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New body launches in UK to bring professionalism to multi home rental sector
With the residential rental sector attracting more investors than ever before the first cross-industry organisation dedicated to driving the professionalism in the sector has been launched. The UK Apartment Association (UKAA) said it will focus on driving up standards of customer service and delivery to ensure that all renters are given the best possible experience. Its creation has been championed by Housing Minister Brandon Lewis, who is calling on the industry to work together to deliver more homes for rent and better standards for tenants. The UKAA aims to differentiate the multi-family housing market from the amateur ad hoc rental service provided by small scale landlords that currently make up the bulk of rentals. ‘I want to see the private rented sector respond to the nation’s housing needs by providing new forms of supply and improved quality and choice,’ said Lewis. ‘I welcome the UKAA as a body that can help build the capabilities of the build to rent sector in this country, bringing together the needs of private renters with the institutional capital that wants to invest in meeting their demands,’ he added. With more than nine million renters in the UK and vast potential for that number to grow, there is a huge opportunity for build to rent developments as an institutional asset class. In recent months alone, the number of developers and investors committing to projects has risen but there is still a distance to go before renting becomes the professional, service led industry backed by large institutional investors that it is in the United States. As the first international partner of the US-based National Apartment Association (NAA), the UKAA will benefit from the experience of the US multi-family industry. A federation of nearly 170 state and local affiliates, NAA encompasses over 69,000 members representing more than 8.1 million apartment homes throughout the United States and Canada. ‘The NAA is eager to bring industry training, best practices and networking opportunities to the UK. In addition, our US members are increasingly seeing opportunities for global growth and are looking to NAA for guidance when entering a new market. Our partnership with UKAA will be invaluable to our association as we address the growing need for a global rental housing industry,’ said Doug Culkin, president and chief executive officer of the NAA. As well as providing a valuable platform for the industry, the UKAA aims to lead educational training, customer service delivery, study tours and provide a suppliers’ forum, market data and a range of resources. A growing number of high profile companies and professionals from across the sector have already signed up as members including Atlas, Hermes, Greystar, Manchester Life and Savills with suppliers including Roomservice by CORT and Yardi. The UKAA is working in conjunction with all of the other industry bodies and is in the process of establishing regional branches, which are so far under way in Manchester and Scotland. ‘This evolution of the rental sector… Continue reading
UK referendum on European Union membership set to hit real estate markets
The forthcoming UK referendum on the country’s future in the European Union poses risks for the re sector due to the uncertainty it is creating, according to a new analysis report. This uncertainty leading up to the vote on 23 June is likely to have a somewhat paralysing effect on investor decisions on real estate purchases, says the report from Standard and Poor’s. It also says that should the country decide in favour of leaving the EU, known as Brexit, then the uncertainty will be prolonged during the subsequent exit negotiations and this may turn investor sentiment more negative. ‘This could potentially reverse the significant boost to real estate asset values that the UK and London in particular has experienced in recent years. Added to this, financial services firms, already under pressure to contain costs, may find an additional reason to reduce office space in London,’ the report explains. ‘Consequently, we consider the risks to the real estate sector of a Brexit may be most pronounced in the commercial real estate sector, particularly in the office segment, more than in retail and logistics,’ it points out. ‘We also think the effects will be more concentrated in London than other parts of the UK. Within the capital, the City of London would be hardest hit, because of a high concentration of international financial services firms,’ it adds. Given the possible negative consequences of Brexit, Standard and Poor’s said that its ratings on real estate investment companies, home builders, and structured financing in commercial and residential mortgage backed assets will require ongoing monitoring. It suggests that in the next few months ahead of the referendum, the uncertainty regarding the outcome of the vote may slightly disrupt the real estate markets. ‘We think it could lead to some deferrals in deals, timed to close after, rather than before the June 2016 vote. We expect that commercial real estate may be more heavily affected than residential overall, as businesses may delay their investment decisions and investors may put on hold contemplated transactions pending more clarity on the referendum result,’ the report says. ‘In our view, a vote in favour of Brexit would accentuate and prolong this period of paralysis since it would most likely take several years for the terms of the exit to be defined. Since the 2009 downturn, wealthy individuals and institutional investors have considered the UK real estate sector a very safe asset class. These assets attracted sustained investor demand primarily for their value preservation characteristics,’ the report explains further. ‘A vote in favour of a UK exit from the EU in June 2016 would likely threaten that perception of safety, at least for some time. A falling UK currency may also contribute to such a change in perception but would also make real estate in the UK less costly to international investors in foreign currency terms,’ it states. It makes the point that residential real estate would not be immune to a Brexit. ‘The… Continue reading
Buy to let borrowing surges in UK, probably due to stamp duty change
Home owners in the UK borrowed £8.7 billion for house purchases in February, up 4% month on month and 21% year on year, according to the data from the Council of Mortgage Lenders. They took out 48,000 loans a rise of 4% compared with January and up 12% on February 2015, the data also shows. First time buyers borrowed £3.4 billion, up 3% on January and 21% on February last year, a total of 22,000 loans, some 3% more month on month and 11% more than a year ago. Home movers borrowed £5.3 billion, up 4% on January and up 20% compared to a year ago. This totalled 26,000 loans, up 4% month on month and up 14% on February 2015. Remortgage activity totalled £4.8 billion, down 17% on January but up 37% compared to a year ago. This came to 28,400 loans, down 15% month on month but up 24% compared to a year ago. Landlords borrowed £3.7 billion in February, unchanged month on month but up 61% year on year. This came to 23,700 loans in total, up 1% compared to January and up 47% compared to February 2015. Paul Smee, director general of the CML, pointed out that there has been substantial increases in house purchase and remortgage activity year on year already in 2016 but warned that this reflects the sluggish market in early 2015, perhaps driven by election uncertainties. ‘Buy to let has also seen substantial year on year increases, with particularly strong growth in remortgaging, a pattern which we have seen in the buy to let sector the past six months,’ he said. ‘Activity has been boosted by landlords seeking to complete purchases before tax changes in April. We do not expect activity to show such strong year on year growth later in the year,’ he added. According to Steve Bolton, founder of Platinum Property Partners, it is significant that three in five buy to let loans are now for remortgage, with the number and value of these loans rising significantly year on year. ‘Landlords are clearly taking advantage of the low rates available on the market, especially as they will soon lose the ability to claim their mortgage interest payments as an allowable business expense,’ he said. He suggested that the 7% monthly increase in the number of buy to let purchase loans is perhaps an early indication of some landlords pushing to complete ahead of the changes to Stamp Duty implemented this month. ‘We expect to see an even greater rush of activity reported for March as landlords seek to complete on purchases,’ he explained. He pointed out that buy to let activity could plummet in the future as the cost of running a buy to let business continues to grow due to recent Government legislation. ‘The introduction of Section 24 of the Finance (No. 2) Act 2015 is a real threat as many landlords in the sector could find themselves… Continue reading
