Tag Archives: lending
Extra stamp duty set to reduce number of lettings in UK, say agents
The extra stamp duty charge for the buy to let sector that begins next April has triggered a less optimistic outlook among letting agents in the UK. Some 40% are predicting that rental supply will decrease over the next five years, the highest rate this year, according to the latest report from the Association of Residential Letting Agents (ARLA). ‘This month’s findings are triggered the Chancellor’s announcements around buy to let tax in his Autumn Statement. We said these changes would be catastrophic for the rental sector and this has been echoed by letting agents across the country,’ said David Cox, ARLA managing director. ‘The new stamp duty increases will make owning a buy to let property unprofitable for a lot of landlords, and certainly make new investors think twice about purchasing a buy to let,’ he added. The ARLA monthly report also shows that tenants experiencing rent increases continue to fall, with 23% of letting agents reporting rent increases for tenants in November, down from 25% in October and the lowest in 2015 so far. Demand for rental properties increased marginally in November, alongside supply of available housing which was likely a result of tenants preparing themselves to find new rental properties in the New Year. ARLA agents registered an average of 34 new tenants per branch this month, up from 33 in October. Supply of rental accommodation also increased in November, rising by 9% from an average of 173 properties managed per branch in October, to 189 this month. However, renters in the capital will still struggle to find a property, with only 121 properties managed per branch, some 36% less than the UK average. ‘It’s promising to see that the number of agents reporting rent increases is continuing to decline, and this should spread some Christmas cheer amongst renters renewing tenancies or looking for a new property to rent,’ said Cox. ‘However, just under a quarter of tenants are still unfortunately seeing hikes in their monthly rent payments. But if we continue to follow trends we’ve seen in previous months, we should see fewer tenants experiencing increases as we welcome in 2016,’ he added. Continue reading
UK property prices set to rise by 3% to 8% in 2016, even with a rate rise
Residential property prices in some locations in the UK could increase by as much as 8% in 2016 as the recovery that has taken hold in London ripples out across the country. But overall price growth is expected to be around 6% across the country during the year, according to the forecast from the Royal Institution of Chartered Surveyors. One location tipped to see strong growth is Cambridge because of its buoyant jobs market and good commuter links to London. However, the RICS report also suggests that the current shortages of supply in the market is set to continue and this will push up prices with this growth likely to outstrip any rises in household income. According to RICS surveyors the average number of properties for sale have fallen to a record low of 46 and 40% of chartered surveyors believe that it is this lack of stock which is the main reason sellers are not entering the market, leading to a vicious circle. After East Anglia, the strongest growth is expected to be in the South East and the West Midlands, where 7% rises are forecast. The lowest level of increase is forecast for the North East of England where prices are forecast to rise by a much lower 3%. Areas with the highest number of transactions are likely to be the North East, Wales, Scotland and Northern Ireland, where prices remain low relative to the rest of the UK. RICS chief economist, Simon Rubinsohn, explained that an interest rate rise of 0.25% has been taken into account when making the forecast but he does not expect there to be a big rise in mortgage rates. ‘Housing has clearly leapt up the government’s agenda, but despite the raft of initiatives announced over the past year the lags involved in development mean that prices, and for that matter rents, are likely to rise further over the next 12 months,’ said Rubinsohn. ‘Lack of stock will continue to be the principal driver of this trend but the likely persistence of cheap money will compound it for the time being. Critically our principal concern with the measures announced by the government is that they are overly focused on promoting home ownership at the expense of other tenures,’ he pointed out. ‘Discouraging buy to let could see private rents take even more of the strain if institutional investment doesn’t increase significantly, particularly given the likely reduced flows of social rent property going forward,’ he added. Continue reading
CML figures shows dip in UK mortgage lending in November
Gross mortgage lending in the UK reached £19.9 billion in November, some 9% lower than October’s lending total of £21.9 billion, the latest data shows. But the figures from the Council of Mortgage Lenders also show that lending was still 23% higher than the £16.1 billion lent in November last year. CML economist Mohammad Jamei pointed out that lending is set to finish the year stronger than it started, with the pace of lending recovering over the summer months. ‘As we’ve said for the best part of 2015, lending continues to be supported by strong fundamentals, which are low inflation, strong wage growth, an improving labour market and competitive mortgage deals,’ he said. ‘Reflecting this recovery, we estimate lending this year to reach £214 billion, up from our earlier estimate of £209 billion. Looking ahead, upside potential appears limited as a result of affordability pressures and new supply challenges which will continue to weigh on activity,’ he added. Peter Rollings, chief executive of Marsh & Parsons, believes that a seasonal slowdown at the end of the year is to be expected although the strengthening economy and favourable lending conditions means that sales haven’t tailed off like they did last year. ‘The recent measures announced by the Government to build new homes and offer help to those looking to take their first step on the property ladder are welcome gestures, but it will be some time before this intervention is evident in the various monthly indices,’ he explained. ‘The powers that be also need to be careful of artificially stimulating the market at the bottom end while continuing to penalise those in the upper reaches,’ he added. Adrian Gill, director of Reeds Rains and Your Move estate agents, believes that mortgage lending has been good over the past year, with loan values showing a huge annual margin in November. ‘When we consider that many of these loans will have been agreed before the added impact of the Chancellor’s Autumn Statement housing announcements, it bodes well for early performance in 2016,’ he said. He pointed out that demand is high, remortgaging activity continues to pick up and first time buyers are benefitting from competitive mortgage rates while the buy to let market has been the most dynamic recently. ‘With a new stamp duty levy for second homes coming into play next April, there will only be a further rush to secure buy to let investment before the cost of completing a purchase rises,’ he said. But he also pointed out that this will pit landlords against first time buyers even more. ‘As the deadline creeps closer, we may see another trend emerge in the spring as canny buy to let investors seize the opportunity to sell up and profit from the triple whammy of impending tax changes, low supply of homes, and high demand. Demand is accelerating, and there will be jostling for a decreased number of properties available on the market. So it will… Continue reading
