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UK house prices rise in February – Halifax

UK house prices grew more than expected in February, according to the latest data from lender Halifax.

Annual house prices rose 2.8% in the three months to February, up from the 0.8% increase seen in January and beating expectations for a 1% jump.

On the month, house prices were up 5.9%, which was well above the 0.1% increase analysts had pencilled in. In the latest quarter, meanwhile, prices were 1.8% higher.

Halifax managing director Russell Galley said the shortage of houses for sale will certainly be playing a role in supporting prices.

“People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident.”

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that right now, he has little confidence in Halifax’s index as a reliable indicator of the housing market.

“Its extreme volatility – February’s gigantic increase follows a 3.0% month-to-month decline in January – undermines its validity. Like others, the index is seasonally adjusted, but it uses an outdated methodology which potentially is contributing to its excessive volatility.

“All other indicators suggest that house prices essentially are on a flat trend, not rising at the 1.8% three-month on three-month rate reported by Halifax. The support to house prices from the combination of faster growth in nominal wages and extremely low unemployment is being offset, for now, by anxiety about Brexit.

“The housing market likely will revive for a short period if, as we still expect, MPs sign off a Brexit deal by the summer. But a Brexit deal also will give the green light to the MPC to push through further increases in Bank Rate. With loan-to-income ratios at a record high, even modest increases in mortgage rates will greatly dampen house price growth. As a result, we still expect the official measure of house prices to rise by just 1.5% over the course of 2019.”

Howard Archer, chief economic advisor to the EY ITEM Club, agreed that Halifax house price measure’s monthly movements have been out of kilter with other measures.

Nationwide estimated annual house price inflation at just 0.4% in February and while the Bank of England reporting that mortgage approvals rose to a three-month high in January, most data and surveys point to a weak housing market.

“February’s spike in house prices reported by the Halifax does not fundamentally change our view of the housing market,” Archer said. “If the UK ultimately manages to leave the EU with a “deal” at the end of March, we expect UK house prices to eke out a modest gain of 1.5% over 2019.

“If the UK leaves the EU at the end of March without a Brexit “deal”, house prices could fall by around 5% in 2019.

“If Brexit is delayed for a few months, ongoing uncertainty is likely to weigh down on the housing market and could very well see house prices stagnate over 2019 or even fall slightly.”

By Iain Gilbert

Source: ShareCast

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Biggest choice in buy-to-let mortgages since 2007 for landlords

The number of buy-to-let mortgages has soared to 2,163, the highest since before the financial crisis hit in October 2007, according to research from Moneyfacts.co.uk.

In March 2017 the average two year fixed rate was 2.96 per cent and that has now gone up to 3.12 per cent following the Bank of England rate rise last year.

The average five year fixed rate in March 2017 was 3.77 per cent and but that has now fallen slightly to 3.61 per cent.

Darren Cook, finance expert at Moneyfacts.co.uk, said: “It is encouraging that buy to let landlords have more mortgage choice than they have had at any time in almost 12 years.

“Total product numbers have increased by 397 over the past year and by 706 over the past two years.

“Despite ongoing uncertainty in the property market, providers are not shying away from offering landlords a greater choice of products, although it is also evident from our research that heightened competition to try and attract buy-to-let business has not resulted in a fall in interest rates, as has recently happened in the residential mortgage sector.

“Indeed, the average two year fixed buy-to-let mortgage rate has increased by 0.20 per cent to 3.12 per cent since September 2018 and the average five year fixed rate has increased by 0.15 per cent over the same period.”

He argued that the recent increases to buy-to-let mortgages interest rates have been a result of mortgage providers attributing a little more to risk into their product rates due to uncertainty over future economic conditions.

Source: Simple Landlords Insurance

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Bank of England more likely to cut interest rates after no-deal Brexit, policymaker says

The Bank of England’s monetary policy committee would be more likely to cut interest rates in the event of a no-deal Brexit, according to rate-setter Silvana Tenreyro.

Tenreyro’s comments adds further clues as to the direction of travel for interest rates if Britain leaves the EU without a deal.

Speaking in Glasgow, she said negative demand would outweigh the impact on supply and the exchange rate.

She said: “In my judgment, a situation where the negative demand effects outweigh those other effects is more likely, which would necessitate a loosening in policy,” she said in a speech in Glasgow.”

She added that a smooth Brexit outcome would not automatically lead her to voting for a hike.

Last month fellow rate-setter Gertjan Vlieghe also said a no-deal Brexit would most likely lead to an easing of monetary policy.

But the Bank’s official position has long been that the monetary policy response to Brexit would not be automatic and could be in either direction.

