Tag Archives: london
London residential rental market disparate due to Brexit uncertainty
Rents in London have peaked in many locations with the market currently stagnant and facing uncertainty due to the UK deciding to leave the European Union, the latest analysis suggests. While Benham & Reeves Residential Lettings' Heat Map generally shows relatively consistent trends across the capital, second quarter results show a disparate market. For example rents were up more than 4% in Chelsea but in nearby South Kensington they were down more than 4%. Similar contradictory results were to be found across London with adjacent areas showing wildly different fortunes. The report explains that even in the early part of this year, uncertainty over Brexit was affecting the prime central London rental market. Non-nationals were awaiting the result of the referendum while UK nationals were finding better value in East London and the suburbs. Rents in central London were falling, much to the frustration of landlords who were also suffering from the double blow of stagnating capital growth. Rental value growth was to be found in outer London until recently. However, the most recent figures from Benham & Reeves Lettings demonstrates that rental values have finally peaked there, as well. Most areas outside of prime central London saw rents plateau or boast only nominal growth. The report says it is perhaps noteworthy that there is a lack of definable trends. Hampstead Garden Suburb saw growth of over 4.5% while adjacent North Finchley saw rents fall by over 10%. The report suggests that the contrast may be due in part to the reopening of the Northern Line interchange at Tottenham Court Road. The eastern part of the City also saw double digit growth, thanks in part to the release of some highly anticipated new developments in the area, while the western part of the City saw rents fall by over 4%. ‘There is nothing the property market hates more than uncertainty. While the referendum result may not have been what many London residents wanted, it has provided us with an answer,’ said Marc von Grundherr of Benham & Reeves Lettings. ‘Our quarter two results are a reflection of what was happening in the market in the run up to the vote. If anything, the referendum result could be just what the market needed. The rental market always benefits in financially volatile times as people would rather rent than commit to buying a property,’ he explained. ‘Demand is still strong and since the referendum, we are receiving an average of 17 applicants per property compared to 13.9 at this time last year. Notably, many of the applicants have been from the EU,’ he added. Continue reading
UK housing market sees marked drop in activity, particularly in the south
Uncertainty fuelled by the European Union referendum has resulted in a marked drop in activity in the UK housing market with new buyer enquiries down significantly across the country. In June some 36% more chartered surveyors nationally reporting a fall in interest, the lowest reading since the middle of 2008, according to the latest month residential market survey from the Royal Institution of Chartered Surveyors (RICS). The South of the UK has been the hardest hit, with anecdotal evidence suggesting both the EU result and the tax changes, which took effect at the beginning of April, as having an impact on sentiment. There was a further fall in the supply of properties coming available for sale across the UK in June, with the exception of Northern Ireland. This highlights the continuing challenge presented to the market by the lack of stock, according to Simon Rubinsohn, RICS chief economist. The report also shows that 45% more chartered surveyors saw a fall in new instructions in June from a net balance of -31% in May, the steepest fall on record and extends a trend that has been in place since 2014. The market has also seen further decline in sales this month with a third successive monthly drop in activity. Contributors expect this trend to continue with 26% more respondents anticipating a further drop in sales across the UK over the next three months. This is the most negative reading for near term expectations since 1998. House price growth saw a reduction in June and although prices are still rising, they are doing so at a more moderate pace with 16% more respondents reported having seen prices rise rather than fall across the UK. London remains the only region where respondents are seeing prices fall with a -46% net balance but this is largely being concentrated in the central zones. ‘That said, near term price expectations are now in negative territory across the whole of the UK with 27% more respondents across the UK expecting to see prices fall rather than rise over the next three months,’ Rubinsohn pointed out. He also pointed out that looking further ahead over the next 12 months, sales expectations have turned negative for the first time in four years with 12% more contributors expecting transactions to fall rather than rise. Significantly, over the next 12 months the dip in prices is only expected to persist in London and East Anglia with net balances of -39% and -34% respectively, and longer term, prices are still expected to rise, albeit a little less than previously anticipated, with a cumulative increase of 14% projected for the next five years. Rent expectations over the same time horizon remain more resilient and are still broadly consistent with an increase of just over 20%, the report also shows. ‘Big events such as elections typically do unsettle markets so it is no surprise that the EU referendum has been associated with a downturn in activity. However, even without… Continue reading
UK needs to build 300,000 homes a year to meet current housing shortfall
The UK Government must lift its home building target by 50% and build 300,000 new homes each year to tackle the current housing crisis, according to a report from the House of Lords Economic Affairs Committee. The report suggests that local authorities and housing associations must be freed to build substantial numbers of homes for rent and for sale and points out that the current targets will fail to meet the demand for new homes or moderate the rate of house price increases. It also says that current policy is restricting local authorities' access to funding to build more social housing and creating uncertainty in the already dysfunctional housing market by frequent changes to tax rules and subsidies for house purchases, reductions in social rents, and the extension of the Right to Buy. All of these changes reduce the supply of homes for those who need low cost rental accommodation and a narrow focus on home ownership neglects those who rent their home, the report adds. The Committee makes wide-ranging recommendations to address the housing crisis, including charging council tax on development that is not completed quickly and not relying solely on private developers to meet the target which the report describes as misguided. Indeed, it points out that the private sector house building market is ‘oligopolistic’ with the eight largest builders building 50% of new homes and their business model is to restrict the volume of house building to maximise their profit margin. To address this the Committee recommends that local authorities are granted the power to levy council tax on developments that are not completed within a set time period. It also suggests that the Government must take decisive steps to build on the very substantial holdings of surplus publicly owned land and that a senior Cabinet minister should be given overall responsibility for identifying and coordinating the release of public land for housing, with a particular focus on providing low cost homes while the National Infrastructure Commission should oversee this process. It also wants local authorities to be given the power to increase planning fees. Local authorities should be able to set and vary planning fees to help fund a more efficient planning system and the upper cap on these charges should be much higher than the current limit. ‘We are facing an acute housing crisis with home ownership, and increasingly renting, being simply unaffordable for a great many people. The only way to address this is to increase supply. The country needs to build 300,000 homes a year for the foreseeable future,’ said Lord Hollick, Chairman of the Committee. ‘The private sector alone cannot deliver that. It has neither the ability nor motivation to do so. We need local government and housing associations to get back into the business of building,’ he pointed out. ‘Local authorities are keen to meet this challenge but they do not have the funds or the ability to borrow to embark on a… Continue reading
