Tag Archives: homes
British rental prices up 2.5% year on year
Rents in Britain increased by 2.5% in the 12 months to May, down slightly from the 2.6% annual rise recorded in the previous month, the latest index figures show. Rental prices grew by 2.6% in England, 0.4 % in Scotland and were unchanged in Wales, the data from the Index of Private Housing Rental index published by the Office of National Statistics also shows. It means that a property that was rented for £500 a month in May 2015, which saw its rent increase by the Great Britain average rate, would be rented for £512.50 in May 2016. Rental prices for Great Britain excluding London grew by 2% in the same period and rental prices increased in all the English regions over the year to May 2016, with rental prices increasing the most in the South East at 3.4%, up from 3.1% in April 2016. This was followed by London at 3.3 but this was down from 3.7% in April 2016 and the East of England at 3.2%, up from 3.0%. Annual price increases had previously been stronger in London than the rest of England since November 2010. I The lowest annual rental price increases were in the North East at 0.8%, unchanged when compared to April 2016, the North West at 1.2%, up from 1.1% and Yorkshire and the Humber at 1.2%, down from 1.3% over the same period. The zero annual rate of change in Wales continues to be below that of England and the Great Britain average. Rental growth in Scotland has gradually slowed to 0.4% from a high of 2.1% in the year to June 2015. The IPHRP series for England starts in 2005. Private rental prices in England show three distinct periods: rental price increases from January 2005 until February 2009, rental price decreases from July 2009 to February 2010, and increasing rental prices from May 2010 onwards. When London is excluded, England shows a similar pattern but with slower rental price increases from around the end of 2010. Since January 2011 England rental prices have increased more than those of Wales and Scotland and since the beginning of 2012, English rental prices have shown annual increases ranging between 1.4% and 3% year on year, with May 2016 rental prices being 2.6% higher than May 2015 rental prices. Excluding London, England showed an increase of 2.3% for the same period. Looking at data from the UK House Price Index over a longer period shows residential house price growth has typically been stronger than rental price growth for a number of years, with an average 12 month rate of house price inflation of 5.7% between January 2013 and April 2016, compared with 2.1% for rental prices. Inflation in the rental market is likely to have been caused by demand in the market outpacing supply. Demand in the lettings market continues to strengthen, with RICS’ Residential Market Survey noting that tenant demand continued to grow robustly in May 2016. The strength… Continue reading
Landlords in UK urged to stay calm in face of EU exit vote
Residential landlords in the UK are being urged not to read too much into the decision by the country to leave the European Union, having gone through a turbulent period recently. Buy to let landlords are now paying a 3% surcharge in stamp duty on each additional property they buy to add to their portfolios and are also facing further tax changes. Now there are concerns that Brexit could affect their businesses. However, according to Richard Lambert, chief executive officer of the National Landlords Association (NLA), while leaving the EU is completely unknown territory, jumping to conclusions isn’t going to help anyone. ‘We welcome governor Mark Carney’s steadying words and his reassurance that the Bank of England and the Treasury have extensive contingency plans in place to ensure the country’s financial stability,’ said Lambert. ‘Any knee-jerk reaction will have a real impact on our members’ mortgages, tenants’ rents and overall confidence in the market. So we would urge the policy as regards to interest rates should be, to continue the Prime Minister’s analogy, one of steady as she goes,’ he added. In a joint statement, David Cox, managing director of Association of Residential Letting Agents (ARLA) and Mark Hayward, managing director of National Association of Estate Agents (NAEA), said that in the short term the market can weather the uncertainty. ‘The outcome of the EU referendum will create a period of uncertainty among home owners, buyers, investors, landlords and developers. We can expect international investors to look a lot harder at the UK as a market and this will have a consequential impact upon the house building sector as investment may be stalled,’ the statement said. ‘In the short term we believe that both prices, and rents, will remain stable, but we cannot be certain about the next quarter as political instability, and market unrest, could lead through into prices in the housing market,’ it pointed out. ‘We believe that the UK housing market is resilient, as is the supply chain that drives it. But as we indicated in our Brexit report last month, the bigger impact may well be in the skills necessary to drive UK housing development, and this is now a major concern for UK buyers and renters,’ it added. Anne Wilson, senior tax manager of the tax department at Pierce Chartered Accountants, pointed out that tougher buy to let mortgage lending criteria has been announced. The rules will require lenders to carry out stricter stress tests on prospective borrowers or those wishing to re-mortgage to ensure that they have sufficient capital to cover repayments if interest rates increase to 5.5%. In the future, there will also be changes to the way that tax relief for interest payments on the purchase of residential lettings will be given in the tax computation. This will affect individuals, partnerships and limited liability partnerships which let out residential properties. At present there are no proposals for this restriction to… Continue reading
Prime property market in London set to be affected most by Brexit
The prime property market in London is likely to be the affected the most by the referendum results in the UK which will see the country leave the European Union. Sales activity and price growth in the prime London residential market have already both slowed since the middle of 2014 and in the run up to the historic vote many commentators and experts were predicting that a vote to leave would affect London the most. ‘There is no doubt that the vote in favour of Brexit will generate a period of renewed uncertainty in the prime London residential market. Some demand, especially from investors, will be delayed and in some cases redirected to other markets although the significance of these trends should not be overstated,’ said Liam Bailey of international real estate firm Knight Frank. He explained that demand for prime London property rests on a wide range of drivers most of which are unaffected by the referendum decision such as the scale of London’s business cluster, depth of skills, education, lifestyle and language. ‘It is not easy to identify an obvious alternative destination for investors despite short term nervousness. On the eve of the vote the pound sat 14% below its mid-2014 peak meaning pricing in the prime market was more attractive for dollar buyers. While a further weakening of the pound could increase inward investment, this impact will be constrained by the fact that around 80% of central London buyers are UK residents,’ he pointed out. ‘It seems a reasonable assumption to make that interest rates will be lower for longer, despite the risk of imported inflation from a weaker pound. While the long term benefit of ultra-low interest rates on the housing market may be questionable, in the short term they will act to underpin demand especially for equity rich buyers with access to the best funding rates,’ he added. Bailey also believes that the prime country house market will be similarly impacted by the result. ‘However while the market has performed relatively well over recent years, following a slow recovery immediately after the financial crisis, prices have not tracked London to date and there is scope for some outperformance in the short to medium term,’ he said. ‘While we are entering a period of renewed uncertainty in the UK and London market, ongoing issues around EU and especially Eurozone stability, which will be highlighted in the run up to French and German elections, are likely to counter this risk and shore-up London’s safe haven appeal,’ he concluded. The decision to leave has opened up a Pandora’s Box as far as the London property market is concerned and for overseas buyers, this big and dramatic drop in the value of Sterling will effectively offset the Stamp Duty and tax adjustments and it will make prime London property a lucrative investment for overseas investors bold enough to make a decision to buy despite the market uncertainty, according to Peter Wetherell, chief… Continue reading
