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Record-breaking year for Leeds property market

Three records were broken in the Leeds property market after a “buoyant” year, according to property consultancy Knight Frank’s Regional Cities Report.

Office take-up in Leeds passed the one million sq ft mark in 2017. This total is more than double the amount registered in 2016 and is 88 per cent ahead of the ten-year annual average for the city.

The agreement with the Government Property Unit (GPU), on behalf of HMRC and the Cabinet Office, was the biggest ever commercial property letting in Leeds. Terms were agreed on a 25-year lease on 378,000 sq ft at 7-8 Wellington Place. NHS Digital will also relocate to the new office, with occupation scheduled for 2020.

Finally, rents have now reached £30 per sq ft in the city for the first time.

Eamon Fox, partner and head of Knight Frank’s office agency department in Leeds, said: “Whilst the GPU letting has attracted the majority of market attention, occupier activity was strong across all sectors. Significantly, three deals above 40,000 sq ft were completed during the year, a feature of the market that was absent from 2016.

“In a deal that will enable a move from Albion Place, Leeds Building Society took control of the 80,600 sq ft Sovereign House as the year was finishing. The building is the former home of Addleshaw Goddard who moved to Bruntwood’s 3 Sovereign Square in one of the largest deals in the city in 2016.

“Earlier in the year, Burberry took 46,000 sq ft at 6 Queen Street on a ten-year lease. The deal was of major significance to the Leeds market with £30 per sq ft being agreed. Prime rents in the city have now shifted upward on the back of this transaction.”

The report also found that a lack of available stock at the upper end of the market, rather than low investor appetite, served to limit investment volumes in 2017.

Although the overall deal numbers were up when compared to 2016, an example of an office sale above £25m was absent from the year. This meant that investment volumes reached only £127m, 25 per cent below the ten-year average for the city.

The acquisition of 9 Bond Court by a confidential purchaser for £24.5m was the largest office sale in 2017.

Source: Insider Media

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Stuart Marshall: buy-to-let changes may mean more expats doing buy-to-let

The reduction in buy-to-let mortgage tax relief may cause more people to emigrate abroad and invest in UK buy-to-let from overseas, the managing director of Liquid Expat says.

Stuart Marshall is the managing director of Expat Packager, which submits UK buy-to-let cases for expats, and Liquid Expat Mortgages, which offers buy-to-let mortgages for expats.

Marshall said: “Lenders not already operating in the expat marketplace will have to start thinking about tapping into it because of more people leaving and becoming expats.

“With Brexit, a lot of the talent pool will leave and this is good for our business. People are realising there’s a big world out there and can experience more cultures and not living in the UK, paying UK taxes.

“If you’re an expat there’s genuinely never been a better time to take out mortgage finance. A lot of the specialist lenders have been looking for new niches.”

The mortgage tax relief changes, phased in over four years, mean 75% of finance costs are deductible from rental income from 2017 to 2018. The year after it will be 50%, the year after that 25% and from 2020 none.

Marshall added: “Some landlords may be selling off some units in the UK because of being hit harder with tax changes.

“We’ve seen more expats wanting to buy into a limited company to do buy-to-let deals but we’ve been educating them, showing a lot of the time, it’s not worth the time and the cost to set up.

“Expats can earn a certain amount in the UK before paying tax and property purchasing may not take them over that amount, meaning they wouldn’t be affected by these tax changes.”

Landlords have had to pay 3% more stamp duty since April 2016, something which Marshall found positive for expats.

He said: “It hasn’t had a negative impact on the number of mortgage applications from overseas landlords. It just means they are looking at more efficient properties and doing due diligence on them with the cost involved and rental yield.”

The Prudential Regulation Authority brought in regulation from 2017, requiring applicants with four or more mortgaged buy-to-lets to provide more information about their existing portfolio.

Marshall said: “There won’t be much change because in the expat marketplace lenders are more cautious, always looking at affordability and there’s more underwriting too.”

