Uk
Extra stamp duty set to reduce number of lettings in UK, say agents
The extra stamp duty charge for the buy to let sector that begins next April has triggered a less optimistic outlook among letting agents in the UK. Some 40% are predicting that rental supply will decrease over the next five years, the highest rate this year, according to the latest report from the Association of Residential Letting Agents (ARLA). ‘This month’s findings are triggered the Chancellor’s announcements around buy to let tax in his Autumn Statement. We said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country,’ said David Cox, ARLA managing director. ‘The new stamp duty increases will make owning a buy to let property unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing a buy to let,’ he added. The ARLA monthly report also shows that tenants experiencing rent increases continue to fall, with 23% of letting agents reporting rent increases for tenants in November, down from 25% in October and the lowest in 2015 so far. Demand for rental properties increased marginally in November, alongside supply of available housing which was likely a result of tenants preparing themselves to find new rental properties in the New Year. ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October. Supply of rental accommodation also increased in November, rising by 9% from an average of 173 properties managed per branch in October, to 189 this month. However, renters in the capital will still struggle to find a property, with only 121 properties managed per branch, some 36% less than the UK average. ‘It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent,’ said Cox. ‘However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016,’ he added. Continue reading
London prime property prices still falling and expected to be flat in 2016
Prime property prices in London fell by an average of 0.8% in the final quarter of 2015 and are expected to remain flat in 2016 and into 2017, the latest residential index shows. The latest fall in the prime London homes sector leaves prices a marginal 0.5% above the levels seen at the beginning of the year, while prime regional town and city markets averaged 4.4% annual growth, according to the research by international property adviser Savills. The marginally positive average annual house price growth across all prime London is attributable to the performance of property below £2 million, which recorded growth of 2.2% over the course of the year, according to the report. However, over the course of 2015 prices fell in all of the submarkets above this price level in London. Prime central London has seen prices fall year on year by 3.4% and 1.5% quarter on quarter and are 6% below the peak of 2014. Overall in prime London prices are up 0.5% year on year, down 0.8% quarter on quarter and down just 0.9% since the peak. Prices have been affected by the stamp duty changes a year ago. In the under £2 million sector they are up 2.2% year on year and 1.7% above the peak but down 0.4% quarter on quarter while all other sectors have seen prices fall. In the £2 million to £3 million market prices are down 1.4% quarter on quarter, down 0.2% year on year and down 2.7% since the 2014 peak. In the £3 million to £5 million sector they are down 1.2% quarter on quarter, down 1.3% year on year and down 3.8% from peak. The higher end of the market is also affected with price growth down all round. In the £5 million to £10 million market prices are down 1.5% quarter on quarter, down 3.3% year on year and down 5.9% from peak. In the £10 million plus market prices are down 1.3% quarter on quarter, down 3.7% year on year and down 7.5% since peak. ‘This reflects a continued adjustment to a less hospitable tax regime and successive increases in stamp duty rates in particular. This is particularly impacting the higher value markets of prime central London,’ said Lucian Cook, the firm’s head of UK residential research. ‘Since the credit crunch, is has been common practice to index price growth in prime London to the previous peak of 2007/2008. It is now clear that 2014 is the new peak reference point for a market that has continued to adjust to higher taxation, introduced at a time when the market was already looking fully priced,’ he added. He also pointed out that while the prime central London market remains price sensitive, data from LonRes indicates that transaction levels in the first 11 months of the year were 75% of the levels seen in the year previous for stock sold for over £1million. ‘In addition,… Continue reading
UK property prices set to rise by 3% to 8% in 2016, even with a rate rise
Residential property prices in some locations in the UK could increase by as much as 8% in 2016 as the recovery that has taken hold in London ripples out across the country. But overall price growth is expected to be around 6% across the country during the year, according to the forecast from the Royal Institution of Chartered Surveyors. One location tipped to see strong growth is Cambridge because of its buoyant jobs market and good commuter links to London. However, the RICS report also suggests that the current shortages of supply in the market is set to continue and this will push up prices with this growth likely to outstrip any rises in household income. According to RICS surveyors the average number of properties for sale have fallen to a record low of 46 and 40% of chartered surveyors believe that it is this lack of stock which is the main reason sellers are not entering the market, leading to a vicious circle. After East Anglia, the strongest growth is expected to be in the South East and the West Midlands, where 7% rises are forecast. The lowest level of increase is forecast for the North East of England where prices are forecast to rise by a much lower 3%. Areas with the highest number of transactions are likely to be the North East, Wales, Scotland and Northern Ireland, where prices remain low relative to the rest of the UK. RICS chief economist, Simon Rubinsohn, explained that an interest rate rise of 0.25% has been taken into account when making the forecast but he does not expect there to be a big rise in mortgage rates. ‘Housing has clearly leapt up the government’s agenda, but despite the raft of initiatives announced over the past year the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months,’ said Rubinsohn. ‘Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being. Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures,’ he pointed out. ‘Discouraging buy to let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward,’ he added. Continue reading
