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Consumers in the north the most pessimistic about UK economy, says report

CONSUMERS in the north are most pessimistic about the prospects for the UK economy, according to a new report.

Analysis from Which? for 2018 shows that two in five people (42 per cent) in Northern Ireland believed the UK economy was in a poor state last year, while almost two-thirds (60 per cent) expected it to deteriorate in 2019.

By contrast, across the UK as a whole, only half (49 per cent) anticipated the economy would worsen.

Of chief concern was rising fuel prices, cited by three-quarters (74 per cent) of local respondents, compared to two-thirds in the UK (68 per cent).

Brexit was highlighted by seven out of 10 (71 per cent) consumers as a worry, along with public spending cuts, both to a greater degree than in the UK as a whole.

Energy bills and the cost of groceries were also among the most common worries for consumers in Northern Ireland.

More people in the north expected to increase spending on everyday essentials compared to consumers across the UK, according to the report, while hikes were also forecast in the cost of groceries and in relation to rent or mortgage payments.

In spite of the plethora of issues raised by consumers in the north, 71 per cent said they were satisfied with their life overall, compared to two-thirds UK-wide (65 per cent). Local people were also happier about their household financial position, with over half (51 per cent) describing it as good,

just above the UK figure of 49 per cent.

Caroline Normand, Which? director of advocacy, said the latest figures for Northern Ireland were concerning.

“This report highlights a worrying sense of pessimism among consumers in Northern Ireland, with Brexit, fuel costs and public spending weighing on people’s minds more than anywhere else in the UK,” she said.

“With uncertainty around Brexit and Stormont politics looming large, politicians, regulators and businesses in Northern Ireland must take heed of these findings and work to ensure consumers are not getting a raw deal when it comes to essential services.”

Source: Irish News

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First-time buyer purchases down 2.4%

The number of consumers borrowing to buy a new property was down across first-time buyers, home-movers and buy-to-let purchases in March, when compared with last year.

UK Finance’s mortgage lending trends, published today (May 16), showed there were about 28,800 first-time buyers with new homes in March — 2.4 per cent fewer than in the same month in 2018.

According to the trade body, this was the first month there had been a year-on-year decrease in first-time buyers since September 2018.

There was also a decline in the number of completed home-mover mortgages, which fell by 6 per cent to 25,280 compared to March 2018.

Mark Harris, chief executive of SPF Private Clients, said: “The decrease in number of first-time buyers after continuous growth over the past six months is a concern, and let’s hope it is just a blip in the numbers.

“First-time buyers are so important for the overall health of the housing market, ensuring transactions further up the chain can happen.”

The remortgage market continued to fare better however and in total, there were 4.1 per cent more residential remortgages in March than in the same month the year before.

Within this, there was a rise in the number of those who borrowed more money through their remortgage — up 9.1 per cent to 16,810 — while ‘pound for pound’ remortgages, where the consumer does not borrow any more money, dropped slightly by 1.1 per cent to 15,030.

This was the twelfth consecutive month of year-on-year growth in remortgaging and, according the UK Finance, this reflected the number of fixed-rate deals that are coming to an end as borrowers actively search for better, more attractive rates.

The remortgage market also grew in the buy-to-let sector but the purchase market declined.

About 5,000 new buy-to-let purchase mortgages completed in March, which was 9.1 per cent fewer than in the same month in 2018, while the number of remortgages increased by 3.9 per cent year-on-year to 14,400.

UK Finance stated the buy-to-let house purchase activity continued to contract due to tax and regulatory changes.

Gareth Lewis, commercial director of property lender MT Finance, agreed.

He added: “Remortgaging is up as those who bought before stamp duty hikes were introduced in 2016 are now remortgaging their fixed rates onto another competitive deal.

“Borrowers are taking out longer-term fixes on residential and buy-to-let deals as they protect themselves from wider uncertainty.”

In January, the Intermediary Mortgage Lenders Association warned that landlords would start to feel the pinch of new regulation in their tax returns for the first time, included the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016 and cuts to mortgage interest tax relief.

Buy-to-let borrowers are also now subject to more stringent affordability testing under the Prudential Regulation Authority’s tightened underwriting rules.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, said despite potentially disappointing numbers, there were no significant movements one way or the other.

