property
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Europe ramps up property investment in central London

London’s appeal as a major hub for overseas investors was underlined by fresh figures today, which showed that the proportion of foreign money being injected into the capital’s commercial property market has hit an all-time high.

A resurgence in demand from European buyers has helped drive central London’s booming office space market in the last three months, with foreign buyers accounting for a record 92 per cent of total investment in the third quarter of 2018.

While overall levels of investment slipped from £5.2bn in the second quarter of 2018 to £.4.1bn in the third quarter, European investment more than doubled after hitting £1.7bn in the three months to the end of September.

Appetite for skyscrapers and major office blocks has largely been dominated by Asian buyers in the last 12 months, but several landmark deals from major European investors caught the headlines during the third quarter of this year.

The Spanish billionaire founder of fashion chain Zara, Amancio Ortega, recently snapped up The Adelphi building for £550m using his real estate arm Ponte Gadea, while German investor Deka also splashed out £460m for Victoria’s Verde office development.

“London office investment volumes continue to be supported by a robust occupational market with low vacancy levels, and take-up well above the 10-year average. Attractive yields relative to other European cities, coupled with the comparative weakness of sterling, mean we have seen investors from all corners of the globe hungry to deploy capital in London,” said CBRE’s head of London investment properties James Beckham.

He added: “There may be some hesitancy from a few investors over the next six months as we enter the latter stages of the Brexit negotiations, but total investment volumes for the year look set to be broadly on par with 2017, once again highlighting the strength of demand for London assets.”

The figures, released by CBRE, come after a report from Cushman and Wakefield showed that London has held its position as the top city for cross-border property investment this year for the ninth time in a decade.

Source: City A.M.

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Buy To Let Investors To Increase Portfolios Over Next Year

The vast majority of buy to let investors plan to increase their portfolios over the next twelve months, despite the uncertainty of Brexit and other potentially challenging government measures.

A survey by investor forum and advice website, The Property Hub, has found that almost 80 per cent of landlords plan to increase their portfolios over the next 12 months. This equates to around 1.95 million investors.

The new survey found that most landlords plan to purchase at least one more property next year, with 70 per cent stating that even a no-deal Brexit will not put off their plans.

Buy to let investors also overwhelmingly confirmed in the survey that the mass exodus predicted from the private rental sector will not happen, with 84 per cent saying that they had no plans to sell properties, and 66 per cent confirming that even if the government were to announce further tax measures – such as restricting interest relief for companies, they still wouldn’t be selling up.

Co-founder of The Property Hub, Rob Dix, commented: ‘There’s been so much talk of a mass exodus of landlords and the death of buy to let, it’s easy for some would-be landlords or, indeed, tenants, to believe the rental market is on its knees. However, it’s clear from our survey that landlords are far from retreating from the market.’

The government proposal for mandatory 3-year tenancies is also not putting off buy to let investors.

When asked what would need to happen in order for them to support this policy  82 per cent said they’d need a way to remove tenants who fall into rent arrears that is faster than the current fault-based method, 69 per cent said the ability to increase rent would need to be given, and 59 per cent said there’d need to be tax incentives, like the ability to deduct more mortgage interest.

Less than 9 per cent of the investors polled said they would oppose the policy regardless.

Mr Dix commented: ‘Getting good long-term tenants is the goal for any landlord so it’s not surprising that less than 9% of landlords would be against this policy regardless of any concessions. However, landlords obviously need to be protected too so it’s only natural that those operating in the sector are calling for some reassurance.’

Source: Residential Landlord

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Commercial property investment ‘subdued’ in third quarter says report

COMMERCIAL property investment in the third quarter of 2018 remained ‘subdued’ in Northern Ireland, with volume recorded at £53.2m, according to Lambert Smith Hampton’s latest regional investment transactions report.

The ITNI Bulletin reports that year-to-date total investment volume stands at £121m, a decrease of 52 percent on the same period in 2017.

And while investor appetite has improved, Q3 activity overall remained low at 38 percent below the five-year quarterly average.

On the upside, the latest quarter did see the first office investments of 2018.

With a combined value of £39.4m, three assets changed hands in Belfast city centre, accounting for 74 percent of the quarterly volume.

