Uk
Prime London property prices up 1.6% in second quarter of 2015
Values across London’s prime housing market grew by an average of 1.6% in the three months to the end of June, but remain 0.7% below where they were a year ago. Increased stamp duty rates and unsold stock levels restricted a bounce in property values after May’s general election, according to the latest analysis from real estate firm Savills. The report also says that buyer caution has been most evident at the top end of the market, with prices in the prime central London market barely showing any net house price growth over the quarter with a rise of just 0.3%. This means that house prices in this market are down by an average of 4.3% year on year. According to Lucian Cook, head of UK residential research at Savills, there was a feeling prior to the autumn statement last year that the prime markets of London were looking fully priced following a sustained period of growth. ‘The stamp duty increases introduced in December 2014 mean they now also looked fully taxed, despite mansion tax fears being confined to history,’ he explained, adding that this effect has not been confined to prime central London. Indeed, across the remainder of the prime London market homes worth over £2 million saw values fall by an average of 0.9% over the past year, despite rising by an average of 2.4% in the quarter. Across London, the market below £1 million, where buyers benefitted modestly from the stamp duty reform, recorded annual price growth, albeit of just 2.4%, as the mortgage market review continues to restrict the amount people can borrow, whether because of the stress testing of affordability or the income upon which this is judged. ‘In the early part of the year we could put buyer reluctance to commit down to political uncertainty pre-election. Only now is the dual effect of taxation at the top end of the prime market and mortgage regulation at entry level becoming clear,’ said Cook. ‘These constraints are keenly felt by buyers, while some sellers are clinging to expectations that values can keep on rising. That has created a gap in price expectations in parts of the market which is likely to hold back any recovery in transaction levels,’ he pointed out. ‘With those transactions having been suppressed prior to the election, it seems inevitable that high value sales will have peaked, at least in the short term, in 2014. That means current constraints on the market could have a negative on impact on stamp duty receipts from most expensive housing upon which the Treasury has become increasing reliant,’ he concluded. Continue reading
Tax change could result in higher residential rents in the UK
Landlords in the UK’s private rented sector could be forced to put up rents if their buy to let mortgage interest payments are made non tax deductible, it is claimed. The National Landlords Association (NLA) is warning that costs in the UK private rented sector (PRS) could rise by up to £2.6 billion if tax changes are made, as has been hinted. In a letter to the Chancellor ahead of Wednesday’s Budget, the NLA’s chief executive officer Richard Lambert says that making mortgage interest payments non tax deductible would be the last thing the UK economy needs and would only put greater pressure on the cost of housing. The letter also outlines the contributions that landlords make to the UK economy by means of their support for the housing industry and through direct contributions in the form of tax. ‘It has been suggested that private landlords receive too many perks or reliefs which give them an unfair advantage compared to owner occupiers, but this ignores the fact that letting residential property for profit is a business,’ said Lambert. ‘No business pays tax on their gross turnover alone so why should landlords be treated any differently. Removing their ability to deduct legitimate costs before declaring their taxable profit would essentially force them to suck up one of the most significant expenses they face in being able to provide homes for others,’ he added. Using figures from the Council of Mortgage Lenders reported at the end of 2014, the NLA estimates that costs in the PRS could rise by as much as £2.6 billion if mortgage interest payments were to be reclassified as non-deductible, a move it warns would leave landlords with no other option than to raise rents. Lambert concluded the letter by seeking ‘an unequivocal reassurance that the Government will continue to regard buy to let mortgage interest payments as a legitimate business cost, and give landlords the confidence and certainty to invest for the future’. Continue reading
UK small home builders get finance boost
Small house builders in the UK are to benefit from a £100 million cash boost to recognise and support their important role in keeping the country building. Housing Minister Brandon Lewis said that The Housing Growth Partnership will act as a dedicated initiative that will invest alongside smaller builders in new developments, providing money to support their businesses, helping get workers onto sites and increasing housing supply. The Partnership will also establish a network of builders, including experienced developers, who will act as mentors and advisers to those looking to expand and grow their businesses. The latest figures show that in the last 25 years, the number of firms building between one and 100 units a year has fallen from over 12,000 to fewer than 3,000 but house building figures show starts have more than doubled since those seen during the same period in 2009 and Lewis said he wants smaller firms to be involved in this growth. The government has matched a £50 million investment from Lloyds Banking Group to create the £100 million Housing Growth Partnership, which will be used to help smaller builders to invest in new projects and develop their businesses, allowing them to recruit and train skilled workers and become more competitive in their local area. The partnership expects to make around 50 investments, with the aim to provide an additional 2,000 homes. ‘The 2008 economic crash devastated our army of small builders, with delivery falling from 44,000 homes to just 18,000 and now seven years on companies are getting back on their feet but we’re determined to give them all the help they need,’ said Lewis. ‘Access to finance is one of the biggest challenges they face so this £100 million commitment will help our smaller builders fund new projects, expand their businesses, create more jobs and build more homes,’ he pointed out. ‘With housing starts at a seven year high and climbing and homes granted planning permission at 261,000, the highest since 2007, this work will ensure we maintain this momentum and keep the country building,’ he added. According to Andrew Bester, group director and chief executive of commercial banking at Lloyds Banking Group, it will help address the challenge of housing supply and affordability in the UK’s housing market. ‘It will provide SME house builders with much needed equity to support residential development projects, to stimulate growth in their businesses and facilitate access to conventional property development finance. We believe building both a greater quantity and mix of homes will help Britain prosper,’ he added. Brian Berry, chief executive of the Federation of Master Builders, confirmed that one of the biggest obstacles these firms have faced is a severe difficulty in accessing finance. ‘Without adequate access to finance they cannot bring forward the number of new homes they would otherwise,’ he said. ‘The new Housing Growth Partnership will directly help to address this issue and the additional £50 million greatly increases the scale of what can be achieved. We… Continue reading
