Tag Archives: outlook
Many buy to let property investors not put off by UK tax changes
Most property investors in the UK are undeterred from buy to let despite 2016 tax changes and 56% are planning on purchasing within the next 12 months, new research shows. With changes in tax approaching some 40% plan to set up a limited company for their properties to counter the impact of tax changes, whilst 33% plan to raise rents, according to the latest client barometer survey from specialist lender Shawbrook. However, while the outlook for investors remains positive, new changes to tax relief and stamp duty have caused some investors to check their ambitions. Of the 44% who are not planning on purchasing a new buy to let property this year 37% said it was due to the 20% cap on tax relief for buy to let properties making the proposition unattractive and 16% said the 3% extra stamp duty levy on additional homes was putting them off. The latest figures also revealed that 49% of clients said they considered regulation to be the biggest challenge facing property investors over the next six months, a significant increase on last year’s barometer results, which found that regulation was something only 23% of investors considered to be the biggest challenge they faced. Despite these challenges 61% have a positive outlook for the upcoming 12 months, predicting either a large or small increase in property value. In total 43% of landlords saw an increase in tenant demand in 2015 and 61% saw an increase in their rental income. A further 44% are confident that their business will grow in 2016. ‘As a lender it is always great to see such positivity in the market, and as with our Broker Barometer conducted in late 2015, it seems that there is a lot of optimism amongst property professionals also,’ said Karen Bennett, the firm’s sales and marketing director of commercial mortgages. ‘Obviously the new changes will have an effect and may instil more caution across the market, however, Shawbrook is well placed to adapt to change, and we are expecting the market to remain buoyant,’ she added. Continue reading
Asking prices in UK still going upwards, latest index shows
The average asking price England and Wales has increased by 8.2% year on year while the total stock of property had dropped to a new record low, according to the latest residential index. Month on month prices increased by 0.3%, the highest such rise observed for January since the onset of the financial crisis and is at odds with the normal seasonal trend, the data from Home.co.uk shows. The index report says that growth in the property market is due to a lack of supply and low mortgage rates and the typical time on market is 117 days across England and Wales, nine days less than in January 2015. Despite a small uptick in supply, the total number of properties on the market has fallen to a new low. Just over 386,000 properties are currently for sale, some 47% less than in 2008. This trend looks set to dominate the UK property market in 2016, the report says. ‘Sellers know full well that there is a shortage of supply and therefore see no need for cautious pricing. Consequently, prices jumped nearly a percentage point over the last month in Greater London, which corresponds with an additional £15,000 on the average home value,’ said Doug Shephard, director at Home.co.uk. All the regional property markets have shown significant improvements in marketing times over the last year. The biggest improvements were in the South East and East of England where competition is fierce and these two regions also experienced the largest price hikes outside of Greater London in 2015. ‘We expect that home values in these regions will rise further this year before cooling as prices become out of reach of most buyers, thereby subduing demand. Perhaps surprisingly, the next best improved markets in terms of reductions in median time on market were the formerly lacklustre North East and Yorkshire regions,’ Shephard explained. ‘This serves as a strong indication that a recovery, until now notably absent, is beginning to take place in these regions as properties begin to move through the market more quickly and the supply demand balance tips in favour of the vendor,’ he pointed out. ‘We expect the first significant price rises post-crisis to be observed in these regions in 2016. The recovery in home values in the West and East Midlands is already well underway and their marketing times continue to improve. We expect increased price rises in these regions this year due to a combination of increased scarcity and buyer demand,’ he added. Shephard also pointed out that the North West property market is also showing signs of incremental improvement and is expected to see price rises in 2016 higher than last year. ‘It is interesting to note that Greater London heads up the four regions which have the least improved marketing times over the last year. Overall, the London market appears to be in a mature post-recovery phase where the breath taking price hikes of the last six years have… Continue reading
Prime central London sales down 14% year on year
Sales levels across the prime central London property market have fallen by 14% year on year from the third quarter of 2014 but the rate of change is slowing, according to a new report. The regular analysis report from W.A. Ellis points out that the annual rate of change is an improvement from the first quarter when transactions were falling at an annual rate 27%. It also shows that the average price paid per square foot across the prime central London sector now sits at £1,832 up by 1.4% over the third quarter of 2014. However, the very top of the market over £5 million has already witnessed the greatest correction in prices with flats and houses being sold for 11.5% less per square foot than in the third quarter of 2014. ‘It would appear that the bubble may already have burst in prime central London but the effect is not as decimating as reports from UBS and Deutsche bank suggest. The government’s intervention in December 2014 by raising Stamp Duty has indeed cooled the very top of the market and the continuous upward spiral has been halted,’ said Richard Barber, the firm’s director. He pointed out that 36% of all properties currently on the market across the sector are now being marketed at a lower price than they were originally listed at, with the average reduction in price being 8.5% of the original asking price. ‘Continuous capital growth in any market is an unrealistic expectation. However, we believe that the correction has already happened and the above statistics bear this out. Whilst there continues to be pessimistic outlooks on the market supported by strong economic arguments, market activity suggests a different story,’ Barber explained. ‘Affordability will undoubtedly remain the key issue within prime central London but news that the population of the UK is likely to grow by 4.4 million in the next 10 years, will undoubtedly impact on both the letting and sales market. This unprecedented level of population growth will prove to be a continuing factor within the supply and demand chain’ he added. Meanwhile, in the lettings sector the report says that the short term outlook for the rental market is looking positive as supply continues to outgrow demand over the next few years. Across Greater London, the firm predicts rental values will increase by 5% in the next year and by 21.7% over the next five years to the end of 2020. Within prime central London, the firm predicts a rise of 3.5% over the coming year, with a slightly more modest prediction of 15.9% over the next five years, which Lucy Morton, head of residential agency at JLL Kensington says still represents a very healthy growth in rental values. ‘This outlook is particularly pleasing given that rental growth over the past two to three years has been minimal… Continue reading
