Tag Archives: investment
Parts of prime property market in London hit by economic uncertainty
Some areas in London’s prime property market are experiencing falls in demand from international buyers for reasons of global economic uncertainly, according to a new analysis report. But this is making way for emerging markets in the capital city’s prime sector which are currently outperforming central London, according to the report from property buying agency Black Brick. This comes at a time when overall London’s housing market is set to see increased demand with the population forecast to grow to 10 million. The report suggests that continued local opposition to new developments and limited brownfield sites for new homes developers in London will struggle to meet building targets which will leave the rental sector to take up the slack. Prices currently vary considerably in the prime market with locations in Knightsbridge and South Kensington seeing prices fall but emerging prime areas such as Islington and the City and Fringe have performed strongly. The reason is straightforward, according to Camilla Dell, Black Brick managing partner. ‘Those areas dominated by international buyers have suffered from falls in demand as a result of global uncertainty around falling oil prices, sanctions on Russia, and the slowdown in the Chinese economy, among other factors,’ she said. ‘Conversely, those parts of London, where demand is driven by domestic buyers, have benefited from the perennial shortage of supply and the strong recent performance of the UK economy,’ she explained. ‘In addition, recent changes to taxation have reduced the appeal of more expensive properties; investors seeking attractive rental yields and the prospect of capital appreciation have been pushed towards properties below £2 million, which tends to lead them away from traditional prime areas in West London,’ she added. Dell also pointed out that this complex picture has two related implications for buyers; the first is that they need to cast their nets more widely when carrying out a search; and the second is that they need to consider areas of which they might not have much knowledge. ‘The upshot is that we’re seeing considerable interest from investors in parts of London they aren’t familiar with and they need a buying agent that not only offers broader geographical coverage, but also brings extensive knowledge of emerging prime locations,’ Dell said. ‘In a market that’s going up, it’s hard to make a bad decision, but in a market like this, good guidance is really important,’ she concluded. Continue reading
UK buy to let landlords could face tougher lending conditions, it is suggested
There is concern that buy to let landlords in the UK will face tougher lending conditions on top of tax relief changes already scheduled for next year. One lender, the Nationwide Building Society is already cracking down on rental calculations and cutting back its maximum loan to value for landlords over worries about the tax relief changes next year.~ Nationwide's Mortgage Works, the mutual's buy to let arm, which provides one in seven loans to landlords, is increasing rental cover requirements from 125% to 145% and cutting its maximum LTV from 80% to 75% from 11 May 2016. According to Armistead Property more lenders may follow suit and while the changes facing buy to let landlords, on top of the recent extra stamp duty payable on additional homes, can be taken into account landlords need to plan ahead. Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of up to 45%. However, the Chancellor’s new tax rules could mean that thousands of buy to let landlords will see their profits hit as the amount they can claim as relief will be set at the basic rate of tax which is currently 20%. Some current basic rate taxpayers will also be hit, because the change will push them into the higher rate tax bracket. It will be phased in over a four year period from April 2017. However, the firm believes that the tougher lending criteria and recent tax hikes, will not have a major impact on the property market as a whole. ‘This move by Nationwide could trigger other big lenders to follow suit. The banks seem to believe that the Chancellor’s tax crackdown on mortgage tax relief will could cause difficulties for landlords. Though the new tax rules are challenging for most landlords, rising asset values and rental income will go a long way to protect profits,’ said Peter Armistead. ‘Landlords have plenty of options available that will help offset the increased taxation. The first thing landlords should do is carry out a serious portfolio review and work out how the tax changes and tougher mortgage lending will affect them and what options there are to save, or make more money. For example, mortgaging to get a better deal, renovating some old stock as these costs will be tax deductible, selling some properties or increasing the rent,’ said Peter Armistead. ‘Landlords need to think outside the box and ask themselves questions like can I buy with cash or with far less leverage, should I incorporate, can I change a house into an HMO and increase the rental income, can I get planning on an existing property to increase its value or can I add an extension, or convert the cellar?’ he pointed out. ‘Although the government is trying to curb the buy to let market, property investment is robust in the long term. It is estimated that two million Britons are now private landlords… Continue reading
UK’s South East office market makes strong start to 2016
Office market in the South East of the UK has seen the strongest start to a year since 2008, according to new research. Overall take-up in the South East Office market increased by 30% in the first quarter of 2016, according to the latest M25 Offices report from Knight Frank. A total of 973,000 square feet of space was let or acquired during the quarter, 10% above the 10 year average. The high level of take-up ensured that overall supply remains historically low with availability across the South East markets 25% to 30% below the long term trend. The report says that following record investment volumes in 2015, the first quarter of this year has recorded £494 million of investment, which is consistent with the 10 year average. It points out that the £325 million acquisition of SEGRO’s 972,000 square foot office portfolio in Slough by AEW was significant representing, not only the largest transaction in the South East market for two years, but also further evidence of overseas purchasers becoming more active and widening their UK focus beyond Central London. With stock levels improving in the second quarter of 2016 Knight Frank predict an increase in transaction volumes from the middle of the year and expect investment volumes to be close to £2 billion by the end of the year. Emma Goodford, head of National Offices at Knight Frank, said that overall take-up in the first quarter has been encouraging, particularly set against increased market anxiety relating to the forthcoming referendum on the future of the UK in the European Union. ‘Although, some decision making will clearly be deferred until after the vote, we continue to see interest rise from diverse array of occupiers with active named demand topping 6.6 million square feet. With this in mind, we are predicting strong rental growth in key locations, particularly where new development is accompanied by infrastructure and amenity improvements,’ she explained. According to Tim Smither, head of National Offices Investment at Knight Frank, the weight of capital targeting opportunities in the South East remains robust. ‘Whilst some investors pause to await the outcome of the EU referendum, others are seeing opportunity. In particular, high yielding, asset management opportunities remain keenly sought after, supported by a strong rental growth outlook for the region,’ he said. Continue reading
