TSI
Brexit could create opportunities for UK farm land market
The decision by the UK to leave the European Union has created uncertainty for farm land values but it could also create opportunities, according to new research. In the short term the effect could be muted, according to the initial analysis from real estate firm Savills. It says that a weak Pound creates export opportunities and if this continues into September there will be a significant increase in farm subsidies to British farmers in 2017. It also points out that a weak Pound creates a favourable buying environment for overseas investors and this, along with the potential of reduced supply due to uncertainty may help to support farmland values. However, according to Ian Bailey, head of rural research at Savills, in the event of a significant reduction in farm subsidies, and therefore incomes, the negative effect is likely to be greater on rents than land values. ‘The full impact of Brexit on all of the UK's property markets will be very dependent on the macroeconomic background and the evolution of the story over the next two to three years. We must stress it is early days and there are many unknowns,’ said Bailey. ‘Uncertainty has to be the key factor and this will principally be around those factors that have direct impact on farm incomes. It is likely that farmland market activity in the remainder of this year will be more subdued as potential sellers wait and see,’ he explained. The report is Savills’s first analysis of how the change might affect rural markets in the UK and this is likely to be updated on a regular basis over the following months as hard data, anecdotal news and forecasts evolve. ‘Uncertainty is the key factor and it is very likely that farmland market activity in the second half of this year will be more subdued as potential sellers wait and see. Our research shows just over 100,000 acres were publicly marketed across Great Britain in the first half of 2016, which was on a par with activity for the same period of 2015,’ Bailey said. ‘Historic trends suggest uncertainty creates a lull in market activity and this appears to be the case across England, where supply in the first half of this year, at 68,000 acres, was 10% lower than the same period last year,’ he pointed out. However, in Scotland and Wales the opposite pattern was recorded. ‘Anecdotal evidence suggests that, in Scotland at least, there has been a degree of referendum fatigue which has not hindered activity. In Wales the market is very small and a few farms can make a difference either way,’ Bailey added. Savills also suggests that the uncertainty will principally be around those factors that have direct impact on farm incomes. These will include the UK’s international trade relationships and the level of farm support that will replace the Common Agricultural Policy (CAP). Currently subsidy represents about 67% of the average UK farm income. However, farming subsidies under the… Continue reading
Poll shows over half of UK landlords refuse requests to improve energy efficiency
Over half of UK tenants claim their rental property is cold and draughty and 58% say their landlords has refused to make energy efficiency improvements, a new poll shows. Since the beginning of April 2016 tenants living in F and G rated homes have been able to request improvements, such as more insulation and landlords are legally bound to bring the property up to the minimum of EPC (Energy Performance Certificate) E rating. Under the new legislation, if a tenant requests a more efficient home and the landlord fails to comply, the landlord could ultimately be forced to pay a penalty notice. The survey, conducted by online letting agent PropertyLetByUs, found that seven out of 10 tenants have indeed made requests to their landlord to make improvements to the property but over half have been refused. The survey also found that 76% of tenants claim the property they rent has an old gas boiler, which is unreliable and 48% say their property does not have double glazing. According to data from the European Union it is estimated that over 10 million British families live in a home with a leaking roof, damp walls or rotting windows. Damp, condensation and mould is a big problem in many rental properties as a result of older, single glazed homes. Jane Morris, managing director of PropertyLetByUs, said it is very disappointing to see that so many tenants have been refused when they have requested their landlords make improvements to the property. ‘Landlords that are trying to rent cold, draughty and damp accommodation should immediately start improving their properties. Otherwise, they could be falling foul of the legislation that requires them to bring their properties up to an E rating,’ she explained. ‘It is estimated that around one million tenants are paying as much as £1,000 a year more for heating than the average annual bill of £1,265. These excessive costs are mainly down to poorly insulated homes, many of which are thought to be the oldest and leakiest rental properties in Europe,’ she pointed out. ‘Landlords that are currently renting out F and G rated properties should be looking at the improvements they can make and researching costs and available help, through the Energy Saving Advice Service (ESAS) or Home Energy Scotland,’ she added. Continue reading
Economy slowing and lower oil prices affecting Abu Dhabi’s rental markets
Average housing rents in Abu Dhabi have fallen for the first time in three years, driven by thousands of job cuts and an increase in the cost of living. The first signs of long expected falls in housing rents in Abu Dhabi started to appear in the second quarter, according to new reports from property brokers JLL and CBRE. Residential property rents in Abu Dhabi have fallen for the first time in three years at a time when jobs are being cut and the cost of living is increasing. The average rental price of a prime two bedroom apartment fell by 2% in the second quarter of 2016 compared with the first quarter, according to the latest report from real estate services firm JLL. The latest report from property firm CBRE also shows that there was a 2% fall in apartment rents in the second quarter of the year while it adds that villa rents fell by an average of 1%. ‘While supply remains stable, the reduction in demand has now started to cause vacancy rates to nudge upwards, indicating we have now reached a tipping point with rents declining for the first time in three years,’ said David Dudley, head of JLL’s Abu Dhabi office. The firm believes that plans by the state owned oil company Adnoc to cut 5,000 jobs by the end of the year, and staff cuts at other government companies, means fewer people are attracted to the emirate and apartments are left empty. JLL is forecasting that rents will fall further this year as more expats and their families are expected to leave as their tenancies expire at the end of the academic year. ‘We expect the impact of these job cuts and reduced incomes to become more pronounced over the summer, as some people look to either leave or downsize. This will push vacancy rates up further and cause rents to decline,’ explained Dudley. The CBRE report also points to a drop in incomes as being behind demand falling for rental apartments with tenants looking for cheaper lets due to a combination of falling wages, a reduction in allowances and benefits, the removal of fuel and water subsidies and a new 3% municipality fee on Abu Dhabi expat rentals. ‘With economic challenges expected to continue in the short term, we anticipate further deflation of high end luxury rates as reduced corporate demand creates a more tenant led market,’ said Matthew Green, head of research in CBRE’s office. He believes that with just 14,500 new homes expected to come to the market over the next two and a half years, around 5% of the current housing stock most of which will be aimed at the upper end of the market, rents for more afford¬able homes are likely to remain fairly flat. ‘With limited stock against current requirements, rental rates for affordable units have remained steady with minimal fluctuation recorded against the general slowdown observed in the upper segments,’ he added. But… Continue reading
