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Londoners set to cash in on short term rental law change
With the Deregulation Bill currently working its way through the UK parliamentary system, a new analysis shows that London homeowners could earn thousands by renting out spare rooms in their homes. The bill, first announced in 2013, would end rental rules imposed in 1973 but now largely viewed as outdated. These currently prevent Londoners from renting out their homes, or rooms within their homes, on a short term of three months to visitors. Unlike other residents across the UK, Londoners require planning permission if they let a room or home on this basis. When it becomes law, probably in a few months’ time, it will allow London home owners to rent out rooms or their entire property, for up to three months of the year. According to central London lettings agency E J Harris, a home owner renting out their two bedroom apartment in prime central London could potentially earn anything from £2,000 per month up to over £5,000 per month, depending on location, netting themselves a potential additional income over three months of anything from £6,000 up to £15,000 or more. At the very top of the luxury housing market in locations such as Knightsbridge or Mayfair an owner of a penthouse could earn themselves £10,000 per week, or up to £120,000 over a three month period. E J Harris adds that if a home owner decided just to rent out a room in their apartment, then at the top end of the market, rental income for an en-suite bedroom in Knightsbridge could earn them up to £6,600 over a three month period. Renting out a room in a two bedroom Mayfair apartment could potentially earn £500 a week or £6,000 for a three month let. In St John’s Wood a room in a two bedroom property could earn £250 a week, or up to £3,000 over three months. However, it is not only home owners in luxury addresses who could benefit significantly. E J Harris, estimate that renting out a room without an en-suite bathroom in a typical apartment in inner London could earn the owner around £100 per week, allowing the owner to bring in an extra £1,200 over three months. Despite the huge sums of money that a wealthy owner in Knightsbridge or Mayfair could earn from a very short term apartment let or room share, Elizabeth Harris, the firm’s managing director, thinks it is unlikely that anyone at this end of the market will choose to enter the short let or room share marketplace. ‘For a super wealthy oil Sheikh or Russian Oligarch an extra £120,000 is pocket change and people who live in addresses such as One Hyde Park or The Knightsbridge really don’t need to room share,’ she said. ‘However, I do forecast that there is a strong potential market from young professionals aged in their late 20s to late 30s who… Continue reading
House prices rise in Portugal for first time in five years
House prices in Portugal increased in January as the country’s economy expands and the unemployment rate falls, according to the latest monthly market survey from the Royal Institution of Chartered Surveyors. It is the first time that prices have increased since the RICS/Ci survey was launched in 2010 and comes at a time when buyers demand is increasing. RICS says that improving employment is being reflected in rising new buyer demand and for over 12 months now, new buyer enquiries have been in positive territory and national confidence has reached a series high of +32. It also says that the outlook for sales volumes is strengthening and sales expectations are more elevated than at any other point in the survey’s four year history. The Portuguese economy expanded for the first time since 2010, albeit modestly, with average annual GDP growth of 0.9%. After a three year period in which GDP contracted by nearly 6%, a recovery does now appear to be emerging. The rate of unemployment has fallen by nearly 2% over the past 12 months and now stands at 13.4% having reached a peak of 17.7% in early 2013. The report describes the emergence of a recovery in house prices, supported by a consistent rise in confidence but also points out that in the lettings market, rents are still falling for now, although survey respondents’ expectations point to a more stable trend on the horizon. In the sales market, buyer demand continued to increase, with the pace of improvement accelerating slightly over the month. Meanwhile, sales continued to rise, extending an uninterrupted positive run dating back to February 2014. Moreover, respondents’ sales expectations are more elevated than at any other point over the past four years. Looking ahead, prices are expected to continue to rise over the next three months but RICS explains that a sustained run of positive data will be needed before it is in a position to talk about a genuine recovery. At the regional level, prices are now rising in both Lisbon and the Algarve, but remain more or less stable in the Porto market. In the lettings sector, tenant demand continues to rise gradually and the number of new landlord instructions is diminishing. However, rents are still falling for the time being, although respondents do expect a flatter trend to emerge in the coming months. ‘Even though the volume of new credit is still low, it has been reported by several real estate agents that banks are now more positive about the market,’ said Ci spokesman, Ricardo Guimaraes. ‘Some already have commercial campaigns, announcing lower spreads. This might be the element that was missing to broaden out the recovery that was primarily located in Lisbon,’ he added. According to RICS senior economist, Josh Miller, the Portuguese housing market reached an important milestone in January with prices rising for the first time since the country’s bailout programme. ‘Whether this trend can be sustained depends on the broader economic recovery…. Continue reading
High street lending in UK down 11% compared to a year ago
Gross mortgage borrowing in the UK in January was £9.8 billion, some 11% lower than in the same month last year, according to the latest data from the British Banking Association. Despite slower demand in the second half of 2014, the overall mortgage stock is 1.4% higher than a year ago and approvals overall in January were slightly below December and 21% lower than a year ago. The data also shows that although turning up slightly in January, house purchase approvals were 20% lower than last January and remortgaging and other approvals continued to trend downwards and were 21% and 25% lower than a year ago respectively. According to David Whittaker, managing director of Mortgages for Business, while the mortgage market may have slowed since the peaks seen in the first half of 2014, the present lull is no cause for serious concern. ‘The spate of lending regulations introduced throughout last year inevitably put breaks on the mortgage market, arguably that was precisely the objective, and as a result activity clearly tapered off towards the end of last year. Borrowers and lenders alike have been factoring in and adjusting to the new regulatory landscape and rightfully exercising caution to ensure healthy balance sheets,’ he said. ‘However, that brake has coincided with a downhill ride for long term borrowing costs, after an almost entirely unexpected shift in global capital markets. This has ushered in even lower new mortgage rates than previous record lows,’ he explained. ‘Essentially, we’ve moved on a long way since the fourth quarter of 2014 and in recent weeks we’ve been seeing landlords take advantage of some incredible deals, especially at the most competitive 75% LTV range. In particular, prudent borrowers are aiming to lock in such low rates now that a five year fix is just as cheap as many variable rate deals. Activity may be below levels seen last year but this is not a reliable indicator of the year ahead,’ he added. Patrick Bamford, director of Mortgage Insurance Europe for Genworth, believes that mortgage lending on the high street falling by almost a third since January 2014 is a damp start to the year. ‘Aspirational first time buyers and home movers face multiple challenges: high house prices relative to wages, strict mortgage lending criteria and a lack of house building,’ he said. ‘Despite a wave of new high loan to value (LTV) products appearing on the market, first time buyers still face financial pressures from every direction. Unless they have a large deposit, they are left paying a far greater premium for 95% LTV mortgages than before the recession,’ he pointed out. He also pointed out that while Help to Buy has certainly invigorated the product range for first time buyers and provided a much needed boost to high LTV activity, greater lender appetite and competition needs to be encouraged to give buyers better rates. ‘There… Continue reading