He said that it’s this manual underwriting that makes the process take longer. “Getting tested and certified passport copies is the most difficult because a British embassy may be far away and there may be a long wait.”

Marshall reckoned that with technological improvements, the process will quicken eventually.

He said: “It will do but will take one major player with a lot more digitally driven processes and once established, lenders will have to follow suit.

“Marsden is the first lender we have trialled doing these passport checks digitally and achieved a 100% success rate, meaning they all worked digitally without needing having to go to an embassy.”

He felt the expat marketplace for lenders is as competitive as ever and new entrants must add something new.

He added: “There is space for new entrants if they have a clear criteria and rate that fills the gap existing lenders are not covering.

“We aim to continue to bring new lending products expats can benefit from, make application process smoother and educate all the expats that see getting a mortgage in the UK as a problem.”

Source: Mortgage Introducer

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Prospects for UK commercial property continue to improve, claims report

The latest edition of the Investment Property Forum’s (IPF) UK commercial real estate consensus report claims that the commercial property sector’s sentiment for the current year continues to improve. In its latest report, IPF said the “outlook for 2018 has improved over the three months since the last survey” was conducted, with average rental and capital value growth rates increasing in virtually all sectors. It claims that the rental value growth average forecast has risen to 0.8 percent from 0.4 percent three months ago. Also, the average capital value growth rate has now increased to -0.2 percent from -0.7 percent in November with industrial growth now expected to be 4.0 percent from 2.7 percent in the last survey.

IPF said the 2018 average total return prediction has improved to 4.6 percent for the year, from 4.0 percent last quarter, reflecting an implied income return of 4.9 percent from 4.8 percent previously. IPF’s latest UK Consensus Forecasts report surveyed 23 property consultants and fund and investment management houses. Research firm Capital Economics said the IPF consensus has pushed up its forecast for all-property total returns this year, reflecting a less pessimistic outlook for rental growth.

Source: Work Place Insight

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More people bought houses in January, but don’t bet on higher UK house prices say economists

The number of mortgages for house purchases surged in January to the highest since last July, but economists warned that hopes it might mark a thawing in the chilly housing market may be misplaced.

Some 67,478 mortgages were approved during January, up from only 61,692 in the previous month, according to data published today by the Bank of England.

Remortgaging activity also bounced back, although it did not match the surge around October and November, when the Bank of England raised interest rates for the first time in a decade.

Yet the bounceback has little impact on a consensus outlook for house prices which sees a moderation of growth over the course of 2018, as the vast affordability gap in London in particular starts to take its toll.

Josie Dent, an economist at the Centre for Economics and Business Research, said: “Higher interest rates will make mortgages more expensive, and so will limit the number of people who can afford them. Therefore, despite this month’s surge in mortgage approvals, going forward numbers are likely to decline.”

The annual growth rate of mortgage lending remained steady at 3.3 per cent, the Bank data showed, well above GDP or wage growth over the past year. Total mortgages outstanding reached £1.37 trillion.

Howard Archer, chief economic adviser to the EY Item Club, said the figures do “little to dilute our belief that 2018 will be a difficult year for the housing market and price gains over the year will be limited to a modest two per cent”.

Noting there is usually volatility in house purchases around the New Year, Archer said: “January’s sharp rebound in mortgage approvals highly likely overstates the current strength of the housing market just as December’s drop overstated the weakness of housing market activity.”

Hansen Lu, a property economist at Capital Economics, said the data “do not signal any improvement in the underlying market”.

He said: “Looking ahead,there are few reasons to expect a meaningful gain in either house price inflation or mortgage approvals this year.

“After all, with interest rates rising and any recovery in real incomes still several months way, there is un likely to be a meaningful improvement in buyers ’ ability to afford the very high prices that homes are currently trading for.”

Source: City A.M.

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Fury at FOURTH housing development for Nuneaton community

Building what would be the fourth new housing development in a Nuneaton community has caused fury among residents.

Weddington’s ability to cope with demand for new school places as well as the impact on the roads has once again been the biggest concern aired by readers following the news that Gladman want to build up to 775 homes on land off Weddington Road.

