Tag Archives: tsi
UK vote on future in EU could have major impact on housing markets
If the UK leaves the European Union there is a risk that the move could have a long last and damaging effect on the country’s residential property markets, according to a new report. It could affect current plans to build hundreds of thousands of new homes, compromise London’s position as a safe haven for property investment, but could also have positive effects for first time buyers. The report from the National Association of Estate Agents (NAEA) and the Association of Residential Letting Agents (ARLA) compiled with the Centre for Economics and Business Research (Cebr), highlights a number of short and long term implications potentially arising from the upcoming vote. While the impact Brexit will have on migration policies is unconfirmed, imposing greater restrictions on foreign workers coming into the UK may compromise the UK’s ability to build homes with the Government having pledged to build one million new homes by 2020. It points out that construction based jobs are decreasing in popularity among UK nationals, and as 5% of current construction workers were born in other EU countries and workers from the are becoming more important than ever in filling the skills gap to boost housing stock. A leave vote could mean that in 10 years’ time there would be a severe skills shortage of construction workers, according to Mark Hayward, NAEA managing director. ‘Even if we then had planning permission, investment and materials to build more housing, we simply wouldn’t have the resource to put the bricks and mortar together. It has the potential to have a very damaging effect on the future housing market,’ he explained. But he added that a leave vote could provide first time-buyers with breathing space as demand for housing would be expected to ease off. The report also says that non EU businesses are currently attracted to the UK’s status as a gateway to the single market as it allows them to establish and grow their presence across Europe. In 2014 some 19% or £5.3 billion) of total FDI inflow into the UK came from EU sources and in 2013 some 17% of sales in London’s prime property market made to non-UK buyers were to European nationals. It suggests that in the event of Brexit, a portion of FDI would be re-directed to EU countries, freeing up housing units, particularly in London, previously purchased through FDI for British buyers. Also, if the UK does not maintain free movement of labour, the total population of the UK could decrease by 1.06 million and the report argues that with fewer people, demand will ease, making the market more accessible for first time buyers, as well as second steppers and last and last time buyers and this is will be especially apparent in London. Reduced migration would also affect the private rental sector. Currently, private renting is a more… Continue reading
UK buy to let landlords could face tougher lending conditions, it is suggested
There is concern that buy to let landlords in the UK will face tougher lending conditions on top of tax relief changes already scheduled for next year. One lender, the Nationwide Building Society is already cracking down on rental calculations and cutting back its maximum loan to value for landlords over worries about the tax relief changes next year.~ Nationwide's Mortgage Works, the mutual's buy to let arm, which provides one in seven loans to landlords, is increasing rental cover requirements from 125% to 145% and cutting its maximum LTV from 80% to 75% from 11 May 2016. According to Armistead Property more lenders may follow suit and while the changes facing buy to let landlords, on top of the recent extra stamp duty payable on additional homes, can be taken into account landlords need to plan ahead. Currently, landlords can claim tax relief on monthly interest repayments at the top level of tax they pay of up to 45%. However, the Chancellor’s new tax rules could mean that thousands of buy to let landlords will see their profits hit as the amount they can claim as relief will be set at the basic rate of tax which is currently 20%. Some current basic rate taxpayers will also be hit, because the change will push them into the higher rate tax bracket. It will be phased in over a four year period from April 2017. However, the firm believes that the tougher lending criteria and recent tax hikes, will not have a major impact on the property market as a whole. ‘This move by Nationwide could trigger other big lenders to follow suit. The banks seem to believe that the Chancellor’s tax crackdown on mortgage tax relief will could cause difficulties for landlords. Though the new tax rules are challenging for most landlords, rising asset values and rental income will go a long way to protect profits,’ said Peter Armistead. ‘Landlords have plenty of options available that will help offset the increased taxation. The first thing landlords should do is carry out a serious portfolio review and work out how the tax changes and tougher mortgage lending will affect them and what options there are to save, or make more money. For example, mortgaging to get a better deal, renovating some old stock as these costs will be tax deductible, selling some properties or increasing the rent,’ said Peter Armistead. ‘Landlords need to think outside the box and ask themselves questions like can I buy with cash or with far less leverage, should I incorporate, can I change a house into an HMO and increase the rental income, can I get planning on an existing property to increase its value or can I add an extension, or convert the cellar?’ he pointed out. ‘Although the government is trying to curb the buy to let market, property investment is robust in the long term. It is estimated that two million Britons are now private landlords… Continue reading
North West of England worse hit by negative equity values in UK
Hundreds of thousands of home owners in the UK who bought property in 2007 are still likely to be stuck in negative equity despite the current strong growth in the residential market. Almost 1.5 million property transactions were completed in 2007 when property prices reached peak levels, just before the financial markets imploded in 2008 and according to research from online estate agent HouseSimple, average property prices 53% of towns and cities are still below average prices in 2007. While average London prices have risen by 56% since 2007, that is not the case across large parts of the country, particularly in the North of England where 17 of the 20 towns and cities worst hit by negative equity are located. The research, which looked at 75 major towns and cities in England and Wales, also shows that it is the North West that has been worst hit by post-recession negative equity with 40% of the top 20 negative equity towns and cities in the region. The worst affected towns are Blackpool and Middlesbrough, where house prices are still almost 30% lower than pre-crash highs. Along with Blackpool, Blackburn and Liverpool are both in the top five worst affected towns and cities, with average house prices still 25% and 23% lower respectively than before the crash. Yorkshire and the Humber has also been hit hard, with a quarter of towns in the top 20 list in that region. Average prices in Middlesbrough are still 28% below pre-2008 levels, while in Bradford and Hull, house prices are 20% and 19% lower than 2007 averages. House price recovery in the South has been much stronger than the north. As you might expect, London’s house prices have more than recovered, and average prices today are almost £200,000 higher than 2007 levels. Property prices in Winchester also seem to be recession proof, up 44% to £447,046, compared to average 2007 prices. Meanwhile, average prices in the commuter town of Stevenage are 39% higher than pre-recession values. Sale and Stockport in the North West, where house prices now average £252,203 and £206,368 respectively at 25% and 22% more than 2007, buck the trend in the region. They are the only towns outside the South of England in the top 20 towns and cities where house prices have more than recovered to pre-recession levels. ‘London home owners have watched as their properties have risen in value substantially since 2008 but, thousands of people around the country have had to put their lives on hold, unable to move because they are trapped in negative equity,’ said HouseSimple chief executive officer Alex Gosling. ‘Unfortunately, the North of England has been slower to recover losses suffered during and after 2008. And anyone wanting to relocate for work or family reasons faces a less than appealing choice, either making a loss on the sale of their property or staying put and waiting until the price of their house at least recovers to… Continue reading
