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Demand for UK commercial property surges, latest analysis shows
Demand for commercial property in the UK is growing close to its fastest pace since 1998 and, along with a surge in investment, reflects the widening economic recovery, according to the latest survey. In the first quarter of 2015 the UK saw its 10th consecutive quarterly acceleration of demand for commercial properties, with 46% more respondents seeing greater interest, the commercial market report from the Royal Institution of Chartered Surveyors (RICS) shows. Occupier activity is now at its highest since 1998, highlighting a more broadly balanced economic expansion, says RICS and overseas buyer enquiries are 34% more compared to 17% in the fourth quarter of 2014. In the investment market, enquiries also increased significantly, with 49% more surveyors seeing more prospective investors, continuing the trend of rising demand which began towards the end of 2012. The survey also reveals that availability is falling with 38% more surveyors seeing fewer commercial properties on the market and RICS says that the impact of these tighter market conditions on rental expectations has resulted in them edging upwards to the highest headline level reading since 1998. This is particularly apparent across the industrial and office sectors, while retail rental expectations continue to lag behind. Looking ahead respondents expect, the office sector to perform most strongly with London leading the way despite increasing concerns over the valuation of prime property in the capital. Significantly, there is also increasing confidence that the more upbeat mood will impact on secondary space with rents and capital projections positive in all locations. According to Simon Rubinsohn, RICS chief economist, the strength of the latest commercial property survey suggests that the underlying momentum of the economy will continue to accelerate through the course of this year. ‘What is particularly encouraging is that a better tone to the results is visible in all parts of the country and increasingly in secondary as well as prime space. Given that these indicators have historically provided a strong steer as to the performance of the economy two to three quarters out, it is hard not to be encouraged by the conclusions of this report,’ he explained. Mark Bladon at Investec Structured Property Finance, said that the lack of supply is also having an impact on investment strategies with more investors looking at alternative opportunities in the search for more attractive yields. ‘Student accommodation has long been viewed as an alternative asset class but Investec believes it could be now be viewed as mainstream. We are also seeing consolidation in other alternative property sectors such as serviced apartments and retirement living, where yields are higher,’ he pointed out. ‘For momentum to continue, or for the alternative sectors to reach their full potential, the financing market will need to remain nimble and innovative in the face of these shifting trends,’ he added. Continue reading
Labour Party plans for UK housing market after general election criticised
Announcements from the UK’s Labour party on policies it would introduce if it wins the general election on rent controls and stamp duty for first time buyers have been met with considerable criticism from the property industry. Under the party's plans to tackle the country’s lack of new housing, Labour leader Ed Miliband said he would introduce a ‘first call’ policy that would give first time buyers who have lived in an area for more than three years priority on up to half of new homes. He also announced that he would scrap stamp duty for first time buyers on homes worth up to £300,000 and said foreign buyers would be subject to higher taxes and a ‘local first’ policy would ensure properties are advertised in the UK before they are promoted overseas. Miliband claimed that cutting stamp duty to zero would benefit nine out of 10 people buying their first home and could save up to £5,000. It would fund the stamp duty plans by tackling tax avoidance by landlords, pointing to HMRC figures that estimate it costs £550 million a year. Labour would want the creation of a national register of landlords, saying this would could tax avoidance by landlords by 20% and bring in £100 million for Treasury coffers. Tax relief for landlords to cover the upkeep of furnished properties would also be reduced for rogue landlords that rent out sub-standard properties. Also, under the plan private landlords would be banned from introducing above inflation rent rises over a three year period and landlords and letting agents would be required to disclose the rent paid by previous tenants, to allow renters to negotiate the best possible deal at the start of a contract. Mr Miliband said Labour's plan would help create ‘a stable, decent, prosperous private rental market where landlords and tenants can succeed together’. Jeremy Blackburn, head of policy at the Royal Institute of Chartered Surveyors (RICS) said that while the proposed stamp duty reform could help some first time buyers in the market, it’s another measure that tinkers with demand side stimulus. ‘Prices are already predicted to rise in the next parliament and this is only likely to make matters worse. The promise of one million homes by 2020 is an ambitious target, but Labour has not fully explained how they expect to remove obstacles to such a supply- ide revolution. What we need is a drastic increase in supply,’ he added. Building affordable homes is a better way of solving the housing crisis than reducing stamp duty, according to housing charity Shelter. ‘While reducing stamp duty may help at the margins, the only way to give generation rent a fighting chance of their own home is to tackle the root causes of our housing crisis by building the affordable homes we desperately need,’ said chief executive Campbell Robb. Mark Hayward, managing director, National Association of Estate Agents (NAEA), welcomed the policy on stamp duty for first time buyers, saying… Continue reading
UK residential rents up by over 2% in last 12 months, latest data shows
Private residential rental prices paid by tenants in Great Britain rose by 2.1% in the 12 months to March 2015, the latest index shows. Rental prices grew by 2.1% in England, 2.1% in Scotland and 0.8% in Wales in the 12 months to March 2015, according to the data from the Office of National Statistics. Rental prices increased in all the English regions over the year to March 2015, with rental prices increasing the most in London at 3.2%, the data also shows. It's no surprise rents are rising, according to Matt Hutchinson, director of flat and house share site SpareRoom.co.uk. ‘We have a chronic shortage of housing in the areas where jobs are being created, so rents continue to rise as supply fails to meet demand. In some areas of London we're seeing up to 13 people compete for every room advertised during peak months,’ he explained. He believes that whoever forms the next government after next month’s general election will need to look at introducing policies aimed at making housing, of all tenures, genuinely affordable. ‘The upward pressure on rents is rapidly making the situation both unmanageable and unsustainable for tenants,’ he added. Steve Bolton, chairman of Platinum Property Partners, pointed out that the blame for rising rental prices is often attributed to landlords, but it is because there are simply not enough suitable rental properties coming on to the market. ‘Rental demand is growing as first time buyers struggle to access the housing market and the UK’s workforce becomes increasingly mobile. At the same time, the number of new rental properties is lagging behind, creating a dangerous imbalance between supply and demand that is pushing rental prices upwards,’ he said. ‘Buy to let investors need to consider how they can meet growing rental demand in a way that is affordable for consumers. Houses in Multiple Occupation (HMOs) are a great way of creating high quality rental accommodation by making the most of existing housing stock,’ he explained. ‘They are also far more affordable than renting a one bedroom flat, providing young professionals with high quality accommodation that also enables them to save for their long term financial goals,’ he added. Continue reading