He said: “[These figures] reflect what we are seeing at the coalface — it is a bit busier one month but down the next and then up again.

“It is no surprise either that buy-to-let mortgages are continuing their downwards trend as landlords face an onslaught of tax and regulatory changes with more on the way.

“We are finding buy-to-let remortgaging increasing is down to properties having to work harder in order to maintain profit levels so this is likely to continue.”

By Imogen Tew

Source: FT Adviser

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United Kingdom unemployment rate falls to 3.8%; wages rise 3.2%

A record 71.8% of working-age women were in employment between January and March this year, according to the Office for National Statistics (ONS). With the United Kingdom hovering close to full employment, the unemployment rate at its lowest since 1974 and the inactivity rate remaining low, there is very little spare capacity in the labour market – and the gap is being filled by ambitious foreign workers who see the chance to build a career in Britain.

The unemployment rate in Britain has fallen to the lowest rate since 1974, with just over a third of those joining the workforce in the previous year coming from outside the European Union.

Excluding bonuses, average weekly earnings for employees rose by 3.3%.

British Employment Minister Alok Sharma applauded the lowest unemployment rate since the 1970s, but called on workers to improve their skills in a bid to “create a modern workforce fit” for new challenges.

Mike Jakeman, senior economist at PwC, said: “It is possible to see the shadow of Brexit in some of these figures”.

Tony Wilson, director of the Institute for Employment Studies, said: “On the face of it, today’s jobs figures look like more of the same – the employment rate is holding steady at a record 76.1%, year-on-year earnings growth above 3%, and unemployment falling yet again, to just 3.8%”.

The strength of the labour market has pushed wages up more quickly than the Bank of England has forecast, leading some economists to think it might raise interest rates faster than investors expect once the Brexit uncertainty clears.

The unemployment rate for women has shown a smaller fall over this period – from 6.4% to 3.7%.

The ONS said that 32.71 million people were in employment, an annual rise of 354,000.

The latest data shows that over the last five years the unemployment rate for men has fallen from 7.0% to 3.9%, the ONS said.

For men the rate was 3.9%, the lowest since mid 1975. This is because falls in the employment rate for men have been roughly offset by population increases. Pension rule changes that force women nearing retirement to work longer have also had an impact.

What is happening to wages and jobs?

While average real wages – adjusted for inflation – were the highest since December 2010, the TUC said the rate of growth was slowing.

“This will come as a relief to employers who have been subjected to increasing pressure from workers to raise pay without accompanying productivity growth”, said Davies. “The last thing workers need is another hit in the pocket when real wages are still lower than a decade ago”.

“The employment rate for young people in Scotland rose to 59.3%, higher than the United Kingdom rate of 54.6%”.

By Marco Green

Source: Click Lancashire

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Buy-to-let purchase loans in melt-down as landlords beat their retreat

The number of mortgage approvals for all types of house purchase has dropped sharply, with a drop of almost 10% in buy-to-let loans.

Approvals for home movers have slid 6% annually to 25,280, while approvals for first-time buyers have dropped for the first time in six months.

Data from banking trade body UK Finance shows there were 28,800 first-time buyer mortgages approved in March, down 2.4% annually, the first time this figure has dropped since last September.

Buy-to-let purchase mortgage approvals fell 9.1% during March.

In contrast, remortgage approvals in both the residential and buy-to-let sector increased.

Commenting on the figures, John Phillips, national operations director at Spicerhaart, said: “The purchasing market has been tough for some time now, and I don’t think it is going to get much better until the wider market forces change, and with no real idea what is going on with Brexit, it is hard to predict when that might happen.

“But with the ongoing threat of a rate rise on the cards, people will be fixing now to avoid any nasty surprises down the line, so this will account for some of the remortgaging rise.”

Paul Smith, chief executive of haart estate agents, said: “Evidently, the demand is there, but mortgage and transaction figures will not increase until we have the stock in the market to match it.”

By MARC SHOFFMAN

Source: Property Industry Eye

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UK remortgaging rate jumps as owners cash in on low interest rates

The number of people remortgaging their homes with additional borrowing spiked in March, according to data released today, as people took advantage of favourable interest rates.

Meanwhile the number of new loans to both movers and first time buyers fell in March year-on-year, figures from finance and business services company UK Finance have revealed.