These included the Metro Building for £21.8m (a yield of 5.75 per cent), Obel 68 for £15.2m (yield 6.73 per cent) and 20 Adelaide Street for £2.4m (yield 7.2 per cent).

The two largest deals of the quarter were by a local property company and Belfast Harbour Commissioners.

Private Northern Irish investors were very active, and this group is responsible for the largest proportion of investment volume in the year-to-date.

Martin McCloy, director of capital markets at Lambert Smith Hampton, said: “Although subdued in comparison to recent years, investment has remained resilient in the face of the political and economic headwinds of the last two years.

“We anticipate that quarter four will follow the same trend as the two previous quarters, with £20m of deals currently agreed or in legals.

“Investor appetite remains and investors are taking advantage where clear value can be found with quality assets quickly being agreed.”

He added: “The uncertainty continues regarding the exact detail of the withdrawal and future relationship agreements between the UK and EU.

“A blueprint for the future trade and security partnership should further increase confidence amongst investors and the commercial property market.”

Source: Irish News

UK mortgage approvals
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UK mortgage approvals drop to six-month low

British banks approved the fewest mortgages for house purchase since March last month and demand to refinance home loans also fell following the Bank of England’s interest rate rise in August, industry data showed on Wednesday.

The number of mortgages approved for house purchase dropped to a six-month low of 38,505 in September from 39,241 in August, down 6.7 percent on a year earlier, the seasonally adjusted figures from UK Finance showed.

Britain’s housing market has slowed since the Brexit vote in June 2016. Most of the weakness has been in London and neighbouring areas, which have also been hit by a rise in purchase taxes for property worth over 1 million pounds.

Net mortgage lending dropped to 1.550 billion pounds last month from 1.617 billion pounds, the weakest since January.

“The mortgage market softened slightly in September, following strong remortgaging activity in the months preceding the recent base rate rise,” UK Finance’s managing director of personal finance, Eric Leenders, said.

Unsecured consumer lending was more stable, growing by an annual 4.0 percent in September, but lending to non-financial companies was down by 2 percent on the year, extending a run of falls seen since April.

“Economic uncertainty continues to impact on businesses’ appetite for finance as overall lending remains slightly below the same period last year,” said Stephen Pegge, UK Finance’s managing director for commercial finance.

The Confederation of British Industry said on Tuesday that factories were scaling back investment as uncertainty about Britain’s relationship with the European Union remained unclear, little more than five months before Brexit.

Source: UK Reuters

property market remains strong
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Property market remains strong despite Brexit predictions

The UK property market remains strong and defiant despite damning pre-Brexit predictions about the impact of the vote to leave, an analysis from estate agent haart has found.

The research compared the Treasury’s “cautious” economic forecast for the two years following the vote to leave published in May 2016, to the realities of the UK property market today, five months prior to the UK’s official exit date.

Paul Smith, chief executive of haart estate agents, said: “For over two years we have been listening to bold claims from industry commentators and public figures about the impact that Brexit will have on the housing market.

“But what we are seeing on the ground is proving them otherwise. The number of buyers entering the market is the highest in two years, and the number of property transactions in August is the most seen since November 2016.

“Now, so close to the end of the Brexit process, I cannot see much changing. EU or no-EU the need to move home will always be there. Brits move for a whole host of reasons including good schools, new jobs and better transport links.”

The paper, which focused on the immediate economic impact on the vote to leave and the two years that followed, predicted doom and gloom for the property market.

Presented by former Chancellor of the Exchequer, George Osborne, it said that demand for housing would fall due to higher costs of lending, and at the end of the two years, house prices would be around 10% lower relative to a vote to remain in the EU.

It also stated in a severe shock scenario, house prices would be around 18% lower. This shock to the property market would be led by consumer uncertainty, and much higher levels of unemployment, with all regions experiencing a rise in the number of people out of work.

However, analysis by haart found that house prices have risen by 9% since the Brexit vote.

Latest HMRC property transaction statics showed the level of residential transactions is currently 13% higher than the same time last year, and on the ground the level of transactions haart is seeing is at its highest in two years.

Smith added: “Brexit’ is not a word our branches are hearing on the ground anymore, but instead, customers are much more focused on what is happening with interest rates and stamp duty, and for investors, the recent tax changes.

