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Sterling rises as strong housing data cements May rate hike bets

The British pound rose against a mostly firmer dollar on Monday and was on track for a third consecutive day of gains as investors were encouraged by data showing British house prices rising more than expected in March.

Since Britain signed a transition agreement last month to cover the 21-month period after it leaves the European Union, concerns about Brexit have abated as investors focus on the state of the UK economy before an expected interest rate rise in May.

Sterling rose 0.1 percent against the dollar to $1.4104 on Monday after mortgage lender Halifax said that house prices rose by a stronger-than-expected 2.7 percent in the first three months of 2018.

The data is likely to bolster expectations that the Bank of England will raise rates next month by a quarter percentage point and reduce fears among investors that Britain’s economy is too weak to stomach a second hike later in 2018.

However, house prices are still rising much more slowly than before the 2016 referendum decision to take Britain out of the European Union which hit confidence among many households as the pound’s fall pushed up inflation.

“House prices recovering somewhat is a welcome piece of news given that one of biggest concerns after Brexit is how UK households will deal with falling house prices,” said Valentin Marinov, head of G10 FX strategy at Credit Agricole.

Marinov said he had a moderately constructive view on the pound for 2018 and that with Brexit concerns on the back burner sterling could start to outperform a range of currencies, as oppose to just the dollar which has been weakened by U.S.-China trade war fears.

“The pound seems to be emerging from under the Brexit cloud. The next time we’ll start focusing on Brexit may be well into the third quarter so ahead of that we’re really left with economic data to focus on,” he said.

But some analysts say uncertainties over Brexit remain and that broad dollar weakness is keeping sterling above $1.40.

Against the euro, the pound strengthened 0.2 percent on Monday to 87.04 pence

Traders last week largely shrugged off tepid survey data and searched instead for more meaningful signs of economic weakness that could deter the BoE from its path of monetary tightening.

Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv

Source: Reuters

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Chance for Plas Madoc tenants to view housing improvement plans at public event

Council tenants in the Plas Madoc area will this week have the chance to view plans for improvement works due to be carried out to their homes.

Hundreds of properties on the estate are undergoing major refurbishment works as part of Wrexham Council’s ongoing modernisation programme – which aims to bring council houses across the borough up to the Welsh Government’s Welsh Housing Quality Standard.

The improvements include re-roofing and installing External Wall Insulation to help keep houses warmer, improve their appearance and extend the lifespan of the buildings.

The first phase of the work is now well underway in the Bodlyn, Bran, Aled, and Idwal areas of the estate. Some properties in Idwal have already been completed.

The second phase is due to start soon and will cover homes in the Alwen, Dinas, Glaslyn, Gwynant and Peris areas.

Plans to demolish 22 ‘difficult to let’ properties in the Gwynant and Peris were approved by the Executive Board in April 2017. During the meeting last year it was noted that the ‘three storey properties offer little to landscape and environment as well as being unpopular and difficult to let’.

This week an information will take place at Plas Madoc Leisure Centre, offering an opportunity for
tenants to come and view the design plans for their homes. Housing officers will also be on hand to answer any queries about the work.

There will also be a chance to view some initial proposals/plans for new-build properties which Wrexham Council are planning to build on the estate.

In February Executive Board members approved a further £50.3m investment for housing improvement work to continue in 2018/19. This includes a Major Repairs Allowance grant, which the Welsh Government awards to local authorities to help them achieve the Welsh Housing Quality Standard.

Lead Member for Housing, Cllr David Griffiths, said: “We have committed to this huge investment to help us continue improvement work across the County Borough over the next 12 months.

“Our aim is to ensure that all our tenants homes meet the Welsh Housing Quality Standard by 2020 and I’m pleased to say we are well on track to achieve this.”

The information event will be held at the Aqua Lounge, Plas Madoc Leisure Centre, 11 April, from 2pm-6pm. It is a drop-in event and anyone is welcome to attend.

Source: Wrexham

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Region-Specific Products Better For UK Investment Property Market

Lenders have been urged to consider implementing region-specific product ranges to support advisors and clients in particular areas of the country.

Mortgage and protection network JLM Mortgage Services has spoken out, suggesting that a homogenised product range is no longer suitable for the current mortgage climate with region-specific offerings better suited. This is particularly relevant in the specialist lending market. It is argued that newer lenders should think about tailoring their ranges to offer specific product types in certain areas of the country.

Suggestions put forward included offering products tailored to the buy to let borrower in University cities for or those purchasing in prime property markets such as London, the Home Counties and areas of the North West.

A region-specific product approach could allow lenders to consider increasing LTVs in the buy to let market, or potentially offer a tiered LTV or rate approach for borrowers aiming to purchase in markets such as London.