Governor Mark Carney, and deputy governor Sir Dave Ramsden have indicated the potential need for rate hikes if Britain leaves the EU without a deal.

Michael Saunders exercised caution last week and said there was no need to rush interest rate hikes until the implications of Brexit were fully realised.

The typically hawkish rate-setter said: “The possibility that monetary tightening might be needed in the future does not necessarily mean we need to tighten now.

“A range of alternative Brexit outcomes are possible, and these may have very different implications for the economy and monetary policy.”

Tenreyro echoed those sentiments, advocating the “wait and see” approach post-Brexit.

She said: “While I still envisage that in the event of a smooth Brexit we will need a small amount of tightening over the next three years, before voting for any rate rises I would want to be confident that demand was growing faster than supply.”

By Callum Keown

Source: City AM

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HMO Property Investments Booming

Many buy to let property investors are moving over to HMO property investments as they battle increasing regulation and taxation changes.

HMO property investments can offer a higher yielding option when compared to standard buy to let, and many lenders are now recognising this and offering finance products for HMO property investments.

Leeds Building Society recently announced that it is now including five-year products in its bespoke HMO mortgage range. This move came on the back of intermediary feedback that landlord clients were looking for additional five-year options for small and large HMO property investments, as growing numbers sought to diversify their portfolios and move into this sector.

Houses in multiple occupation (HMOs) are nothing new, but with affordability issues continuing to impact first-time buyers and rents sitting at high levels, it’s evident that more people are staying in accommodation such as house shares for longer, well beyond their student years.

A study into HMO property investments by broadband and utilities provider Glide looked further into house shares, highlighting that London remained the best location in terms of the variety of house share opportunities, with over 19,000 rooms available. However, with the average monthly rent six times higher than the most affordable city to live in (average rent in London was suggested to be £3,278 pcm, compared to £499 in Bradford), the capital ranked 17th overall as the best city for house sharers.

Ranking the biggest UK cities on a range of measures – including the number of house shares in the city, number of job opportunities advertised, the cost of rent, university rankings and broadband speed – Bristol came out on top. The rest of the top 10 consisted of: Nottingham, Birmingham, Manchester, Liverpool, Derby, Southampton, Brighton and Hove, Leicester, and Portsmouth.

Landlords looking to venture into HMO property investments need to be fully aware of wider legislation changes as well as local licencing requirements when operating within this space. But, with increasing numbers of lending options becoming available, this is certainly an area worth considering.

Source: Residential Landlord

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Buy-to-let landlord numbers are plummeting!

It hasn’t been an easy time for buy-to-let investors over the past two-and-a-half years. First came the European Union referendum of summer 2016, an event whose result led to fears of collapsing house prices amid a meltdown in the UK economy.

We may still be waiting for this slump to happen, and is something I believe won’t occur given the scale of the supply imbalance in the homes market. But one thing is sure. The breakneck property price boom of recent decades has ground to a painful halt and is showing no clear sign of returning in the near future.

Landlord are evacuating With the stunning house price growth of yesteryear now seemingly over, a trend that had created a great number of buy-to-let millionaires, there seems little reason to take the plunge right now. With tax relief for landlords also being tightened, costs rising, and the sheer quantities of paperwork for these property owners increasing, well it’s little wonder that the rental market is in sharp decline.

This phenomenon was underlined by recent data from estate agent haart released this week. This showed the number of landlords registering to buy property over the past year plunged 37.4% on a nationwide basis.

The widening of the supply shortage in the rentals market has pushed rents up all over the country, and particularly so in London where the agency advised the average has jumped 6% over the past 12 months to a fresh record of £1,924.

Rents to keep rising? Haart chief executive Paul Smith commented: “The lack of new homes to buy has, in turn, pushed up rental prices… as Londoners scramble for rental accommodation as an alternative to buying a home.”

Smith blamed the “misguided efforts” of government to reform the property market by hiking the tax liabilities of landlords, and tipped that the cost of renting will continue rising for tenants. “Until buy-to-let taxation is relaxed, we can expect rents to rise throughout 2019,” he added.

The punitive tax changes that have hit both proprietor and renter hard in the pocket are here to stay too. Government is desperate to be seen to be helping first-time buyers get onto the housing ladder by reducing the number of homes hoovered up by the buy-to-let sector, even if in reality this is resulting in higher near-term costs for those aspiring to own their first home.

If anything, the financial and practical headaches for landlords in particular are only likely to rise in the years ahead as demand for new homes steadily booms. This imbalance makes the housebuilders great places to invest in for the years ahead, in my opinion. I for one would much rather invest in the stock market right now than to take the plunge in the increasingly-challenging buy-to-let market.