“The average house price has tripled since 1995 and that increase is driven by domestic demand. Britain is a nation obsessed by property, and people are more determined than ever to move on to and up the ladder

“But the reality is that the property market is heavily driven by sentiment. If the government can provide a strong vision of the UK’s post-Brexit future, greater stability and confidence will follow. Comments from those such as Mark Carney who downplay the potential market conditions are extremely unhelpful.”

Demand for housing has also risen by 8% and is currently at its highest level since May 2016. Lending remains historically low and wage growth for British workers is also increasing at its strongest rate for three years, amid the lowest levels of unemployment since the mid-1970s.

Haart’s research came shortly after claims from the Bank of England Governor that a ‘no-deal’ Brexit scenario would be comparable to the 2008 recession. However, it was also found that the UK mortgage market has become much stronger and healthier in the past decade.

Smith said: “Today’s market is well-insulated against any macro-financial situations that may come our way, and I do not believe these doomsday predictions are within any realistic parameters of what could happen, or that a ‘no-deal’ Brexit could have the same impact on the property market today than the financial crash did back in 2007.

“Today, debt in the form of mortgages accounts for just 43% of house purchase funding due to measures introduced after the crash, and last month there was the highest level of remortgaging activity in a decade as homeowners locked themselves into a low-interest rate deal.

“With these mortgage conditions and strong demand, prices will always be propped up.”

Source: Mortgage Introducer

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Buy-to-let lenders criticised for tenant discrimination

The Government is facing calls to end the “discrimination” against benefit claimants by buy-to-let mortgage providers.

The Residential Landlords Association (RLA) has urged action against the “unjust practices” after its research found 66 per cent of lenders representing 90 per cent of the buy-to-let market did not allow properties to be rented to tenants in receipt of housing benefit.

The research was carried out last year by the association’s mortgage consultants, 3mc, and found TSB, Virgin and NatWest were among the lenders which imposed the renting restrictions.

David Smith, policy director at the RLA, said: “With growing numbers of benefit claimants now relying on the private rented sector, it is shameful that many lenders are preventing landlords renting property to some of the most vulnerable in society with little or no justification.

“The banks have had long enough to get their house in order. It is now time to take firm action to stop such unjust practices.”

The RLA wrote to the Treasury minister responsible for banking, John Glen, calling for the Government to use its influence as a shareholder in certain banks to end the “discriminatory” practices.

The association also asked the Financial Conduct Authority and Bank of England to investigate the extent of the problem and prepare plans to end it, claiming the practices breach the FCA’s ‘Treating Customers Fairly’ agenda.

The letter also suggested the Equalities and Human Rights Commission carry out a review of whether the lenders’ practices breach equalities law.

The RLA’s calls came after news a buy-to-let borrower had her mortgage revoked when the lender discovered she rented to a benefit claimant.

Helena McAleer, a landlord from Northern Ireland, contacted her bank, NatWest, to discuss releasing equity from her property – but instead Ms McAleer claims the lender revoked her buy-to-let mortgage citing its policy prevented rentals to benefit claimants.

Ms McAleer said the bank instructed her to “seek an alternative tenant” but it is understood NatWest did not tell her to evict the tenant.

NatWest’s buy-to-let eligibility criteria reads: “We will not consider multiple tenancies, Homes of Multiple Occupancy, bedsits, DSS tenants or ‘Related Person’ tenancies.”

A NatWest spokesman said: “The bank has specific lending criteria and is not able to offer mortgages in certain circumstances, which are made clear on a customer’s terms and conditions.

“There are alternative providers who may be better suited for customers in these circumstances.”

Ms McAleer has launched a petition and online campaign page calling for measures to close these “loopholes”.

However, a UK Finance spokesperson said most lenders do not place restrictions on landlords letting to benefit claimants.

He said: “Any landlord wanting to let to tenants in receipt of benefits should be able to find a lender that will allow this.

“We always encourage individuals to speak to their lender if they have any concerns and research the market to find the best possible deal for their needs.”

Source: FT Adviser

property transactions
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Property transactions down in September

There were 98,400 residential property transactions in September, down 0.5% from August and 2.7% year-on-year, HMRC property statistics showed.

Similarly the seasonally adjusted estimate showed 9,450 non-residential property transactions in August, decreasing by 6.7% from September and 7.3% lower than that last year.

