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Rents in England and Wales reach new record level
Rents across England and Wales reached the highest level on record between August and September in a trend increasingly divergent from the wider rate of consumer price inflation, new data shows. Average rents now stand at a new record of £816 per month, after rising by 1.6% month on month and 6.3% year on year, according to the latest buy to let index from Your Move and Reeds Rains. Trends in the private rented sector are increasingly divergent from the official measure of wider inflation. According to the Office for National Statistics consumer prices are by contrast now 0.1% lower than in September 2014. On a cumulative basis the difference with inflation is starker, the index report shows. Rents are now 24.4% higher than in January 2010, while the index of CPI inflation is just 14.1% higher over the same period. This means rents have risen by 10.3% in real terms since the start of the decade. ‘Rents are rising strongly in real terms due to the recent acceleration in wages, and the much deeper and longer term shortage of available properties across the UK of all tenures,’ said Adrian Gill, director of estate agents Reeds Rains and Your Move. ‘Meanwhile, as the price of everyday essentials plateaus and even falls, rents are no longer following the same broad trends. The cost of a place to live has now uncoupled from the cost of living. As long as this supply and demand imbalance keeps up, it is hard to see any reversal in the speed of rent rises,’ he explained. ‘In many ways housing is more essential than other expenses, so this also raises important questions about the nature of inflation. In this case, reform of the UK housing market and planning system is the only serious way to maintain steadier rental inflation,’ he added. The data also shows that five out of 10 regions of England and Wales have also seen individual rent records in September. Rents in London are rising most rapidly, up 11.6% on an annual basis to a new record of £1,301 per month. The annual change in London has also overtaken the East of England, where rents are now rising marginally more slowly, yet are still up 8.8% over the last 12 months. Record rents in the East Midlands are now 6.7% higher than a year ago, at £603 per month, while the West Midlands has seen its own record of £592 per month, or 5.2% higher than in September 2014. Meanwhile, South Western rents have risen at a comparable annual rate of 5.5% to stand at a fresh local record of £691 per month. The final region to see a local record, rents in the South East now average £831 per month, but have risen more slowly, by 3.6% since September 2014. ‘We are in the middle of… Continue reading
Steady price growth forecast for London’s prime property market
Homes in London’s prime property market are set for steady price growth in the mid term as the market adjusts to new constraints such as tax and inflation, new research shows. Stamp duty reform at the end of last year, very low inflation and the mortgage market review which came into being in 2014 will continue to moderate London’s prime housing markets over the short term, according to the latest five year forecast from real estate advisor Savills. But the fundamentals of wealth generation and demand point to a steady medium term price growth and the key trend will be different patterns of growth across the different tiers of the prime London market. The prime market covers a broad swathe stretching from Ealing in the west to Canary Wharf in the east and from Highgate in the north to Wimbledon in the south, dictated as much by price band as by location. As such, the higher value markets of prime central London, where the average house price in the Savills index is around £5 million, are expected to remain flat next year, but record five year growth of 21.5% given the medium term forecasts for international and domestic economic growth and wealth generation. Prime central London values are currently showing annual price falls of 4.6% but are expected to have largely absorbed the impact of higher stamp duty charges by the end of 2015, to close 2015 some 2% down year on year. Other prime London markets are less impacted by higher stamp duty charges and are expected to see moderate price growth through next year, rising 2%, the report says. However, tighter lending criteria will continue to be a constraining factor for these more domestic markets, capping five year growth at lower 18.2%. ‘The stamp duty reform of December 2014 was a defining moment for the top end of the prime London market, particularly as it was looking fairly fully priced having grown significantly to outperform the rest of the market over a 10 year period,’ said Lucian Cook, Savills head of residential research. ‘It is fair to say that last year’s Autumn Statement took the market by surprise and has essentially prevented any bounce back in values post-election, leaving little scope for significant value uplift next year, particularly in a low inflation environment,’ he explained. ‘As such, we have pushed out our five year forecast by a year to 18 months, building in a period of little or no growth as the market continues to adjust to a new fiscal and regulatory environment,’ he pointed out. ‘Thereafter, we expect the depth of the market and the maturity of London as a global city, coupled with job creation and economic growth forecasts to return to long term trend rates of real price growth, particularly, but by no means exclusively, in core prime central London… Continue reading
London Mayor secures planning change for the city
The Mayor of London has welcomed the UK Government's decision to reconsider planning proposals that would have potentially seen valuable office space in the city turned into homes. Boris Johnson has been actively lobbying the Government to amend proposals that he believes would have put the capital's key business districts at risk by allowing office space to be converted into homes without developers applying for planning permission for the change of use. Now the Minister for Housing and Planning, Brandon Lewis, has announced that he will amend the original proposals to ensure London is able to maintain a stock of quality office space in existing key areas, and allow the city to continue to attract jobs and growth. Last year the Mayor successfully negotiated for defined areas of central London to be exempt from a Government policy that allowed office space to be converted into homes without developers applying for change of use planning permission. These areas covered the Central Activities Zone which incorporates the City of London, the South Bank, parts of Kensington and Chelsea, the West End, the commercial area north of the Isle of Dogs and London's Enterprise Zones in the Royal Docks, plus the part of the City Fringe in east London which makes up the emerging Tech City opportunity area. However new proposals announced by the Government would have removed these exemptions which Johnson believes potentially threatened London's internationally important business locations. Lewis said that the Government will allow local authorities to bring forward special planning regulations known as Article 4 directions if they wish to continue determining planning applications for the change of use. This will ensure that London's commercial heartlands will be protected from planning changes. ‘I am delighted that Government has put policies in place that will lead to the protection of our thriving business districts. Removing the planning exemption in those areas would have put the future economic growth of this city at risk, but by agreeing to amend their proposals the Government are ensuring we will be able to maintain the full stock of quality office space required for our city to continue to prosper,’ said Johnson. The Mayor is firmly on track to deliver 100,000 affordable homes over his two terms, with more than 94,000 already built. In the last year there were almost 18,000 affordable completions, the most in any year in London since 1991 and the equivalent of a new affordable home built every 30 minutes. Since the Mayor took on 670 hectares of public land in 2012 some 99% has been released for development, in line with the Mayor's 100% target by the end of his term in 2016. Land already released by the Mayor includes east London's Royal Docks, the Beam Park site in Rainham, and the former Cane Hill hospital site in Croydon. The current exemptions will remain in place until May 2019, providing time for these local authorities to make an Article 4 application to remove the rights… Continue reading
