Uk
British rental prices up 2.5% year on year
Rents in Britain increased by 2.5% in the 12 months to May, down slightly from the 2.6% annual rise recorded in the previous month, the latest index figures show. Rental prices grew by 2.6% in England, 0.4 % in Scotland and were unchanged in Wales, the data from the Index of Private Housing Rental index published by the Office of National Statistics also shows. It means that a property that was rented for £500 a month in May 2015, which saw its rent increase by the Great Britain average rate, would be rented for £512.50 in May 2016. Rental prices for Great Britain excluding London grew by 2% in the same period and rental prices increased in all the English regions over the year to May 2016, with rental prices increasing the most in the South East at 3.4%, up from 3.1% in April 2016. This was followed by London at 3.3 but this was down from 3.7% in April 2016 and the East of England at 3.2%, up from 3.0%. Annual price increases had previously been stronger in London than the rest of England since November 2010. I The lowest annual rental price increases were in the North East at 0.8%, unchanged when compared to April 2016, the North West at 1.2%, up from 1.1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period. The zero annual rate of change in Wales continues to be below that of England and the Great Britain average. Rental growth in Scotland has gradually slowed to 0.4% from a high of 2.1% in the year to June 2015. The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010. Since January 2011 England rental prices have increased more than those of Wales and Scotland and since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with May 2016 rental prices being 2.6% higher than May 2015 rental prices. Excluding London, England showed an increase of 2.3% for the same period. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation of 5.7% between January 2013 and April 2016, compared with 2.1% for rental prices. Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. Demand in the lettings market continues to strengthen, with RICS’ Residential Market Survey noting that tenant demand continued to grow robustly in May 2016. The strength… Continue reading
Brexit has positives and negatives for UK home building
The decision to leave the European Union could adversely affect the construction of new homes as many workers are from other countries, it is suggested, but red tape will be reduced. It seems that overall Brexit has potentially mixed effects for the home building industry. One the one hand many workers are from other EU countries but builders would be free from red tape regarded as holding up construction. According to Brian Berry, chief executive of the Federation of Master Builders, the UK construction industry has been heavily reliant on migrant workers from Europe for decades. ‘It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off. If ministers want to meet their house building and infrastructure objectives, they have to ensure the new system of immigration is responsive to the needs of industry,’ he said. He believes at the same time more must be put into training British people in the skills necessary for the construction industry and that should be done by investing in apprenticeship training. ‘We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important the Government gets the funding framework right for apprenticeships,’ he explained. ‘When you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the government could result in the skills crisis becoming a skills catastrophe. It’s only through close collaboration between the government and industry that we’ll be able to overcome these challenges,’ he added. Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors (RICS) there are questions around the impact on access to a skilled workforce to meet the country’s construction and infrastructure needs. ‘We need reassurance that workforce migration will be addressed as a priority and it must not be allowed to impact on the attractiveness of the UK for investment, or as a place where major corporate and industrial occupiers want to do business,’ he said. However, John Elliott, managing director of Millwood Designer Homes, believes that Brexit could be good for the house building industry. ‘I am excited to get on with the New World and see the back of EU laws which have been detrimental to us for over 40 years,’ he said. ‘One of the UK’s biggest assets is our home grown housing market and this will now be much better off out of EU regulation. For many years, the EU Habitats Directive has had an unnecessary impact on house building,’ he explained. ‘The mere hint of great crested newts or slow worms on a site, which unlike in Northern Europe where they are rare and given special protection, are prolific in the South East of England can delay building for months as they have to be translocated… Continue reading
Landlords in UK urged to stay calm in face of EU exit vote
Residential landlords in the UK are being urged not to read too much into the decision by the country to leave the European Union, having gone through a turbulent period recently. Buy to let landlords are now paying a 3% surcharge in stamp duty on each additional property they buy to add to their portfolios and are also facing further tax changes. Now there are concerns that Brexit could affect their businesses. However, according to Richard Lambert, chief executive officer of the National Landlords Association (NLA), while leaving the EU is completely unknown territory, jumping to conclusions isn’t going to help anyone. ‘We welcome governor Mark Carney’s steadying words and his reassurance that the Bank of England and the Treasury have extensive contingency plans in place to ensure the country’s financial stability,’ said Lambert. ‘Any knee-jerk reaction will have a real impact on our members’ mortgages, tenants’ rents and overall confidence in the market. So we would urge the policy as regards to interest rates should be, to continue the Prime Minister’s analogy, one of steady as she goes,’ he added. In a joint statement, David Cox, managing director of Association of Residential Letting Agents (ARLA) and Mark Hayward, managing director of National Association of Estate Agents (NAEA), said that in the short term the market can weather the uncertainty. ‘The outcome of the EU referendum will create a period of uncertainty among home owners, buyers, investors, landlords and developers. We can expect international investors to look a lot harder at the UK as a market and this will have a consequential impact upon the house building sector as investment may be stalled,’ the statement said. ‘In the short term we believe that both prices, and rents, will remain stable, but we cannot be certain about the next quarter as political instability, and market unrest, could lead through into prices in the housing market,’ it pointed out. ‘We believe that the UK housing market is resilient, as is the supply chain that drives it. But as we indicated in our Brexit report last month, the bigger impact may well be in the skills necessary to drive UK housing development, and this is now a major concern for UK buyers and renters,’ it added. Anne Wilson, senior tax manager of the tax department at Pierce Chartered Accountants, pointed out that tougher buy to let mortgage lending criteria has been announced. The rules will require lenders to carry out stricter stress tests on prospective borrowers or those wishing to re-mortgage to ensure that they have sufficient capital to cover repayments if interest rates increase to 5.5%. In the future, there will also be changes to the way that tax relief for interest payments on the purchase of residential lettings will be given in the tax computation. This will affect individuals, partnerships and limited liability partnerships which let out residential properties. At present there are no proposals for this restriction to… Continue reading