Steve Seal, director of sales and marketing, Bluestone Mortgages, said: “Again, it’s the same story as last month, and the month before. Seasonal activity continues to remain flat, with rising living costs and house prices discouraging many aspiring homeowners from entering the property market.

“We mustn’t also forget the added burden of saving enough money on the side to cover a mortgage deposit.

“Building more affordable housing isn’t new news. However, it’s not just a question of building more ‘one size fits all’ housing, but building stock across all the different stages of the housing cycle.

“Demand may outweigh supply in London, for example, but in other parts of the UK, supply outweighs demand due to a lack of appropriate housing stock for aspiring families or those looking to downsize.

“With a week until the Autumn Budget, it is vital that the industry and government work together to address these issues and commit to a long-term genuine plan.”

Jeremy Leaf, north London estate agent and a former RICS residential chairman, added: “Transactions will always be a much better test of property market health than prices.

“These numbers show the patient to be in reasonable condition but still fairly weak so vulnerable to any unpleasant Budget medicine which may stall their recovery.

“On the ground, some buyers and sellers are cautiously coming to the market but in nowhere near the numbers hoped for or expected. As a result, sentiment is not strong and only those prepared to negotiate hard are successful.

“The content of the Budget, one way or the other, will make a difference to property market prospects for the rest of this year, as will the conclusion of the Brexit negotiations.”

Andy Sommerville, director at Search Acumen, illustrated that property transactions took a dip at the end of the summer as the property market cooled down in September, and also highlighted the significance of the upcoming Budget on 29 October.

He said: “Property transactions took a dip at the end of the summer as the property market cooled down in September. After a strong August, activity in UK housing has sunk back down to earth.

“Overall however, transaction figures prove that talk of a housing market crash at the hands of Brexit uncertainty is seemingly overdone.

“While London continues to suffer from a significant property market freeze, the housing market outside the capital continues to be active. People are ignoring the lack of clarity from the government and are instead pressing ahead with the business of buying and selling homes.

“Looking ahead to next week’s Budget, it would be surprising if the Chancellor didn’t continue his support for first-time buyers who have been a major engine that’s helped keep the UK’s housing market moving through 2018.

“The entire property sector is hoping for a helping hand to keep what momentum we do have going into 2019.”

Source: Mortgage Introducer

Southend
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Southend Tops Buy To Let Property Investment Table

Southend tops the buy to let property investment market for rental yields according to recent research.

New analysis from Private Finance reveals Southend-on-Sea is the UK’s number one buy to let hotspot for investment, offering average rental yields of 6.6 per cent once mortgage costs are taken into account.

The analysis – which calculates rental yields in the 50 UK towns and cities with the highest proportion of private rental housing stock – highlights that house prices and mortgage costs can be just as influential as rental income when assessing the best locations to invest.

An annual rental income of £23,280 means that landlords in Southend enjoy a lucrative return for a relatively small upfront investment, with house prices in the area only slightly higher than the national average (£279,358 against £231,000).

Four out of 10 areas with the highest rental yields feature in the top ten buy to let hotspots – Westminster, Camden, Tower Hamlets and Southend-on-Sea – but an equal number of areas with the lowest house prices also feature in the top ten list.

Liverpool, Nottingham, Greater Manchester and Coventry all feature in the top 10 and benefit from some of the lowest house prices in the UK, suggesting potential buy to let property investors should not only consider potential rental income when assessing where to invest.

This is also encouraging news for buy to let property investors with smaller sums to invest, demonstrating you don’t need to spend millions to secure a lucrative property investment.

Director at Private Finance, Shaun Church, commented: ‘Southend is a popular spot for renters, with all the benefits of living in a popular seaside town less than an hour’s commute from Central London, and with good airport connections.’

He continued: ‘With the high cost of renting pricing many out of the city, towns in a commutable distance from London that offer a more relaxed lifestyle at an affordable price are becoming increasingly popular among young professionals. Rental demand is likely to grow in these pockets outside of London, offering good opportunities for buy to let investors.’

