TSI
June sees surge in valuation activity in UK residential markets
Strong market growth in the UK has resulted in a surge in residential property valuations in June with activity up 23% year on year, the latest data shows. June’s activity total was also up 42% month on month with valuations for established owner occupiers moving home were especially strong, up 34% in June compared with the same month in 2014 and 51% compared to May. Home movers in particular are showing a very different sentiment to that seen in April and at the start of May and demand is growing faster than the overall market trend and even outperforming the buy to let sector, according to the report from Connells Survey & Valuation. The data also shows that valuations in June for first time buyers saw annual growth of 16% compared to the same month last year, while also registering a 42% uptick on last month’s total. Meanwhile, the number of valuations for the buy to let market rose 24% compared with June 2014 and 22% compared to May 2015. And the number of valuations for those remortgaging their property rose 17% in June compared to the same month in 2014, on the back of 44% month on month growth. ‘First time buyers haven’t benefitted from higher house prices in the same way as those already on the property ladder. An era defining shortage of suitable first time homes, combined with still rapid rises in average prices are keeping many would be home owners renting for the time being. Yet despite this, numbers of valuations for new buyers have shown double digit growth,’ said John Bagshaw, the firm’s corporate services director. He pointed out that remortgaging still lags behind most other sectors in terms of yearly growth. ‘This could also be a sign that the numbers remortgaging to access a better mortgage rate may have reached a plateau,’ he added. Continue reading
Prime London property prices up 1.6% in second quarter of 2015
Values across London’s prime housing market grew by an average of 1.6% in the three months to the end of June, but remain 0.7% below where they were a year ago. Increased stamp duty rates and unsold stock levels restricted a bounce in property values after May’s general election, according to the latest analysis from real estate firm Savills. The report also says that buyer caution has been most evident at the top end of the market, with prices in the prime central London market barely showing any net house price growth over the quarter with a rise of just 0.3%. This means that house prices in this market are down by an average of 4.3% year on year. According to Lucian Cook, head of UK residential research at Savills, there was a feeling prior to the autumn statement last year that the prime markets of London were looking fully priced following a sustained period of growth. ‘The stamp duty increases introduced in December 2014 mean they now also looked fully taxed, despite mansion tax fears being confined to history,’ he explained, adding that this effect has not been confined to prime central London. Indeed, across the remainder of the prime London market homes worth over £2 million saw values fall by an average of 0.9% over the past year, despite rising by an average of 2.4% in the quarter. Across London, the market below £1 million, where buyers benefitted modestly from the stamp duty reform, recorded annual price growth, albeit of just 2.4%, as the mortgage market review continues to restrict the amount people can borrow, whether because of the stress testing of affordability or the income upon which this is judged. ‘In the early part of the year we could put buyer reluctance to commit down to political uncertainty pre-election. Only now is the dual effect of taxation at the top end of the prime market and mortgage regulation at entry level becoming clear,’ said Cook. ‘These constraints are keenly felt by buyers, while some sellers are clinging to expectations that values can keep on rising. That has created a gap in price expectations in parts of the market which is likely to hold back any recovery in transaction levels,’ he pointed out. ‘With those transactions having been suppressed prior to the election, it seems inevitable that high value sales will have peaked, at least in the short term, in 2014. That means current constraints on the market could have a negative on impact on stamp duty receipts from most expensive housing upon which the Treasury has become increasing reliant,’ he concluded. Continue reading
Tax change could result in higher residential rents in the UK
Landlords in the UK’s private rented sector could be forced to put up rents if their buy to let mortgage interest payments are made non tax deductible, it is claimed. The National Landlords Association (NLA) is warning that costs in the UK private rented sector (PRS) could rise by up to £2.6 billion if tax changes are made, as has been hinted. In a letter to the Chancellor ahead of Wednesday’s Budget, the NLA’s chief executive officer Richard Lambert says that making mortgage interest payments non tax deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing. The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax. ‘It has been suggested that private landlords receive too many perks or reliefs which give them an unfair advantage compared to owner occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently. Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others,’ he added. Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the PRS could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible, a move it warns would leave landlords with no other option than to raise rents. Lambert concluded the letter by seeking ‘an unequivocal reassurance that the Government will continue to regard buy to let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future’. Continue reading