Director of JLM Mortgage Services, Rory Joseph, said: ‘Our view is that, in this market, a one size fits all lending approach is not going to work if you are a relatively new lender who is merely replicating the range of tens of lenders that already exist, have a larger lending appetite, and a far wider reach.’

He continued: ‘In talking to numerous lenders, and weighing up the needs of our clients right across the country, there would be considerable mileage in providing region/sector-specific products. For instance, with buy to let that could mean increasing LTVs for HMO or multi-unit blocks in large student cities such as Sheffield, Leeds, Nottingham and the like, or it could mean offering different criteria/higher LTVs in London, which as we all know is a ‘different place’ when it comes to the housing market. There are opportunities to drill down and get much more specific in different regions.’

Source: Residential Landlord

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UK buy-to-let investor count hits 2.5 million

The number of UK buy-to-let investors in the market reached 2.5 million in the latest tax year, an increase of 5% year-on-year, research by London estate agent ludlowthompson has found.

The number of investors in the market increased by 27% in the past five years, up from 1.97 million in 2011.

Stephen Ludlow, chairman at ludlowthompson, said: “Rising numbers of landlords shows the enduring appeal of buy-to-let, particularly in London.

“The long-term picture for the buy-to-let market remains strong. As a ‘London-leaning’ Brexit looks more likely, a final deal will focus on strengthening the appeal of the capital as a go-to destination for overseas professionals, graduates and students alike.

“Our own figures underline the strength of London’s attraction with a significant increase in rental applicant numbers since the start of 2018. In addition, job creation in the capital remains healthy, its social scene is world-class and new, better transport links continue to come online.”

Source: Mortgage Introducer

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Mortgage paperwork and jargon cause stress for home owners in the UK, new study finds

Two in five home owners, some 41%, in the UK suffer from mortgage stress and 70% want lenders to go digital, according to a new national study.

Paperwork and jargon are regarded as the biggest contributors to this stress which is affecting some 625,000 new borrowers each year, the study from online mortgage broker Trussle has found.

Some 20% said there was too much paperwork involved in the mortgage initial application and subsequent remortgage process, while 15% claimed the industry’s prevalent use of jargon was the main issue.

When asked what could be done to reduce stress levels, a large number of customers wanted mortgages to become more digital. Three quarters said lenders should be legally required to make their outstanding balances accessible online, while 70% wanted a downloadable mortgage statement, generally posted by lenders once a year.

The form warns that because paperwork can be so time consuming, some borrowers risk lapsing onto their lender’s high interest Standard Variable Rate (SVR) deal while attempting to remortgage. This can cause significant financial damage.

For example, until a home owner has sent their annual mortgage statement to their new lender, along with personal documents such as their passport, they won’t be able to switch. It can take up to six weeks to replace a lost annual mortgage statement. In this time, the average customer lapsing onto their lender’s SVR would pay almost £400 more a month.

In an experiment involving one of the big six lenders and a local conveyancing firm, Trussle found that a mortgage customer was required to deal with 219 sheets of paper to complete their home purchase.

‘I’ve experienced the frustration of struggling to secure a mortgage first hand. There‘s too much jargon, too much complexity, and not enough transparency. Millions of people lose out not only financially, but emotionally as a result,’ said Ishaan Malhi, Trussle chief executive officer.

‘Your mental health is no less important than your financial or physical health, so I’d like to see modern brands working hard to reduce the friction and stress of their products and services,’ he explained.

‘The mortgage sector has traditionally been one of the worst offenders, with 40% of borrowers finding the process stressful and a third sitting on the wrong mortgage, collectively spending £15 billion a year too much on interest as a result,’ he added.

‘If service providers focus on making the overall user experience simpler, more intuitive, and accessible, hurdles will be reduced and many people are going to save money in the process,’ he concluded.

Source: Property Wire

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Three-quarters of UK housing wealth held by over-50s – Savills

Homeowners aged over 50 hold £2.8trn of housing equity, a new study from Savills has revealed, the equivalent of around three-quarters of the UK’s entire housing wealth.

More than 40% of the nation’s wealth – around £1.6 trn – is held by the over-65s, the study found.

The contrast with younger property owners is stark, with homeowners under the age of 35 holding just £221bn in equity.

Savills identified a stark regional difference in property wealth owned by different generations too. Older households were found to be most dominant in the south west where the over-65s own almost half of all homeowner equity. In fact, those aged over 50 own around 80% of the region’s property wealth, while the under-35s hold just 4%.

London enjoys a less significant generational split when it comes to property wealth though. The under-35s own around 11% of the capital’s housing equity, with the over-50s accounting for almost two-thirds at 65%.

Savills puts this down to London being a hub for young professionals, boasting a lower average age than the rest of the UK.

The study also highlights that the over-65s are not completely debt free. They owe around £112bn on outstanding mortgage borrowing, though this works out at just 7% of the value of their homes.

