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Brexit Impacts London Investment Property Prices

London house prices are likely to fall this year as Brexit impacts demand, according to a poll of housing market specialists conducted by Reuters.

Property prices in London could fall by an average of one per cent this year, marking the first annual dip in nearly 10 years, according to a poll of 30 experts. However, prices are expected to bounce back in the coming years.

The survey suggested that house prices could rise an average 1.7 per cent across Britain in 2018, before falling again with inflation. A 2.5 per cent consumer price rise is expected too.

Next year, growth in house prices is expected to pick up, with a rise of two per cent nationally predicted. A smaller rise of 0.5 per cent is expected in London. By 2020, it is thought that house prices will increase by two per cent both in the capital, and in Britain.

Reuters found a range of forecasts for London, noting predictions ranging from a six per cent fall to a 2.5 per cent rise.

Associate at estate agency Knight Frank, Oliver Knight, attributed much of the uncertainty ‘as to where we are with Brexit negotiations’. He said: ‘That has really kept a lid on further growth. There is a wait-and-see attitude.’

Brexit-related uncertainty may have reduced the appeal of the capital for overseas buyers, with a decline in demand for property in London also attributed somewhat to reductions in mortgage interest relief.

Brexit may have reduced the appeal for overseas buyers, according to the ONS, while falling demand for property in London could also be partly attributed to reductions in mortgage interest relief.

The ONS commented ‘With the referendum and subsequent uncertainty regarding Britain’s political and economic environment, perceptions of the future value of London property have been adversely affected. This is what you might call a fall in ‘speculative demand.’

Source: Residential Landlord

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Britain could end homelessness in a decade, claims new report

Homelessness in Britain could be eradicated within 10 years with the correct measures in place, according to a report.

Government policies needed to end homelessness have been set out in a report by charity Crisis called Everybody In: How To End Homelessness In Great Britain.

The plan has been endorsed by experts in the US, Canada and Finland, who are leading successful movements to end homelessness in their countries, Crisis said.

The report follows work with the Chartered Institute of Housing, Heriot-Watt University, the National Housing Federation, and PricewaterhouseCoopers LLP (PwC).

The plan says that a national roll-out of Housing First would benefit more than 18,000 homeless people, by providing homes that come with a package of specialised support.

The plan also sets out the policies needed to support people once they are housed, including better rights and longer tenancies for private renters, and reforming housing benefits.

Ending homelessness will also require hospitals, prisons, the care system, and other parts of the state to play a role, the research finds.

Crisis said these organisations should be legally required to help prevent people leaving their care from becoming homeless.

The plan also proposes that job centres have homelessness specialists.

PwC found that, over the next decade, these policies would cost £9.9 billion and deliver benefits worth £26.4 billion, Crisis said.

Jon Sparkes, chief executive of Crisis, said: “For the first time ever, we have a comprehensive plan that shows exactly how we can address the root causes of homelessness and make it a thing of the past.

“Other parts of the world are taking huge strides towards ending it, and Britain can too.

“We must not become a society that simply accepts homelessness as ‘a sad fact of life’, because the good news is that we know it doesn’t have to be this way.”

This includes people living on the streets, in cars and tents, or in unsuitable temporary accommodation.

Martin Tett, the Local Government Association’s Housing spokesman, said: “It is essential that all councils are able to borrow to build new homes and adapt welfare reforms to prevent homelessness from happening in the first place.

“A genuine renaissance in council housebuilding would increase housing supply, boost home ownership and reduce homelessness.”

A spokeswoman for the Ministry of Housing, Communities and Local Government said it was committed to tackling homelessness and rough sleeping, working with charities like Crisis.

“We are investing more than £1.2 billion to tackle all forms of homelessness and just last week we announced £30 million for councils to help boost the immediate support available to people living on the streets.

“We are also investing £9 billion to build more affordable homes and are piloting the Housing First approach in three major regions to get people off the streets and into stable accommodation.”

Source: Herald Scotland

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The housing market is broken at every level, Homeowners Survey finds

The housing market is broken at every level with everyone from first-time buyers, second-steppers to downsizers struggling, the Homeowners Survey 2018 has found.

The research on behalf of HomeOwners Alliance and BLP Insurance, found millions of UK adults are failing to realise their dream of homeownership or are stuck in houses that are unsuitable for their needs as a result of affordability issues and lack of properties.

