Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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Slow-moving prime London property market drives £1 billion January ‘sale’
The pain in the prime London property market continues as research reveals that nearly £1 billion has been knocked off the original asking prices of properties for sale within its upmarket streets. Analysis of portal data by Garrington Property Finders shows that the average reductions is 9% or, by the crazy metrics of the capital’s property market, £223,000. Such dramatic reductions (shown in a heat-map form, above) have been created by a slow market, Garrington says, and in six of the seven areas featuring the greatest reductions more than half of properties currently for sale have been on the market for over six months. The most dramatic reductions in prime London property are in the more expensive enclaves including St James and Victoria, where the average reduction is 14.1% or £765,919 and Knightsbridge, where asking prices have been slashed by 12.1% or £927,188 on average. Well-to-do homes in the City, South Kensington, Soho, Covent Garden and Marylebone areas of London have all seen an average reduction of approximately 10%, the research shows. “2017 was not a year for the faint-hearted in London’s prime property market,” Garrington’s Managing Director Jonothan Hopper (pictured, left). “Acute price sensitivity among buyers continues to force…
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Portfolio landlords struggle to get mortgages as PRA rules kick in, research shows
Nearly three quarters of landlords with multiple properties are finding it harder to get either mortgages or remortgage existing debt as the Prudential Regulation Authority’s second wave of mortgage rules kick in, it has been revealed. Research completed on behalf of lender Foundation Home Loans among 2,000 landlords found that 70% of those with more than four properties had struggled to obtain further finance to buy more properties, while half of those with between one and three properties also faced problems. The second wave of PRA rules went live in September last year to allay fears that excessive borrowing by banks on generous terms to landlords might endanger the economy during a downturn. The larger the portfolio, the harder it has become for landlords to get the green light for more finance, largely because those with more than four properties are now effectively classed as enterprises and must submit business plans to get a home loan or remortgage an existing one. Rejected by lenders Two thirds of landlords with eleven or more properties within their portfolio now believe the range of mortgages available to them has dropped, while a quarter think they are now more likely to be rejected by…
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Airbnb to restrict ‘entire home’ rentals to 90 days in another UK city
Airbnb has offered to restrict the period landlords can rent out their properties in Edinburgh to 90 days a year, copying a similar ban it introduced in London last year following criticism of its business model. In London, from January 2017 any ‘entire home’ listing has been limited automatically by the company’s software to a maximum 90 days total per calendar year. This has now been mooted in Edinburgh by the Californian company in a submission it made to a expert panel set up by the Scottish government due to publish its findings next week. Airbnb: ‘commercial’ lets? Criticisms of the way landlords use Airbnb in Edinburgh echo those made in London; that too many landlords are buying properties with the express purpose of renting them out via the platform. This, says Green MSP Andy Wightman (pictured, left), means Airbnb is being used “as a route to market by commercial operators who see it as a very cheap way of advertising the availability of a flat, which is used 100% of the year for commercial short-term letting,” he told the BBC. Wightman says this is far from its original purpose, which was to enable home owners to make extra cash…
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Tory’s flagship housing policy will not get Britain building again, say MPs
The government’s recently-launched flagship housing policy to get ‘Britain building’ has been heavily criticised by senior MPs today, including members of May’s own party, and also that the Stamp Duty changes for first time buyers will “distort” the property market. The Treasury Select Committee believes both the abolition of Stamp Duty for properties bought by first-time buyers worth up to £300,000, and the easing of the local council borrowing cap to build homes, do not go far enough and will not achieve the 300,00-a-year new homes a year the government thinks it will. The Committee also says the Stamp Duty will create a ‘cliff edge’ at the £500,000 price point because the new rules enable the duty to be avoided by first time buyers on properties up to that value, although only on the first £300,000. “A house worth £500,000 will attract £5,000 less in SDLT than a house worth £500,001,” the Committee report says. Housing cliff edge “When the previous Government redesigned [Stamp Duty] to remove ‘cliff edges’ faced at certain property values, the then Chancellor said that he had reformed a ‘badly designed system that has distorted our housing market for decades’. “It is regrettable that the abolition…
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Savills says its UK estate agency branches enjoyed strong finish to 2017 despite “uncertainty”
Savills says its UK residential arm helped grow its group revenue during 2017 “ahead of our previous expectations” as it prepares to publish its full-year results in March. The company’s statement to the stock exchange early this morning reveals that it experienced a stronger than expected finish to the year helped both by its resilient UK residential business but also its presence in several expanding commercial property markets overseas. These include Hong Kong, China, Australia, Japan, Ireland, Spain and the Netherlands, the company says. These countries performed better than Savills had expected and helped offset a wobble in the US office market which has been impacted by reduced government spending, and the recent cost of setting up Savills’ Capital Markets operation in New York. It is now part of its wider global property investment advice and brokerage team. Savills says it helped commercial clients buy and sell property assets worth €5.5 billion last year and launched several property funds. 2018 worries But the company’s now largely global business may be not so rosy next year. Savills says that “in the current year, against the backdrop of heightened uncertainty over global economic prospects, geopolitical risks and rising interest rates, we expect…
