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Industrial building driving UK construction growth, latest RICS survey shows
Industrial building is driving construction growth in the UK and the country’s office and industrial sector rents are expected to rise as their fastest rate since 1998 in the last quarter of 2014. Indeed, the UK has seen a sixth consecutive quarterly fall in office space availability nationwide with the decline at its fastest pace since the late 1990s according to the latest Commercial Market Survey from the Royal Institution of Chartered Surveyors (RICS). It also shows that the rise in transactions of commercial properties being sold with Permitted Development Rights (PDR) appears to be compounding the lack of availability, with two thirds of respondents to the survey suggesting that if PDR exemptions are not extended then availability of commercial properties will be impacted further. In London, 20% of respondents said PDR transactions had led to more than 10% of available commercial properties being earmarked for conversion into residential use and a net balance of 51% of surveyors reported a rise in demand for office, industrial and retail space. Across the whole of the UK, 32% more surveyors said availability across office, retail and industrial properties had fallen, while demand had risen to a net balance of 44%. RICS says it is significant that demand for industrial property grew on the previous quarter from a net balance of 49% in the second quarter to 56% in the third quarter and surveyors in London also saw a large rise in prospective overseas investors in the industrial sector of 73%. The picture across the UK appears increasingly upbeat, with the firmer tone spreading beyond the capital as the economic expansion gains greater traction. This is being reflected in rental expectations which are now in positive territory in all parts of the country in the office and industrial sectors. Retail remains something of a laggard with a flatter rental trend away from the more dynamic parts of the market. For the next 12 months a net balance of 71% surveyors are forecasting an increase in rent levels in London across all segments of the market, compared to 36% in the North of England. ‘The third quarter results provide further evidence that the economic expansion is becoming more broadly based with tenant demand for space picking up in all parts of the country and the need for landlords to provide inducements diminishing,’ said Simon Rubinsohn, RICS chief economist . ‘There are also now clear signs that investors are casting their nets wider in a bid to find better value in the market following the steep drop in yields on prime property in the capital,’ he added. He also pointed out that while permitted development rights is helping in a small way to boost much needed housing supply, the latest survey suggests that it is also having the unintended consequence of contributing towards a shortfall of office space in some parts of the country. ‘Feedback from members suggests that this is particularly marked in London and adding to the upward pressure on rents. Moreover, there is… Continue reading
Research reveals mortgage burden on retirees in the UK
Four in 10 over 50s in the UK are paying off a mortgage worth on average of £49,000 and a fifth in their 70s are still paying off their mortgage, new research has found. Overall more than 900,000 people in their 70s still have an average mortgage bill of some £38,000 and that means the over 70s are saddled with an extraordinary total mortgage debt of £35.2 billion, according to the study by Saga Personal Finance. And for 6.3 million over 50s with an interest only mortgage who had intended to pay it off with an endowment policy, the outlook is not good with two thirds saying their underperforming endowment will not foot the bill. Indeed, some are having to contemplate selling their house to make up an average shortfall of more than £42,000 and a third of over 50s, would need to sell their house to make up the shortfall, according to Saga’s research. Two thirds of over 50s have made alternative plans to pay off their mortgage, often using a combination of options. A third say they will dip into their savings, 22% say they have been making capital repayments to reduce the debt, 18% will use other investments to make up the shortfall and just over one in 10 say they have extended their mortgage to give them extra time to pay it off. However, more than one in 10, some 1.7 million people, admit they have no way of bridging the gap. Another solution for people who have no idea how they are going to clear the mortgage or who are facing the decision to have to sell a home they do not want to part with could be to use equity release to clear the debt. ‘Being saddled with mortgage debt well into your retirement is far from ideal as it means keeping an eye on the coffers when you should making the most of life,’ said Jeff Bromage, chief operating officer, Saga Personal Finance. ‘Millions of British home owners have been hit hard by underperforming endowments. Thankfully, there are options available. A growing number of people are turning to equity release as in order to avoid selling their home. Selling and moving is probably the least-favoured option for many facing a shortfall, as their home is so much more than bricks and mortar and will hold so many happy memories,’ he explained. ‘If you’re over 55 and a home owner, equity release could be a solution. It gives you access to money tied up in your home, giving you peace of mind and the freedom to enjoy your retirement properly,’ he added. Continue reading
ARLA calls for better regulation of rental fees in the UK
Better regulation is needed in the private rental sector in the UK to stop rogue agents charging over the odds tenant fees, according to the Association of Residential Letting Agents (ARLA). ARLA’s most recent report on tenant fees found that 74% of ARLA licensed agents charge tenants no more than £250 in tenant fees. Overall, among the members surveyed, the report found ARLA licensed agents charge a reasonable £213 on average in tenant fees to cover the lettings process. While many are concerned about tenant fees, David Cox, managing director of ARLA, said they are needed. ‘Tenant fees cover the cost of essential items during the lettings agreement process such as reference checks, the drafting of the tenancy agreement, and the management of tenancy extension or renewal,’ he explained. ‘All of these items cost the agent money to carry out, and in fact, provided the agent has a fair pricing structure, the agent will not make a noticeable profit on charging for these items,’ he added. However, there are some landlords and agents that do take advantage of the cost of tenant fees. ‘This is where better regulation is needed in the private rental sector to ensure consumers are not taken advantage of,’ said Cox. ‘We want to see tenants paying a fair price for the service they receive. Regulated agents don’t charge excessive fees. The results of our survey show that on average ARLA licensed agents charge a reasonable £213 in tenant fees; which we see as a fair price,’ he added. Among ARLA licensed members, the services which tenants are most likely to be charged for are reference checks, with 98% of branches doing so. Some 69% charge for the tenancy agreement and 65% for tenancy renewal. Also 57% of ARLA licensed agents stated they charged a flat fee that includes all of these services for tenants, rather than charge individually itemised and calculated tenant fees. ‘Renting a property is a big financial commitment and tenants should be made aware of what exactly they are being charged for and what they are getting for their money. ARLA supports openness and transparency when it comes to fees,’ Cox pointed out. ‘By choosing an ARLA Licensed agent, tenants are reassured that members follow a strict code of conduct which puts the tenant first. This not only ensures a fair fee structure, client money protection which means their deposit will be reimbursed if their agent goes bust, but also that they will be dealt with in a professional way by a qualified agent to receive the best advice when renting a property,’ he added. Continue reading