While almost three in four non-homeowners (74%) want to own their home one day, affordability problems are preventing them from doing so.

The main reasons cited for not being able to buy their first home include: property prices are too high (66%), difficulty saving for a deposit (58%) and difficulty getting a new mortgage (31%).

Paula Higgins, chief executive, Homeowners Alliance, said: “These figures show the true scale – and indeed, the breadth – of the problems facing the housing market.

“Buyers and sellers at every single level are being met with problems and it’s clear that tinkering with just one area will not solve this crisis.“

“The housing market is broken at every level. A massive 74% of people want to own their own homes, yet millions face the realisation that might never happen.”

Higgins added: “At HomeOwners Alliance we’re doing all we can to help those struggling in the market with advice, calculators and tools but there needs to be some drastic action to address this.

“The government needs to come up with a long-term strategy. If 7.5 million people being locked out isn’t a tipping point, what is?”

Aspiration to own is at its highest level in six years for first-time buyers with 74% wanting to own one day with affordability being the biggest reason. Some 66% said property prices being too high, 58% said difficulty saving a deposit and 31% put it down to difficulty getting a mortgage (31%).

Half of second-steppers looking to move but not following through, wanted to do so for a bigger property. And affordability is the main barrier preventing a move for them, with stamp duty (24%) and being able to increase an existing mortgage (18%) being relatively bigger issues for this group.

Some 46% of last-time buyers cited suitable housing as a reason preventing their move.

Nearly two thirds (64%) of homeowners 55+ who considered but did not move said it was difficult to find a property with the characteristics they were looking for.

Relatively more important property characteristics for them included: a garden/outside space (80%), a property in good condition (no major improvements needed), (79%) and parking (76%).

Following this there were low running costs/maintenance (74%), good transport links (61%), proximity to friends/family (47%), proximity to shops/restaurants (40%) and living on one level (38%).

Kim Vernau, chief executive, BLP Insurance, said: “A comprehensively integrated approach is needed to cure the ills of the housing market.

“Government policies such as the abolition of stamp duty for first time buyers may have created positive headlines but it ignores the needs of large swathes of potential buyers.

“By recognising the interconnected nature of the housing market and implementing policies that will positively affect all, real progress can be made.”

“One of the biggest challenges facing the sector is incentivising elderly individuals living in large, former family homes to downsize.

“Constructing an adequate stock of purposely-built homes for last time buyers, that meets their specific needs, has the potential to free up housing stock for first and second-time buyers and inject much needed impetus into the whole market.”

Source: Mortgage Introducer

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Second charge volumes up 8% in April – but they ‘should be higher’

There were 1,771 new second charge mortgages issued in April 2018, an increase of 8% year-on-year – but London Money director Scott Thorpe reckons “they are a long way off where they should be”.

The Finance and Leasing Association found that in the 12 months leading up to April, there was a rise of 9% in new agreements from that last year.

The value of new business was £83m in April, up by 2% year-on-year,though lending reached was £1.025bn in the 12 months leading up to April, a rise of 11% from that last year.

But Thorpe said: “I actually think these figures should be a lot higher The market should have expanded greater and faster since MCD than it has.

“The reason why that hasn’t happened is down to the same old barriers – high fees and brokers being able to access to lenders directly. Both these issues are stopping the market growing.

“What we are seeing is a gradual upturn in second charge lending. The numbers are a long way away from where they should be but all forward progress is good progress.”

He added: “I really think the industry should be concentrating on making sure the consumer is given the best advice regardless of the secured options.

“We need to see the end of advisers and packagers being able to opt out offering full advice. Do that, curb fees and open up distribution and we will be talking about double digit growth for the sector for many years to come.”

Fiona Hoyle, head of consumer and mortgage finance at the Finance & Leasing Association (FLA), said: “The second charge mortgage market reported new business growth of 2% by value and 8% by volume in April, compared with the same period in 2017.

“In the three months to April 2018, the number of new second charge mortgages was 5,339, unchanged on the same period in 2017. This versatile product continues to prove popular with customers.”

Source: Mortgage Introducer

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House prices recover from April slump, but annual growth slows again

The rate of annual house price growth has slowed for the second month in a row as Halifax reports a “subdued” property market.