Motley Fool UK 2019

Source: Investing

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Brexit woes hits UK services sector

UK services sector output increased marginally in February, Brexit concerns have continued to weigh on the economy and hiring of staff has declined to its fastest pace in seven years.

HIS Markit/CIPS purchase managers index (PMI) showed a reading of 51.3 in February, a reading above 50 indicates growth.

Economist’s expectations were forecast to be 49.8, however recent data suggests the economy is almost stagnant, and on track for its weakest quarter since the last three months of 2012.

Financial services firms have held off hiring staff due to the outlook of the economy, and employment numbers declined at a faster rate since 2012.

Chris Williamson, chief business economist at IHS Markit, which compiled the survey said, “The latest PMI surveys indicate that the UK economy remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU.

“The data suggest the economy is on course to grow by just 0.1% in the first quarter.

“Worse may be to come when pre-Brexit preparatory activities move into reverse. Many Brexit-related headwinds and uncertainties also look set to linger in coming months even in the case of PM May’s deal going through.

“Business optimism about the year ahead has consequently sunk to the lowest ever recorded by the survey with the exceptions of the height of the global financial crisis and July 2016.”

Howard Archer, chief economic adviser at Item Club said, “There is a genuine chance now that the Bank of England will sit tight on interest rates through 2019, especially if Brexit is delayed and extends the uncertainty.”

Source: London Loves Business

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One in five home loans were remortgage or product transfer

More than 1.6 million borrowers switched product or remortgaged in 2018, making up almost one in five of all homeowner mortgages, according to UK Finance.

Of these, over one million (1,189,100) borrowers opted for a new deal with their existing provider through a product transfer, representing £158.7 billion of mortgage debt refinanced internally.

The total number of product transfers that were conducted on an advised basis was 624,900, worth £85.7 billion, while 564,300 transfers, worth £73 billion, were execution-only.

In the fourth quarter of 2018, there were 331,500 homeowners product transfers representing £46.1 billion of mortgage debt refinanced internally.

Of the total number of product transfers in the fourth quarter of 2018, 176,700 transfers, worth £25.2 billion, were conducted on an advised basis and 154,900 transfers, worth £20.9 billion, were execution-only.

These figures do not feature in any market data on remortgaging, or other published gross mortgage lending data.

Jackie Bennett, director of mortgages at UK Finance, said: “This shows a high level of customer engagement, as borrowers continue to take advantage of a competitive marketplace to switch to a product that best suits their needs.

“For those who need help in finding the right product, support is widely available through both direct channels and intermediaries, with more than half of borrowers taking advice for their new deal.”

Mark Harris, chief executive of mortgage broker SPF Private Clients, commented: “It is good to see these stats are now being produced and that the product transfer market was a little larger than most people would have thought.

“Product transfers are good for lenders with big back books but for new lenders they are going to have to offer competitive products to compete and attract business away. From a borrower’s perspective, this makes it a great market.”

By Joanne Atkin

Source: Mortgage Finance Gazette

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Property investors defy Brexit scaremongering

UK property investors are planning to increase their property portfolios in the next 12 months, according to research provided exclusively to FTAdviser.

According to an independent survey commissioned by Experience Invest, 39 per cent of real estate investors in the UK are planning to add to their holdings, with just 11 per cent seeking to reduce their property portfolios.

A further 35 per cent said they would be maintaining their current number of properties, with 15 per cent planning to sell some assets to then reinvest in new properties.

The research dispels the myth that investors are turning their backs on bricks and mortar as an investment as a result of tighter tax regulations and ongoing Brexit uncertainty.

Of the 54 per cent that plan to invest in more properties during the year, Greater London is the most popular destination, followed by the North West and Midlands.

The least popular areas for property investors, according to the research, were Northern Ireland, East Anglia, Wales and Scotland.

Jerald Solis, business development and acquisitions director at Experience Invest, said: “In light of tighter tax regulations on landlords and on-going Brexit uncertainty, there have been some doom and gloom predictions about the future of the UK property market. But this research shows that, as an investment asset, real estate is still hugely popular, with a significant number of property investors looking to grow their portfolio further in 2019.

“It is interesting to see that, while London remains the most popular location for property investment, other regions across the UK are very close behind. In particular, the North West has established itself as something of a ‘hotspot’ for buy-to-let investors, with cities like Liverpool and Manchester providing strong rental yields and healthy capital growth.”

