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Increasing demand for prime property in commuter areas in Scotland
Scotland has seen an increased demand for prime property in commuter locations with the housing market as a whole generally improving, according to new research. Scotland’s prime market is expected to grow by 18.8% over the next five years in terms of values, outperforming the overall residential market and in comparison to 22.2% across Great Britain, according to the latest report from real estate firm Savills. However, the prime market between £400,000 and £1 million continues to be constrained outside Edinburgh by the Land and Buildings Transaction Tax (LBTT) which was introduced a year ago, it points out. And after seven years of phenomenal growth, the Aberdeen market is experiencing price falls linked to falling oil prices. ‘While Scotland continues to attract overseas buyers, we are now seeing the return of wealthy home grown buyers, and there were some important trophy country house and estate sales during 2015,’ said Faisal Choudhry, director of Scottish research as Savills. ‘However, one of the most important factors in the Scottish market is the fact that the recovery, which began in prime city locations, is finally established in the suburbs and is beginning to reach more outlying locations,’ he explained. ‘Our latest data reveals today’s house buyers are falling back in love with the Scottish suburbs. This may partially be explained by a dwindling supply of the best homes available to buy in the most sought-after city centre locations,’ he added. While the prime areas like the New Town, Stockbridge and Morningside in Edinburgh and the West End in Glasgow, have been enjoying a strong market over the last five years, outlying areas had been slower to recover. Over the past year, however, there has been a jump in sales across adjacent locations, with the return of the ‘closing date’, and premium prices being paid. ‘We expect this trend to continue and to ripple further outwards to more attainable suburbs, like Liberton in Edinburgh and Netherlee in Glasgow,’ said Choudhry. Property prices are predicted to rise across the UK as a whole this year, but commuter locations are expected to see the greatest growth, with lower fuel costs playing a part. As a result, further outlying areas including Midlothian and locations such as Helensburgh and Kilmacolm are on the upturn. But Choudhry pointed out that there are market risks ahead of the European Union referendum in June and this may result from a drop in buyer confidence. ‘A vote to leave the EU has the potential to offset housing market demand, as an exit is negotiated. However, the impact on values might be mitigated due to low interest rates. Whatever the outcome, there will continue to be a market due to the essential requirements to move house, together with the needs of upsizers and downsizers,’ he said. Continue reading
Over half of UK letting agents think buy let surcharge will push up rents
Over half of UK letting agents believe the new buy to let stamp duty surcharge from April will push up rent costs, new research has found. It could also trigger a decline in the supply of available properties coming onto the rental market, according to the report from the Association of Residential Letting Agents (ARLA). The report also points out that in February demand for rental properties grew to an average 37 per letting agent branch, the highest since February 2015, as supply increased marginally. Some 52% of letting agents reported an uplift in interest from buyers looking to invest in by to let properties before the stamp duty reforms come into effect, up from 47% in January. However, after the 01 April deadline some 63% predict that supply will fall as landlords are pushed out of the market. Some 57% of ARLA members agree rents will be pushed up once the stamp duty reforms have come in to effect, as increased costs for landlords are passed through to tenants. This is especially high in London, where 73% of letting agents expect to see this happening. ‘The stamp duty changes are now imminent, and as well as hitting small landlord’s, they will also impact institutional investors,’ said David Cox, ARLA managing director. ‘Although members are reporting a rush from landlords trying to snap up their buy to let investments now, it’s likely that we’ll see the buy to let market drop like a stone come April and probably not pick up again until next year. This will most certainly cause rents to increase, with supply dropping, as competition for the limited availability of properties intensifies,’ he explained. The report also shows that demand rose by 19% in February, with an average 37 prospective tenants registered per member branch. This is the highest level seen since February last year, when an average 40 tenants were registered per branch. Alongside growing demand, the supply of rental properties on letting agents’ books increased to 176 in February, a rise from 172 in January. ‘The demand for housing continues to intensify as supply remains an issue across most of the country. We are concerned that the government rhetoric of wanting to help people onto the housing ladder does not tally with their action of continuing to target the rental market with additional costs,’ said Cox. ‘Some landlords will simply withdraw from the market whereas others who can take the hit of the extra stamp duty will simply raise rents to cover the extra costs. The dream of home ownership will remain out of reach for many as we move closer towards becoming a nation of forever renters,’ he added. Continue reading
Scottish rents rise at two thirds the speed of England and Wales
Scottish rents are rising at just two thirds the speed of those in the rest of England and Wales with a rise of 2.1% year on year, the latest index data shows. This compares with a 3.3% rise in England and Wales and month on month in Scotland average rents have stagnated at £548 and some areas, such as the Highlands and Glasgow have seen rents fall compared with January. The figures from the latest buy to let index from lettings agent network Your Move also shows that while rental growth has seen a slowdown from 2.3% in the 12 months to January, it is an uptick from the 1.1% annual change recorded in February 2015. According to Brian Moran, lettings director at Your Move Scotland, it is ironic that Scotland is witnessing one of the biggest government interventions into the private rented sector, at a time when rents have been moving at a much slower pace than in other parts of the UK. But he pointed out that Scottish rents are still making incremental upwards progress but crucially, against a bedrock of stronger tenant finances. ‘Like in any market, affordability is a fundamental check on prices. Rental arrears are a great benchmark of affordability in the market, and their frequency is falling,’ he said. However, he also pointed out that the passing of the Private Tenancies Bill last week signals a paradigm shift in the private rented sector in Scotland, introducing a new artificial influence in the market, aside from regional supply and demand. ‘Intervention in the market has had negative side effects in the past, noticeably the abolition of tenancy fees in 2012, and it will be interesting to see how landlords recuperate and recover from this regulatory blow,’ he explained. ‘Anything that makes buy to let investment slightly harder to swallow, and managing property portfolios more of a painful process for landlords, risks cutting off the inflow of investment. Tenants will ultimately be the ones who feel the effect on their bottom line, if the supply of properties to let dries up, Moran added. A breakdown of the figures show that in the year to February 2016, three of five regions in Scotland have recorded positive annual growth in rents. Edinburgh and the Lothians is leading rent growth across Scotland, with the strongest year on year rise in rents, at a record speed of 7.7%. This is the fifth successive acceleration in annual rent growth and has taken average monthly rents in the region to a new peak of £644, up £46 from £598 in February 2015. Rents in the South of Scotland are also now standing at a record high of £515 per month, up from £498 a year ago. This 5.3% annual rise is the second fastest increase recorded in the year to February. In the Highlands and Islands, rents are now 2.5%… Continue reading