Telegraph readers took to social media in their droves to react to the news of the development, which would be the fourth new one in the area.

What readers had to say

The plans were described as “utter madness” by Weddington ward councillor Keith Kondakor and it was a sentiment shared by Andrea McDonnel l on Twitter, who said: ” Absolutely agree! How can the current infrastructure cope?! Children struggling for schools, waiting times for doctors and sitting in queues of traffic to get to and from work #madness.”

On Facebook, Nick Groot Smith said: “They need to sort the town access out before any more homes are built.”

Liam Dunn wrote: “Wanna build more houses, yet you can’t fill potholes properly!”

Kerry Orton posted: “Have we not reached the housing target for the next ten years already? Surely we can’t be far off! And any sign of an approved Borough Plan yet?”

While Dan Holdaway said: “How? There is no way to widen the roads in a heavily built residential area? The roads will not change.”

Christopher ‘Suggsey’ Smith posted: “Yet more well used footpaths and bridleways in the countryside to be swallowed up by another development on green belt land. Time for everyone to say no, enough is enough!”

Fury at FOURTH housing development for Nuneaton community Commercial Finance Network
The lay-out of the proposed new development in Weddington. (Image: Image courtesy of Gladman leaflet)

Gladman has said that, at the moment, the plans are in the very early stages and the leaflets sent out locally form part of their consultation before they officially submit the proposal to Nuneaton and Bedworth Borough Council .

What is known is that, at the moment, the latest round of inspection is taking place into Nuneaton and Bedworth Borough Council ‘s crucial Borough Plan, which maps out where houses can be built over the next 15 years.

Until the government inspector decides if the plan is ‘sound’ and fit for purpose, the council has little defence in the face of applications for housing developments.

Source: Coventry Telegraph

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House prices in regional cities set to surge, says Hometrack

Average house prices in regional cities including Birmingham, Edinburgh, and Manchester are expected to rise by 20% to 30%, according to new figures from Hometrack.

In its latest UK Cities House Price Index, Hometrack said that regional cities would start to close the gap to London, which has seen nominal prices leap by 89% since 2009.

While Oxford and Cambridge have also performed strongly, effectively as if they were extensions of the London market, and Bristol has grown 70%, other areas have seen much slower increases.

Prices in Aberdeen have risen just 6% since 2009 and average prices in Newcastle are just 18% higher over the same period.

However, Hometrack said that while regional cities have lagged the London market over the past ten years, they are now starting to see stronger growth.

Average prices in Edinburgh rose 7.7% year on year in January, with a 7.3% increase in Birmingham and 6.7% in Manchester.

By contrast, growth in London has slowed to 1.6% year on year, meaning that prices are falling in real terms.

Overall UK city house price inflation is running at 5%, up from 4% a year ago, making the average price of a home £211,200.

Hometrack said cities outside southern England have further room for house price growth but that this growth would not match the scale registered in London since 2009 because the underlying market dynamics for London are different, thanks to high levels of overseas and investor buying.

Richard Donnell, insight director at Hometrack, said: “We expect to see average house prices rise by 20% to 30% in cities like Edinburgh, Birmingham and Manchester in the next three to four years.

“The income to buy a home in regional cities is well below the London average so in the near term we expect to see rising house prices stimulating additional buying and market activity in those areas.

“House prices have some way to increase before there is a material constraint on demand.

“This assumes mortgage rates remain low by historic standards and the economy to continues to grow.”

House prices in regional cities set to surge, says Hometrack Commercial Finance NetworkHouse prices in regional cities set to surge, says Hometrack Commercial Finance Network

Source: Property Industry Eye

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Scottish Government to adopt ‘new and innovative’ housing approach

THE Scottish Government will adopt “new and innovative” approaches to help the housing sector cope with challenges such as Brexit and the country’s ageing population, Communities Secretary Angela Constance has said.