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Landlord exodus revealed as stock of London rental properties drops by 21%
The stock of rental properties within the private sector dropped last year by 4% across the UK and by 21% in London, helping push the average rent for a property to £960 a month, and without London to £768, it has been revealed. The East of England also saw a double digit (-15%) reduction in the number of rental homes. Five other areas also witnessed a shrinking stock of rental properties includes Scotland, the SW, Yorkshire and the Humber, East Midlands and the NW. But stocks in four rental markets are still expanding including Wales (+13%), the West Midlands (+12%) the NE (+6%) and the SE (+5%). Countrywide’s monthly rental index reveals that the ratio of homes bought by landlords during 2017 as a percentage of the total market dropped to 12.5%, a nine year low, and lower than during 2016 (14.7%) and 2015 (16.3%). Increasing rents This reduction in the stock of privately rented homes, set against a trend of increasing numbers of tenants, is helping push up rents, Countrywide says. Rental increases have jumped by a third from 1.8% in 2016 to 2.4% during 2017. The figures also reveal that forty-six per cent of landlords increased the rent…
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New Year property market gets off to a roaring start, claims Rightmove
The first weeks of the New Year property market have begun well with increased numbers of buyers looking for homes and asking prices rising, says Rightmove. Its monthly snapshot of the property market reveals that the number of visits to its online listings of sales properties is up 9% so far this month compared to last year. Also, asking prices for newly-listed homes are up 0.7% compared to last year. But Rightmove warns that, despite the rise in interest during the New Year, buyers are extremely wary on price, and that the number of sales agreed during the final three months of last year was down by 5.5% compared to the same period the year before. Rightmove also hints that while in more normal times the current stretched buyer affordability and uncertain political outlook might have seen prices tumbling, a surge in first time buyers following the recent Stamp Duty reductions, plus a lack of supply in the market, is instead pushing prices up. “Considering some of the gales that buffeted the market in the latter part of 2017, these early readings for 2018 show that there is currently a good following wind of search activity,” says Rightmove Director Miles…
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Tax changes will drive 46,000 properties out of private rented sector, says NLA
The number of private rented sector landlords intending to reduce the size of their portfolio is at its highest for ten years, it has been claimed, with 46,000 properties due to be taken out of the rental market. The National Landlords Association (NLA) says 20% of its members plan to shrink the number of properties, largely because the recent tax changes for landlords and the looming tenants’ fees ban are “undermining the viability of many landlords’ businesses”. Research firm Capital Economics were commissioned by the NLA to look into the recent tax changes, which reveal that landlords are set to lose £400m from the changes, which come into full effect in 2020. The research also reveals that ‘moderate earner’ landlords will soon pay “significantly higher taxes” than those who earn comparable incomes through other means. Private rented sector The NLA’s CEO Richard Lambert (pictured, left) says the government’s recent tax assault on private landlords is clearly taking its toll and that “the Government needs to look at the impact these policies will have on the PRS”. Landlords have recently had several tax allowances rolled back including an automatic wear and tear allowance and tax relief on mortgage interest payments, and…
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Universal Credit is “car crash” for tenants, landlords and agents, says MP
Universal Credit has been an “ideological error” for the 1.2 million tenants on housing benefit within the system as well as landlords and agents, it has been claimed by Stephen Lloyd, MP for Eastbourne (pictured, right). This is despite the Chancellor’s measures in his budget last November, which attempted to mitigate the financial stress of those moving to Universal Credit falling into rent arrears as they awaited payment. Stephen’s comments came during a debate he led in the House of Commons this morning during which speakers from all sides of the political spectrum savaged Universal Credit and its effect on the housing sector. As well as dramatically increasing the number of people presenting themselves to councils as homeless after being evicted from private rented properties for rent arrears, Universal Credit has made many private landlords reluctant to rent to claimants, he said. “Many years ago I warned that this would be a car crash, and it has become one,” he said. Quoting figures given to him by the Residential Landlords Association, he said 87% of landlords will not rent their properties to Universal Credit claimants and that among those who did, 38% have experienced rent arrears problems. He then called…
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House prices to rise by just 1% this year, says leading lender
House prices will rise by just 1% this year, the latest house price report from the Nationwide reveals, returning to growth only in the “the longer term”. The lender says the average house price increase last year was 2.6%, down from 4.5% during 2016 as housing affordability problems and mounting pressure on household incomes continued to put the brakes on activity within the property market. Despite this, during 2017 all regions of the UK experienced house price gains except London, where they dipped by half a percent. “The major surprise during 2017 was undoubtedly the slowdown in London house prices. It’s been 13 years since the Capital sat at the bottom of the house price growth table, and since then we have seen prices surge to unprecedented and unaffordable levels,” says Alex Gosling, founder of HouseSimple.com (pictured, left). “Fortunately, there’s no longer the reliance on the London market to prop up the rest of the country. Growing regional business hubs have seen other major UK cities prosper, while London has suffered as property prices have become unaffordable for the majority. The West Midlands was the top performing region in the UK last year for house prices, where they rose by 5.2%…
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