In March there were 16,180 new remortgages with additional borrowing, a 9.1 per cent increase year on year. The average amount taken out on top of the remortgage money was £55,700.

There were 1.1 per cent fewer simple pound-for-pound remortgages in March, at 15,030.

New first-time buyer mortgages reached 28,800 in March, according to the finance and business services organisation, 2.4 per cent fewer than in the same month a year earlier.

The number of new mortgages going to those moving house fell six per cent to 25,280.

Andrew Montlake, director of the UK mortgage broker Coreco, said: “With rates nearing rock-bottom given the intensity of competition among lenders, remortgages have gone off the Richter Scale.”

“The 9.1 per cent rise in additional borrowing remortgages compared to a year ago reflects the fact that a lot of people are choosing to add value to their existing homes rather than move,” he said.

“While home-mover mortgages were down in March, purchases have really started to gain momentum since April, with the usual late spring lift being boosted by a growing indifference to Brexit,” Montlake added.

Keith Haggart, managing director of mortgage provider Responsible Lending, said: “March was meant to be the month when the Brexit trigger was pulled, and it may have been a significant deterrent for first-time buyers who tiptoed away from the housing market for the first time in six months, despite low interest rates and other incentives.”

“The jump in remortgaging chimes with a market that is languishing on low supply of homes for sale,” he said.

By Harry Robertson

Source: City AM

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Brexit Going Nowhere: Pound Drops to Three Month Low

The Pound hit a three-month low on Wednesday as investor sentiment soured on the lack of Brexit progress. Against its peers, the British Pound has become the worst performing currency this week as markets lose hope that Theresa May will be able to get her Brexit deal across the line on her fourth attempt next month. 

Brexit Goes Nowhere, British Pound Exchange Rate Hits Three-Month Low

It’s been almost three years since the monumental vote took place, and there’s still no deal in place, despite a Brexit day extension. The risk of a hard Brexit has also increased, with most of Theresa May’s successors seen as hardline Brexiteers. Sterling has tumbled by around 1.2% in five days, a far cry from earlier in the year when it was one of the market’s most impressive performers.

Maximilian Kunkel, UBS Wealth Management Chief Investment Officer for Germany, said:

‘We don’t think it makes any sense at the moment to trade in U.K. government debt. We have become relatively cautious on the U.K. in any case, given no matter what Brexit you’re going to get, in the end the U.K. economy is likely going to suffer from it.’

Meanwhile, Eurozone growth data surprised today, coming in at 0.3% quarter-on-quarter in Q1 on a seasonally adjusted basis, rather than the 0.4% expected. On the year, Q1 jumped from 1.2% to 1.3%.

The rest of the week is relatively quiet for Eurozone and UK domestic data, meaning a lot of the Pound to Euro (GBP/EUR) exchange rate’s movements will be determined by developments elsewhere and political events. The Pound to Euro exchange rate has been trending in the region of 1.1488, hitting highs of 1.1535, and residing at lows of 1.1445. The Pound to US Dollar (GBP/USD) exchange rate has hit lows of 1.2826 in today’s European session, with highs of 1.2923.

BY CHARLIE MURRAY

Source: Currency News Centre

UK economy Commercial property investment
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Commercial property investment falls as Brexit impasse continues

Commercial property investment across the Midlands has fallen as the ongoing Brexit impasse continues to have a negative impact on the market, a new report has revealed.

Lambert Smith Hampton’s (LSH) latest UK Investment Transactions(UKIT) report, says that at £10.9bn, Q1 investment volume across the UK dropped to its lowest quarterly total since the aftermath of the EU Referendum in Q3 2016.

Heightened investor caution in the weeks leading up the UK’s scheduled exit from the EU has clearly been reflected in investment activity. £10.9bn of assets changed hands in the quarter, 26% below average and a substantial 34% below Q4 2018, the largest recorded quarter-on-quarter percentage fall in five years.

Adam Ramshaw, LSH’s regional director for the Midlands, said that in Birmingham and the West Midlands a total of £313m of investment deals were completed in Q1, compared to £470m in Q4 2018. Compared to the same quarter last year there was a 33% drop in investments, with a 54% decrease on the figure for Q4 2018.