By contrast, the under-35s owe £117bn, but this is over half the total £22obn of housing wealth they own.

Lawrence Bowles, research analyst at Savills, said that the nation has not seen so much housing wealth concentrated in older hands for a long time, and noted that it is likely that there will be an increase in people downsizing in order to release some of that equity.

He continued: Our analysis shows that there’s truth in the old stereotype of affluent households selling up in London for a ‘move to the country’. The figures for the South West of England are evidence of the trend for older homeowners making a lifestyle move, making the region arguably the country’s largest naturally occurring retirement community.”

Source: Mortgage Solutions UK

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UK commercial property outstrips even most bullish expectations

Offices in the UK continued to see strong takeup in the second half of 2017, as the commercial property sector smashed expectations.

But the performance of retail property was less positive, according to UBS Asset Management’s report, which predicted that the high street will continue to suffer from changes to shopping habits.

Overall, the total return from UK commercial real estate in 2017 was 10.3 per cent, outstripping even the most bullish of expectations.

Demand for offices held up, increasing by 19 per cent on 2016. This segment was given a major boost by the presence of the serviced office sector in London, in particular WeWork.

But the retail sector is still facing headwinds including consumer confidence, meaning demand is slowing for traditional shops. The report also suggested that the spate of company voluntary agreements (CVAs) in recent months could shift the power balance away from property investors in the sector.

New Look, Byron, Jamie’s Italian, and Prezzo have all entered into the process to restructure their portfolios, asking some landlords to agree to rent reductions and closing some sites.

But there is a bright spot in industrial space, which UBS says has a growing role in the increased levels of home delivery. Rents on smaller warehouses in South London are thought to have increased a whopping 50 per cent over the last year due to the demand for last mile fulfilment.

Total returns for the logistics property sector reached 21 per cent last year, and returns are expected to be maintained at an average of 7.7 per cent for the next two year period.

Source: City A.M.

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Mayor demands better new homes in Shrewsbury planning row

Controversial plans for 164 houses on land off Otley Road have moved a step closer. Council officers have recommend that the plans are approved – but Shrewsbury Town Council has objected to the development, with the mayor today saying the town deserves better quality houses.

The plans are part of a much larger scheme of up to 550 houses, commercial development, a hotel, a care home of up to 70 beds and supporting local centre and community uses.

Work will also involve the building of new estate roads and associated highways works, associated infrastructure, associated earthworks, and landscape works including informal open space and children’s play area, which were given outline permission in 2015.

Shrewsbury Town Council has objected to the plans for the houses and said that there are not enough open spaces, lack of parking, and lack of affordable housing.

Shrewsbury’s mayor Jane MacKenzie said she will personally be objecting over the lack of quality and she said she is organising a public meeting to set up a list of principles for quality development to be handed to developers at the first stage of a planning application.

Standards

She said: “I’m going to be objecting over the quality of the building, the lack of imagination and the low standards that property developers seem to be getting away with.

“We’re hoping to set up a meeting next month and develop a list of principles which will go to Shropshire Council’s planning department and be handed out to developers at the first stage of the planning process.

“We’re getting the same old developers thinking they can just push something through that doesn’t support the culture and heritage of Shrewsbury.

“It’s very disappointing, people deserve better. It’s about the next generation not us.

“I’m organising the public meeting for people who are tired of what’s happening in Shrewsbury with the development.

“We need development, but just better quality development.”

The public meeting will take place at The Guildhall on April 28.

Bellway Homes Ltd have applied to build the homes which would consist of 15 two bedroom houses, 72 houses with three bedrooms, 52 houses with four bedrooms, which would all be private housing.

There would also be a number of affordable homes including four one bedroom apartments, 14 two bedroom houses and seven three bedroom houses.

Shropshire Council’s central planning committee will make a decision on the plans on Thursday in Shirehall.

Source: Shropshire Star

 

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Buy-to-let crackdown starts to bite

Buy-to-let has historically been a popular route for would-be property investors. But, new data from UK Finance shows that the number of new buy-to-Let purchase mortgages in January 2018 fell more than 5 per cent compared to the same month a year earlier.

In recent years, the government has introduced a raft of changes to the taxation of UK residential property, which has led many investors to rethink their options.

On top of increased stamp duty on the purchase of additional properties, measures to phase out higher rate tax relief on mortgage interest have been gradually introduced. Tougher affordability checks on borrowers are also proving to be a barrier for many aspiring buy-to-Let investors.

We’ve seen first-hand how the crackdown, for many, has made the buy-to-let route simply uneconomic. When combined with the reality of owning investment property, including regular maintenance and securing tenants, it’s no surprise that landlords are beginning to think twice about the merits of Buy-To-Let. In fact, it can sometimes feel like managing a residential property is more like running a business, rather than making a simple investment.

Whilst this route is becoming less attractive, investing in property remains a popular aspiration.

