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Over half of UK landlords will increase rent due to tax cuts, poll shows
More than half of UK landlords who took part in a new poll said that they are likely to increase their tenants’ rents as a direct result to tax changed announced in the Mini Budget. Some 56% said they would need to respond with rent hiked to Chancellor George Osborne’s cutting of mortgage interest reliefs from 45% to 20%, in the poll by lettings agent Rentify. The poll also found that 57% are likely not to expand their property portfolio beyond its current size in the face of the cuts and 23% said they may plan to sell off their current properties. ‘These statistics are a stark reminder that if landlords aren’t incentivised to be landlords then they will just stop buying. The Chancellor’s cutting of the mortgage interest relief remains a very unwelcome decision and one that could irreparably damage the approach of many buy to let landlords and quality of living for their tenants,’ said George Spencer, chief executive officer of Rentify. Spencer said it is not good news coming on the back of recent research showing that more than half of 20 to 39 year olds will be renting property from private landlords rather than living in their own homes a decade from now. He explained that the current mortgage reliefs helped UK landlords offset other costs such as high street lettings agent fees, home insurance, maintenance and repairs costs, as well as council tax and any ground rent. ‘Mortgage interest relief often makes up a large proportion of deductible costs for landlords, and reduces their tax bills significantly,’ he added. Continue reading
Average house prices in UK’s biggest cities up 6.4% in first half of 2015
House prices across the UK’s 20 largest cities increased by 6.4% in the first half of 2015, led by Oxford, London and Glasgow, the latest index data shows. Oxford was the fastest growing city with a ride of 8%, followed by London with house price growth of 6.6% and Glasgow with growth of 6.4%, according to the Hometrack UK Cities House Price Index. Aberdeen was the weakest performer with house prices flat in the first half of the year, while northern cities like Leeds, Manchester, Liverpool and Sheffield, while seeing growth, still have average prices below the peak of the market in 2007. The data also shows that on a quarterly basis prices in these top cities increased by 4.3% while Oxford and Cambridge continue to perform overall like direct extensions of the London market. On a year on year basis growth across all 20 cities covered by the index is 8.4% with an average price of £226,200. At a city level this ranges from 11.6% in Cambridge to 2.9% in Liverpool. Looking to the second half of the year, the index report suggests that the headline rate of growth across the 20 cities index looks set to move higher as continued growth in house prices pushes the year on year rate towards 10% as the recovery spreads and households continue to price low mortgage rates into house prices. The greatest risk on the horizon is an increase in interest rates, recently highlighted by the Bank of England Governor. The report points out that 57% of outstanding mortgage debt is on variable rates, which is lower than the 73% high registered in the middle of 2012. While a year’s worth of new buyers have been subject to tougher affordability tests, the majority of mortgagees have not, Hometrack director of research Richard Donnell pointed out. Donnell explained that many home owners have continued to pay off debt while rates have been low, so any increase in mortgage rates is likely to impact market sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth. ‘Rising demand for property against a backdrop of low supply continues push city level house prices higher. At 8.4%, city level house price inflation is running higher than the overall UK rate. While house price growth might moderate slightly in the second half of the year, it looks increasingly likely that city level house price growth will return to double digits by the year end,’ said Donnell. ‘The greatest risk facing the housing market is an upward movement in interest rates which would check market sentiment, cool demand and result in a marked slowdown in house price growth,’ he added. Continue reading
Commercial property demand up in UK as supply falls
Demand from business for commercial property in the UK rose for the eleventh consecutive quarter, while available space fell for the ninth successive period, the latest sector market survey report shows. The Royal Institution of Chartered Surveyors (RICS) says that as a result, rents are expected to rise at the fastest pace since its survey began in 1998 with 46% more respondents forecasting higher, rather than lower, rent rates going forward. Offices remain the segment of the market where rental expectations remain most buoyant, while retail continues to lag although even in this area, momentum is picking up, while prices are expected to keep rising over the next 12 months. The picture is not dissimilar in the investment market, where purchase enquiries rose again; 53% more surveyors reported an increase in prospective investors over the quarter. Meanwhile, availability continues to decline, exerting further upward pressure on capital values. There were also reports of greater overseas buyer interest, with 36% more respondents seeing more enquiries from overseas investors. Across the whole of the UK, but excluding London, 95% of respondents believe that current commercial market valuations are either at or below fair value, this is roughly unchanged since the first quarter of 2015. However, in London 50% of contributors now feel that commercial property valuations are 'expensive', an increase from 45% in the first quarter. RICS says it was interesting that given the upcoming referendum on the UK’s position in the European Union, when asked if Britain leaving the EU would have significant negative implications for the commercial property market, 44% of respondents felt it would, while 32% believed it would not. Reflecting the high degree of uncertainty, 24% reported they did not know at this point. ‘The results of the latest survey suggest the price of commercial real estate will continue to move higher over the next 12 months and quite possibly by another 10%,’ said Simon Rubinsohn, RICS chief economist . ‘Fortunately, the strength of the occupier market is providing some underlying support for the market. Indeed, the feedback we are getting from around the country tells us that the economic expansion is continuing to broaden out with both tenant demand, and just as significantly, investor interest, rising in all areas,’ he added. Continue reading
