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EU citizens renting homes in UK concerned about Brexit effect
Over 30% of European Union (EU) citizens living in the private rented sector in the UK say they are worried that the result of the referendum will make it harder for them to rent a home. Some 31% expect difficulties and 25% are worried that landlords will be less willing to rent to non UK nationals due to Brexit, according to the latest survey from the National Landlords Association (NLA). The poll found that 18% of private renters, approximately two million people, are EU citizens who currently have the right to freedom of movement within the EU. However, there are concerns about whether or not EU citizens will be able to remain in the UK if the right to freedom of movement is removed or restricted during the process. ‘These findings show that a significant proportion of tenants from the EU are genuinely concerned they’ll have to uproot themselves from their work, studies, or friends and family on the strength of the referendum result,’ said Richard Lambert, NLA chief executive officer. ‘There is still a great deal of uncertainty surrounding the referendum, but we want to reassure European citizens living in the UK it’s simply not the case that landlords will stop letting to them just because the country has decided to leave the EU,’ he pointed out. ‘However, if the right to freedom of movement within the EU is curtailed during the exit negotiations, then landlords may have no other option than to end tenancies rather than facing fines and even jail time if they let property to someone without the legal right to remain in the UK,’ he added. Continue reading
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
