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Interest rates and property tax concerns impacting prime central London market
Concerns around interest rates and property taxes have impacted on sentiment within the prime central London residential market, it is claimed. The latest market commentary report from W.A. Ellis says that sentiment within the housing market often reflects the mood of the overall economy and this has resulted in demand falling over the last four months. Richard Barber, director of W.A.Ellis, pointed out that this coincides with the Bank of England’s ‘sabre rattling’ over raising interest rates and increasing taxes on property, particularly those with a high capital value or owned by foreign investors. ‘This, coupled with the run-up to what must be the most property centric general election that we have experienced, is what is now bringing swift realism to our previously bullish market,’ he said. ‘The prime central London market is undoubtedly slower, and the usual withdrawals from the market are becoming more apparent as discretionary sellers now wait and see the result of the general election. Purchasers are also more wary of paying last spring’s frothy prices,’ he explained. ‘There are many factors influencing our market, both negative and positive but undoubtedly higher property taxation, stronger sterling and a fear of the politically unknown has had a cooling effect,’ he added. This has influenced the firm’s more restrained prediction of 1.5% growth within the prime central London market through 2015. ‘More positively, we expect to see 4% growth within the central London new development market and the interest generated from the third phase of the Battersea Power Station development is indicative of the sustainable growth we foresee within this sector,’ said Barber. ‘Furthermore, our research predicts stronger growth in prime central London from 2016 to 2019, once political uncertainty and potential increased taxation has been absorbed, culminating in a predicted rate of growth of nearly 20% from 2015 to 2019,’ he added. In the sector’s lettings market Lucy Morton, director and head of agency, explained that the end of the month has seen the release of third quarter research results from Lonres, the agents’ intranet, which have confirmed that the recovery in the central London rental market that began earlier in the year has continued, boosted by the positive state of both the UK and London economies. There were 43% more properties let in the third quarter of 2014 than in the previous quarter, although this is still 4.6% less than in the third quarter of 2013. ‘While demand from tenants for properties has increased, stock levels have eased back. There were 9.5% fewer properties available to let across central London in the third quarter of 2014 compared to the same quarter in 2013,’ she said. ‘Demand is out stripping supply at the lower levels of the market but there is more of a balance in the middle tier of the market, with the most choice for tenants with budgets from £1,000 to £2,000 per week,’ she pointed out. ‘Competition for properties has increased rents over the last quarter indicating an optimistic outlook… Continue reading
Research reveals UK landlords experience difficulties accessing buy to let finance
Three in 10 landlords in the UK plan to look for additional buy to let lending or to re-mortgage in the next three months, yet many may not gain access to finance, it is claimed. According to the latest report from the National Landlords Association (NLA) some 67% of landlords rely on a buy to let mortgage to fund their portfolio, but one in five, or approximately 300,000, landlords have not been able to expand due to difficulties in accessing buy to let finance over the last year. Furthermore, 59% say that lenders fail to consider their individual circumstances, and 56% that current buy to let lending criteria is too conservative. There are two ways a landlord can obtain a buy to let mortgage, either by going direct to a lender or by using the services of a broker, and the NLA believes it is vital that landlords have access to a wide range of products in order to find the one most appropriate solution for them. ‘A significant number of landlords are having trouble accessing finance and expanding, which is a major concern because the private sector is vital in meeting the ever increasing demand on housing at the moment,’ said Carolyn Uphill, NLA chairman. ‘Many landlords are frustrated as lending criteria is too prescriptive. There’s no one size fits all mortgage, and as the leading landlord association in the UK we understand that landlords need access to a range of products that meet their specific individual circumstances,’ she explained. She pointed out that NLA Mortgages provides a free online buy to let mortgage search facility which sources from over 600 mortgage products to help landlords find the best product to suit their needs. Mortgage schemes that are not available in the general marketplace are also available through NLA Mortgages, all via the NLA website. ‘We urge any landlords who are having difficulty in finding a mortgage that meets their needs to get in touch to see how NLA Mortgages can help,’ she added. The NLA’s research also asked landlords what they would say to lenders if given the opportunity. ‘Mortgage lenders are becoming increasingly difficult to work with. The requirement to produce further information on income is causing delays and becoming problematic…if your income does not fit their box on criteria they say no, which wastes time and slows the process,’ said one. ‘Mortgage lenders should consider each borrower on their own merits, and not impose a blanket ban on lending to individuals earning less than £25,000, regardless of their personal circumstances. Someone who is lucky enough to have no outgoings, servicing a mortgage with personal income of £25,000 a year is more than adequate,’ said another. Continue reading
Distressed properties in the US selling 37% below market value, latest data suggests
Distressed residential properties in the United States sold for a median 37% below market prices in September, according to the latest foreclosure report. This was $130,000 nationwide compared to the median price of $205,000 for non-distressed homes during the month, according to the data from RealtyTrac’s report covering the third quarter of the year. ‘Even as the share of distressed sales decreases, the average discount on distressed properties continues to be substantial because the primary factors driving that discount are still in place,’ said Daren Blomquist, RealtyTrac vice president. ‘Distressed properties are typically in poor condition and have a highly motivated seller whether that seller is the distressed homeowner in foreclosure or the bank that has repossessed the property through foreclosure,’ he explained. The major metropolitan areas were distressed homes were most heavily discounted were Pittsburgh and Milwaukee both at 67%, Cleveland at 64% and Memphis at 59%, a breakdown of the data shows. Overall, the median sales price of US residential properties, both distressed and non-distressed combined, was $195,000 in September, an increase of 1% from August and 15% from September 2013, the largest year on year increase since October 2005. September 2014 was also the 30th consecutive month in which the median home price increased annually. ‘Median home prices nationally in September were boosted by a new low in the share of distressed sales during the third quarter, resulting in fewer home sales on the lower end,’ Blomquist pointed out. ‘The share of homes selling above $200,000 is up 7% from a year ago, and the share of homes selling above $500,000 is up 15% from a year ago,’ he added. Continue reading
