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Research reveals deposit gap between Greater London and rest of UK
The average deposit for a Greater London property is nearly three times or 170% more that of the rest of the UK, at £127,000, new research shows. Average deposit has increased by nearly £30,000 or 30% for London home movers in the last three years, the report from My Home Move also shows. However, overall, the average UK deposit size as a proportion of purchase prices has decreased by 1.8% since 2013, but home movers’ deposits remain high as house prices increase. The figures show that national the average property price in 2013 was £162,040 with a deposit of £44,690, rising to £173,202 and £45,534 in 2014 and £182,293 and 46,976 in 2015. In Greater London the average property price was £377,855 in 2013 requiring a deposit of £99,375, rising to 439,399 in 2014 with a deposit of £112,266 and £482,512 in 2015 with a deposit of £127,141. So in the UK as a whole the deposit needed in 2013 was 27.58 of the purchase price, falling to 26.29% in 2014 and then falling again to 25.77% in 2015. But in Greater London in 2013 a buyer needed an average deposit of £26.3% in 2013, falling to 25.55% in 2014 but rising again to 26.35% in 2015. ‘The London property market has always commanded greater prices than anywhere else in the UK but our research has shown just how extreme the situation is becoming,’ said Doug Crawford, chief executive officer of My Home Move. He pointed out that London property prices have risen by 27% in the last three years and while the rest of the UK has seen a small decrease in the average deposit size, those looking for a London home are depositing 170% more than their UK counterparts. ‘This situation is unsustainable and has been driven by rising house prices. For some, their deposit will come from the equity in the property they are selling. However, for many, they will still need to save tens of thousands of pounds to make the move onto and up the property ladder,’ he explained. ‘Ultimately, it still begs the question – who is going to help those looking to enter the capital’s housing market and those on the lower rungs of the ladder, first time buyers and second steppers?’ he pointed out. He also pointed out that earlier this year the firm predicted that 100,000 properties would be purchased in 2016 using gifted deposits courtesy of the Bank of Mum and Dad and based on these figures, it looks like a very large portion of these could be based in the Greater London area. Having analysed over 60,000 purchase records to determine the average deposit size paid by home buyers between 2013 and 2015, My Home Move compared these findings to the average property prices held by the Land Registry for the same period. Continue reading
New body launches in UK to bring professionalism to multi home rental sector
With the residential rental sector attracting more investors than ever before the first cross-industry organisation dedicated to driving the professionalism in the sector has been launched. The UK Apartment Association (UKAA) said it will focus on driving up standards of customer service and delivery to ensure that all renters are given the best possible experience. Its creation has been championed by Housing Minister Brandon Lewis, who is calling on the industry to work together to deliver more homes for rent and better standards for tenants. The UKAA aims to differentiate the multi-family housing market from the amateur ad hoc rental service provided by small scale landlords that currently make up the bulk of rentals. ‘I want to see the private rented sector respond to the nation’s housing needs by providing new forms of supply and improved quality and choice,’ said Lewis. ‘I welcome the UKAA as a body that can help build the capabilities of the build to rent sector in this country, bringing together the needs of private renters with the institutional capital that wants to invest in meeting their demands,’ he added. With more than nine million renters in the UK and vast potential for that number to grow, there is a huge opportunity for build to rent developments as an institutional asset class. In recent months alone, the number of developers and investors committing to projects has risen but there is still a distance to go before renting becomes the professional, service led industry backed by large institutional investors that it is in the United States. As the first international partner of the US-based National Apartment Association (NAA), the UKAA will benefit from the experience of the US multi-family industry. A federation of nearly 170 state and local affiliates, NAA encompasses over 69,000 members representing more than 8.1 million apartment homes throughout the United States and Canada. ‘The NAA is eager to bring industry training, best practices and networking opportunities to the UK. In addition, our US members are increasingly seeing opportunities for global growth and are looking to NAA for guidance when entering a new market. Our partnership with UKAA will be invaluable to our association as we address the growing need for a global rental housing industry,’ said Doug Culkin, president and chief executive officer of the NAA. As well as providing a valuable platform for the industry, the UKAA aims to lead educational training, customer service delivery, study tours and provide a suppliers’ forum, market data and a range of resources. A growing number of high profile companies and professionals from across the sector have already signed up as members including Atlas, Hermes, Greystar, Manchester Life and Savills with suppliers including Roomservice by CORT and Yardi. The UKAA is working in conjunction with all of the other industry bodies and is in the process of establishing regional branches, which are so far under way in Manchester and Scotland. ‘This evolution of the rental sector… Continue reading
UK referendum on European Union membership set to hit real estate markets
The forthcoming UK referendum on the country’s future in the European Union poses risks for the re sector due to the uncertainty it is creating, according to a new analysis report. This uncertainty leading up to the vote on 23 June is likely to have a somewhat paralysing effect on investor decisions on real estate purchases, says the report from Standard and Poor’s. It also says that should the country decide in favour of leaving the EU, known as Brexit, then the uncertainty will be prolonged during the subsequent exit negotiations and this may turn investor sentiment more negative. ‘This could potentially reverse the significant boost to real estate asset values that the UK and London in particular has experienced in recent years. Added to this, financial services firms, already under pressure to contain costs, may find an additional reason to reduce office space in London,’ the report explains. ‘Consequently, we consider the risks to the real estate sector of a Brexit may be most pronounced in the commercial real estate sector, particularly in the office segment, more than in retail and logistics,’ it points out. ‘We also think the effects will be more concentrated in London than other parts of the UK. Within the capital, the City of London would be hardest hit, because of a high concentration of international financial services firms,’ it adds. Given the possible negative consequences of Brexit, Standard and Poor’s said that its ratings on real estate investment companies, home builders, and structured financing in commercial and residential mortgage backed assets will require ongoing monitoring. It suggests that in the next few months ahead of the referendum, the uncertainty regarding the outcome of the vote may slightly disrupt the real estate markets. ‘We think it could lead to some deferrals in deals, timed to close after, rather than before the June 2016 vote. We expect that commercial real estate may be more heavily affected than residential overall, as businesses may delay their investment decisions and investors may put on hold contemplated transactions pending more clarity on the referendum result,’ the report says. ‘In our view, a vote in favour of Brexit would accentuate and prolong this period of paralysis since it would most likely take several years for the terms of the exit to be defined. Since the 2009 downturn, wealthy individuals and institutional investors have considered the UK real estate sector a very safe asset class. These assets attracted sustained investor demand primarily for their value preservation characteristics,’ the report explains further. ‘A vote in favour of a UK exit from the EU in June 2016 would likely threaten that perception of safety, at least for some time. A falling UK currency may also contribute to such a change in perception but would also make real estate in the UK less costly to international investors in foreign currency terms,’ it states. It makes the point that residential real estate would not be immune to a Brexit. ‘The… Continue reading