The lender’s May House Price Index showed average prices were up 1.9% annually, slower than the 2.2% yearly growth recorded in April, to £224,439.

House prices returned to growth on a monthly basis, up 1.5% during May after a 3.1% decline in April.

Russell Galley, managing director of Halifax, suggested house prices were mainly being supported by a strong labour market.

He said: “These latest price changes reflect a relatively subdued UK housing market.

“After a sharp rise in January, mortgage approvals have softened in the past three months. Both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months.

“The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years.

“We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease.

“With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Commenting on the figures, Jeremy Leaf, north London estate agent and a former RICS residential chairman, said: “At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May.

“Once again we are seeing the rather topsy turvy pattern to the housing market – up one month, down the next. It is the same on the ground – no real pattern, with buyers and sellers negotiating hard but not always successfully.

“Looking forward, we expect more of the same and possibly slightly better as we await figures reflecting the crucial spring market period.”

Source: Property Industry Eye

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More landlords will buy using limited companies

Nearly two out of five (38%) landlords will use limited companies to buy properties over the next year compared to 28% as individuals, highlighting the continuing rise of the professional landlord.

Precise Mortgages found that among landlords with more than four properties the percentage buying new property via a limited company rose to 42%, while it dropped to 31% among those with up to three properties.

Landlords operating in London are the most likely to be planning to purchase through a limited company.

Alan Cleary, managing director of Precise Mortgages, said: “Buying property within a limited company structure has become increasingly popular, particularly among larger professional landlords.

“Given the predicted rise in landlords switching to limited company status this year, we can expect this trend to continue.”

“The contrasting levels of awareness of the PRA’s recent changes to lending criteria and the application process between small and larger portfolio landlords points to the growing professionalisation of the latter group who stand to be the most affected.”

“Precise Mortgages is currently one of the most recommended specialist mortgage lenders, helping landlords to find solutions and supporting them through the process.”

Some 89% of brokers expected the number of landlords setting themselves up as a limited company to increase, with the ability to continue to claim tax relief on mortgage interest seen as the main motivation.

Around 15% of landlords intended to add to their portfolios over the coming year, buying an average of two new properties, the BDRC study found. And about 23% of those planning to buy will add three or more properties to their portfolio.

The BDRC also found landlords with larger portfolios are significantly more aware of the Prudential Regulation Authority (PRA)’s lending criteria and portfolio application process changes.

Less than half (45%) of all landlords are aware of PRA changes but that rises to 67% among landlords with four or more buy-to-let mortgages.

However, 74% of those with larger portfolios thought the changes have made it more difficult to secure buy-to-let finance, underlining the growing demand for specialist lenders.

Source: Mortgage Introducer

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Yearly house price growth slows

House prices in the three months to May were 1.9% higher than the same period a year earlier – down from 2.2% in April, the Halifax House Price Index found.

Prices were 0.2% higher than in the preceding three months (December-February 2018) and also rose on a monthly basis, increasing by 1.5% in May, partially reversing the 3.1% monthly decline in April. The average house price is now £224,439.

Mike Scott, chief property analyst at estate agent Yopa, said: ‘’The fundamentals of the market are still strong, with tight supply, strong employment figures, average wages rising faster than inflation and continuing low mortgage interest rates.

“We are unlikely to see much more of a turndown in prices unless those economic fundamentals change.

“However, both supply and demand are subdued compared with last year, and we may see a lower total number of house sales in 2018 than in recent years.”

Meanwhile Jeremy Leaf, north London estate agent and a former RICS residential chairman, was less optimistic with the figures.

He said: “At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May.

“Once again we are seeing the rather topsy turvy pattern to the housing market – up one month, down the next. It is the same on the ground – no real pattern, with buyers and sellers negotiating hard but not always successfully.

“Looking forward, we expect more of the same and possibly slightly better as we await figures reflecting the crucial spring market period.”

UK home sales grew by a healthy 4% from 96,800 in March to 100,190 in April. In the three months to April sales were 1.6% lower than in the preceding three months. This weakness reflects the sharp slowdown seen in mortgage approvals at the end of last year.

Bank of England industry-wide figures showwed that the number of mortgages approved to finance house purchases – a leading indicator of completed house sales – were 62,455 in April.

