Investment
Concerns voiced over new deregulation act effect on private landlords in England
A range of changes come into force today in England which affect private sector residential landlords amid concern that many are not aware of them. Under the Deregulation Act 2015 there are changes which affect whether or not a landlord can serve a Section 21 notice on an assured shorthold tenancy as well as changes to the form itself. However, following lengthy consultation, tenant eviction firm Landlord Action has concerns that not enough has been done to inform landlords of the changes and questions whether the Government has enough resources in place to properly enforce measures against so-called ‘retaliation eviction’. Just some of the key changes which come into effect for new tenancies entered into from 01 October, include the use of the new prescribed Section 21 notice which combines fixed term and periodic. A section 21 notice can no longer be served in the first four months of a tenancy and a section 21 notice will now have a six month life span. Despite recognising that the changes are in response to the ever growing private rental sector and a need for best practice, Paul Shamplina, founder of Landlord Action has expressed several concerns over the changes. ‘There have been a lot of significant changes in a short amount of time and I would like to have seen the Government proportion a greater budget to educating landlords, particularly those that don’t use agents to manage their properties, to ensure they are up to speed with new legislation,’ he said. ‘We still receive calls to our advice line on a weekly basis from landlords who don’t know about the deposit scheme which came into effect eight years ago,’ he pointed out. Less than 12 months ago Shamplina told The All Party Parliamentary Group for the Private Rented Sector at the Houses of Parliament that a law on retaliation eviction could result in tenants abusing the system and use it to remain in properties rent free for longer. As part of the new Act tenants will now have the first four months of a tenancy to file a complaint to a landlord with regards to issues of disrepair. ‘Good landlords will deal with complaints within the given 14 days, but my concern is the level of resource the local authorities have in place to action environmental health officers to carry out inspections when staffing levels have been cut to the bone,’ said Shamplina. ‘Landlords’ circumstances can change and if they need to end their tenancy, but can’t because they are waiting for an inspection or to gain access from the tenant, landlords are going to lose valuable time,’ he pointed out. If a property is considered in disrepair, landlords are now unable to serve a section 21 notice for six months from the date an improvement notice is served by the council and Shamplina believes this could lead to a huge spike in complaints from tenants. ‘I am a bit fed up… Continue reading
London and Paris still dominate wish list of European real estate investors
European real estate investors are increasingly looking beyond London and Europe’s gateway cities such as London and Paris as they seek to meet their return objectives, new research suggests. But not every regional city is suitable for investors and returns can disappoint in the medium term if one does not factor-in local market fundamentals such as local growth trends, demographic changes and human capital, it points out. According to the latest LaSalle Investment Management’s European Regional Growth Index (E-REGI), which ranks Europe’s top 100 cities, the region’s economy is driven by dynamic urban centres with London and Paris once again in first and second position in the ranking. The index report explains that the extraordinary resilience of such cities, combined with their deep investment markets, justifies targeting them for a wide range of investment strategies. Other cities increasingly coming to the fore include Manchester at 17 and Bristol at 25 which have both climbed three spots in the European ranking, while Birmingham at 37 is up two spots. ‘Having published this index for 16 years, we now have an unrivalled understanding of the different economic patterns in Europe’s leading cities,’ said Mahdi Mokrane, LaSalle Investment Management’s head of research and strategy for Europe. ‘The index not only determines which real estate markets are likely to out or underperform in the medium term, but combined with our on the ground expertise we also use the index as a strategic framework to match cities with the most relevant investment styles,’ he explained. In order to help investors navigate the complexity of the different strategies which best match different cities, LaSalle has categorised them into four distinct groups: consistent, affluent, mover and aspiring. Consistent is the largest group in the E-REGI analysis. Cities in this group are generally sizeable and combine deep investment markets with long term economic strengths related to demographics, technology and urbanisation (DTU), creating the right conditions for growth focused strategies. London and Paris top this group of consistent performers, but balanced E-REGI scores and consistent performance over time are not limited to the top of the ranking. Munich, Frankfurt, Hamburg, Stuttgart and Amsterdam also seem suited for value-add or opportunistic strategies. Düsseldorf, Mannheim-Karlsruhe, Cologne-Bonn, Rotterdam-The Hague, Utrecht, Edinburgh and Leeds are also included in the group but the report says core investment would be more suited given their smaller market size. Affluent is a small group of cities that also support long term strategies but are more difficult to transact-in due to their smaller size and stronger domestic investor base. Consumer related strategies are most attractive in these cities as their strong E-REGI scores are predominantly driven by their wealth and research and development spending components. This group includes Stockholm, Luxemburg, Oslo, Copenhagen-Malmo and Zürich. Movers are more ‘cynical’ market where timing is of the essence for investment in these more cyclical markets. For example Spanish cities have seen moves at both the top and the bottom of the… Continue reading
Prime London homes continue to feel stamp duty effect
Prime London house prices grew marginally over the summer months as the market continues its adjustment to the higher stamp duty charges introduced in December 2014, the latest index shows. This means that average values are back to levels seen a year ago, according to the Savills prime London index. Overall average prices across all prime London’s housing markets rose by 0.7% in the three months to the end of September, while the prime central London average fell slightly, by 0.4%. The data also shows that year on year prime central prices are down 4.6% while the whole of the London prime market saw no change. But prices are still up considerably over five years by 28% and 35.8% respectively. However, Savills says, these averages mask variations in price growth, which now relate as much to the different value bands as to location. Over the past year, price changes have broadly reflected stamp duty increases at different price points and therefore growth has been concentrated in the sub £2 million market. Homes in the £500,000 to £1 million range, which are subject to lower stamp duty charges, have risen by 3% year on year, and in the £1 million to £2 million range by a marginal 0.9%. By contrast, those over £2 million have fallen by an average of 2.6%. ‘The increased transactional costs over £1 million have undoubtedly made buyers more cautious, offsetting any post-election euphoria, particularly as the stamp duty change came when parts of the market were beginning to look fully priced after five years of steady growth,’ said Lucian Cook, head of residential research at property adviser, Savills. ‘For all but the very best in class properties, many buyers are expecting a discount on last year’s prices at least equivalent to the additional tax. By contrast, stamp duty changes have benefitted properties in lower tiers of the prime market, which have performed more strongly,’ he explained. ‘The prime London market now looks fully taxed and buyers are slower to commit, which is likely to continue to constrain the market in the short term, however the medium term fundamentals of demand for prime property in the UK capital remain positive. This has been reflected in a busy September in the new build market, where best in class is recognised,’ he added. Continue reading