Property investors are most attracted to houses, with 67 per cent looking here for their next purchase. This is closely followed by flats at 54 per cent and new builds at 39 per cent.

Other leading asset types within real estate were commercial and semi commercial properties.

Adrian Lowcock, head of personal investing at Willis Owen, said: “The results are not too surprising, property has been a very successful investment for many over the past couple of decades and, as such, there are a lot of investors who will reinvest into the asset class as they see it as the gift that keeps on giving.

“The recent falls in prices in some areas are nowhere near enough to convince property investors the bull market is over and they have also been supported by Governments who have looked to shore up the property market following the financial crisis.”

Mr Lowcock added: “I am not sure buy-to-let landlords would look at many other investments as a genuine alternative. They are often a different type investor and they are not necessarily the type of people who would invest in shares.

“Property is a physical tangible asset which they can work on, see and manage whilst owning shares is less visible and more often than not requires investors not to take any action – just to do some occasional background reading.

“Brexit is a huge risk to the property market and arguably some of the damage has already been done. An eleventh-hour agreement might help avoid big falls in the property market but it will take a while to see what damage has been done and how long it might take for the market to recover.

“Overseas investors might take a bit longer to come back as property investment requires a bigger financial commitment and is more illiquid than the stock market.”

The research was based on responses from more than 500 buy-to-let landlords and real estate investors from across the UK.

By Jenny Turton

Source: FT Adviser

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Pound falls as PM May tries to clinch Brexit compromise

The pound had gained earlier in the session on signs some pro-Brexit lawmakers were willing to compromise with May, increasing the chances she will get her Brexit deal through parliament next week.

“Despite a strong start for the pound, dismal construction sector data and a strengthening dollar saw sterling drop below $1.32,” said City Index senior market analyst Fiona Cincotta.

Britain’s construction industry reported the first fall in activity in almost a year last month, with the HIS Markit/CIPS Purchasing Managers’ Index (PMI) falling to 49.5 in February from January’s reading of 50.6, although the pound was unmoved after the release.

Media reports over the weekend suggested London was softening its demands of the European Union in renegotiating parts of the Brexit withdrawal deal that is deeply unpopular within large parts of May’s own Conservative party.

The Sunday Times said a group of Brexit-supporting lawmakers who previously rejected May’s deal have set out changes they want to see to her agreement in return for her support.

The British parliament is set to vote on May’s deal next week, although the vote could be held sooner. If it fails to pass, lawmakers will get to vote on whether to delay Brexit, currently set for March 29.

Hopes for a delay to Brexit and bets that a no-deal Brexit is a far less likely outcome sent sterling surging last week as high as $1.3351. The British currency is up 3.7 percent against the dollar so far in 2019 and 4.7 percent versus the euro.

On Monday, though, sterling fell 0.3 percent to $1.3167, its lowest since Feb 26. It traded broadly flat against a weaker euro at 85.92 pence.

While Brexit negotiations dominate the headlines, concerns about a slowdown in the British economy continue to build.

The PMI for Britain’s dominant services sector is published on Tuesday.

Source: UK Reuters

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Demand from landlords wanting to purchase rental homes plummets by over a third

Haart is urging the Chancellor to relax the buy-to-let taxation crackdown after its data showed the number of landlord registrations was down by more than a third during January.

The agent’s data showed the number of landlords registering to buy rose by 2% between December and January, but fell 37.4% annually.

In London, the number of landlord registrations was down 41.3% annually.

Its branches did, however, report that the number of national sales to landlords was up 13.9% annually in January.

In sales generally, branches reported a 15.2% annual boost in new listings, a 2.6% rise in buyer registrations and a 5.5% yearly increase in exchanges.

Paul Smith, chief executive of haart, said: “There is a clear appetite to move amongst buyers and sellers.

“Just one month from Brexit, buyers are continuing to act in ignorant bliss, ignoring formidable predictions that are still dominating headlines.

“With increased confidence in activity, we can expect price rises over the coming months.

“But January was very much a tale of two halves. The London market did not pick up in the same way that the rest of the UK did, and the number of new instructions for sale in the capital dropped by 2.6%.

“The lack of new homes to buy has, in turn, pushed up rental prices by 6% on the year to a record £1,924 as Londoners scramble for rental accommodation as an alternative to buying a home.

“This is a not a fault of Brexit, but rather a consequence of the Government’s misguided efforts to reform the property market with taxation on buy-to-let landlords.

“Until buy-to-let taxation is relaxed, we can expect rents to rise throughout 2019 and tenants will increasingly be faced with difficulty when finding a new home in the capital.”

Source: Property Industry Eye