This was a 0.6% month on month decline – marking the third consecutive month in which approvals have fallen. In the three months to April approvals were 1.9% lower than in the preceding three months, continuing to indicate a subdued residential market.

The decline in housing activity eased in April. After four straight months of sharp decline, new buyer enquiries stabilised in April.

However demand fell for the 13th month in a row. Supply continues to remain tight with new instructions falling for the 26th consecutive month in April yet the pace has slowed markedly. Agreed sales also held relatively steady over the month.

Kevin Roberts, director, Legal & General Mortgage Club, said: “We’re continuing to see house prices rising at more sustainable levels than those of the past, which is good news for many buyers trying to get onto the property ladder.

“Younger buyers are also benefitting from growing support for schemes like shared ownership, which are putting them in a better position than a few years ago.”

The average price of a flat in the UK has risen by £75,074 over the last five years, from £157,061 in 2013 to £232,135 in 2018.

Flats now account for 15% of all home sales. Although six in every 10 property sales last year were either terraced or semi-detached properties, flats have increased in value by 48%, compared to 39% for all property types over the same period.

Terraced homes have seen average prices rise by £60,482 since 2013, while detached homes recorded an increase of £73,638.

Although flats have recorded greater price gains over the past five years, semi-detached and terraced homes have remained the most popular choices for homebuyers.

Russell Galley, managing director, Halifax, said: “The continuing strength of the labour market is supporting house prices. In the three months to March the number of full-time employees increased by 202,000, the biggest rise in three years.

“We are also seeing pay growth edging up and consumer price inflation falling, and as a result the squeeze on real earnings has started to ease. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Source: Mortgage Introducer

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Scottish pubs and care homes outperforming rest of property market

PUBS, care homes, students flats and hotels are outperforming traditional property sectors, according to a new report.

Research by leading property consultant CBRE reveals Scottish commercial property had another positive quarter at the start of the year, reflecting wider improvements reported for Scottish GDP.

The Scotland Property Quarterly report shows the performance across the three main sectors of office, retail and industrial property was average with very little change.

It was the “alternatives” sector – a mixture of smaller, specialist real estate types ranging from student accommodation and care homes to pubs, hotels, leisure and roadside services – that outperformed everything else in the first quarter with returns of 4.0%, and 13.2% over the 12 months to the end of March.

On an annual basis, most sectors in Scotland saw an improvement in returns. For all property, returns rose by around 25 basis points over the quarter to stand at 7% for the twelve months to the end of March. This contrasted with the UK, which saw annual returns dip lower over the same period.

Total returns for Scottish retail in the first quarter were 1.2%, a slight decrease on the 1.5% total return in Q4 of 2017. The annual total return for retail over the year to the end of March was 5.4%. Last year, capital values for retail in Scotland were, on average, flat.

Performance has edged lower this year due to weakening rental growth in the first three months of 2018.

However, these overall figures for retail are somewhat misleading given the diversity of local and sub-sector performance. This is evident in the data for capital growth in Scotland, with retail warehouses values virtually flat (-0.1% over Q1), compared to more robust growth for high street retail (0.9% growth over the quarter). Scotland saw the fastest capital growth for high street retail in the UK, outside of London.

Returns dropped back to 1.6% in this period, the same rate of return that was achieved in Q3 2017, and down from the 2.2% return in the final quarter of last year.

Rental growth remained in negative territory, but this is not typical of market conditions in the larger office markets of Glasgow and Edinburgh.

Industrial capital and rental values were virtually unchanged during the first quarter of 2018. As such, the sector had to rely solely on the income return of 1.5% in order to achieve a total return of 1.4%. Over the past twelve months, the sector remains the strongest performer of the three main sectors, with an annual total return of 8.1% during the year to the end of March.

Aileen Knox, senior director at CBRE Scotland, said: “The returns for alternative property have been very impressive so far this year with the sector now forming an increasing share of the real estate market.

“Around the start of the century, alternatives accounted for just 6% of the properties in the sample but now in 2018, it forms 19%.

“Our data also reflects the growing importance of alternatives as an asset class for investment purchases; as our analysis demonstrates, more money was invested into Scottish alternatives in 2017 and in Q1 2018 than went into the retail sector.”

