Tag Archives: africa
Housing development land prices in UK down by 2.3% quarter on quarter
Residential development land prices in the UK fell by 2.3% between April and the end of June and activity remained steady in the run up to the historic vote on the future of the country in the European Union. The quarterly reduction extended annual declines in pricing for prime central London and greenfield development land, but urban brownfield land is still recording strong annual growth, according to the latest index from real estate firm Knight Frank. Greenfield development land prices declined by 2.3% between April and the end of June taking the annual fall to 3.8%. In prime central London, average residential development land prices fell for the third consecutive quarter, dropping by 6.9%. Average values are down 9.4% on an annual basis, but the report points out that this follows several years of very strong growth, so the index has returned to 2014 levels. Developers reported that activity continued in the run-up to the EU referendum vote, with house purchase rates remaining steady, especially in the regional markets. ‘The fundamentals of the market, characterised by an imbalance between supply and demand and ultra-low mortgage rates, remain unchanged,’ said Grainne Gilmour, head of UK residential research at Knight Frank. However, she pointed out that some house builders and developers are increasing their margins and hurdle rates on greenfield and prime central London land deals. ‘This is in order to allow for increased uncertainty over the future economic landscape as the UK negotiates its way to a new position within the Europe. This is feeding into land prices,’ she explained. In terms of greenfield sites, smaller plots for around 150 to 200 units close to urban areas and transport links are still the most in demand, with higher levels of competition for such opportunities and the report also points out that construction costs, which have risen notably over the last two years, are also a factor in land prices, especially in the central London market. Indeed, in London the cost of construction is altering the viability of some sites and in some cases this has led to a trimming of land costs. Urban land values are up by more than 9%. There is still strong demand for city centre sites in key regional locations, and in outer London boroughs, although the dynamics of each market are closely aligned with the demand and supply fundamentals at play in the local area. Continue reading
Landlords in UK should plan ahead for new energy regulations
New Government plans in the UK will require buy to let landlords to spend up to £5,000 to make their rental properties more energy efficient. The new legislation, which kicks in 2018 will require landlords to raise the energy efficiency of their homes to at least Band E for new tenancies by carrying out improvements such as insulation, cavity wall filling and new boilers. It has been suggested by the Residential Landlord’s Association that a total of 330,000 buy to let homes, typically Victorian and Edwardian properties, will be affected and the RLA has warned the new so called ‘green tax’ could push rents even higher. The Government has proposed a £5,000 cap, claiming that most landlords will pay no more than £1,800 but according to Peter Armistead of Armistead Property, the Government should be providing alternative support, now the Green Deal has ended, to help fund energy efficiency improvements. ‘Landlords have been bombarded with new tax measures over the last 12 months and this is yet another cost that some landlords will have to face. Landlords can’t be expected to absorb all these new taxation measures and just stand back and watch their profits being eroded. Unfortunately, it will be tenants that will have to bear the brunt of these costs through higher rents,’ he said. ‘While it is a good move to improve the quality of rented accommodation, there should be another scheme to help landlords make the improvements. The Green Deal gave loans to improve energy efficiency and these loans were then repaid by tenants, who as a result of the works were paying lower bills,’ he explained. To help spread the improvement costs, landlords should start upgrading their properties, before it becomes mandatory in 2018 for new tenants. Buy to let mortgage providers will require borrowers to comply with the regulations and valuers are likely to amend their criteria in the run up to 2018, making buy to let mortgage applications more difficult. ‘Most insurance policies require landlords to comply with all relevant statutory requirements. This may mean that it could be more difficult to get insurance unless landlords comply with the forthcoming regulations. Landlords with F and G rated properties need to manage the upgrading and improving their properties to avoid potential prosecution and fines,’ added Armistead. Continue reading
Stamp duty change more of an impact than Brexit on prime central London
Stamp duty change is more of an issue for the prime central London sales market than the UK leaving the European Union, new research suggests. However, the vote to leave the EU has created a backdrop of short term uncertainty that is affecting behaviour in the prime central London property market. As a result prices are now down 1.5% compared to a year ago and the number of new prospective buyers has fallen by 6.2% over the same period, according to the latest index from real estate firm Knight Frank. The index report also shows that the number of exchanges, including new build properties, fell by 10.5% in the first half of 2016 but the number of viewings was 40.8% higher than in 2015. However, the sub-£1 million market registered a relatively stronger performance, with annual price growth of 1.1%. According to Tom Bill, head of London residential research, early indications suggest the Brexit vote is reinforcing existing pricing trends and viewing the referendum in the context of the preceding two-year period is helpful. In June 2014, annual growth in prime central London was 8.1%, the last peak before a period that saw growth fall steadily to -1.5% in July 2016. ‘This slowdown was a natural consequence of strong price rises between 2009 and 2013, however the process was accelerated by two stamp duty increases and a series of other tax measures,’ said Bill. ‘Despite the widespread media coverage devoted to the EU referendum and its potential impact on house prices, the primary factor curbing demand in prime central London remains stamp duty. The result of this two year slowdown is that vendors had already begun to adapt to the new pricing environment and in many cases Brexit has been a trigger to make overdue reductions to asking prices,’ he explained. ‘Indeed, had the result of the referendum been a victory for Remain, it is likely there would have been a similar mismatch between expectations and reality that followed the 2015 general election. Following the formation of a majority Conservative Party government, high stamp duty costs acted as a brake on demand that was widely expected to surge. Since the vote, a number of buyers have requested discounts due to the climate of political and economic uncertainty,’ he pointed out. ‘However, where the asking price was set at an appropriate level before the vote, deals are proceeding with no reductions. In other cases, the Brexit vote has encouraged vendors to show increased flexibility. It is too early to say whether the reductions are likely to trigger higher transaction levels,’ he added. Bill also pointed out that there is no uniform picture across London and the situation is compounded by thin trading during seasonal summer lull. However, it is possible to see the benefit of recent downward repricing in some markets. In Belgravia overly ambitious vendor expectations, which had led to weak trading over the past two years, has been replaced by a more realistic approach from… Continue reading