Across the East Midlands, there was investment of £197m in Q1, a year-on-year decrease of 67% and a 66% drop compared to Q4 2018, added Adam.

The national impasse was most clear with larger lot size deals. Q1 saw only 19 transactions in excess of £100m, the lowest number since Q4 2012 and significantly below the quarterly average of 31. That said, the total numberof recorded deals in Q1 was only 15% below average, indicating a stronger tolerance to current uncertainty across the wider market.

The market was in some respects turned upside down in Q1. For the first time on record, the three traditional core sectors accounted for less than half of volume. Offices took the brunt of the drop-off in Q1, with volume at a ten-year low of £2.7bn, down a substantial 60% quarter-on-quarter and reflecting a moribund period for large-lot size deals in Central London.

Meanwhile, a perfect storm of structural change and Brexit uncertainty saw retail volume sink to its lowest quarterly total on record, at just over £1bn. Industrial volume dropped to £1.4bn in Q1, far removed from the record £2.2bn in Q4 2018 but only 18% below the trend.

Other sectors proved notably more resilient. Hotel & leisure volume of £2.6bn in Q1 was its strongest quarter in 13 years, boosted by a number of portfolio deals and the UK’s largest deal in Q1, Queensgate Investments’ £1.0bn acquisition of the Grange Hotel Portfolio. Collectively, the specialist sectors also bucked the trend in Q1, with volume of £2.7bn being 35% above average and fuelled by twelve Build to Rent forward funding deals.

The heightened caution in the UK market in Q1 was evident across each of the main investor groupings. Quoted property companies were the least acquisitive buyers compared with trend, with volume of £680m at below half the average, followed by UK institutions where volume of £2.0bn was 35% below average. While investment from overseas investors was also subdued by recent standards, tellingly, they remained major net buyers of UK property, to the tune of £3.3bn in Q1.

The All Property average transaction yield moved out by 14 bps in Q1 to stand at 5.48%. While all the main sectors moved out, retail saw the largest outward movement of 68bps to stand at an average of 6.21%.

Ezra Nahome, CEO of Lambert Smith Hampton, said: “Q1 turned out much as we expected, with investors of all persuasions opting to take a backseat in the crucial run-up to the UK’s scheduled EU exit date. For the first time ever, the so-called alternative sectors collectively accounted for well over half of total volume, a telling reflection of the direction of travel in the market and the insatiable demand for long-income deals.

“While many will be relieved the UK avoided a no deal Brexit outcome, frustratingly, the EU’s extension to later in the year will only act to preserve uncertainty in the market. Despite the generally sound fundamentals of UK real estate investment, this is likely to prove detrimental to the rebound in volume we had been expecting for the latter part of 2019.”

By Rachel Covill

Source: The Business Desk

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Properties selling at slowest rate for five years as market slump continues

The property market is moving at its slowest rate for five years, Home.co.uk claims.

Analysis of listings data from the property website found the median time on the market for May is 89 days – 11 days longer than the same month last year and the slowest rate for this time of year since 2014.

Time on the market – defined as the period between listing and sold subject to contract – is now at its slowest rate in ten years for London at 96 days.

Supply continues to fall, with new instructions down 9% year-on-year across the UK and down 28% in the capital, while total stock levels are up just 1.7%.

This malaise has seen asking prices increase just 0.5% on a monthly basis but fall 0.2% annually to £307,521.

Doug Shephard, director of Home.co.uk, said: “Uncertainty is a highly corrosive factor for the economy. Decisions are postponed indefinitely, projects put on hold and normally bold actors become cautious in the midst of the unknown.

“The Brexit mess may not hamper the purchase of a pair of jeans, but the housing market is severely affected because the stakes are so high.

“Key factors such as cost, importance of timing and the irreversible commitment involved in a home purchase make the current economic environment almost unbearable for the average buyer or seller.

“Uncertainty in the market moves the ‘invisible hand’, a term coined by Adam Smith to describe the unobservable market force that helps the supply and demand of goods in a free market to reach equilibrium.

“That equilibrium is vital for price recovery but is currently being undermined by a growing crisis of confidence in the housing market, especially in Greater London.

“While evidence of falling demand is widespread across the UK, in London both supply and demand are collapsing, and this is causing an acute distortion of the market.

