Tag Archives: election
Prime London rental values up but price growth remains muted
Rental values in prime central London continued to climb in May, and annual growth of 4.2% was the highest figure since December 2011, the latest published data shows. It compares to a decline of 1.4% in May 2014 and the positive upwards momentum over the last year has been driven by the recovering UK economy and the transfer of demand from the sales market ahead of last month’s general election, according to the report from Knight Frank. A mood of hesitation around the election, combined with the two bank holidays, meant activity in May was slower compared to last year in what was a stop start market, the report says. Indeed, the number of new prospective tenants was down 12% in May compared to the same month in 2014, while the number of viewings declined 18%. In spite of the recent dip, new prospective tenants and viewings in the 12 months to May 2015 are up by 12% and 7%, respectively, and activity is expected to increase over the summer as part of a seasonal trend among students, families and corporate tenants. Demand has remained strong in markets including Marylebone and Hyde Park, particularly in lower price brackets, suggesting companies and private renters are still cost conscious despite the improving economy. Prime gross rental yields edged upwards to 2.96% in May, their highest level since August 2013, widening the spread between the risk free rate on a 10 year government bond. Meanwhile, in the prime central London sales market annual growth is lower than at any time since the last general election in 2010. Although prices grew 0.3% in May, an annual increase of 2.3% is the lowest since November 2009. ‘This relatively low level of growth underlines the gap between the expected impact of the result and the reality of a property market still digesting a series of tax changes,’ said Tom Bill, head of London residential research at Knight Frank. Continue reading
Rents in UK set to rise in next five years, according to lettings agents
A third of lettings agents in the UK reported that rents increased in April, the latest data shows, and many believe they will continue rising over the next five years. The latest monthly private rental sector report from the Association of Residential Letting Agents (ARLA) shows that in the North West some 46% of landlords reported an increase in the region. Overall nine in 10 agents reported that they were happy with the general election result and with Labour’s rent cap proposals thrown out, 79% of ARLA agents predicted that rents will increase over the next five years. The report also shows that in the last month, the number of landlords selling their buy to let properties has increased, particularly in London. ARLA agents in London saw the number of landlords selling their buy-to-let properties double between March and April, rising from three to six properties on average per branch. Scottish agents saw an increase from four to seven buy to let properties going up for sale in the last month, whilst the national average increased from three to four buy to let properties up for sale on average per branch. ‘It is interesting that we have seen an increase in the amount of landlords selling their buy to let properties in the last month, which is likely to have been a result of political uncertainty,’ said David Cox, ARLA managing director. ‘We know that Labour’s plans were unpopular for many landlords and agents, so this increase in those selling their buy to let properties may have been a knee jerk reaction to the possibility of Labour’s proposals coming in to practice,’ he added. Following the general election result earlier this month 90% ARLA letting agents were happy with the outcome of a majority Conservative government with 95% believing the result is good news for the private rented sector. Some 13% of those agents said it was good news because the Conservatives will interfere less with the industry and 11% believe the result will provide certainty and stability to the market In April, supply and demand remained similar to last month. On average, ARLA member branches managed 193 properties, compared to 192 in March. In April, ARLA agents reported an average of 36 prospective tenants per branch, which remains exactly the same as March. ‘It is going to be interesting to see what happens in the market in the next few months following the election result and whether we see an increase in supply of rented accommodation as a result of the Conservative’s promise to build 200,000 new starter homes offered at 20% discount to first time buyers. This policy will help first time buyers make that leap onto the housing ladder and as a result this will hopefully free up rental property,’ Cox pointed out. ‘Hopefully, now the country is under less political… Continue reading
Lack of supply could hold back London property market, it is suggested
A limited drip feed of new homes to buy or rent and forthcoming tightening of mortgage lending criteria may hold back the resurgent residential market in London, it is claimed. Demand is still outstripping supply in both sales and lettings now that the political uncertainty of the past few months is over, according to research from London estate agency Chestertons. The firm’s latest prime residential sales report says that despite the uncertainty in the lead up to the general election at the beginning of May, the demand for new homes remained robust in the first three months of the year and continued to outstrip modestly improved supply. Demand for new-build homes from overseas also remained high. Prime central areas resales experienced a marginal return to capital value growth of up to 0.7% for the first time since the first quarter of 2014, although the north and east of the city, led by Canary Wharf, saw above average value growth of 1.4% in the first three months of the year. ‘We experienced a fairly subdued six months in the run-up towards the election, with fears of a mansion tax which could have wiped up to a quarter of a million pounds off the value of properties in the £2 million plus bracket had it been introduced, clearly having an impact on buyers in prime London markets,’ said Nick Barnes, Chestertons' head of research. ‘Furthermore investors, institutions and landlords were in many cases reviewing their holdings in the event of major changes to taxation and lettings regulation being brought in by a Labour led administration. The Conservatives' slim majority has calmed such fears and enquiries have been strong since the morning of 0 May, up by more than 15% on the pre-election period,’ he explained. But he pointed out that there are still challenges that need addressing if the upturn in confidence is to be sustained. ‘The first major challenge is to revitalise supply of good quality homes of all shapes and sizes into both the sales and lettings markets. Politicians at the national and local level must now step up to deliver more land for development, while finding new ways to incentivise house builders and easing the planning regulatory burden to get more homes into the system,’ said Barnes. ‘The raft of policies aimed at getting more people on to the housing ladder that the Tories pledged in their manifesto also have a key part to play, especially as anticipated tightening of mortgage lending criteria may actually make home ownership less accessible for many,’ he explained. ‘Any future rises in the base rate of interest will of course also have a significant impact, while the expiry of the mortgage guarantee portion of the Help to Buy scheme in early 2017 could also have a detrimental effect. Still more needs to be done to incentivise builders and developers. It will be interesting to see what the Chancellor George Osborne announces in his July Budget to… Continue reading