Top Ten Buy to Let Hotspots by Average Net Rental Yield

Location Percentage of Privately Rented Housing Stock Average house price (July 18) Average house price (July 17) Mortgage costs (interest-only) Average Rent 2018 (Monthly) Average Rent 2018 (Annual) Net Rental Yield Aug 2018
Southend-on-Sea 20.72% £279,358 £272,873 £4,840 £1,940 £23,280 6.6%
Nottingham 21.64% £137,835 £134,019 £2,388 £928 £11,136 6.4%
Westminster 37.56% £970,990 £1,058,953 £16,822 £5,554 £66,648 5.1%
Edinburgh 20.48% £254,170 £239,016 £4,403 £1,410 £16,920 4.9%
Greater Manchester 26.85% £167,928 £160,001 £2,909 £911 £10,932 4.8%
Liverpool 21.75% £136,521 £127,060 £2,365 £725 £8,700 4.6%
Tower Hamlets 30.84% £473,327 £449,170 £8,200 £2,447 £29,364 4.5%
Camden 30.46% £810,708 £865,076 £14,046 £4,178 £50,136 4.5%
Coventry 19.02% £185,990 £175,375 £3,222 £952 £11,424 4.4%
Southampton 23.42% £212,155 £205,687 £3,676 £1,045 £12,540 4.2%

Source: Residential Landlord

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Five-Year Fixed Buy To Let Rates At Lowest Point

Five-year fixed buy to let rates have plummeted to a record low of 3.4 per cent, according to the latest data released by Moneyfacts.

Five-year fixed buy to let rates have declined from 3.55 per cent in April, with fierce competition in the sector as well as a tumultuous market stimulating the swift drop.

Finance expert at Moneyfacts, Charlotte Nelson, said: “The buy to let market has been on a rollercoaster ride in recent years, with not only two base rate rises to contend with, but multiple regulation and tax changes thrown into the mix. With all these elements, many would have assumed that rates would rise as a result. However, the opposite appears to be the case, particularly for the long-term fixed rates, with the average five-year fixed mortgage rate falling by 0.05 per cent in just one month to reach the lowest on record.’

Landlords have faced a turbulent market, and many are seeking a break. The number of buy to let property purchases were down 11.1 per cent year on year in July 2018. Providers are therefore aiming to encourage borrowers by revitalising their deals and absorbing some of the costs themselves in order to keep prices down for potential customers.

Nelson continued: ‘Competition in the buy to let market remains high. In the aftermath of August’s base rate rise, many buy to let borrowers will be looking to remortgage from their standard variable rates, with several of these landlords potentially considering longer-term options to act as a buffer against any future rises. It is this extra business that providers are wanting to attract. Not only would a five-year fixed mortgage protect landlords from future rate rises, but savvy borrowers are aware that the strict stress test applied to two-year deals is not applied to five-year fixed rates. This could be yet another reason why competition is now homed in on the five-year fixed rate mortgage market.’

Source: Residential Landlord

Help to Buy
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West Midlands third for Help to Buy sales

The West Midlands has had the third highest number of homes in England sold through the Help to Buy equity loan scheme since its launch five years ago.

More than 169,100 completed Help to Buy equity loan purchases have been made since 2013 worth an estimated £42.2 billion.

The figure for the West Midlands was 7,074, with Birmingham the area with the most at 1,532.

Of all purchases nationally, 81 per cent were made by first-time buyers.

The scheme is set to run until 2021, although it has been under scrutiny with claims it is enabling people who can afford to buy without the equity loan to climb on to the property ladder with just a five per cent deposit, thus driving up property prices.

Homelessness charity Shelter analysed the increased amount of mortgage lending in correlation to the scheme and concluded Help to Buy has increased the average home price by £8,250.

Housing experts at Fasthomes.org carried out the research to find out which counties in England have had the most and least completed Help to Buy equity loan property purchases.

Interest-free

It found that London was top with 12,206 and Greater Manchester second with 7,280. Staffordshire had 3,737.

Within the West Midlands Sandwell had 991 sales, Walsall 922 and Dudley 753.

The Government launched the Help to Buy equity loan mainly to help people step on to the housing ladder. It allows buyers with a minimum five per cent deposit of a property value to secure an interest-free loan of a further 20 per cent in England and Wales for the first five years.

The loan is only available on new-build homes up to £600,000.

The Government id currently deciding on the future of Help to Buy.

The Home Builders Federation says the scheme has been an “unmitigated success”, with 81 per cent of those helped having been first-time buyers.

Source: Express and Star