“Price fluctuations during such episodes are to be taken with a pinch of salt. Low volumes lead to extreme volatility in several key market price indicators.

“Take the Halifax and Rightmove indices, which are showing wild variations from month to month and adding to confusion in the marketplace.”

By MARC SHOFFMAN

Source: Property Industry Eye

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Further Brexit delay would hit UK economy – BoE’s Broadbent

Britain’s economy risks damage if Brexit is delayed beyond its latest Oct. 31 deadline because companies would continue to hold back on investment, Bank of England deputy governor Ben Broadbent was quoted as saying on Monday.

“It’s pretty clear that investment has been feeling the consequences of the uncertainty about Brexit and particularly the possibility of a bad outcome,” Broadbent told the Press Association news agency.

“If you continually expect news to arrive imminently – a resolution – then that can have quite a depressing effect on investment,” he said.

By contrast, a Brexit deal would lead to “quite a strong bounce-back in investment.”

Broadbent reiterated the BoE’s guidance that future interest rate increases would be limited and gradual, adding the “emphasis is on the ‘gradual’ bit of limited and gradual.”

He said he did know whether the British central bank would need to increase rates or cut them in the event of a no-deal Brexit shock to the economy.

“I don’t know. I really don’t, because I don’t know how much the exchange rate will move,” he said.

Several other top BoE officials, including Governor Mark Carney, have said a rate cut would probably be needed to help the economy weather the shock of leaving the European Union with no deal.

On whether he will put his name forward as a candidate to succeed Mark Carney as BoE governor, Broadbent said: It’s a big job…I have lots of things to think about before I make that decision.”

Writing by William Schomberg; Editing by Peter Graff

Source: UK Reuters

Second charge Brexit
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Brexit calls for landlord flexibility

Brexit is having an impact in the rental as well as the for-sale market. Concerns are growing over changes to regulation; dips in property value; possible interest rate hikes meaning rents will have to increase, affecting affordability for tenants; and the ambiguity around having EU nationals as tenants.

But amidst this turbulence is an opportunity for landlords to bring some stability to the rental sector and move forward with the evolving tenant. While the waiting game on Brexit continues, we can look at how to be more effective and responsible as landlords overall.

PPP Capital has been developing and renting property for over 15 years, but in the past few years we have had to think more creatively in the face of Brexit uncertainty about our approach to the evolving tenant. Below is a list of suggestions we have found effective in attracting and retaining good tenants and we are confident this approach will help our portfolio weather whatever Brexit brings.

Move forward with tenants’ changing profile: For example, many tenants are now pet owners. Landlords are often reluctant to accept pets, but we give applying tenants the chance to describe their pet before we decide whether to accept. We also suggest putting a clause in the contract about having pets in the property. In our experience, if we show flexibility and care as a landlord, we receive the same respect in return.

Engage in efficient two-way conversations with tenants: One way to do this is to use property maintenance software that updates tenants in real time. Making them feel connected to their landlord eliminates rounds of calls or emails and speeds up simple maintenance requests, but also builds trust between both parties.

Enabling your company, tenants, contractors and tradespeople to access it separately and simultaneously makes things easier for all involved. A digital maintenance log also helps you to see if properties are costing more than was forecasted.

Be open to installing high quality finishes and extras: More tenants than ever envisage themselves as long-term tenants rather than homeowners. For a landlord, this means tenants will give extra care to the property, treat it more like their own home and stay for years. So it is often worth investing in some ‘extras’ such as smart home systems, underfloor heating or safety features such as alarm systems and great outdoor lighting.

Give back to the community: One way to do this is sponsor a local community initiative or help to create an outdoor communal area or park nearby. This is an idea we have started exploring but not yet implemented. We have donated to national charities but also want to identify projects in communities where we have developments.

Our priority is to identify opportunities that support a greener, brighter future for the communities we are present in.

Renters’ needs are evolving. Property selection and the decision to stay for the long-term are not only determined by the basics but by a landlords’ attitude to diverse tenants and how responsible they are as a landlord. There are ambiguous times ahead, but private and corporate landlords with mid-to long-term buy-to-let and build-to-rent properties should remain very optimistic about the future.

Let’s focus on the long-term yield while doing our best to be responsible landlords with solid portfolios occupied by respectful tenants.

By Sanjeev Patel

Source: Property Week