and out. In the Midlands and Wales the number of £1 million plus sales over the year to June 2014 rose by 78% year on year, while in the north, where the housing market recovery since the downturn has been slowest, the number of sales in this sector was 24% higher compared to the previous year. However, in terms of the number of sales, the bulk of prime activity during the first half of 2014 was concentrated on southern England and the Home Counties with the majority located around the transport corridors of the M3, M4 and the M40. These markets benefit from their proximity to London and excellent transport links back to the capital, good schools and local amenities. Agents report that demand has been bolstered by an increase in the number of buyers looking to take advantage of the gap between urban and rural values, particularly those moving from London. Prime prices in the country look good value on a historical basis having experienced several years of static or modest growth since the end of the financial crisis. But while the number of property millionaires in England and Wales may be rising, it is worth noting that the number of homes worth over a million pounds outside of London still only accounts for less than 1% of the total housing stock. ‘These increases confirm the long held belief that property in the… Continue reading
