Uk
Good design could help make Build to Rent popular in the UK, says a new report
Good design is the secret for the future success of the build to rent sector in the UK with developers needing to look beyond traditional layouts, says a new report. Britain is on the verge of a rental revolution with around £30 billion of institutional investment earmarked to build and manage homes for rent, but success means creating homes that foster a sense of community, according to the report. Indeed, the report ‘Funding Britain’s rental revolution’, by Addleshaw Goddard, a law firm and the British Property Federation, a trade body, says Build to Rent could bring in substantial additional finance for housing. For example, it says that getting tenants to know their neighbours will help encourage them to stay for the long term, saving operators money on costly voids. The key to this will be creating user friendly living areas that encourage circulation within the buildings. It points out that much of the concept around Build to Rent is borrowed from North America’s multifamily sector where listed companies own much of the housing stock. Many of the Build to Rent schemes coming forward will include a range of communal space throughout the buildings and the report suggests this could include top floor amenity decks in the place of penthouse flats allowing all renters to benefit from the views and additional space. Others will be simpler, such as a lobby area with shared seating but the report says that crucially, all schemes need to be of a decent quality. Overall it suggests that the shift towards a professionally run rental market with developments owned by single companies rather than multiple speculators and buy to let investors, promises to offer Britain’s nine million renters higher standards, better value and greater transparency with homes purposefully designed for renters. Institutions such as APG, Hermes, and Legal & General, together with companies such as Grainger, Essential Living and Fizzy Living are spearheading the new sector and the report says that the growth of Build to Rent is good for the economy, communities, investors and consumers. It also points out that extra finance for housing is unlikely to surface through existing house builders or council funded development so Build to Rent could bring in more than £30 billion over the next five years. The positive includes that fact that it allows investors to match to long term liabilities such as annuities or pensions with stable returns delivered from rent and it reduces the amount of debt held by individuals at a time where record low interest rates are set to rise. On top of this Build to Rent investors can take a long term view and residents will be offered long term tenancies since the homes will not be sold off. Also, landlords will encourage tenants to stay by offering onsite amenities and good customer service. In America, this is the way companies seek to beat their competition. Build to Rent has emerged as a separate new asset class, distinct from… Continue reading
Development land prices in England and Wales down 0.9% in second quarter of 2015
The average price of greenfield land in England and Wales fell by just under 1% between April and June, according to the latest sector index. The 0.9% fall was a more moderate decline than the 1.8% fall recorded in the first quarter and it takes the annual fall in prices to 2.4%, the residential development land index from Knight Frank shows. However, the market remains localised. Development land prices in prime central London, for example, are up by 0.9% in the second quarter of the year and up 12.1% on an annual basis. Prices have returned to levels last seen in Autumn 2013. The firm’s index report says that prices reflect the fact that house builders have had access to relatively higher levels of consented land in the last few years because of the National Planning Policy Framework which has allowed them to top up their supply of land. As a result, house builders and developers are more selective about the sites they are now choosing to buy. There is a shortage of supply of consented greenfield land in some areas of the Home Counties due to the planning system for example, and a resulting premium for the sites that do come on the market. The report says that in central London there is still good demand for development land, although buyers are applying more detailed criteria before making offers, with a bigger consideration being paid to build cost inflation. ‘The sales market has returned to more normal conditions, along with absorption rates, and this is being reflected in a slowing in the growth of development land prices,’ said Gráinne Gilmore head of UK residential research at Knight Frank. ‘While there are also signs that build cost inflation, which has risen sharply over the last 18 months, is now levelling off, developers are still having to factor these higher costs into their offers. In addition, house builders are generally maintaining their margins, and this is weighing on land prices,’ she explained. ‘However there is still strong competition in areas which are considered to have real opportunity for growth, these include areas in outer London, and particularly for sites where completed units can be delivered for less than £1,000 per square foot,’ she added. Continue reading
Research reveals chromic shortage of first time buyers in UK housing market
The UK housing market is experiencing a potentially serious shortage of first time buyers, particular in the South East and North West, new research has found. First time buyer activity in the North East and Yorkshire and Humberside is less than half of what it was pre-recession while London is the least affected, according to the report from private mortgage insurer Genworth based on an analysis of government and industry data. The South East averaged 86,733 first time buyers a year from 1974, when records began, up until 2006. But since 2007 when the financial crash hit, this has fallen to just 47,863 a year. As a result, this has created a total shortfall of 310,967, the biggest of any English region. The North West has also seen first time buyer numbers drop from 46,461 a year between 1974 and2006 to 23,875 between 2007 and 2014. This has created a shortfall of 180,685 first-time buyers. The North East’s first time buyer market is less than half of its pre-recession size as the data analysis shows that the average number of first time buyers between 2007 and 2014 at 10,575 is just 46% of the pre-2007 average of 23,191, the lowest percentage of any region. In contrast, London is the least affected in relative terms and has lost just a quarter of its first time buyers in percentage terms. Its average of 39,175 between 2007 and 2014 is equal to 73% of the pre-recession average, despite the continued house price increases London has seen in recent years. The report says that comparing these shortfalls to the regional populations of 18 to 45 year olds who are traditionally first time buyers, suggests a significant percentage are potentially ‘denied home owners’ as a result of the fall in first time buyer numbers. For example, a shortfall of 100,927 first time buyers in the North East compared to an 18 to 45 population of 1.3 million means as many as 21% could be classed as ‘denied home owners’. In the South East a shortfall of 310,967 compared with an 18 to 45 population of 1.6 million means 19% are in the same position. ‘Tougher regulation and higher capital requirements for lenders as a result of the recession have accelerated the fall in homeownership and dramatically reduced the number of people, especially younger households, who are able to buy their first home,’ said Simon Crone, vice president for mortgage insurance Europe at Genworth. ‘A dual crisis has emerged with the shortage of new homes exacerbated by a shortage of loans traditionally used to help first time buyers get on the property ladder with 5% or 10% deposits. Our analysis shows that all regions have felt the impact of the squeeze on first time buyers, regardless of the so-called ‘North/South’ divide,’ he explained. ‘While London and the South East face the biggest pressure of high house prices, a lack of housing… Continue reading
