Tag Archives: finance
Equity release value in Britain up, but in London hit by Brexit uncertainty
The potential wealth available to over 55s in England, Scotland and Wales through equity release increased to £381 billion in the second quarter of 2016, a 0.7% quarterly increase, the latest research shows. However, values failed to increase across Greater London for the first time in almost four years due to uncertainty surrounding the European Union referendum while equity release potential elsewhere in the country continues to grow apace, according to the Equity Release Property Value Tracker report from Retirement Advantage. The report says that house prices are rising fastest in regions outside of Greater London, with the capital suffering its first quarterly drop in property values since the fourth quarter of 2012. The North of England with growth of 7.2% saw the greatest quarterly increase in wealth available, followed by Yorkshire and the Humber up 6.6% and the West Midlands up 5.6%. Meanwhile in Greater London growth stagnated with a drop of 0.04% and was also comparatively slow across the South East, up 2.8%. The two regions top the table for annual growth, however, up 14.6% and 13.9% respectively, with East Anglia next with growth of 8.2%. According to Alice Watson, product and communications manager at Retirement Advantage Equity Release, it is too early to tell what impact the Brexit vote will have on housing wealth but she pointed out that if mortgage lending conditions tighten as the result of a post-referendum economic slowdown, it could enhance the appeal of equity release. ‘A substantial proportion of this demographic is now accessing the wealth stored in their homes to facilitate a more enjoyable and fulfilling retirement. They are increasingly using equity release for home improvements, gifting to family members and holidays,’ she said. ‘Over the past three months we’ve seen new entrants to the market, innovative partnerships and welcome changes to the Financial Conduct Authority’s affordability assessments. These developments are great news for the consumer and have no doubt helped to further boost equity release’s already surging popularity,’ she added. However, she pointed out that despite rapid growth in its popularity, less than 1% of equity release’s potential is being realised. ‘Over the coming years, this popularity will increase further as over 55s take an increasingly holistic approach to retirement finance which places equity release alongside pensions and investments,’ she concluded. Continue reading
Residential sales in UK up by almost 5% between May and June
The provisional seasonally adjusted UK property transaction count for June 2016 was 94,550 residential and 10,930 non-residential transactions. Residential property sales recorded in the UK increased by almost 5% between May and June 2016, according to the latest estimated figures to be published. The residential transaction count was 94,550 and while this is up 4.9% month on month, it is 10.2% lower compared with the same month last year. The large increase in transactions for March 2016 followed by the substantial reduction in April is likely to be associated with the introduction of the higher rates on additional properties in April 2016, according to HMRC which publishes the figures. However, whilst April and May 2016 are lower than the corresponding months in 2015, it should be noted that the total for March to May 2016 is still substantially higher than the corresponding period last year, it pointed out. The additional property rates were announced in the Autumn Statement 2015 for England, Wales and Northern Ireland, and in the Scottish Government's draft 2016/2017 budget for Scotland. Non-tax factors may have played a role as well, for example the Bank of England's plans to curb buy to let mortgages resulting in a rush to purchase before April 2016, and the European Union referendum affecting transactions in recent months. The residential count includes properties paying the main and additional rates. For June 2016 the number of non-adjusted residential transactions was about 21.2% higher compared with May 2016. The number of non-adjusted residential transactions was 11.1% lower than in June 2015. According to Doug Crawford, chief executive officer of My Home Move, June’s figures show a market returning to health after a very quiet April and May which was due to investors doing business earlier in the year to avoid the stamp duty changes. ‘While the number of property transactions remain below the levels seen a year earlier, a 4.9% increase between May and June is very encouraging. My Home Move’s own data suggests that the number of completions in June 2016 was actually 2.7% higher than in June 2015,’ he said. ‘The June increase shows that the property market mostly shook off the uncertainty from the Brexit referendum at the end of the month. This reflects our experience as most purchases went ahead without any issues. The big question now is what the impact will be for the rest of the year,’ he explained. ‘While this is less clear, our view is that the fundamentals of the property market are strong enough that there will not be a significant impact. There have been anecdotal reports of a slight slowdown in July from the estate agents we work with, but it is impossible to tell how much of this is actually Brexit related and how much is down to a normal summer slowdown. The picture will only start to be clearer in September after the holiday season,’ he said. Continue reading
BPF calls for policy measures to support commercial real estate post Brexit vote
The British Property Federation (BPF) has called in the UK Government to consider a raft of policy measures to support real estate, particularly the commercial sector. The calls comes following the publication of the latest report from the Royal Institute of Chartered Surveyors (RICS) which shows a significant decline in confidence, activity and investor interest in UK commercial real estate. The report, covering the second quarter of 2016, says that investment demand for commercial real estate has fallen sharply and that, although some immediate turbulence was to be expected following the European Union referendum, the sector may in fact face a far more significant downturn. The BPF is urging the Government to monitor the situation closely and consider introducing a package of support for the real estate sector, including accelerating its proposed reform of business rates to support activity in the broader business economy. It also wants it to delay the introduction of plans to restrict the tax deductibility of corporate interest expense for a year until 2018, to ensure that the rules are implemented in a way that doesn’t deter investment. And the BBP suggests the introduction of a range of tax reliefs for Build to Rent development, including CIL relief, relief for modular construction, and stamp duty relief for new build to rent developments on the condition that they will be let on tenancies of three years or longer with rent increases tied to inflation. It also wants an absolute and continued commitment to devolution and public infrastructure investment in the HS2 rail project, the East-West Rail Line, Crossrail 2, and an imperative decision on growing airport capacity. ‘This is not the time for knee jerk reactions, but commercial property and a number of the government’s priorities are interdependent,’ said Ian Fletcher, director of real estate policy at the BPF. ‘Ministers must closely monitor developments in the commercial property market and be ready to act in weeks, not months, if evidence continues of a slowdown in investment,’ he pointed out. ‘Commercial property investment is not always an obvious priority for governments because its social and economic impacts are indirect, but construction and development activity flow from it, ultimately impacting on jobs and economic growth,’ he added. ‘In scenarios like this the focus is often on construction, but you don’t get construction without an investment client, so it is essential that government monitors fluctuations in investment very closely,’ he concluded. Continue reading