Returns from bricks and mortar continue to outstrip the performance of the stock market and alternative means of generating income, with a long run average total return of 9.5 per cent per year from 1997 to 2017. Over the same period, the FTSE all share index delivered a total return of 6.3 per cent per year.

For many investors, it goes without saying that property should form at least part of a diversified investment portfolio.

Alternatives to buy-to-let investing

So how can investors access returns from property with the buy-to-let route falling out of favour?

Investors have previously turned to property funds. However, these vehicles are notorious for being illiquid and often opaque. Many investors will wince at the memory of the weeks that followed the EU referendum, when several UK commercial funds were forced to halt withdrawals.

Property crowdfunding has emerged as one alternative that has the potential to replace the buy-to-let investment route.

Property crowdfunding refers to the process of buying shares in individual properties alongside other investors. Investors target returns from both monthly rental income and through the increase in the value of the property. So, investors receive a regular income from tenants and hope to achieve long term capital growth on the basis that property prices have always tended to increase over time.

Another obvious benefit of property crowdfunding is that investors are able to easily diversify their holdings. For example, you can own shares in properties at opposite ends of the country without requiring the cash to purchase multiple properties outright. This gives investors access to multiple regional property markets and the ability to better protect themselves against price volatility in local markets.

Property stock exchange

Similarly, platforms such as ours now allow individual investors to diversify across sectors. Once the preserve of property funds, REITs and other professional investors, individual investors can now invest in blocks of purpose-built student accommodation (PBSA) or commercial properties at the click of a button.

Unlike property funds, property crowdfunding offers a more liquid way of entering the market.

Property Partner allows you to offer your investment for sale whenever you want through the secondary market, which functions as a property stock exchange.

Of course, investors should carry out the necessary due diligence before buying shares in a property. As with any investment, the value of your holdings and any income can fall as well as rise. With property crowdfunding you are exposed to movements in the property market. So, whilst there’s the potential to enjoy returns from any increase in the capital value of a property, there is also a risk the property could fall in value. This risk is partially mitigated through the monthly rental income received from tenants. Diversifying into a range of different properties across sectors and regions can also minimise this risk.

Where the modern buy-to-let ‘landlord’ once had to review reams of surveyor and legal reports it’s now possible to invest across a range of high quality properties across the UK.

For example, rather than committing a significant sum to acquire a one-bedroom flat in a corner of London, it’s now possible to split the same deposit across twenty properties, from Bangor to Brent Cross. Up until recently, owning a diversified portfolio of investment properties that spanned the UK would have required thousands of pounds in deposits. New technology means that it is now easier than ever before.

With the government’s crackdown on buy-to-let putting many investors off, equity crowdfunding continues to grow in popularity as an alternative way to access the property market.

Mark Weedon is head of research at Property Partner.

Source: Money Observer

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Lettings plunge as prime London homeowners opt to sell after tax changes

Homeowners in wealthy areas of London are opting to sell rather than let out properties, following buy-to-let tax and stamp duty changes in a trend that could spread to the wider market.
The number of properties listed for sale in so-called prime central London (areas such as Chelsea, Belgravia, Marylebone and Knightsbridge) jumped by 5.4% in the year to February, while in the lettings market this was down 21.2%, according to analysis by estate agent Knight Frank. (See graph below.)

The change in part reflected additional tax burdens for landlords, the agency said.

Wider house price indices have shown London to be the worst performer in recent months.

Andrew Montlake, director at London-based broker Coreco, said the firm had seen a drop in let-to-buy across the market– where people hold on to their homes when moving in with a new partner.

The additional stamp duty surcharge for buying a second home and removal of buy-to-let mortgage interest tax relief are the main reasons for this change, according to Montlake. He said: “Now there is an extra cost of let-to-buy, so people are putting properties on the market rather than keeping.”

However, this trend is not as evident among wealthier clients, who are prepared to hold on to properties for 15-20 years in order to benefit from capital appreciation, Montlake added. Political uncertainty and the threat of rising interest rates do not appear to be driving behaviour as much. He said: “Brexit has no effect whatsoever – we haven’t noticed a change where Brexit is concerned.”

Transactions rising

Knight Frank’s data showed trading volumes have picked up by around 2% over the past year, which is a trend that Montlake has also witnessed. Mark Harris, chief executive of mortgage broker SPF Private Clients agreed that there has been a pick-up in activity.

He said: “More people are selling rather than letting, which is certainly something we are seeing. This year has seen an increase in the number of sales as the market has settled down, transactions are picking up and people have come to terms with higher stamp duty being here to stay and Brexit negotiations are progressing well. Life has to carry on and is doing so.

“SPF Private Clients has seen a 45% increase in £1m-plus mortgage enquiries in the first quarter of this year compared with the same quarter last year, which backs up this data.”

Source: Your Money