Housing Market
News covering issues affecting the UK residential property market, house prices, interest rates and buying and selling trends.
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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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NLA rebuffs Shelter’s rogue landlords report
The National Landlords Association (NLA) has defended the private rented sector’s track record after a ‘rogue landlords report’ was released over the weekend by housing charity Shelter. It revealed that more than a million tenants in the UK have suffered illegal landlord activity over the past 12 months. The research, which was conducted among 3,250 people by YouGov, revealed that abuses include entering a property without tenant permission, threatening behaviour or harassment, disconnection of utility supplies or changing of locks without good reason, not lodging deposits correctly as well as racial, gender or nationality-based discrimination. But Richard Lambert, CEO of the NLA, says much of the blame for this lies at the feet of councils who are not enforcing the relevant laws or prosecuting landlords who break them which, he says, means “it’s way too easy for the unscrupulous to get away with this kind of behaviour”. “These [Shelter] figures highlight serious issues that are simply unacceptable but our research with tenants shows that 82 per cent say they are happy with their current landlord. Furthermore, Shelter’s figures show the vast majority of landlords to be law abiding.” Lambert also clearly believes that Shelter should also be tackling the problem of abusive…
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How long does it take first time buyers to save up?
Shocking figures just out reveal that it takes five and a half years for the average couple to save up for a deposit while it takes singleton savers ten years. The data from the London market is even more hair-rising. There, couples are taking on average nine years to save up a deposit while single savers require 14 years, says Hamptons International. This is despite recent help for from the Bank of England, which announced a cut in interest rates in early August. This has been passed on by lenders in recent weeks including to first time buyers (FTBs) and, if they shop around, rates for ‘discounted mortgage’ products can be found for under 3% while several two-year fixed rates are available at 3.5%. Overall, August’s 0.25% cut to interest rates, if fully passed on, mean that mortgage payments could on average be £244 a year lower for the average first-time buyer home in England and Wales. In London, the agent says, mortgage payments would be £518 lower. But despite the long wait to gather a deposit, enthusiasm for property ownership is not waning; figures from the National Association of Estate Agents show that the number of sales to FTBs has…
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Post Brexit vote market is still buoyant…but only just
The number of properties on the market has increased by 1% since the Brexit vote but the number under offer has dropped by 2.5% and national asking prices are down by 2% reports Jackson-Stops & Staff. The agent has given its verdict on the post-Brexit vote market after looking at 500,000 properties for sale across the UK. “Three months after the UK’s historic vote to leave the EU, the property market remains alive and active [and] there are more properties on the market today than on the day of the Brexit vote,” says chairman Nick Leeming. Predictions during the EU referendum of a bloodbath in London after the Brexit vote have proved to be inaccurate, the JSS research suggests, as it reveals that asking prices in the capital are down by only 3% since mid-June and that “properties priced below £1m are still seeing high levels of interest”. London’s £2m+ prime market is in less good shape. Only 7% of properties in this price bracket are under agreed offer compared to 36.1% nationally, the JSS research reveals. Leeming says this is down to a range of factors including reduced confidence in the prime property following Brexit and the increased Stamp…
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