Investment
Prime London rental market affected by financial market jitters, says new report
Annual rental value growth in the prime central London property market fell to 2.5% in August as demand remained subdued over, probably due to financial market jitters, a new report suggests. The analysis from international real estate firm says that as a significant proportion of tenant demand in prime central London derives from companies, in particular financial services, it should be no surprise that volatile global stock markets continued to affect sentiment in August. Rental values rose 0.1% from July, however quarterly growth was 0.2%, the lowest three month change since April 2014. Prime gross rental yields edged back up to 2.96% from 2.95% in July. Tom Bill, head of London residential research at Knight Frank, pointed out that there is a correlation between rental values in prime central London and the performance of the FTSE 100 and the recent stock market dip has been due to concerns over the state of the Chinese economy, with weak manufacturing data and the recent devaluation of the Yuan increasing nerves. ‘Despite the recent volatility, the devaluation should be seen in its historical context and China has several levers it can pull in an attempt to calm stock market falls that aren’t necessarily a reflection of its underlying economic health. The result is more subdued corporate activity and fewer relocation agents currently active in prime central London,’ he explained. He also pointed out that new tenancies in recent weeks have been UK based families that are moving from one neighbourhood of London to another. In the three months to July this year, the number of new applicants fell by 15% compared to the same period in 2014, while viewing levels were down 12.6% and the number of tenancies agreed declined by 12.1%. Meanwhile, the rentals market is still affected by distortions in the sales market following the general election, Bill also pointed out. ‘Some vendors have delayed selling and are exploring the rental option as they wait for stronger house price growth to return after a stamp duty increase in December for properties worth more than £1.1 million dampened growth,’ he said. ‘The result is more rental stock on the market, which has led to prospective tenants making offers on multiple properties, meaning deals are harder to finalise,’ he added. Continue reading
One in five UK landlords could be out of business due to tax breaks change
The cut in UK tax breaks for certain buy to let landlords due to be phased in over the next few years could put one in five out of business, new research suggests. The blow comes at a time when £9.9 billion is lost to rent arrears and damage every year and for some the change in tax could be the final straw. Landlords are also losing £4.5 billion in terms of damage to their properties. There are also concerns about the new immigration checks on tenants which have been running as a pilot scheme in the West Midland and due to be rolled out nationally, according to the annual landlord report from specialist landlord law firm Access Legal. It points out that many but to let landlords are running a small business and would not continue if they face making a loss. Currently 33% say they feel that the odds are stacked against them and in favour of tenants. The research cites extortionate upkeep costs, cuts to tax breaks and around 46% of tenants getting away with not paying their rent arrears, even after court proceedings, as the main reasons for the pessimism. Three quarters of buy to let investors also stated that they don’t feel money is safe with letting agents, and 43% of landlords have dropped their letting agents to save money and avoid safety issues. The research says that in total damage, repairs and rent arrears amounts to £9.9 billion every year. £4.5 billion and it means that every landlord in the UK is out of pocket by £6,600 covering these costs, every year. ‘We work with many landlords covering tenant and landlord disputes. The extortionate cost of being a landlord seems to be a figure that keeps growing. Many landlords are subject to damaged properties and rent arrears. The law doesn’t always side with tenants, but it’s a hard process for landlords to go through and a tricky legal system,’ said Eamonn Hogan, a solicitor at Access Legal. The five most common causes of damage to a property are broken appliances at 41%, damaged decorating at 40%, damaged carpets 37%, lack of cleanliness 33.18% and cigarette burns 22%. Worst areas in the UK for rent arrears include Cambridge, Newcastle, Oxford, York and Manchester while the worst areas in the UK for property damage include Manchester, London, Wrexham, Chelmsford and Birmingham. The study also found that 40% of landlords have been subject to a tenant not paying rent and 20% of landlords have been subject to vandalism in their properties. Continue reading
Homes in England near top state schools sell at large premium, new study shows
Homes near England’s top state schools have an average price of £344,466 and parents face paying over £40,000 more to buy a home in their catchment areas, new research has found. Homes near Beaconsfield High School in Buckinghamshire have the highest premium of £636,132 or 186% compared to the average house price in neighbouring areas, according to the study from Lloyds Bank. Regionally the largest premium paid to live near the best state schools is in the North West, with discounts seen around schools in the East Midlands and the South West. Overall in 2015, house prices in the postal districts of the top 30 state schools in England, defined as those secondary schools that achieved the best GCSE results in 2014, were on average £40,728 or 13% higher than the neighbouring locations in their counties. House prices in the postal district of The Henrietta Barnett School in Barnet had a premium of £418,860 or 76%, the second highest, followed by St. Olave's and St. Saviour's Grammar School in Orpington with a premium of £180,447 and the Tiffin schools in Kingston upon Thames with a premium of £137,665. But over half, some 16, of England's top 30 state schools are in locations with an average property price below their neighbouring areas’ average. Properties in the postal district of Aylesbury High School, for example, sell at £122,506 or 36% less than the county average of £342,166. The next largest price discounts in cash terms at 119,485 are in Reading, where Reading School and Kendrick School are located. These schools are followed by Queen Elizabeth's School, Barnet at £95,681 and Westcliff High School for Boys Academy in Essex at £58,970. ‘In general, homes close to the nation's top performing state schools command a significant premium over neighbouring areas,’ said Andrew Mason, Lloyds Bank mortgages director . ‘The presence of a top performing state school appears to help support property values in many of these locations as parents compete with other buyers to land the property that gives their child the best possible chance to attend their chosen school,’ he added. The North West has the largest premium with average house prices in the postal districts of the top ten state schools in the region selling at £66,398 or 39% above the average house price in their county. This is followed by East Anglia at £48,642 or 20% and the South East at £45,871 or 15%. In contrast, homes in the East Midlands and the South West that are close to the best performing state schools are, on average, around £6,600 or 3% lower than in neighbouring locations. The average house price of £344,466 in the postal districts of the 30 best performing state schools is 9.2 times average gross annual earnings. This is significantly higher than the average across England at £267,956 or 7.7 times average gross annual earnings. The least affordable homes are those with a typical property price of £971,882 within the postal district of The… Continue reading
