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Positive outlook for buy to let lending in the UK
Intermediaries’ are positive about their future levels of mortgage business over the next year, according to the latest quarterly intermediary survey. On average, advisers expect to do 6% more overall mortgage business in the fourth quarter of this year compared with the third quarter, up slightly from an average predicted quarter on quarter increase of 5% in the second quarter, according to the survey from buy to let lender Paragon Mortgages. In terms of levels of buy to let mortgage business, advisers expect to see a 3% average increase over the next 12 months, which is unchanged from the level recorded in the second quarter of the year. More than half, 56%, of intermediaries expect their levels of buy to let mortgage business to remain stable over the next year. In comparison, 40% said they expect to do more buy to let business, with 19% expecting there to be an increase of 6% or more. The majority, 69%, of intermediaries identified rental demand as the most important factor for determining the expected change in their level of buy to let mortgage business over the next 12 months, followed closely by property prices at 65% and interest rates at 64%. ‘It is positive to see that average expected levels of mortgage business, both general and buy to let, have increased since the previous quarter, particularly following the recent implementation of the Mortgage Market Review,’ said the firm’s director of underwriting Paul Clampin. ‘Demand from tenants continues to remain high and is likely to do so over the foreseeable future as more people move into the private rented sector. Therefore, this is likely to have a positive impact on intermediaries’ expected levels of buy to let business going forward,’ he added. Continue reading
Prime central London experiencing shortage of three bed homes to rent
As the lettings market in the capital continues to thrive, one leading national estate agent is experiencing a shortage of rental properties available, particularly for three bedroom homes which are in high demand. The demand for three bedroom homes for rent in central London is seemingly insatiable, according to Zoe Rose, head of London lettings at Strutt & Parker. ‘As soon as we get a good one on our books, it lets in a flash. We recently let a three bedroom lateral top floor apartment on Cranley Gardens in South Kensington for £1,300 per week within two days on its first viewing and similarly we let a three-bedroom apartment on Ladbroke Gardens within one week for its asking price of £1,500 per week,’ she explained. She said that while buy to let investors often believe owning a one or two bedroom flat is a failsafe option when it comes to attracting tenants and optimising rent, the firm’s experience suggests that it’s actually three bedroom homes that are the most sought after at present. Indeed, Rightmove recently reported that more than a third of its top 5,000 most viewed homes were all three bedroom properties. ‘Owning a three bedroom property is clearly good news for landlords. They are a great investment because they have such broad appeal. Prospective tenants include young couples, small families and older couples looking to downsize. At a time when there has been a surge in working from home, having a spare room to use as an office is also very attractive to tenants,’ Rose pointed out. Strutt & Parker’s latest figures for lettings transactions in the third quarter of 2014 also indicate that it’s the larger, more expensive properties that are performing most strongly. When compared to the same period last year, transactions are up 18.4% for properties between £2,000 and £2,999 per week, up 14% for properties between £3,000 and £3,999 per week and up 16.7% for properties over £4,000 per week. However, lower priced properties costing less than £999 per week to rent, were down 7.5% on last year and properties between £1,000 and £1,999 per week were also down very slightly by 1.4%. Rose predicts that 2015 will be a good year for landlords with property in the prime central London market. ‘We are anticipating a 2.5% increase in lettings prices in prime central London for 2015 and we’ve already seen 2% growth for lettings in 2014,’ she explained. ‘This slow but steady growth will be underpinned by the simple fact that there are still so many people out there that can’t afford to buy a home in London and these people will continue to rent. Not to mention the large number of people who enjoy the flexibility of renting and the threat of rising interest rates rising will also play an important contributing factor,’ said Rose. ‘We currently have 25% less property available for… Continue reading
Prime central London property market sees second quarter of sales decline
The prime central London property market is seeing further adjustments with the latest figures showing that the overall value of properties transacted is down 21.1%. Properties under £2 million saw a decrease of 20.8%, while those in the £2 million to £5 million bracket went down by 27.1% in the third quarter of 2014 compared to the same period in 2013. The data from Strutt & Parker also shows that £5 million plus homes performed slightly better, but still saw a decline of 15.2%. A similar pattern emerged in terms of volume sales, which were down 26.8% overall, with all price bands seeing a reduction in the number of transactions. However, the firm points out that when looking back over the past five years, these statistics are not so concerning as the volume of transactions are actually up by 3.1% compared to the rolling five year quarterly average. Over the past five years, the £2 million to £5 million price bracket has seen a 20.9% increase, and the £5 million plus bracket is up by 19.6%. In contrast, the sub £2 million price bracket is marginally down by 2%. ‘Whilst total values transacted in central London are markedly down on this time last year, we must have a sense of perspective and accept that 2013 was an exceptional year. It is really not surprising that prices are stabilising after the dramatic price increases we saw over the past 12 months,’ said Stephanie McMahon, head of research at Strutt & Parker. ‘Sales volumes are also showing a slowdown and two quarters of data do suggest a trend of decline. This is as we predicted. We have seen these conditions before in the run up to a General Election when speculation mounts. It is a recognisable pattern and we do not believe it spells doom for the property market in the long term,’ she added. According Lulu Egerton, Partner at Strutt & Parker in Chelsea, there is no doubt that prime central London property is in the midst of a price correction. ‘Properties which are priced competitively and realistically are still selling and we are achieving good figures,’ she said. ‘After a spectacular year in 2013, asking prices had become inflated and they are now in a period of correction where prices are being adjusted down by around 5% to 10% as buyers become far more price sensitive,’ she added. Continue reading