She will use a speech to the Chartered Institute of Housing conference to stress the importance of providing “high-quality affordable housing”.

Homes should be “first and foremost” for living in, rather than for accumulating wealth, according to the Scottish Government.

Ministers also believe the housing market has to become more flexible, to help meet the needs of an increasingly elderly population.

Meanwhile the vote for Brexit has put the future of 5000 European citizens working in Scotland’s construction industry in jeopardy, while the housing sector is also having to deal with “damaging” UK Government welfare reforms.

Speaking ahead of the conference in Edinburgh, Constance said: “High-quality affordable housing is about more than just bricks and mortar – it provides safe, warm homes, helps create a fairer Scotland, and delivers great economic benefits. As we look to the challenges that lie ahead, that will become ever more important.

“The UK Government’s approach to Brexit threatens jobs, prosperity, and workers. Welfare cuts are plunging more people into poverty.

“And an ageing population presents big questions in how we support independent living and increase a flexible housing supply.”

“Against that backdrop we are taking firm action. Since 2007 we have delivered almost 71,000 affordable homes and committed to delivering at least 50,000 over this Parliament, and we are spending £100 million a year protecting people from the worst impacts of the UK Government’s welfare cuts – cuts that threaten to push more children into poverty. But there is more we can and must do. We have given councils long-term planning assumptions totalling £1.75 billion to March 2021 – providing the guarantee needed to deliver our ambitions.”

Source: The National

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Buy-to-let mortgage costs are rising

The cost of most mainstream buy-to-let mortgages is starting to climb, according to new data from Mortgage Brain.

Over the past three months, since Base Rate rose to 0.5% from 0.25%, the cost of a two-year buy-to-let tracker with a 60% and 70% LTV, is now 3% higher. With a current rate of 1.79% and 2.14% respectively (as of 1 February 2018), the 3% rise equates to an annualised increase of £216 on a £150,000 mortgage.

The cost of an 80% LTV two-year fix at 3.44% is now 2% higher than it was three months ago, while its 60% and 70% LTV counterparts, and a 70% LTV three-year fix, are all 1% higher than they were at the beginning of November 2017.

Longer-term deals are faring better with Mortgage Brain’s latest data showing a 2% reduction in cost over the past three months for a 70% LTV five-year fix. For the same product with a 60% and 80% LTV, the cost reduction is 1%.

Rise in product numbers

Despite the recent fluctuations in rates and costs, the buy-to-let sector has also seen the strongest performance in terms of product numbers and availability over the past year.

An additional 721 products were introduced into the buy-to-let market during 2017, representing a 32% increase in overall product availability – up from 2,238 in January 2017 to 2,959 as of 15 January 2018.

Mark Lofthouse, CEO of Mortgage Brain, commented: “It looks like the Prudential Regulation Authority changes, coupled with what could be seen as the start of a number of interest rate rises, is starting to affect the cost of mainstream BTL mortgages.

“Buy-to-let product numbers are at a new high, however, and there are still pockets of cost reductions and savings to be had for potential landlords and property investors. With the BTL market set to become even more complex in 2018 though, we might be on the start of a new path in terms of mortgage cost movement compared to the past few years.”

Source: Mortgage Finance Gazette

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UK mortgage lending rises but experts warn of tough year ahead

THE number of mortgages approved by UK banks increased for the first time in four months in January, according to industry data.

However, UK Finance – the body that represents all the major high street banks – found lending to consumers fell, reflecting caution among households.

Total mortgage lending rose by 9.7 per cent to £21.9 billion in January compared with the same month a year ago.

Consumer credit declined by 0.2 percent in annual terms in January – the first drop since UK Finance’s new consumer credit series started in April 2017.

Much of the boost to mortgage lending could have come from a cut in stamp duty for first-time buyers.

But lending to businesses contracted by 1.4 per cent, with construction falling. Spending on credit cards rose by 5.8 per cent, or much faster than the growth in personal incomes, although the banks said that repayment levels on credit cards were also high.

