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Rents rising across most of the UK, latest rental index shows
Rents continue to rise in many parts of the UK with Greater London, the East Midlands and Scotland seeing the fastest rent rises in the first quarter of 2016. The figures from the latest HomeLet index also show that overall the average rent in the UK, excluding Greater London, is now £755 per month, some 4.9% higher than a year ago. It also shows that the average rent in London is not £1,536, up 7.7% year on year and the North West is the only area to see a quarterly decline. The figures are published as the private rental sector is anticipating the impact of tax changes and new regulations coming into force, and HomeLet said it has been the busiest ever month for landlord insurance. HomeLet’s research shows that rents continue to rise significantly ahead of inflation, with demand for property remaining strong. However, this comes ahead of reforms that are predicted to have a major impact within the sector, including a stamp duty increase for landlords buying new properties to let, new rules from regulators on buy to let lending and limiting tax relief on mortgage interest payments to the basic rate. HomeLet’s own data already shows evidence of landlords taking action ahead of the stamp duty changes. In March it saw a marked increase in enquiries from property investors, with 37% of insurance policies being purchased by landlords with new properties compared to just 24 per cent in the same period last year. This fits with recent data from the Council of Mortgage Lenders showing a spike in buy to let lending ahead of the stamp duty increase. London’s rental market, where the average rent on a new tenancy is now £1,536, continues to see rents rise more quickly than in other areas of the country. At 2.8 percentage points, the gap between rent rises on new tenancies in London and the rest of the UK, where rents average £755, was almost identical to last month at 2.9 percentage points. Just one area of the country, the North West of England, saw lower rents on new tenancies over the three months to March, with the HomeLet Rental Index recording a fall of 3.5% over the year. ‘We’ve continued to see increases in rents on new tenancies in almost every part of the UK during the first quarter, as the private rental market has responded to the pressures of an imbalance between demand and supply,’ said Martin Totty, Barbon Insurance Group’s chief executive officer. ‘However, external factors may now come into play: the stamp duty increase has already had an impact and that surge in the acquisition of property by landlords could now cause a short term increase in the supply of rental property in some areas of the country,’ he pointed out. ‘In the longer term, changes to rules around buy to let mortgage interest being offset against tax bills, coupled with the… Continue reading
English farmland prices fall in first quarter of 2016
English farmland values fell by 3% in the first quarter of 2016 with average prices dropping back below £8,000 an acre, according to the latest index. Year on year farmland prices fell 2% but they are still up 32% over five years, up 176% over 10 years and up 4,886% over 50 years, the data from the Knight Frank Farmland Index shows. However, the drop was the largest quarterly decline since the 5% slide that occurred during the final three months of 2008, following the collapse of Lehman Brothers bank. ‘Given the significant issues weighing on the market at the moment, a period of readjustment is perhaps unsurprising. Agricultural commodity prices remain low with little prospect for a strong rebound in the short term, while the potential implications of a UK exit from the European Union are adding further uncertainty,’ said Andrew Shirley, head of rural research at Knight Frank. ‘To put the drop into context it should also be noted that the average value of farmland is still only £18 an acre lower than it was at the end of 2014, and remains almost 180% higher than it was 10 years ago. And despite falling in the two quarters after Lehmans’ collapse, farmland values had recovered all of their lost value and more by the end of 2009,’ he explained. Shirley also pointed out that while last year the feeling was that the In campaign was going to win the EU referendum relatively comfortably, now the polls are predicting a much tighter result, with neither side of the argument yet to establish a convincing lead. ‘Predicting where values will head in 2016 and beyond is almost impossible until we know the results of the EU referendum in June. In the case of a Brexit much will depend on for how long DEFRA commits to providing a replacement system of support payments,’ he said. ‘But if sterling weakens for a prolonged period as some analysts predict, this would make UK grain and meat more competitive on global markets. UK land, which is already cheaper than in some EU countries, may also become more attractive to international investors,’ he added. ‘Whatever the outcome, we are still seeing strong demand from farmers who are either not reliant on EU subsidy payments or have taken the long term view that expansion is the way forward for their businesses,’ he concluded. Continue reading
UK house prices up 7.6% year on year, down slightly from previous month
UK house prices increased by 7.6% in the year to February 2016, down from 7.9% in the year to January 2016, taking the average price to £284,000, the latest official figures show. House price annual inflation was 8.2% in England, 2.8% in Wales, and 2.4% in Northern Ireland. But prices fell by 0.8% in Scotland, the data from the Office of National Statistics (ONS) also show. Annual house price increases in England were driven by year on year growth of 11.4% in the South East, growth of 10.3% in the East and growth of 9.7% in London. Excluding London and the South East, UK house prices increased by 5% in the 12 months to February 2016. Also excluding London and the South East, the average UK mix-adjusted house price was £216,000. On a seasonally adjusted basis, average house prices increased by 0.4% between January 2016 and February 2016, compared with an increase of 0.8% in average prices during the same period a year earlier. The index also shows that in February 2016, prices paid by first time buyers were 8% higher on average than in February 2015 while for existing owners prices increased by 7.4% for the same period. London continued to be the English region with the highest average house price at £524,000 and the North East had the lowest average house price at £158,000. London, the South East and the East all had prices higher than the UK average price of £284,000. David Brown, chief executive officer of Marsh & Parsons, explained that while annual growth was down slightly he believes that UK property prices are certainly on a solid footing and despite the regulatory knocks over the past year, London remains one of the leading regions out in front. ‘Government intervention has prompted a lot of yo-yoing in the housing market of late, and the last week of March was one of the busiest we’ve ever experienced. A sense of urgency was palpable in the last few working days leading up to the implementation of higher stamp duty on second homes and buy to let purchases, and solicitors were working around the clock to service more than quadruple our average number of purchase completions per day,’ he explained. ‘Now we’re over the hump and this immediate buy to let incentive has passed, activity is sure to level out into the summer months, but continued high levels of buyer demand will help to keep London house prices strong,’ he added. Rob Weaver, director of Investments at property crowdfunding platform Property Partner, pointed out that first time buyers are still feeling the pinch, with average prices paid by them of £214,000. He believes that as the rate of inflation on new builds is accelerating more than existing housing stock, demand is still outstripping supply but a mood of uncertainty over the June referendum on the country’s future in the European Union could slow house price growth. He also believes that a dip… Continue reading
