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Demand for rental properties in UK increased in first quarter of 2016
Despite attempts by the UK Government to dampen the buy to let market and stimulate home buying, the first quarter of 2016 saw demand for properties to rent continue to rise, new research shows. The number of landlords reporting tenant demand as either increasing slightly or significantly stood at 39%, up from 34% in the fourth quarter of 2015. A further 36% of landlords described tenant demand as being stable. According to the latest survey by BDRC Continental for Paragon Mortgages, the sector is also witnessing high levels of tenant satisfaction. Some 79% tenants surveyed said they are satisfied with their current landlord. The research also found that 85% of tenants consider their current rental property to be their home and 69% believe the level of rent they pay to be good or very good value for money. Reflecting the changing balance in housing tenure, the average length of time tenants are spending in their current properties now stands at nearly seven years. The average length of time spent in the Private Rented Sector (PRS) in total was reported to be nearly 13 years. Landlords also agree that the PRS plays an increasingly important role in housing the UK. With the social housing sector having lost around one million homes since 1991, some 78% of landlords polled agreed the PRS compensates to some extent for the decline of the social housing sector. An overwhelming majority, 89%, of landlords also stated the PRS has an important role to play in accommodating those who are priced out of home ownership, while 74% agreed the PRS plays a role in accommodating those excluded from social housing by dwindling supply. ‘The rise of the PRS and the decline of the social housing sector have been the predominant trends in the UK’s changing housing tenure over the last 20 years. This data gives an interesting insight into how both tenants and landlords perceive these trends,’ said John Heron, director of mortgages at Paragon. ‘It’s good to see tenant satisfaction at such high levels. The sector often suffers from negative PR and the good work done by the vast majority of landlords to provide homes for those who cannot or do not want to buy goes unremarked,’ he explained. ‘This survey clearly demonstrates that the PRS is increasingly providing longer term solutions in housing and that responsible and professional landlords are supporting the provision of housing to those that rely on the PRS for their home,’ he added. Continue reading
Call for UK to drop tax on new prime property developments
The UK Chancellor George Osborne should pause housing tax at the top end of the market or risk distorting the wider market, it is claimed in anew analysis report. Up to a 100% rise in stamp duty on high luxury homes has seen buyer interest drop at a time when there has been a 40% rise in prime properties planned in London, according to the report from design and consultancy firm Arcadis. It points out that the unintended consequences of successive stamp duty rises means projects in development for a number of years have been disproportionately affected and the delivery of affordable homes could be threatened as a result. Despite initially encouraging investment in prime residential property as a means of stimulating wider economic growth, the government has since changed policies mid-cycle, the report suggests. It says that this is regardless of the fact that many developers have already committed to major schemes. Since the end of 2014, the stamp duty alone on a £6 million home has almost doubled, rising from £420,000 to £810,000 when bought as a second property. The timing of these reforms has come just when certain parts of the market had already begun to slow. In order to ensure sales, some developers who had committed to schemes before 2014’s reforms have been forced to discount prices or resort to ‘stamp duty paid’ deals. These sales discounts have hit margins by as much as 4% on prime homes and up to 7% on super prime properties. Meanwhile, others have opted merely to delay construction, meaning that a significant number of affordable homes, planned as part of the original development, are not being built as quickly. Furthermore, with fewer would-be purchasers willing to pay such high rates of tax, many investors are eyeing homes under the £1.5 million price threshold. This additional wave of interest risks distorting the mid-market and inadvertently pricing out those people who would typically be looking to purchase these as family homes, the research adds. According to Mark Cleverly, Arcadis head of commercial development, to accelerate the delivery of affordable housing currently in the pipeline and ensure the construction sector remains sustainable, the Chancellor must impose a temporary reduction in stamp duty on new build properties. In tandem with this, he must better focus the debate onto ensuring acceptable levels of affordable housing are delivered as part of new developments. Cleverly suggests that this approach would get the market moving again, meaning both a steady flow of affordable homes coming onto the capital’s market and making schemes viable again for developers, safeguarding jobs and ensuring development can proceed as planned. ‘The Chancellor has to act on prime property tax. Despite initially encouraging investment in prime housing, the government since changed its mind and attempted to stem demand through ongoing tax increases and new fiscal regulations. This has prompted a drop in buyer interest at the very top of the market, creating… Continue reading
UK house prices fall ahead of EU referendum, latest index shows
More evidence is emerging that the run up to the referendum on the UK’s future in the European Union is affecting residential property prices. Property values in England and Wales fell by 0.4% in May, the steepest fall since November 2011, according to the data from the lastest index from Your Move and Reeds Rains. This takes the average house price to %293,599 and year on year values are still up 6.8% but 5.4% if London and the South East are excluded from the calculation. However, London’s house prices fell by 0.3% or £1,769 month on month and it was the weakest May for home sales in five years, after stamp duty surcharge caused a rush of buy to let sales in March. But house prices in Slough defied the trend, jumping 23.3% year on year, with values lifted by Crossrail and new tech jobs, according to the index report. According to Adrian Gill, director of Your Move and Reeds Rains estate agents, May’s correction in property values also follows on from a surge in activity earlier in the year, when second home buyers and landlords brought forward their purchases to avoid the stamp duty surcharge. ‘That tax hike and the Government’s anti-landlord policies are weighing down the market, but the main factor is short term confidence ahead of the 23rd June referendum,’ he said. The year on year growth in house prices has also slowed, down to 6.8% in May, from 7.7% in April. ‘With the Chancellor predicting that a Brexit from the EU would reduce property values by at least 10%, many buyers are holding off until after the uncertainly surrounding the referendum has been resolved,’ Gill explained. The fall in prices in London has pushed average property values in the capital city back under the £600,000 mark, with the value of a typical home in the city falling to £598,421. However, this decline in property values has not spread across the entire capital. While house prices in the most expensive eleven boroughs have declined by an average of £4,000 or 0.5% from the previous month, values in the cheapest eleven boroughs continue to rise, jumping £3,000 or 0.8% month on month. But despite maintaining property values well above the rest of the UK, the demand for homes in London continues to grow. In the three months between February and April, sales of homes in London increased by 15%, compared to the same period last year. ‘The majority of this upswing in sales came from flats. As landlords often prefer to provide flats to rent, these properties were a popular choice before the stamp duty surcharge came into force in April,’ said Gill. He also pointed out that with so much uncertainty in the UK economy, home sales have been subdued. While the total number of property sales did increase from the previous month, this month has seen the fewest May property sales since 2011,… Continue reading