The figures suggest that borrowers are switching away from personal loans, which declined by 15 per cent on the month, and preferring to borrow via their credit cards instead.

Deposits at banks and building societies advanced just two per cent on the year, hitting a total of £835bn, with ISA products continuing to see outflows.

UK Finance warned 2018 is likely to be a difficult year for the housing market.

Howard Archer, chief economic advisor to the EY Item Club said: “UK Finance reported that mortgage approvals for house purchases picked up to a three-month high of 40,117 in January after slowing to a 56-month low of 36,085 in December from 39,624 in November, 40,599 in October and 41,647 in September.

“January’s rebound in mortgage approvals suggests that there may have been a hit to activity in December as a reaction to the Bank of England raising interest rates in November.

“It is also possible that cutting stamp duty for first-time buyers in the Chancellor’s Budget may have provided limited support to mortgage approvals in January. The abolition of stamp duty for first time buyers for properties costing up to £300,000 (and on the first £300,000 for properties costing up to £500,000) should also provide some support to house prices.

“It should be noted that housing market activity can be particularly volatile around Christmas and New Year.

“While January’s rebound in mortgage approvals suggests that December’s drop overstated the weakness of housing market activity, it is still subdued. Indeed, January saw mortgage approvals for house purchases at the third lowest level since September 2016.

“Furthermore, at 40,117 in January, mortgage approvals for house purchases were still 22.2 per cent below their long-term (1997-2018) average of 51,563

“The latest survey evidence also points to lacklustre housing market activity early on in 2018.

“New buyer enquiries were down for a 10th month running while agreed sales fell for an 11th month.

“The latest UK Finance mortgage approvals data does little to dilute our belief that 2018 will be a difficult year for the housing market and price gains over the year will be limited to a modest two per cent.

“The fundamentals for house buyers are likely to remain challenging. The squeeze on consumers’ purchasing power remained significant going into 2018, and it is likely to only gradually ease as the year progresses.”

Source: The National

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Shropshire Council plans to build and sell houses in bid to plug financial hole

Shropshire Council is planning to build and sell houses to make money as part of its efforts to tackle a financial black hole.

The council is suggesting the measure as one way of dealing with its financial deficit and says that the purchase of Shrewsbury’s shopping centres will also provide an income of £2.7 million in the next financial year.

Other projects the authority hope will raise money include the redevelopment of Shirehall as a ‘public sector hub’, the development of health centres and community hubs, and buying and developing commercial property.

The council also wants to sell its services to external clients, and look at new services it could provide.

These include a new library services initiative called “Fab Reads”, charging for the time of building control team staff, and fees for tree preservation orders.

The proposals will be discussed at Thursday’s Audit Committee meeting.

The move to build and sell houses has been welcomed by the council’s Labour leader Alan Mosley, who described the plan as a “far better” investment than the shopping centres.

He said: “It’s good to see that they’re looking at investing in housing, particularly the rental section, which would be a far better investment than the shopping centres in terms of social value.”

But he criticised proposals to sell some of the council’s services as a risk.

“Shropshire Council is desperate to try and fill the massive black hole in its finances and seeking additional income for services is one way,” Councillor Mosley added.

“However, as has been acknowledged in the financial strategy, there are massive risks in relying on income to fund future service needs.

“This is no way in which councils should be financing the provision of vital and critical resources for residents.”

The council’s commercial strategy, approved by cabinet in March 2017, intends to invest in schemes and projects which can deliver £10m to £15m of new revenue income over a period of five to 10 years with returns of investment exceeding 10 per cent.

A spokeswoman for Shropshire Council said: “As government funding dwindles, choosing where to make savings is getting more and more difficult, especially as demand on the services we provide for our most vulnerable residents increases.

“Our financial strategy sets out a number of savings we propose to make over the next five years in order to balance our (revenue) budget.

“A key part of this is raising income.

“We are continuing to review all of the services we deliver (over 150, across the county) to explore whether they can sell their existing services to external clients and identify any new ones they can provide.”

Source: Shropshire Star