TSI
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
Uncertainty creeping into UK housing market likely to be short term
Uncertainty is set to creep into the UK housing market due to stamp duty changes, the European Union referendum and forthcoming regional elections, it is claimed. Overall short term confidence in the market has flattened following the rush from buy to let investors to beat the extra 3% imposed on additional homes at the start of April, says the latest monthly survey report from the Royal Institution of Chartered Surveyors (RICS). Survey respondents say that the uncertainty is fuelled by stamp duty changes, a weaker pound, the UK potentially leaving the EU (Brexit) and devolved elections in Scotland and Wales and local elections in England. The report also shows that the rate of house price inflation is slowing with indicators pointing to more modest house price gains and house prices have fallen further in London than elsewhere. These factors have been most strongly felt in central London, where 38% more respondents expected to see house prices fall over the next three months. The report also says that across the UK, while expectations around the number of new house sales peaked following the Chancellor’s Autumn Statement, this trend has reversed with 2% more respondents expecting to see the number of sales fall rather than rise over the coming months. Confidence around house price inflation has also dampened with 17% of respondents (net balance) expecting to see prices rise over the next three months, compared to 44% (net balance) in December. However, the longer term outlook suggests that prices will still be expected to rise by more than 4% each year for the next five years across England and Wales, with prices in London projected to grow by a broadly similar amount rising by 3% each year over the same period. Despite, the increased rates of stamp duty tax, now expected to be paid by prospective landlords, rent inflation, while expected to increase, is not predicted to rise any faster than it has in previous months. Although over the next five years respondents continue to anticipate rents will increase by an average of 4.5% per annum, there is no indication yet that tax increases are being passed on to the tenant. The expected rate of rent of inflation has remained constant for the past year at around 3%. ‘As expected, the buy to let rush has now run its course and, as a natural result, the market is starting to slow. But there are other significant factors that are currently weakening short term confidence in the UK property market,’ said Simon Rubinsohn, RICS chief economist. ‘Elections inevitably bring with them periods of uncertainty in the market, and our figures would suggest that next May’s devolved elections are no exception. Likewise, the EU referendum, is likely to be an influencer in terms of the damper outlook for London in particular,’ he added. ‘However, all indications suggest that whatever the outcome of the forthcoming elections and referendum, in the long term, the imbalance between demand and… 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
