TSI
A competitive price and quality amenities demanded in London super prime market
People buying the most expensive properties in the London are increasingly seeking the highest quality and amenities such as concierge services, secure parking and leisure facilities, new research has found, and price still matters. Also, after exceptionally strong price growth in the so-called golden postcodes such as Kensington and Chelsea, buyers are looking further afield for value in the super prime London real estate market. Indeed, according to the latest research from international real estate firm Knight Frank, the market is still sensitive to the Stamp Duty changes introduced at the end of last year and price and amenities matter. Richard Cutt, of Knight Frank’s prime residential team, pointed out that while the idea of a mansion tax has fallen from the political agenda, December’s increase in stamp duty for properties worth more than £1.1 million means the transaction tax on a £10 million property has risen to £1.1 million from £700,000, a difference equivalent to 4% of the sale price. Despite this increase, the election of a majority Conservative government caused some sellers to anticipate a short term spike in prices, which failed to materialise. ‘Nobody assimilated the stamp duty changes while the election was on the agenda. Meanwhile, those who expected the market to strengthen after the election are realising that it is still finely balanced, sensible pricing being the key,’ said Cutt. He explained that while reality has begun to set in with some vendors, it will be telling to see what impact the changes have on overall stamp duty revenues when the figures are released later this year. Despite this Knight Frank super prime sales rose by a quarter in the year to the end of June 2015 even although a series of factors, including political uncertainty and the new stamp duty rates meant volumes across the whole super prime market shrank by a fifth. Furthermore, price growth at the £10 million plus level has underperformed the prime central London average, growing 4% in the two years to June versus 10.3% in prime central London. Further changes in July’s Budget ended the permanent status for non-dom residents and widened the inheritance tax net to property held offshore. It comes on top of a succession of tax changes in recent years that make it increasingly difficult to argue that high value residential property is under taxed. ‘It’s too early to detect a discernible impact on sentiment at this stage, though there may be a marginal effect further down the line,’ said Tim Wright, also from the prime property team, in relation to the non-dom change. The research shows that the area covered by £10 million plus sales in London in the year to 30 June 2015 is wider than three years ago and now encompasses areas like the Southbank. ‘A number of best in class developments are coming through and, crucially, achieving critical mass in areas perhaps not considered super prime in the past,’ said Cutt. As well as casting the net further, the… Continue reading
Seasonal summer dip fails to impact UK property market as demand remains high
House prices in the UK fell 0.8% this month, but this is much less than the usual summer seasonal fall off, according to the latest index from property portal Rightmove. Overall the marginal fall compared to a post credit crunch average August fall of 1.5% and a shortage of new sellers, down 8% on same period in 2014, and active buyers help to minimise usual summer holiday price falls. This takes the average asking price of a home in the UK to £292,284 which is 6.4% above a year ago, the data shows. But there is considerable variation within the market. First time buyers face a 1.8% rise with the average price in this market £177,977 while at the top end the average price is £524,822, a fall of 2.2%. Rightmove says that the strongest August price performance since 2007 demonstrates the continuing supply/demand imbalance in the property market. It reveals that the top three reasons for people not moving are not able to find somewhere to buy, the cost of moving and affordability. ‘While new seller asking prices have been muted by the traditional summer holiday property slowdown, the underlying shortage of property coming to market compared to buyer demand has helped to deliver the strongest August price performance since before the credit crunch,’ said Miles Shipside, Rightmove director and housing market analyst. ‘Buyers can normally pick up some bargains in August as sellers who are marketing their homes when they should be holidaying often have a pressing need to sell and mark their prices down pretty aggressively. At 0.8% down on the previous month, this is the least generous that sellers have had to be for eight years and a clear sign of upwards price pressure in the pipeline,’ he explained. Another factor highlighted by Rightmove is the lack of new build supply with current new home volumes still being well below the levels reached just before the credit crunch. ‘The historic new build shortfall results in there being a smaller overall housing stock available to come to market, while the current new build shortfall also limits the number of existing property owners who are looking to sell their house in order to buy the limited number of suitable brand new homes available,’ Shipside pointed out. ‘The shortage of suitable property being built exacerbates the vicious circle of not enough property on the market to meet demand, increasing prices, and a reluctance among home-owners to come to market if they think the prospects of finding and funding their next move are severely compromised,’ he said. ‘These stay away sellers who are seriously considering a move but have yet to put things into motion have concerns around a shortage of choice and stretched affordability. They could be helping to get the country’s limited property stock circulating, but they have concerns about coming to market, deepening the supply shortages affecting many areas,’ he added. He also explained that home owners are reluctant to put… Continue reading
Some landlords struggling to get buy to let finance, research suggests
Despite a choice of 900 buy to let mortgages available on the market, lack of finance is hindering almost a quarter of UK landlords, new research has found. The situation is preventing them from expanding their property portfolios, according to the study conducted by online letting agent Property Let By Us. Overall one in 10 landlords has had difficulty securing a mortgage over the last 12 months but 82% of landlords have managed to successfully secure a mortgage at a when the buy to let market has been challenging for landlords. Indeed almost 80% of landlords are reporting rent arrears, nearly a quarter of landlords have served an eviction notice and 7% have had to resort to the courts to evict tenants. The good news is that void periods are down as demand continues to outstrip demand. ‘While the booming buy to let market looks like good news for landlords, the real picture is not so rosy. Spiralling rents are great news for yields, but the down side is that it brings with it a higher risk of rent arrears,’ said Jane Morris, Managing Director of Property Let By Us. ‘Securing finance also looks like it is going to get tougher for landlords. A new high street crackdown now means landlords will need a bigger deposit and face tighter checks for a buy to let loan. High Street lenders are introducing strict criteria in a crackdown on the buy to let boom, which is feared to be pushing up house prices across the UK,’ she explained. ‘The amount landlords will be able to borrow is expected to fall by thousands and they are likely to face new tough lending criteria to secure a buy to let loan. Landlords must also prove that they are not wholly reliant on their rental income and that they will also be able to cope with void periods and any repairs to the property,’ she added. Morris also pointed out that some lenders are introducing new affordability checks, which require landlords to answer such questions as how much they spend on household bills and childcare before they can get a loan. Lenders may also refuse loans to anyone dependent solely on a rental income and some providers expect applicants to have income of at least £25,000 a year from other sources. ‘Landlords need to thoroughly research lenders and ensure they meet the lending criteria before applying for a mortgage,’ Morris concluded. Continue reading
