Uk
Review of British development tax welcomed by property industry
The British property industry has welcomed a government review of one of the country’s biggest bugbears in the planning system. According to the Property Federation (BPF) the relook at the Community Infrastructure Levy (CIL), a development tax which is used to fund local infrastructure, is long overdue. The organisation, which is supportive of CIL in principle, has long advocated a review of the tax and says that it has become overly burdensome and inefficient. The BPF says that the review must not be the end of the story. In some cases, the evidence base used for the initial CIL setting is now fully out of date, and not fit for purpose. It is crucial that local authorities are encouraged to regularly review their own charging schedules against market signals and to test them against ‘real life’ projects that reflect market conditions. It pointed out that CIL simply does not work for complex or large scale strategic sites, and a more site specific and targeted approach to infrastructure funding and other contributions must be taken. It also wants to see clarity between CIL and s106. A fundamental premise of CIL was that it would be used to fund a set of identified infrastructure requirements, whilst s106 obligations should relate only to site specific mitigations and affordable housing provision. However, in reality, this has not happened, and there is considerable overlap between the two. This fundamental issue must be addressed and clarity provided in order for CIL charge setting to be at the right level and to make the process work properly. It is also calling for the integration of CIL with local plans. There is a disconnect between the preparation of local plans and the formulation of CIL charging schedules, which local authorities should prepare in tandem, in conformity with the National Planning Policy Framework. It is critical that emphasis is placed on delivery of infrastructure, rather than just revenue collection, it adds. ‘Many of our members cite CIL as one of the biggest bugbears of the planning system, and there are plenty local authorities who would agree. Whilst some would like to see it abolished altogether, we believe that with the right changes, CIL could be a useful tool for ensuring infrastructure delivery on development sites,’ said Melanie Leech, chief executive of the British Property Federation. ‘The creation of this group is a step in the right direction, but it must not stop here. It is crucial that Government take any recommendations on board, and works with both public and private sectors to ensure that the regime really works in the future,’ she explained. ‘CIL was supposed to provide a quicker, fairer and more efficient way of delivering infrastructure to support development and our members have always supported this principle, but we are concerned that in many places it is not working. We look forward to engaging with the review panel to ensure that CIL becomes less of a burden and more… Continue reading
House prices growth in UK cities on track for 10% growth in 2015
City level house price inflation in the UK is on track for 10% growth in 2015 as price increases accelerates in large regional cities, according to a new index report. Cities have seen annual house price growth of 9.4% per annum and the large regional cities outside southern England are recording an acceleration in growth off a low base, says the Hometrack UK Cities House Price Index. In Glasgow prices are up 8.3%, in Manchester up 7% and in Liverpool up 5.1%, meaning that these cities are registering the highest rates of annual house price growth since 2007. Glasgow house prices currently average £110,000, less than half the £229,300 average price across all the 20 cities measured by the index. House prices in Glasgow stopped falling three years ago and have since risen by 13%. In the last 12 months they are up by 8.3%, the highest rate of growth since August 2007. Manchester house prices have been recovering since 2012 and average house prices have risen by 17% over this time to £141,200. In the last 12 months house prices across Manchester have grown by 7%, the highest rate of growth since July 2007. Liverpool has registered the weakest house price performance of all the British cities covered by the index. House prices declined between 2007 and early 2013 and have since increased by 10.5%. In the last 12 months the rate of growth has risen to 5.1%, the highest since August 2007. Despite this modest recovery, the average price of £109,800 is still 13% lower than the 2007 peak. The recovery emerging in large regional cities contrasts strongly with the rise of London’s house prices where average values are up by 70% since 2009 and by over 100% in the highest value markets in central London. The report says that it is these high value markets that are now recording some of the weakest levels of house price growth as tax and currency changes impact demand after a period of stellar price appreciation. Kensington and Chelsea has seen prices fall by 2.6% and in the City of Westminster they are up by only 1.3%. ‘Improving consumer confidence and low mortgage rates are boosting demand in cities where the recovery in house prices is in its infancy. While southern cities have been in recovery mode for over six years with price gains of up to 70%, the large regional cities have seen far more modest price rises over just the last three years,’ said Richard Donnell, director of research at Hometrack. ‘Further house price growth is likely to improve market confidence as it pushes down loan to values on mortgaged homes and creates capacity for households to access cheaper credit. Many corporate investors and developers are looking to the major regional cities in search of better value for money in new investments relative to London,’ he explained. ‘The outlook for the next 12 to 18 months… Continue reading
Gross mortgage lending in UK jumps 8% month on month
Gross mortgage lending in the UK reached £21.8 billion in October, some 8% higher than the previous month, according to the latest estimates from the Council of Mortgage Lenders. In addition to the month on month rise, lending rose 19% year on year, from £18.4 billion in October 2014, the highest monthly figure since gross lending reached £23.6 billion in July 2008. ‘As lending in the regulated mortgage space picked up over the summer months, the pace of recovery has improved. This looks set to continue over the closing months of the year with the factors helping support this recovery continuing to be low inflation, strong wage growth, an improving labour market and competitive mortgage deals,’ said Bob Pannell, CML chief economist. ‘As a result lending this year is likely to exceed our forecast of £209 billion, though affordability pressures will limit business volumes for first-time buyers and movers meaning that we think the market has only modest further upside potential over the short term,’ he added. According to Peter Rollings, chief executive officer of Marsh & Parsons, lending levels are at an impressive seven year high. ‘We’re yet to clear the pre-crisis July 2008 benchmark but over the summer the mortgage market has really taken it up a notch, and month on month improvements are getting more cheerful as we approach the festive season,’ he said. He pointed out that London has seen a significant boost in mortgage buyers and first time buyers since June, as domestic activity intensifies in the housing market. Mortgage buyers accounted for 65% of London property purchases in the third quarter of 2015, a significant leap from 52% the previous quarter. In addition to this 26% of all third quarter sales were to first time buyers. ‘Overall competitive mortgage rates and low inflation have paved a smoother road for buyers, and this has shifted the dynamic in the capital towards British buyers, as key tax changes still act as a speed bump to some overseas buyers and investors,’ added Rollings. John Eastgate, sales and marketing director of OneSavings Bank, pointed out that a scarcity of supply of property remains an issue in a lending market that is still driven very much be refinancing activity. ‘Wages are still growing, while deflation is bolstering incomes in real terms, supporting borrower’s finances. Negative inflation is also kicking a rate rise into the long grass, which is enabling lenders to offer historically attractive rates,’ he added. Demand is being driven by continued interest from prospective house buyers and a surge in the remortgage market, and this is being matched by the availability of finance, according to Henry Woodcock, principal mortgage consultant at IRESS. ‘Eyes are now turning towards end of year targets, fuelling interest rate competition between lenders, further stimulating borrower demand. With interest rate hikes now unlikely until the first half of 2016 at the earliest, the cost of servicing a mortgage… Continue reading
