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Research suggests buy to let landlord confidence in the UK is low
Recent and forthcoming changes to tax for buy to let landlords in the UK seems to have dented confidence with new pieces of research showing many are set to re-evaluate their situation and put new strategies in place. One new report reveals that just one in five landlords believe there is still money to be made in the buy to let market even although many purchased buy to let property in the last three months to beat the Chancellor's stamp duty reforms. The study conducted by online letting agent PropertyLetByUs, shows that 43% of landlords are considering putting their properties into a limited company to beat the tax rises. Some 5% of landlords have sold buy to let property because of the increased tax burden and 6% plan to reduce their property portfolio and invest their capital in stocks and shares. However, despite all the rhetoric about buy to let profits, only one in six landlords are seeing a reduction in their profits and many of them appear to have strategies in place to off-set the tax rises such as opting for incorporation, but they are also set to increase rents. The surge in landlords investing in buy to let property in the first quarter of 2016 has created a bubble of new rental properties in some parts of the UK, according to a separte report from research consultants BDRC Continental. It suggests that in the longer term, it is likely that the tax changes will limit the supply of rental property and discourage potential new landlords from investing in the buy let market. The good news is that tenant demand will continue to rise, as unaffordable house prices push home owning out of reach for many people. Indeed, according to BDRC Continental’s latest quarterly Landlord’s Panel research report confidence is at the lowest level since the research began almost a decade ago. ‘There are few happy ever after tales here. Many private landlords in Britain are really concerned about the impact of the 2015 Budget when tax relief on private rental properties was cut, and given the housing shortage, the potential knock-on effect on renters and the supply of rental homes is something that we all need to care about,’ said Mark Long, director at BDRC Continental. The report says that confidence in three key metrics has seen the biggest falls year on year; that’s business expectations for the UK Private Rental Sector, UK Financial Markets and Own Letting Business. The majority of landlords, 59%,believe that the 2015 Budget will decrease their profitability Some 81% of private landlords with 20 plus properties believe that they will experience a decrease in profitability, twice as many as single property landlords. Landlords with buy to let mortgages feel hardest hit. Just 39% of those with a buy to let mortgage rate their short term prospects as good or very good, compared to 48% of landlords who are not leveraged. The research also… Continue reading
US existing home sales bounce back after unexpected decline
Sales of existing homes in the United States bounced back in March with big gains in the Northeast and Midwest, according to the latest index data to be published. Total existing sales, which are completed transactions that include single family homes, town homes, condominiums and co-ops, increased by 5.1% to a seasonally adjusted annual rate of 5.33 million in March from a downwardly revised 5.07 million in February. The data from the National Association of Realtors also shows that overall sales rose in all four major regions last month and were up 1.5% compared with March 2015. Lawrence Yun, NAR chief economist said the rebound was welcome after an uncharacteristically large decline in February. ‘Closings came back in force last month as a greater number of buyers, mostly in the Northeast and Midwest, overcame depressed inventory levels and steady price growth to close on a home,’ he explained. ‘Buyer demand remains sturdy in most areas this spring and the mid-priced market is doing quite well. However, sales are softer both at the very low and very high ends of the market because of supply limitations and affordability pressures,’ he added. The index also shows that the median existing home price for all housing types in March was $222,700, up 5.7% from March 2015 when it was $210,700. March's price increase marks the 49th consecutive month of year on year gains. Total housing inventory at the end of March increased 5.9% to 1.98 million existing homes available for sale, but is still 1.5% lower than a year ago when it was 2.01 million. Unsold inventory is at a 4.5 month supply at the current sales pace, up from 4.4 months in February. ‘The choppiness in sales activity so far this year is directly related to the unevenness in the rate of new listings coming onto the market to replace what is, for the most part, being sold rather quickly,’ said Yun. ‘Additionally, a segment of would be buyers at the upper end of the market appear to have been spooked by January's stock market correction,’ he explained. Matching the lowest share since August 2015, properties typically stayed on the market for 47 days in March, a decrease from 59 days in February and below the 52 days in March 2015. Short sales were on the market the longest at a median of 120 days in March, while foreclosures sold in 50 days and non-distressed homes took 46 days. Some 42% of homes sold in March were on the market for less than a month, the highest since July 2015 when it was 43%. The data also shows that the share of first time buyers was 30% in March, unchanged both from February and a year ago. First time buyers in all of 2015 also represented an average of 30%. ‘With rents steadily rising and average fixed rates well below 4%, qualified first time buyers should be more active participants than what they are right now. Unfortunately,… Continue reading
Prime property prices in New York driven by strong demand and limited supply
A global powerhouse, domestic and international wealth has fuelled the expansion of New York’s prime residential real estate markets, according to a new analysis report. New York is one of the most diverse, globally connected and high performing cities in the world and alongside London, it stands apart from any other city as a true global powerhouse, says the prime residential report from international real estate firm Savills. It points out that as a world leader in financial services, technology and media, New York hosts a large number of global company headquarters, is an important centre of education and a tourism destination. Download the full PDF report > > The sheer diversity of factors in the city’s success make New York’s residential real estate highly sought after, from the international wealthy seeking a foothold in a global city through to local young families realising the appeal of urban living. It explains how strong occupier demand and limited supply has pushed up prices so affordability is a growing issue for many. However, although costly by US standards, prime New York residential real estate is still relatively good value by global levels . For example, prime property prices in New York are 35% less than London and 61% below Hong Kong. But prices are rising, up by 42% from $1,200 per square foot in 2008 to $1,700 per square foot in 2015. The longest established prime residential markets are in Manhattan on the Upper East Side and Upper West Side, bordering Central Park. The Upper East Side is known for its large, classic New York apartments, while the Upper West Side is a somewhat more relaxed and accessible alternative. Together, these two large neighbourhoods accounted for 38% of all $1 million plus transactions across Manhattan and Brooklyn in 2015, and 47% of all $5 million plus transactions in 2015. The report explains how the generation of new wealth in the city has pushed the prime markets into new neighbourhoods. The Financial District saw 385 deals over $1 million in 2015, more than 10 times the 35 deals recorded in 2005. Harlem, Williamsburg and Park Slope all saw increases of a similar magnitude and even Downtown Brooklyn, a market where no deals over $1 million were seen in 2005, recorded 64 such deals last year. At the upper end of the prime market, Chelsea, Greenwich Village, Tribeca and Midtown have all seen rapid growth in the number of $5 million plus sales. From just a handful each in 2005, all these neighbourhoods recorded more than 50 in 2015. This comes as new condominium stock is delivered to appeal to the super prime market, the report says and price growth has been especially apparent in Midtown where many super prime condo schemes are concentrated. The average sales price here rose by 193% to $3.8 million in the 10 year period. New York’s prime residential market is dominated by two property types: cooperatives and condominiums (condos). Condos have… Continue reading
