Tag Archives: finance-update
UK real estate markets set to continue to expand in 2015 says CBRE
Year on year, UK real estate markets will continue to expand, but the overall trend will be a slowing of growth to more sustainable levels, according to the latest forecast. Prime London commercial markets will continue to grow in 2015, but confidence and investor interest will encourage growth in prime regional markets, says the report from commercial real estate advisor CBRE. It reveals that in 2014, total returns to property averaged nearly 20% but predicts that in 2015, there will be a slowing of growth rates with average returns just under 13%. It also points out that the general election will bring some uncertainty in property decision making and adds that year on year there will be significant rental growth for most sectors but a further improvement in yields as investment inflows continue into the UK market. Prospects for retail properties remain among the most uncertain, with few sure signs just yet that stable growth is returning to consumer spending, and cost pressures and distractions across the sector, particularly in grocery retailing, although in 2015 as in 2014, prime retail destinations will remain a safe bet. Industrial property will continue to be attractive for investors due to a dearth of quality supply and price growth in the housing market will ease in 2015 to around 6% with transaction levels having peaked for the time being. ‘This has been a year of extraordinary expansion across the property sector and while this will continue into 2015, overall there will be a return to more sustainable levels of growth,’ said Miles Gibson, head of UK research at CBRE. ‘Rental growth will continue in all sectors and we expect investment yields to continue to improve as levels of capital flows into the UK market remain high. In terms of where growth, we forecast a ripple effect next year as property investors shift from London out to the regions,’ he explained. He also pointed out that global economic factors, most notably the falling price of crude oil, in 2015 will benefit the UK. ‘The likely effects of pushing down inflation and boosting consumer spending, means we should expect to see a knock on benefit for retailers which in turn could stimulate growth in the retail property sector,’ said Gibson. ‘Although there positive signals for the property market, we recognise that there will be uncertainty caused by the imminent general election. The combination of these trends makes 2015 an intriguing prospect for the sector,’ he added. Continue reading
UK buyers and sellers concerned about property prices, research suggests
Both buyers and sellers in the UK are concerned about the price of property with 86% of buyers feeling it deters them and 91% worried about selling up. Some 40% of sellers stated that getting the best price for their property was their primary concern and an equal percentage of buyers listed house prices as a major deterrent to buying, according to research by online estate agent eMoov.co.uk. The over 50's lead the way as those most concerned about securing a good price for their property. With retirement potentially on the horizon, 40% of them listed getting the best price as their primary fear. This is in contrast to those looking to buy, as 43% of those aged 18 to 24 were most fearful of the price they would have to pay for their property. With London property costing double the national average, over 40% of people living in the capital feared property price tags, however Norwich was the surprise top of the bunch with over half of buyers surveyed worried about price. Southampton held the biggest fear factor for buyers searching for a new property with 42% of them stating that finding their next dream home was a concern. With interest rates currently as low as they can get and a rise inevitable next year some 19% of buyers considered this something to fear when looking to buy a property. The majority of these were under the age of 44, most likely as a result of larger mortgages and less equity in comparison to the older property buyers. Estate agency costs were the third biggest concern with 27% of sellers worried about it. This was most prevalent for those 35 and over. Finding the right mortgage concerned 29% of those aged 18 to 24, the highest of all the age brackets surveyed. Some 16% of those aged 25 to 34 also cited finding the right mortgage as a worry. ‘Buying or selling a property can be scary business for some. It can be a minefield of problems from start to finish and it's no surprise it strikes fear into the hearts of those involved,’ said Russell Quirk, the firm’s chief executive officer. ‘It won't come as a shock to anyone that house prices top the survey, they are what drive the market and unfortunately for the majority dictate the options open to them. It comes down to the age old game of cat and mouse, buyers worry about finding the lowest price, sellers are fearful about selling under value,’ he said. ‘It is interesting to see just 6% of people worry themselves silly over which estate agent they are going to use but 27% are put off by the actual cost of estate agency fees. This reflects a significant change in consumer behaviour over recent years and the importance put on ensuring value from an estate agent, something that the mainstream, high street agent simply does not provide,’ he added. Continue reading
UK has more part time landlords but many not aware of the rules
One in 20 people in the UK rents out a property to supplement their main income, receiving £678 in rent each month on average but many are unaware of the regulations, new research shows. This amounts to nearly £28 billion a year across the country as part of a boom in part time landlords, says the research from LV= landlord insurance. The research found however, that almost 500,000 landlords have not had their property checked by a gas safety engineer in the last 12 months, risking prosecutions and fines of up to £20,000 Also, some 32% of landlords have had their property damaged at some point, which has cost them £1,200 on average to repair. Landlords in London and the South East collect the highest rents at £1,079 and £816 respectively, followed by the West Midlands at £678 and then East Anglia at £676. Approximately 60% of this is spent on borrowing costs, management fees and maintenance costs, leaving landlords a healthy pre-tax profit of 40% on average. The trend is mainly being driven by people moving to a new home and then renting out their old one. Indeed 55% of these landlords are renting out properties that they never intended to, with 15% saying it was because they wanted a bigger property and 10% having to move for Whatever the reason for letting out a property, all landlords must comply with current regulations on rented homes, LV= points out. By law, all landlords must ensure that gas and electrical equipment is installed and checked annually by a registered engineer. Tenant deposits must be held in a deposit protection scheme and some local authorities insist that landlords in their area obtain a licence. A managing agent will usually take responsibility to ensure that all legislation is complied with for a fee, as well as check tenants and manage the rent collection. However, 49% of today’s part time landlords manage their rental property themselves and do not have such protection. As well as risking fines from the local authority, landlords could find themselves heavily out of pocket should one of their tenants make a claim against them. Slips and trips can result in expensive compensation claims for property owners who are liable for any harm to a tenant or member of the public as a result of the condition of the property. For example, a landlord could be sued by someone who falls and is injured because a pathway has not been maintained. Landlords can also be liable for damage to adjacent properties, such as an overflowing gutter causing water damage to a neighbouring house. Analysis of LV= data shows that the number of liability claims being made against property owners has been steadily increasing in recent years, which can be attributed in part to Britain’s growing compensation culture. The insurance needs of a rented property are very different to those of an owner occupied home and standard home buildings insurance will not usually… Continue reading
