Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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Tenants are struggling to survive as home ownership declines
Private renters have grown in number by a million since 2010 but these tenants are struggling financially much more than their mortgaged counterparts, according to research carried out by the University of Bristol. Its report on renters, which was commissioned by money website Momentum UK, reveals that renters spend half their salary on rent every month, go on fewer holidays, save less money and are more likely to make forced cutbacks than those with a mortgage. Cut back on food A third of private renters have less than £100 in savings, a fifth have cut back on food expenditure over the past year, 11% have reduce their heating to get by while 14% have borrowed money from friends or family to survive. The research follows recent government figures within the English Housing Survey which revealed that home ownership continued to decline. More than four million households in the UK now rent their home from a private landlord, nearly twice as many as 10 years ago. Within England, homeownership fell to 62.9% last year, the lowest percentage since 1985 and eight points lower than the peak in 2003. “The average private renter loses around half of their pay cheque on rent…
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Official house price index highlights sales slide in London and beyond
The total fee slice taken by London estate agents each month dropped by over £20 million between 2015 and 2016, the latest house price index reveals. Today’s figures from the Office of National Statistics (ONS) reveal that the number of completed sales during November 2016 compared to November 2015 fell from 9,800 to 6,400. This, based on an average fee of 1.5%, saw agents’ total revenue for the two Novembers dip from just over £67 million in 2015 to £47 million last year. Completed house sales across England also reduced during the same period, down by 21.2% to 62,500 from 79,300. This reduction in supply is the main driver behind buoyant house price figures, most commentators agree. The figures for completed sales, also released today, show prices rising by 6.2% over the past year. The average price for a property in London is now £490,700 compared to £234,800 in England and £145,900 in Wales, the index says. “With only a week to go until Article 50 is triggered, house prices remain indestructible as the average person is paying £13,000 more to own a home than the same time last year, reflecting the health and buoyancy of the UK economy seen in…
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‘Bank of mum and dad’ backed first time buyers driving property market, it is claimed
If you’re wondering which way the property market is moving, then be heartened by the Council of Mortgage Lenders (CML). It says that while the number of home loans dropped 1% year-on-year, the number of first-time buyer loans has increased by 9%, driven in part by parents re-mortgaging to help their offspring get on the property ladder, it has been claimed. The number of first time borrowers in the market hit 337,000 last year, the highest level in any twelve month period since the financial crash of 2008, the CML says. Re-mortgaging activity in the property market increased by 54% between December last year and January this year, and although this is driven in part by competition among lenders to offer lower and lower rates, agent Haart says it’s also driven by ‘bank of mum and dad’ parents. “We are seeing more and more parents on the ground looking to release equity in their homes to support increasing numbers of young people who are leaning on their parents for support to get onto the property ladder,” says Haart’s CEO Paul Smith (pictured, left). “With rents sent to increase as landlords are squeezed, and ONS figures showing that house prices have reached 10 times the average…
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Government consults on closing Rent-a-Room loophole for Airbnb hosts
All eyes on are on Philip Hammond as he battles to save his National Insurance Contributions tax increases for the self-employed following a back-bench revolt on the measures, which were announced in Wednesdays Spring Budget. But while the political football continues today, a measure designed to stop the rise of Airbnb has been slipped through in the detail of his recent budget statement. The government is to consult on proposals to reformulate the Rent-a-Room relief. It’s a measure introduced in 2014 that enables home owners to earn up to £7,500 a year tax-free from letting out furnished accommodation within their home. This was increased recently from £4,250. Airbnb hosts have taken advantage of this loophole which now makes using Airbnb doubly attractive, and has persuaded many landlords to rent their homes out via the website, rather than using traditional letting agents. Research for The Negotiator by consultancy Airdna reveals that, in London, the number of properties listed to rent out via Airbnb has risen from 22,945 in January 2015 to over 60,214 today, an increase of 162%. Airdna also says Airbnb properties have an average occupancy rate of 60% and that average revenues for Airbnb hosts in London are all…
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Spring Budget 2017: stunned industry wonders where the property went
Chancellor of the Exchequer Philip Hammond delivered a Spring Budget 2017 totally devoid of any help for the UK’s struggling housing market. It also failed to lessen or backtrack on recent Stamp Duty hikes for landlords or the lettings fees ban. The only palpable good news for agents includes a mooted extra tax for digital-only businesses to level the playing fields with their high-street competitors – something for agents facing competition from online-only and hybrid ones. Corporation tax Other business benefits within the budget include a reduction of corporation tax from 19% to 17% by 2020 and that businesses with turnovers below the VAT threshold will be given a year’s grace before having to start quarterly digital reporting. Business rates But for the industry’s 20,000 branches, a much-hoped-for reform of the business rates system did not materialise as major hikes loom for many high-street operators. Instead, and in order to see off a potential Tory rebellion, the Chancellor announced a fighting fund of £435m to help soften the blow. This will include a £300m discretionary fund to be shared out by councils to businesses least able to take the rates hit. Hammond also pledged that no business losing its small…
