Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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Home moves to shrink by 200,000 following Brexit vote, says L&G chief
The Brexit vote may lead to some 200,000 transactions being knocked off the number of homes sold this year according to Legal and General Building Services’ managing director Steve Goodall. Speaking at a recent conference organised by Mortgage Finance Gazette, Goodall (pictured, below) said the UK long-term average was 1.5 million transactions a year, topping out at 1.6 million during the “heady heights” of 2006/7 before the financial crisis, then dipping down to 900,000 and now running at 1.2 million. “Because of what happened over the summer – i.e. the referendum vote for the UK to leave Europe – this year we night see a flatlining of transactions,” he said. “The equivalent number of transactions over the last three months may have actually dropped to around one million per annum.” Goodall also said transactions should be much higher overall, pointing out that current levels of transaction should be measured against the growing number of households in the UK. Therefore, he calculates, the market should be running at 1.7 or 1.8 million transactions a year not 1.2 million. “There are more people yet there are fewer housing transactions,” he said. The conference was attended by a mixed bag of industry leaders including Karl…
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Knight Frank says extra buy-to-let Stamp Duty must go
Knight Frank chairman Alistair Elliott has today added his voice to the growing industry backlash against last year’s introduction of an extra three percent buy-to-let Stamp Duty levy. Elliott (pictured, left) this morning told City AM that “increasing tax doesn’t increase housing supply” and called for the recent second homes levy to be reversed during the next budget. Knight Frank also claims that the Stamp Duty change has had a bigger effect on the property market than the Brexit vote, particularly in central London. In Chelsea, it says, the number of house sales has dropped by 10% year-on-year. Government figures show that after the Stamp Duty was introduced in April the number of buy-to-let properties purchased dropped off by a fifth, and buy-to-let lending dropped by 65% over the same period, according to the Council of Mortgage Lenders. Elliott is not the only high-profile person to be tackling the government on this issue. Last week Cherie Blair led a failed attempt in the high court by a landlord action alliance called Axe the Tenant Tax Group to reverse the government’s planned reduction in tax allowances for landlords, due to come into force next year. And the property industry is not…
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Landlords: the only way is Essex!
The east London borough of Havering offers London’s highest rental yield...
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Homelessness rises
October 10th is World Homelessness Day and the statistics for homelessness in the UK are on the rise.
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‘Proptech and eviction laws are emboldening tenants’
The rise of proptech-led apps coupled to the introduction of regulation to prevent the worst kind of predatory evictions has emboldened tenants and is one reason why more are asking for rent reductions, says David Cox, ARLA’s Managing Director. Last week ARLA revealed that the percentage of tenants asking for rent reductions has increased from 2.1% to 3%, the highest proportion since ARLA began keeping records. Cox says the relationship between landlord and tenant is now more balanced. This, he says, is because the plethora of private rented sector data now available online via both the portals as well as new apps such as recently-launched Movebubble mean many tenants are now more aware of local rental prices and whether their rent is fair or not. “Tenants are looking around and if they see that similar properties nearby are available to rent for much less, they now feel secure enough in their tenancies to start the rental re-negotiation process with their landlord,” says Cox. He says that many tenants who had complained to their landlord in the past about the condition of their property and subsequently asked for a reduction in rent would have been open to a retaliatory eviction, but that now this has…
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Buy-to-let mortgage stress test shock
As mortgage approvals continue to fall – down to 60,058 in August from 60,925 in July – buy-to-let lending is also likely to decrease with the latest news from the BoE’s Prudential Regulation Authority (PRA) which has confirmed that a series of investors’ affordability checks and interest rate “stress tests” will be introduced from January 2017. Buy-to-let lenders will be required to verify that landlords can afford to pay the mortgage under potential future interest rates of 5.5 per cent, as the PRA recommended that the interest coverage ratio, a commonly used measure of the ratio of rental income to mortgage payments, does not fall below 125 per cent. Affordability assessments will need to take into account borrower’s costs, personal income and possible future interest rate increases, with lending to portfolio landlords to be assessed using a specialist underwriting process. “The PRA’s actions are intended to bring all lenders up to prevailing market standards and guard against any slipping of underwriting standards during a period in which firms’ growth plans could be challenged by the changing economic landscape and the impact of forthcoming tax changes,” it said. Peter Williams, Executive Director of Intermediary Mortgage Lenders Association (IMLA) said, “IMLA welcomes…
