Uk
New residential rent controls take effect in Paris
The rental market in Paris is now subject to new rent control regulations covering all new residential leases and those that are up for renewal. The law seeks to cap rent increases from one lease to the next in the country’s largest cities as part of sweeping housing reforms promised by French President Francois Hollande during his election campaign. The policy is likely to be popular among tenants in the city who have seen home rents rise by 42% in the last 10 years, although it has been criticised by estate agents and landlords. Paris is the first city to see the law being enforced and it is likely to be rolled out in Lyon, Bordeaux, Marseille, Lille, Grenoble and other big cities in the coming months. The law allows the prefecture of each city to establish a maximum rents measured in euros per square meter based on when the property was built and where it is located. The levels must be no more than 20% above or 30% below the median rental price for the area. There is likely to be winners and losers. It is estimated that rents on around 60,000 properties are likely to come down and those of 25,000 to go up. The biggest decreases are likely to be for studios and one bedroom apartments, according to agents. The National Federation of Estate Professionals (FNAIM) said the law will hold back the rental housing market and put off buy to let investors. It is considering legal action and already agents in Lille have blocked the law being implemented by withholding housing and rent data. Continue reading
UK lenders start to increase mortgage rates ahead of expected interest rate rise
Indications from the Bank of England that interest rates are set to rise, possibly as early as the beginning of 2016, several lenders have started to increase their mortgage rates. Research by comparison website MoneySuperMarket suggests that since the bank’s governor Mark Carney suggested just a few weeks ago that rates could rise by the turn of the year, some of the best mortgage deals have become less favourable. For example, First Direct offered 1.49% at the start of July on its best price two year fixed, but this now sits at 1.69%. However the research also shows that there are still some great mortgage offers available, but interestingly, 65% loan to value (LTV) mortgages are now cheaper than 60% LTV mortgages on average. The current average 60% LTV rate across fixed, variable and discount mortgages is 2.23%, while the average 65% LTV rate is 2.08%. So for example, someone borrowing £150,000 over 25 years would pay less back over the promotional period on YBS’s 65% LTV two year fixed rate of 1.07% with a fee of £1,545 than on Post Office’s 60% LTV two year fix at 1.05% but with a higher £1,995 fee. ‘It’s prime time for those looking for a mortgage as there are still some great deals on the market even if it’s a bit bizarre that you can currently get a cheaper deal with a smaller deposit,’ said Dan Plant, consumer expert at MoneySupermarket. ‘However, the recent rate rise speculation is starting to make providers cautious, and this is being reflected in their offers. We know choosing a mortgage can be confusing but if people can do it now, they avoid the risk of rates rising over the next few months,’ he explained. ‘Many lenders allow mortgage holders to reserve rates available now for up to six months for a small fee, so even those who still have some time left on their current deal can benefit. As always, prospective buyers need to think about the long term and work out the total cost of the mortgage, including both rates and fees, before committing to a deal,’ he said. He also pointed out that while 65% LTV mortgages are better than the 60% LTV deals at the moment, consumers should be wary of a rate rise and make sure they can afford the repayments if they suddenly shoot up, should they choose a variable rate mortgage. Continue reading
Lower end US homes just 10% below 2006 and outperform middle market sector
Lower priced houses in the United States have been outperforming the middle priced market and are now only 10% below their peak values of 2006, a new analysis shows. Middle tier homes, typically selling between $120,000 and $345,000, are the worst performing segment with current price levels 24.8% below 2006 peak levels, according to a new report from real estate firm Clear Capital. It says that this vast difference in market recovery underscores the continued challenges the majority of home owners face, despite a quicker recovery in both the bottom and top segments of the market. Regionally, there was a small uptick in quarterly gains in both the West and Midwest, between 0.3% to 0.1%, while the Northeast and South remained unchanged over the quarter, at 0.2% and 0.8%, respectively. These minimal changes reinforce housing’s continued moderation and suggest the initial thrust of the home buying season is starting to wane, according to Alex Villacorta, vice president of research and analytics at Clear Capital. He pointed out that disparity still exists at the local market level. The Northeast reports the widest gap in price performance between the top and bottom performing areas with Pittsburgh seeing growth of 14.1% year and year and Providence down 14.1%. At the national level, the data through July shows a 0.1% increase in quarterly gains, from 0.6% in June to 0.7% in July. ‘While this minor increase, a carry-over from spring’s performance, is expected as we enter the thick of summer’s peak demand cycle, it reflects the overall contraction from spring’s initial surge,’ said Villacorta. ‘Through the first half of 2015, we observed a housing recovery that is normalising after an impressive price surge from the trough of the market. After more than two years of a pretty remarkable upward swing, the housing market’s correction to the correction has given way to more normal rates of growth,’ he explained. ‘What we now know, however, is that this correctionary period has not treated all markets, nor segments within markets, the same. In the present environment, micro analysis is key. In particular, our latest data exposed a mid-tier lag. This segment is still way behind both the top and bottom of the market in terms of recovery over the last nine years,’ he pointed out. Indeed, the analysis of the change in home prices since the summer of 2006 shows that the middle tier has lagged behind both the upper end and lower ends of the market by a surprisingly wide margin. At 24.8% below its peak level, the middle tier is more than double that of the lower tier. Villacorta said that the lower tier was both hit and buffered by high levels of distressed activity which, in recent years, has sparked investor activity driven in large part by the accelerated demand in the rental sector. And, the top tier has benefited from a segment of the market that is more resilient to the current economic climate. ‘The middle… Continue reading
