Investment
Data confirms buy to let surge in UK ahead of stamp duty change
The UK’s buy to let sector has seen a surge of activity as property investors have rushed to complete their transactions before the new Stamp Duty surcharge comes into force next month. In February the number of buy to let valuations carried out increased by 34% compared to the same month last year. Meanwhile, remortgaging activity, which includes buy to let remortgaging activity, was up 41% over the same period. In addition, buy to let activity saw a month on month increase of 25%, while remortgaging volumes climbed 6% in February compared to the previous month, largely driven by buy to let remortgaging, according to the data from Connells Survey & Valuation. It confirms a lot of anecdotal evidence that the extra 3% Stamp Duty surcharge on second homes or buy to let properties due to take effect on sales completed after 01 April 2016 has resulted in increased demand from buy to let investors. ‘Buy to let investors and those remortgaging with the aim of buying a second home are racing against the clock. Activity from both these groups is picking up pace on a monthly basis as the April Stamp Duty deadline looms and people hurry to complete their transactions before being hit by the 3% surcharge on their buy to let property or second home,’ said John Bagshaw, corporate services director of Connells Survey & Valuation. ‘Expect this activity to reach a crescendo in March before calming in the second quarter of the year. Buy to let investors will be calculating the impact the Stamp Duty hike is having on their rental yields, while those thinking of remortgaging to fund a second home will weigh up whether it’s still financially viable for them to do so,’ he explained. ‘But behind these somewhat frantic figures there is an underlying story of steady, long term growth. Despite taking some political heat recently, the buy to let market continues to attract investment off the back of its potential returns, while the remortgaging sector remains popular with those looking to get a better mortgage or release capital on their home for investment purposes,’ he added. In addition, the home mover and first time buyer sectors have experienced strong monthly rises in valuation activity. The number of valuations carried out for first time buyers surged by 36% between January and February 2016, while those carried out for home movers grew by 35% over the same period. Activity for both these sectors was steadier on an annual basis. Those taking their first step onto the property ladder in February reported a 9% increase compared to January and home movers experienced an 8% uptick on the same month on month basis. ‘Home movers are confident the strong but steady property price rises which typified 2015 are set to continue, and so feel confident that their home’s value will hold them in good stead as they endeavor to move up the ladder,’ said Bagshaw. ‘Meanwhile, first time buyers, whose personal… Continue reading
Average property service charges in UK 96% higher on new builds
The average annual property service charge in Britain is £1,863 with the figure 96% higher for new build than older properties at an average of £2,777, new research shows. The survey also shows that some 33% of property management companies have increased service charges in the last two years and they vary between £1.55 per square foot to £7 per square foot. The research by landlord insurance provider, Direct Line for Business, reveals that the average service charge or fees leaseholders pay to cover their share of the overall building maintenance represents more than two months of the average monthly rental income received by landlords, which stands at £906. In addition to this, they will also have other costs to think about such as paying tax on these monies, mortgage payments, management and agency fees and any ground rent fees which are now on average £371 a year for a new build and £327 for a property before 2016. The service charges for new build properties, coming on the market in 2016 are significantly greater than for older dwellings at £2,777, indeed 96% higher than the average for an older property. Service charge levels also vary markedly between developments. One new build development coming onto the market in Croydon in 2016 will see home owners paying £1.55 per square foot in service charges, while a development in Lambeth coming onto the market in 2017 is charging four and a half times more at £7 per square foot. The research report points out that there is an increasing trend for new builds to include amenities such as libraries, 24 hour concierge services, gyms and cinema rooms that is contributing to the increased cost of service charges, but also offers added value for landlords looking to invest in this type of property. Recent moves by developers have seen more private housing stock owned by freeholders subject to service charges. Owners of freehold properties situated on private roads or private estates are being charged for upkeep of roads and gardens. In one example owners of every four-bedroom property situated on a development in Guildford are charged £900 a year for upkeep of the road and communal gardens. ‘Service charges are often a hidden cost, which should be factored in when considering the affordability of a property. In some cases service charges are uncapped and can escalate rapidly. Landlords need to take into account all associated costs when purchasing a property, such as service charges, ground rent and taxes that may impact their rental yield,’ said Nick Breton, head of Direct Line for Business . The method for calculating service charges also varies between developments. In some cases it is a flat rate for all properties, while for others it is determined by the number of bedrooms or the square footage of a property. Service charges usually cover repairs to communal areas of a development such as windows, drainage and the roof…. Continue reading
Poll shows widespread support for UK build to rent sector in Parliament
There is cross party support among British Member of Parliament for the emerging build to rent sector and predictions for growth, according to a new poll. Some 81% of MPs say they support the build to rent sector and the contribution it makes to the UK housing supply while 62% think it will make a higher contribution to housing supply over the next five years compared to current levels. The survey commissioned from ComRes by the British Property Federation (BPF) also found that build to rent has cross-party support, with 71% of Labour MPs in support and 91% of Conservatives. Few MPs think buy to let property will make a higher contribution to housing supply over the next five years, with 27% expecting its contribution to be higher, compared to 41% who expect it to be lower. MPs were somewhat split on social housing and affordable rent, with 26% of MPs expecting to see a lower contribution of social housing and affordable renting, compared to 39% who expect to see a higher contribution over the next five years. The results showed that new MPs are more likely to see this sector as a growth area than long serving MPs at 46% compared to 37%. The BPF estimates that there is at least £30 billion investment ready to enter the build to rent sector, and that it has the potential to deliver significant amounts of additional housing across the UK. The most recent figures from the BPF’s Build to Rent Map show that there are over 37,500 build to rent units with planning permission, under construction or complete across the UK. Most development is concentrated in the capital, where there is more than 20,000 units. ‘The widespread recognition amongst MPs of the build to rent sector is a positive sign it is starting to enter the nation’s housing vocabulary,’ said Ian Fletcher, BPF director of policy for real estate. ]It is also heartening that whilst all political parties are pushing a home ownership agenda, there is recognition amongst MPs that housing supply will come in other welcome forms and our nation requires that if we to get anywhere close to meeting demand,’ he pointed out. ‘This is not a zero-sum game, where tenures are competing, but a quest to deliver far more homes, where it is imperative that other forms of tenures are also encouraged,’ he concluded. Continue reading