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Weak pound makes prime London 29% cheaper
The Brexit vote may have contributed to the current prime London woes but the ensuing pound bloodbath since June is set to save it, says London housing data firm Lonres. The company has crunched the numbers to work out how much cheaper London’s fashionable central postcodes are now that sterling has crashed against the dollar and euro, with surprising results. For those buying with dollars, Lonres says, average values paid including both currency changes and recent average price reductions of up to 10% make prime London up to 29% cheaper than 2014 when sterling and the overall market was at its strongest. “This makes prime central London, for those buying with dollars, the most affordable it has been since 2012,” says Marcus Dixon, Head of Research and Data Analysis at Lonres (pictured, below). And for euro buyers, it’s a similar picture. “Price falls and a weaker sterling have meant the amount paid per square foot in euros in prime central London has dropped by 26% from €2,684 per square foot at the peak in July 2015 to €1,997 in August this year,” says Marcus. “A combination of price falls and a weaker sterling could mean the next few months represent…
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Number of property sales rise in August by 5.2%
The August Land Registry figures just out reveal that the number of residential properties sold in England and Wales increased between July and August by 3,353 sales or 5.2%. This chimes with recent mortgage figures from the Council of Mortgage Lenders, which revealed that £22.5 billion was lent in August, a rise of 7% on July’s figure and an increase of 15% on the year before. The number of houses sold in August compared to July increased across the board including detached, semis and terraces although the number of apartments that were sold decreased, albeit by only 400 properties or 2.3%. But the prime market is clearly showing signs of weakness, the figures reveal, as George Osborne’s Stamp Duty increases kick in for higher-value properties. The number of homes sold for over £1m decreased from 581 in July to 552 in August while the decline in London was more marked. There sales of homes over £1m dropped from 339 to 297 during the same period. The data release by the Land Registry also shows the breadth of the market. The most expensive sale during August was a terraced property in Westminster, central London, at £25.5 million while the cheapest homes were…
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Brighton leads campaign to charge landlords business rates
Agents with landlord clients operating HMOs beware – Brighton and Hove Council is urging the government to treat them as enterprises and enable councils to charge business rates on their ‘premises’. The city’s Labour administration has just announced that it is preparing to write to the government to introduce such measures as it struggles to finance the policing of its huge HMO property market, which is driven largely by the city’s 30,00-strong student population. Business rates last year brought in in £2.7 billion for the government, according to the Office for Budget Responsibility, which means the average charge was £1,516 for each of the UK’s 1.8 million eligible premises. According to Brighton and Hove’s Labour group a new levy would create a level taxation playing field for HMOs with hotels, self-catering holiday homes and short-term lets while helping to control the city’s vast HMO market of more than 15,000 properties. A Labour party spokesperson told The Evening Argus that the support of rival political parties in the area would be sought before presenting the proposals to central government. The chances of that happening look relatively slim, though. Conservative group leader Geoffrey Theobald believes landlords will pass the extra costs on to tenants,…
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Every eviction costs landlords £7000
The average cost to a landlord of their tenant being advised to ignore an eviction notice stands at nearly £7,000, according to a recent survey of landlords across the UK. Private tenants who become unable to pay their rent to a private landlord are often advised by local councils and agencies including Shelter to ignore the eviction notices that are served by their landlords – and to wait until evicted by bailiffs – in order to qualify as homeless and thus become eligible for rehousing. The National Landlords Association’s (NLA) research reveals that the mean total cost of a tenant being advised to remain in a property is £6763. In addition, half (47 per cent) of tenants who have been served a section 21 eviction notice by their landlord say they have been told to ignore it by their local council or an advice agency such as Shelter or the Citizen’s Advice Bureau (CAB). Richard Lambert, Chief Executive Officer at the NLA, said, “We have consistently campaigned on this issue, but despite many warnings to councils and agencies, this damaging advice is still being given out to tenants. “Possession cases can take a very long time to resolve, and aside from putting…
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