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Equity release going from strength to strength in UK
Looming interest only mortgage due dates have driven a surge in sales of lump sum equity release plans to 40% of the market in the UK in the first quarter of 2016, according to a market monitor report. Some 40% of people are taking a single lump sum advance to reduce their debts, up from 30% for the same period in 2015, the data from the report from Key Retirement shows. The firm believes that the surge is largely being driven by customers who need the maximum cash available rather than drawdown as they are using the lump sum to pay off shortfalls in interest only mortgages. Average amounts released through equity release are now £76,000 and as high as £134,000 in London. The Market Monitor, which analyses data for Equity Release Council members and non-members, for the first three months of 2016 shows record growth with total property wealth released rising to nearly £415 million, up from £341 million last year. The detailed report by the over 55’s specialist shows rising numbers of retired home owners using their property wealth to pay down increasing debts including loans, credit cards and mortgages. Around 29% of customers used some or all of the money to pay off unsecured borrowing. Debt was primarily run up on credit cards or loans while 21% used some or all of their money to clear outstanding mortgages. 14% used the money to help with regular bills. ‘The record high number of equity release plans being taken out underlines how property wealth is an important part of retirement planning,’ said Dean Mirfin, technical director at Key Retirement. ‘Pensioners are making the most of successful property investment and rising house prices to substantially improve their retirement standard of living. However retiring in debt is still a major issue. It’s long been predicted that as the first large wave of interest only mortgages maturities begins more customers will turn to equity release to plug this gap,’ he added. The average amount released to boost retirement income increased 12% to £76,115 in the three months compared with £66,730. In London the average released was nearly £134,350 up from £129,991. Home and garden improvements remained the most popular way of using the money with 63% of those releasing equity from their home doing so for this purpose. Customers are also using the money to treat family and friends with 21% citing this as a main reason. A further 28% are using the money to pay for holidays. Across the country 10 out of 12 regions saw growth in the value of property wealth released with East Anglia recording an 80% rise, North West seeing a 48% increase and a 24% rise for London. The value released dropped 29% in the North and 16% in Northern Ireland. Growth continued in plan sales with 10 regions seeing increases and just two seeing decreases. The North saw plan sales decrease by 35% and Yorkshire and Humberside saw an 11%… Continue reading
Demand leaves key Scottish city centres short of office space
A lack of suitable office space in Scotland’s key cities, combined with rising rents, is leading to companies looking to take offices in locations outside the city centre, new research shows. According to the latest Scottish Office Market report from real estate firm Savills, take-up of office space outside the central business districts of Aberdeen, Edinburgh and Glasgow was 4% higher in the first quarter of 2016 than the previous quarter. The firm believes this trend is set to increase as occupiers continue to be attracted by the low rents on offer in out of town locations, where in some cases there can be a 50% discount on the £30 per square foot prime rents being achieved in the city centre. ‘The out of town markets are on the cusp of experiencing a resurgence in popularity, particularly in Edinburgh and Glasgow. This is primarily due to occupiers being able to save money on rents compared to inner city locations,’ said Mat Oakley, head of commercial research at Savills. As a result Savills predicts Scotland’s strongest rental growth could be seen in the out of town markets of both Edinburgh and Glasgow, where rents in the early £20's could be achieved in the next three years. Savills research also shows that demand for office space across Scotland has increased significantly this year. Glasgow has seen approximately 300,000 square foot of space let in the first quarter of 2016 alone, more than half of the total amount of space taken in the city during the whole of 2015. Edinburgh, meanwhile, saw its second strongest quarter of leasing activity since 2013 at 324,000 square feet. According to the report, this spike in demand, combined with further employment growth and falling availability of Grade A space, has led to a squeeze in supply. Total supply in Glasgow has now fallen below two million square feet for the first time since 2011, with only approximately 500,000 square feet of Grade A space available. In Edinburgh availability has steadily fallen since its peak in 2008. Savills estimates that there is now only 2.1 million square feet of office space available across the city’s combined central business district and out of town markets, of which only 365,000 square feet is Grade A. The report also points out that Scottish office investment volumes have stayed healthy, with just over £811 million transacted in 2015, 33% above the long run average, and just over £300 million transacted in Aberdeen, Edinburgh and Glasgow in the year to date. Prime yields have fallen in Edinburgh and Glasgow, leaving both markets at 5%. However, Aberdeen's recent slowdown in leasing activity has seen yields there rise from 6% to 7% over the last two years. Of all Scottish office investments in 2015 some 44% were by non-domestic investors according to Savills research. Figures show this has continued into 2016 with 89% of all purchases made by non-domestic investors. Savills attributes this to a combination of UK… Continue reading
London property prices have risen in last 20 years by over 400%
Property prices per square metre have risen by 432% in Greater London against a national average increase of 251% over the past two decades, according to new research. Although London dominates the country's list of most expensive property locations on a per square metre basis, several areas outside southern England fetch a higher property price per square metre than the national average of £2,216. These locations are given as Solihull and Leamington Spa in the West Midlands, Altrincham in the North West, Scotland’s capital, Edinburgh and Harrogate in Yorkshire, according to the report from UK lender the Halifax. It points out that there has been a substantial gap widening in property prices per square metre between southern England and the rest of Britain over the past 20 years. This has continued since 2011 with London gains nearly double that of the rest of the country. The borough of Kensington and Chelsea remains Britain's most expensive neighbourhood, with an average price of £11,321 per square meter. Despite dropping 1% lower than last year, it is more than five times the national average of £2,216. Kensington and Chelsea, along with Westminster at £10,552 are the only areas in Britain with an average price above £10,000 per square meter followed by Camden at £9,012. Some 17 areas, all in Greater London, have an average price in excess of £5,000 per square meter with the borough of Merton in South West London the latest addition to this group since last year. Half of the 10 most expensive towns outside southern England are in the West Midlands. Solihull, with an average price of £2,661 per square meter and Leamington Spa at £2,645 are the two most expensive towns. The other West Midlands towns that made the top 10 include Sutton Coldfield at £2,113, Bromsgrove at £1,970 and Stourbridge at £1,943. Meanwhile, five places outside southern England have average prices per square meter above the national average of £2,216. In addition to Solihull and Leamington Spa, these include Altrincham in the North West at £2,634, Edinburgh at £2,355 and Harrogate at £2,342. The research found that nowhere in Britain had an average price below £1,000 per square meter but Airdrie in Scotland had the lowest average price at £1,019, less than a tenth of the average price per square metre in Kensington and Chelsea. Six of the 10 towns with the lowest prices per square metre are outside England. There are four in Scotland with Airdrie at £1,019, Lanark at £1,040, Coatbridge at £1,071 and Kilmarnock at £1,120. Two are in Wales with Llanelli at £1,028 and Neath at £1,065. The four English towns with the lowest house prices on a per square metre basis are all in northern England with Scunthorpe at 1,036, Accrington at £1,055, Hartlepool at £1,062 and Wallasey at £1,067. ‘House price per square metre can be a useful comparison measure as it helps to adjust for differences in the size and type of properties between… Continue reading