Source: The National

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Over half of London properties to be priced out of stamp duty relief in 10 years

Over half of the 52,002 properties that currently qualify for a stamp duty relief for first-time buyers in London will be priced out of the tax cut in the next ten years, according to mortgage adviser L&C Mortgages.

The company looked at how many homes across England are and will be available for under £500,000 by 2028, and therefore qualify for the Government’s first-time home buyer’s relief.

The research shows that as many as 4m homes across England could move out of the stamp duty relief threshold in the next 10 years due to rising house prices.

In London, the total proportion of properties that would benefit from the stamp duty cut will drop from 57 per cent to 28 per cent by 2028.

The study also found that London has a relatively low proportion of properties within the band eligible for a cut, primarily because just over two fifths of sales are over £500,000 and therefore not applicable for the stamp duty cut.

In Brighton, almost a third (30 per cent) of properties that could currently be eligible to pay less stamp duty are forecast to move above the threshold in ten years.

However, homes in Nottingham are the most likely to remain within the price bracket for tax exemption over the next ten years.

The research also found that Southampton, Norwich, Bristol and Plymouth are currently the best places to buy to avoid stamp duty.

City Houses below £500,000
Southampton 88 per cent
Norwich 87 per cent
Bristol 87 per cent
Plymouth 80 per cent
London 57 per cent

According to the research, Nottingham will have the most houses within the price bracket for tax exemption over the next ten years.

David Hollingworth from L&C said: “It’s alarming that in cities in the South, so few properties will see any type of benefit from the stamp duty changes in 10 years’ time.

“Our research shows that many of the first-time buyers, especially those based in southern England, who are set to pay less or nothing will need to act fast before many of the properties currently eligible fall out of the price bracket that qualifies for the cut.”

The research also found that almost a third of first-time buyers don’t know if the stamp duty abolition will benefit them when they buy their first home.

However, a fifth of first-time buyers have changed the area in which they want to buy in order to pay less or no stamp duty, which rises to 37 per cent of Londoners.

James Hender, head of private wealth at Saffery Champness, said: “The research shows that people are aware of the stamp duty relief and are changing behaviour to benefit from the savings.

“House price inflation could render this relief meaningless. Although higher stamp duty receipts would be the result, a future Chancellor may wish to raise the thresholds to ensure that first time buyers continue to get a helping hand onto the property ladder.”

Source: City A.M.

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UK house prices edge up in May after April slump – Halifax

The UK housing market remains subdued, however, house prices in the three months to May were 1.9 per cent higher than the same period a year earlier, according to survey by UK bank Halifax.

On a monthly basis, prices rose by 1.5 per cent in May, partially reversing the 3.1 per cent decline in April.

Halifax’ April housing Index showed that house prices fell over three per cent, following a 1.6 per cent rise in March.

However, the May figures represent something of a slow down from the 2.2 per cent annual growth seen in April, while still being 0.2 per cent higher than in the preceding three months.

The average house price in the UK is now £224,439, Halifax said.

Russell Galley, managing director at Halifax, said: “These latest price changes reflect a relatively subdued UK housing market.

“After a sharp rise in January, mortgage approvals have softened in the past three months, whilst both newly agreed sales and new buyer enquiries are showing signs of stabilisation having fallen in recent months.

“The continuing strength of the labour market is supporting house prices. With interest rates still very low we see mortgage affordability at very manageable levels providing a further underpinning to prices.”

Howard Archer, chief economic adviser at the EY ITEM Club said: “The ongoing softness in house prices comes amid still lacklustre housing market activity.

“The further dip in mortgage approvals in April – albeit slight – looks particularly disappointing given housing market activity that they had likely been adversely affected in March by the severe weather.

“April’s mortgage performance indicates that housing market activity remains muted as it pressurized by still limited consumer purchasing power, fragile confidence and likely further gradual Bank of England interest rate rises following November’s first hike since 2007.”

However, Jeremy Leaf, north London estate agent and a former RICS residential chairman, was somewhat more positive on the Halifax numbers: “At first glance, these figures look disappointing with Halifax reporting annual house price growth softening in May.

“Once again we are seeing the rather topsy turvy pattern to the housing market – up one month, down the next. It is the same on the ground – no real pattern, with buyers and sellers negotiating hard but not always successfully.

“Looking forward, we expect more of the same and possibly slightly better as we await figures reflecting the crucial spring market period.’

Source: City A.M.