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Hybrid agent ‘concept’ for build-to-rent sector is launched
More proof that the build-to-rent sector is establishing a significant foothold in the UK property market has come today with the launch of what is claimed to be new kind of hybrid property company. Two London-based firms, specialist block management company James Andrew Residential and new-build property management and lettings outfit LiFE Residential, have combined their expertise to create The PRS Partnership to manage one-owner apartment blocks. The two firms say their new partnership is the first to be created specifically to offer a one-stop-shop service for this market. Both companies say they already have 6,000 properties under management between them in the capital. Although The PRS Partnership claims it a new kind of company, several of the larger agents including Savills and CBRE offer block management services. Also, several specialist property management companies such as Trinity, which until now have managed estates for house builders and management companies, are active in this market. According to build-to-rent consultant Dustin Fjeld (pictured, left), there is a growing market for these kinds of companies. This is because he says, some of the larger US build-to-rent operators are already in the UK managing their own apartment blocks. “One company running these blocks will become a requirement for…
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‘There will not be a segment of short-term rentals that Airbnb does not wish to dominate’
The threat that Airbnb presents to agents is laid bare by recently comments by a senior figure within the company, as well as research carried out exclusively for The Negotiator within the London market. This shows that the dot com is not only beginning to eat up the general short lets market in London and remove many properties from the traditional private rented sector, but that many high-end property owners are also utilising it to increase their returns too. The research by Airdna reveals that there is a significant number of central London properties that are generating huge incomes for their owners, properties that can hardly be described as bedroom rents or sofa surfing. This includes a six-bedroom property in Mayfair that over the past 12 months has earned £97,600 for its host, a Swiss Cottage garden flat that has earned £69,800 and a Westminster duplex that has generated £67,100. Some property owners are also renting out entire apartment blocks. One property in Shoreditch, a nine-apartment block, has generated £212,670 for its owner via Airbnb over the past year, according to Airdna. “Entering the high end of the market lays out the statement that Airbnb has gone far beyond its air…
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House buyers rejoin the market, but where are the properties for sale?
The number of house buyers increased significantly during January, the latest data from NAEA Propertymark has revealed. It says that while property supply remains at its lowest since July last year, the number of buyers increased by 10% compared to the month before, although the number of first time buyers decreased. “January saw a surge in buyers looking to kick off the New Year with a new home – but competition is rife with an average of 11 buyers chasing each property,” says Mark Hayward, Chief Executive of NAEA Propertymark (pictured, left). This increase in the number of home movers looking to buy has not fed through to sales yet; the number agreed per branch rose by just one to eight, on average. The significant imbalance between supply and demand – 425 prospective buyers per branch versus 38 properties for sale – drove up agreed prices and seven percent sold for more than their asking price, the highest level since April last year. “The increase in the number of properties selling for more than asking price in January could be a result of heightened interest and the fact there is simply not enough housing to meet demand,” says Mark. “When the…
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Hobbit house, barge, chapel, what’s your dream?
A quarter of British people dream of living in a hobbit house. Truly, they do. A further 10 per cent would like to sail away to live on a converted boat, a canal boat or a floating house and, holy smoke, 26 per cent pray for a converted chapel, in which to rest. However, once they have realised how expensive/problematic/silly their dream is, most British buyers settle down and moderate their dreams. The most coveted feature of a modern home, reports the interiors retailer Curtains.com, is a country kitchen – a surprisingly high 54 per cent of women covet the cosy look. That country kitchen would, ideally, be in a traditional thatched cottage (32 per cent) and when it comes to the decor, most are in favour of traditional features and period character. And, of course, it follows that over 50 per cent of us fantasise about that cottage being set in a decent sized garden in a quiet rural setting. SIZE MATTERS, APPARENTLY More than half of Brits would rather live in a small home (if not an actual hobbit house) in a premium location as opposed to a home with more square footage in a cheaper area. When…
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Mortgage lending recovery lead by first-time buyers, says CML
Last month mortgage lending reached £18.9 billion, 6% lower than December but 2% more than last January, says the Council of Mortgage Lenders (CML) The CML also says last month’s total was the highest for a January since the pre-financial crash peak in 2008. The number of loans approved has also been increasing since last summer’s Brexit-induced quiet property market, and the CML now says it expect to see 71,000 mortgages approved every month, 10,000 a month more than the period following the EU Referendum. But the CML’s senior economist Mohammad Jamei says the figures mask a twin-track market. “Weakness in buy-to-let and home movers have been offset by an increase in first-time buyers and remortgage lending,” he says. The CML says this trend shouldn’t be a surprise because most government schemes have been aimed at helping boost first-time buyer numbers and that, as a result, there were 360,000 first time buyers during 2016, up 8% on 2015. “A continuing acute shortage of homes being offered for sale is one aspect of a broken housing market, that looks unlikely to resolve in the near term,” says Jamei. Jeremy Dunscombe from the Legal & General Mortgage Club, says: “The start of…
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